Act of 1934 -- Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended __________to ____________
Commission File No. 1-12494
CBL & ASSOCIATES PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1545718
- ---------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2030 Hamilton Place Blvd., Suite #500
Chattanooga, Tennessee 37421-6000
- -------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 855-0001
-------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of Each Class on which Registered
- ------------------- -------------------
Common Stock, $.01 par value per share New York Stock Exchange
9.0% Series A Cumulative Redeemable Preferred New York Stock Exchange
Stock, par value $.01 per share
8.75% Series B Cumulative Redeemable Preferred New York Stock Exchange
Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) Yes_X__ No_____
As of May 12, 2003, there were 29,995,030 shares of common stock, par value
$0.01 per share, outstanding.
1
CBL & Associates Properties, Inc.
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
ITEM 1: FINANCIAL INFORMATION 3
CONSOLIDATED BALANCE SHEETS - AS OF MARCH 31, 4
2003 AND DECEMBER 31, 2002
CONSOLIDATED STATEMENTS OF OPERATIONS - FOR THE 5
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 6
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS 14
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE 28
ABOUT MARKET RISK
ITEM 4: CONTROLS AND PROCEDURES 29
PART II OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS 30
ITEM 2: CHANGES IN SECURITIES 30
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 30
ITEM 4: SUBMISSION OF MATTERS TO HAVE A VOTE 30
OF SECURITY HOLDERS
ITEM 5: OTHER INFORMATION 30
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 30
SIGNATURE AND CERTIFICATIONS 31
2
CBL & Associates Properties, Inc.
Item 1: Financial Information
The accompanying financial statements are unaudited; however, they have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and in conjunction with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the disclosures required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation of the financial statements
for these interim periods have been included. The results for the interim period
ended March 31, 2003, are not necessarily indicative of the results to be
obtained for the full fiscal year.
These financial statements should be read in conjunction with the CBL &
Associates Properties, Inc. (the "Company"), audited financial statements and
notes thereto included in the CBL & Associates Properties, Inc. Form 10-K for
the year ended December 31, 2002.
3
CBL & Associates Properties, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
March 31, December 31,
2003 2002
----------------------- ---------------------
ASSETS
Real estate assets:
Land.............................................................. $ 568,293 $ 570,818
Buildings and improvements........................................ 3,405,457 3,394,787
----------------------- ---------------------
3,973,750 3,965,605
Less accumulated depreciation................................... (458,638) (434,840)
----------------------- ---------------------
3,515,112 3,530,765
Developments in progress.......................................... 114,256 80,720
----------------------- ---------------------
Net investment in real estate assets............................ 3,629,368 3,611,485
Cash and cash equivalents........................................... 22,989 13,355
Receivables:
Tenant, net of allowance for doubtful accounts of $2,889 in
2003 and $2,861 in 2002........................................ 37,589 37,994
Other............................................................. 6,366 3,692
Mortgage notes receivable........................................... 22,903 23,074
Investment in unconsolidated affiliates............................. 76,195 68,232
Other assets........................................................ 37,729 37,282
----------------------- ---------------------
$ 3,833,139 $ 3,795,114
======================= =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable.................................... $ 2,443,482 $ 2,402,079
Accounts payable and accrued liabilities............................ 100,320 151,332
----------------------- ---------------------
Total liabilities................................................. 2,543,802 2,553,411
----------------------- ---------------------
Minority interest................................................... 523,002 500,513
----------------------- ---------------------
Commitments and contingencies (Note 8)..............................
Shareholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized:
9.0% Series A Cumulative Redeemable Preferred Stock,
2,675,000 shares outstanding in 2003 and 2002.............. 27 27
8.75% Series B Cumulative Redeemable Preferred Stock,
2,000,000 shares outstanding in 2003 and in 2002 .......... 20 20
Common stock, $.01 par value, 95,000,000 shares authorized,
29,886,912 and 29,797,469 shares issued and outstanding
in 2003 and 2002, respectively.................................. 299 298
Additional paid - in capital...................................... 767,194 765,686
Accumulated other comprehensive loss.............................. (1,543) (2,397)
Retained earnings (accumulated deficit)........................... 338 (22,444)
Total shareholders' equity...................................... 766,335 741,190
----------------------- ---------------------
$ 3,833,139 $ 3,795,114
======================= =====================
<FN>
The accompanying notes are an integral part of these balance sheets.
</FN>
4
CBL & Associates Properties, Inc.
Consolidated Statements Of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
----------------------------------------------
2003 2002
----------------------- ---------------------
REVENUES:
Rentals:
Minimum rents..................................... $ 102,988 $ 90,569
Percentage rents.................................. 6,330 6,717
Other rents....................................... 2,029 2,058
Tenant reimbursements................................ 49,956 38,587
Management, development and leasing fees............. 1,319 1,298
Interest and other................................... 3,924 5,688
----------------------- ---------------------
Total revenues..................................... 166,546 144,917
----------------------- ---------------------
EXPENSES:
Property operating................................... 28,272 22,320
Depreciation and amortization........................ 26,312 22,481
Real estate taxes.................................... 13,993 11,527
Maintenance and repairs.............................. 10,557 8,562
General and administrative........................... 6,353 5,741
Interest............................................. 36,956 36,787
Loss on extinguishment of debt....................... -- 1,948
Other................................................ 2,341 3,747
----------------------- ---------------------
Total expenses..................................... 124,784 113,113
----------------------- ---------------------
Income from operations............................... 41,762 31,804
Gain on sales of real estate assets.................. 1,104 415
Equity in earnings of unconsolidated affiliates...... 1,757 2,087
Minority interest in earnings:
Operating partnership.............................. (20,637) (16,197)
Shopping center properties......................... (540) (917)
----------------------- ---------------------
Income before discontinued operations................ 23,446 17,192
Operating income of discontinued operations.......... 87 566
Gain on discontinued operations...................... 2,935 1,243
----------------------- ---------------------
Net income........................................... 26,468 19,001
Preferred dividends.................................. (3,692) (1,617)
----------------------- ---------------------
Net income available to common shareholders.......... $ 22,776 $ 17,384
======================= =====================
Basic per share data:
Income before discontinued operations, net of
preferred dividends.......................... $ 0.66 $ 0.59
Discontinued operations.......................... 0.10 0.07
----------------------- ---------------------
Net income available to common shareholders...... $ 0.76 $ 0.66
======================= =====================
Weighted average common shares outstanding....... 29,726 26,356
Diluted per share data:
Income before discontinued operations, net of
preferred dividends.......................... $ 0.64 $ 0.57
Discontinued operations.......................... 0.10 0.07
----------------------- ---------------------
Net income available to common shareholders...... $ 0.74 $ 0.64
======================= =====================
Weighted average common and potential dilutive
common shares outstanding........................ 30,803 27,121
<FN>
The accompanying notes are an integral part of these statements.
</FN>
5
CBL & Associates Properties, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------------------------
2003 2002
----------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $26,468 $19,001
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................................... 20,132 18,717
Amortization...................................................... 7,246 4,612
Gain on sales of real estate assets............................... (1,104) (415)
Gain on discontinued operations................................... (2,935) (1,243)
Loss on extinguishment of debt.................................... -- 1,965
Issuance of stock under incentive plan............................ 1,129 1,150
Amortization of lease origination value........................... (50) --
Write-off of development projects................................. (8) --
Deferred compensation............................................. 89 --
Equity in earnings in excess of distributions from
unconsolidated affiliates....................................... (1,046) --
Minority interest in earnings..................................... 21,177 17,111
Changes in:
Tenant and other receivables...................................... (2,575) 2,025
Other assets...................................................... 1,266 (1,178)
Accounts payable and accrued liabilities.......................... (11,279) (2,804)
----------------------- ---------------------
Net cash provided by operating activities................. 58,510 58,941
======================= =====================
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets................................. (22,525) (13,305)
Other capital expenditures...................................... (27,570) (11,629)
Capitalized interest............................................ (1,186) (844)
Additions to other assets....................................... (419) (401)
Proceeds from sales of real estate assets....................... 9,508 22,682
Payments received on mortgage notes receivable.................. 170 2,540
Additions to mortgage notes receivable.......................... -- (3,219)
Distributions in excess of equity in earnings of
unconsolidated affiliates..................................... -- 13,618
Additional investments in and advances to unconsolidated affiliates. (6,917) (12,483)
----------------------- ---------------------
Net cash used in investing activities..................... (48,939) (3,041)
======================= =====================
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other notes payable.................. 164,347 120,330
Principal payments on mortgage and other notes payable.......... (122,944) (248,571)
Additions to deferred financing costs........................... (2,399) (341)
Prepayment penalties on extinguishment of debt.................. -- (1,875)
Proceeds from issuance of common stock.......................... 1,011 115,690
Proceeds from exercise of stock options......................... 769 1,367
Distributions to minority investors............................. (17,511) (15,650)
Dividends paid.................................................. (23,210) (15,258)
----------------------- ---------------------
Net cash provided by (used in) financing activities....... 63 (44,308)
----------------------- ---------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS............................. 9,634 11,592
CASH AND CASH EQUIVALENTS, beginning of period...................... 13,355 10,137
----------------------- ---------------------
CASH AND CASH EQUIVALENTS, end of period............................ $22,989 $21,729
======================= =====================
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized................ $36,575 $37,223
======================= =====================
<FN>
The accompanying notes are an integral part of these statements.
</FN>
6
CBL & Associates Properties, Inc.
Notes to Unaudited Consolidated Financial Statements
(In thousands, except per share data)
Note 1 - Investment In Unconsolidated Affiliates
Condensed combined results of operations for the unconsolidated affiliates
are presented as follows:
Total for the Three Months Company's Share for the
-------------------------------- Three Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
Revenues $10,746 $11,854 $6,175 $5,927
------- ------- ------ ------
Depreciation and amortization 1,597 1,738 896 924
Interest expense 3,012 2,549 1,860 1,271
Other operating expenses 2,542 3,264 1,662 1,645
------- ------- ------ ------
Income from operations $3,595 $4,303 $1,757 $2,087
====== ====== ====== ======
At March 31, 2003, the Company had investments in nine partnerships
representing four malls, two associated centers and two community centers, as
well as one mall under construction, vacant land held for sale or lease and one
development property, all of which are accounted for using the equity method.
Note 2 - Mortgage and Other Notes Payables
Mortgage and other notes payable consisted of the following at March 31,
2003 and December 31, 2002, respectively:
March 31, 2003 December 31, 2002
--------------------------------- -----------------------------
Weighted Weighted
Average Average
Interest Interest
Amount Rate(1) Amount Rate(1)
--------------- --------------- ------------- --------------
Fixed-rate debt:
Non-recourse loans on operating $1,943,722 7.06% $1,867,915 7.16%
properties --------------- -------------
Variable-rate debt:
Recourse term loans on operating 281,057 3.90% 290,954 3.98%
properties
Lines of credit 186,525 2.31% 221,275 2.69%
Construction loans 32,178 2.98% 21,935 3.08%
--------------- -------------
Total variable-rate debt 499,760 3.24% 534,164 3.41%
Total --------------- 6.28% ------------- 6.32%
$2,443,482 $2,402,079
=============== =============
<FN>
(1) Weighted-average interest rate before amortization of deferred financing costs.
</FN>
On February 28, 2003, the Company entered into a new secured credit
facility for $255,000. This new credit facility replaced both the Company's
$130,000 secured credit facility and its unsecured facility of $105,275. The new
credit facility bears interest at LIBOR plus 100 basis points, expires in
February 2006, and has a one-year extension, which is at the Company's election.
Six regional malls and three associated centers secure the new credit facility.
The Company's credit facilities total $365,000, of which $178,475 was
available at March 31, 2003. Additionally, the Company had other credit
facilities totaling $14,585 that are used only for issuances of letters of
credit, of which $1,630 was available at March 31, 2003.
7
As of March 31, 2003, the Company had total commitments under construction
loans of $59,573, of which $27,395 was available to be used for completion of
construction and redevelopment projects and replenishment of working capital
previously used for construction. The Company also had $9,056 available in
unfunded construction loans on operating properties that can be used to
replenish working capital previously used for construction.
On February 26, 2003, the Company obtained an $85,000, non-recourse loan
that is secured by Westmoreland Mall and Westmoreland Crossing in Greensburg,
PA. The loan bears interest at 5.05% and has a term of ten years with payments
based on a 25-year amortization schedule.
The weighted average maturities of the Company's consolidated debt was 5.7
years at March 31, 2003 and December 31, 2002.
In May 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections", which rescinds SFAS No. 4. As a
result, gains and losses from extinguishments of debt should be classified as
extraordinary items only if they meet the criteria of Accounting Principles
Board Opinion No. 30 ("APB 30"). SFAS No. 145 was effective for the Company on
January 1, 2003. All losses on extinguishment of debt that were classified as an
extraordinary item in prior periods have been reclassified to an operating
expense in the accompanying consolidated statements of operations.
Fourteen malls, five associated centers and the office building are owned
by special purpose entities that are included in the consolidated financial
statements. The sole business purpose of the special purpose entities is the
ownership and operation of the properties. The mortgaged real estate and other
assets owned by these special purpose entities are restricted under the loan
agreements in that they are not available to settle other debts of the Company.
However, so long as the loans are not under an event of default, as defined in
the loan agreements, the cash flows from these properties, after payments of
debt service, operating expenses and reserves, are available for distribution to
the Company.
Note 3 -Derivative Financial Instruments
The Company uses derivative financial instruments to manage exposure to
interest rate risks inherent in variable-rate debt and does not use them for
trading or speculative purposes. The Company had the following interest rate
swap agreement, which was designated as a cash flow hedge, at March 31, 2003:
Notional Amount Fixed LIBOR Component Expiration Date Fair Value
- -------------------- ------------------------- ------------------- -------------
$ 80,000 5.830% 08/30/2003 $(1,543)
At March 31, 2003, the interest rate swap's fair value was recorded in
accounts payable and accrued liabilities. For the quarter, adjustments of $854
were recorded as adjustments in other comprehensive income. Over time,
unrealized gains and losses held in accumulated other comprehensive loss will be
reclassified to earnings. This reclassification occurs in the same period or
periods that the hedged cash flows affect earnings. Before August 30, 2003, the
Company estimates that it will reclassify the entire balance of $(1,543) to
earnings as interest expense.
The Company is exposed to credit losses if counterparties to the swap
agreements are unable to perform; therefore, the Company continually monitors
the credit standing of the counterparties.
8
Note 4 - Segment Information
The Company measures performance and allocates resources according to
property type, which are determined based on certain criteria such as type of
tenants, capital requirements, economic risks, leasing terms, and short- and
long-term returns on capital. Rental income and tenant reimbursements from
tenant leases provide the majority of revenues from all segments. Information on
the Company's reportable segments is presented as follows:
Associated Community
Three Months Ended March 31, 2003 Malls Centers Centers All Other Total
- -------------------------------------- ------------ ------------ ----------- ------------- -----------
Revenues $ 140,629 $ 5,396 $ 15,207 $ 5,314 $ 166,546
Property operating expenses (1) (47,831) (1,336) (3,857) 202 (52,822)
Interest expense (33,072) (953) (1,941) (990) (36,956)
Other expense -- -- -- (2,341) (2,341)
Gain on sales of real estate assets (5) -- 348 761 1,104
------------ ------------ ----------- ------------- -----------
Segment profit and loss $ 59,721 $ 3,107 $ 9,757 $ 2,946 75,531
============ ============ =========== =============
Depreciation and amortization (26,312)
General and administrative (6,353)
Loss on extinguishment of debt --
Equity in earnings and minority
interest in earnings (19,420)
-----------
Income before discontinued operations $ 23,446
===========
Total assets (2) $3,083,149 $162,130 $412,279 $175,581 $3,833,139
Capital expenditures (2) $ 34,700 $ 1,185 $ 664 $ 17,406 $ 53,935
Associated Community
Three Months Ended March 31, 2002 Malls Centers Centers All Other Total
- -------------------------------------- ------------ ------------ ----------- ------------- -----------
Revenues $ 121,806 $ 4,075 $ 15,898 $ 3,138 $ 144,917
Property operating expenses (1) (41,627) (1,238) (4,340) 4,796 (42,409)
Interest expense (30,203) (913) (2,641) (3,030) (36,787)
Other expense -- -- -- (3,747) (3,747)
Gain on sales of real estate assets (262) -- (1,301) 1,978 415
------------ ------------ ----------- ------------- -----------
Segment profit and loss $ 49,714 $ 1,924 $ 7,616 $ 3,135 62,389
============ ============ =========== =============
Depreciation and amortization (22,481)
General and administrative (5,741)
Loss on extinguishment of debt (1,948)
Equity in earnings and minority
interest in earnings (15,027)
-----------
Income before discontinued operations $ 17,192
===========
Total assets (2) $2,730,895 $128,017 $457,991 $ 83,838 $3,400,741
Capital expenditures (2) $ 80,162 $ 787 $ 4,679 $ 21,064 $ 106,692
<FN>
(1) Property operating expenses include property operating expenses, real estate
taxes, and maintenance and repairs.
(2) Amounts include investments in unconsolidated affiliates. Developments in
progress are included in the All Other category.
</FN>
9
Note 5 - Discontinued Operations
On February 28, 2003, the Company sold a community center for $7,760 and
recognized a net gain on discontinued operations of $2,935. Total revenues for
this community center were $116 and $192 for the three months ended March 31,
2003 and 2002, respectively.
Note 6 - Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net income
available to common shareholders by the weighted-average number of unrestricted
common shares outstanding for the period. Diluted EPS assumes the issuance of
common stock for all potential dilutive common shares outstanding. The limited
partners' rights to convert their minority interest in the Operating Partnership
into shares of common stock are not dilutive. The following summarizes the
impact of potential dilutive common shares on the denominator used to compute
earnings per share:
Three Months Ended March 31,
--------------------------------
2002 2003
---------------- ---------------
Weighted average shares 29,850 26,455
Effect of nonvested stock awards (124) (99)
---------------- ---------------
Denominator - basic earnings per share 29,726 26,356
Effect of dilutive securities:
Stock options, nonvested stock awards and
deemed shares related to deferred
compensation plans 1,077 765
---------------- ---------------
Denominator - diluted earnings per share 30,803 27,121
================ ===============
Note 7 - Comprehensive Income
Comprehensive income includes all changes in shareholders' equity during
the period, except those resulting from investments by shareholders and
distributions to shareholders. Comprehensive income consisted of the following
components:
Three Months Ended March 31,
--------------------------------
2002 2003
---------------- ---------------
Net income $26,468 $19,001
Gain on current period cash flow hedges 854 2,142
---------------- ---------------
Comprehensive income $27,322 $21,143
================ ===============
Note 8 - Contingencies
The Company is currently involved in certain litigation that arises in the
ordinary course of business. It is management's opinion that the pending
litigation will not materially affect the financial position or results of
operations of the Company.
Based on environmental studies completed to date, management believes any
exposure related to environmental cleanup will not materially affect the
Company's financial position or results of operations.
The Company has guaranteed all of the construction debt related to
Waterford Commons, which is owned in a joint venture with a third party that
owns a minority interest. The total amount of the commitment for this
construction loan is $30,000, of which $10,762 was outstanding at March 31,
2002. The Company will receive a fee from the joint venture in exchange for the
guaranty, which will be recognized as revenue pro rata over the term of the
guaranty to the extent of the third party partner's interest. The guaranty will
expire when the construction loan matures in July 2004. The fee had not been
received as of March 31, 2003.
10
The Company has guaranteed 50% of the debt of Parkway Place L.P., an
unconsolidated affiliate in which the Company owns a 45% interest. The total
amount outstanding at March 31, 2003, was $56,458, of which the Company has
guaranteed $28,229. The guaranty will expire when the related debt matures in
December 2003. The Company did not receive a fee for issuing this guaranty.
Under the terms of the partnership agreement of Mall of South Carolina
L.P., an unconsolidated affiliate in which the Company owns a 50% interest, the
Company will guarantee 100% of the construction debt to be incurred to develop
Coastal Grand. There was no construction debt outstanding at March 31, 2003. The
Company will receive a fee for this guaranty when the guaranty is issued, which
will be recognized as revenue pro rata over the term of the guaranty to the
extent of the third party's interest.
Note 9 - Stock-Based Compensation
Historically, the Company has accounted for stock options using the
intrinsic value method of APB No. 25, "Accounting for Stock Issued to
Employees". Effective January 1, 2003, the Company will record the expense
associated with stock options granted after January 1, 2003, on a prospective
basis in accordance with the fair value and transition provisions of SFAS No.
123, "Accounting for Stock Based Compensation". There were no stock options
granted during the three months ended March 31, 2003.
No stock-based compensation expense related to stock options granted prior
to January 1, 2003, has been reflected in net income since all options granted
had an exercise price equal to the fair value of the Company's common stock on
the date of grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", to
employee stock options:
Three Months Ended March 31,
----------------------------------
2003 2002
------------- --------------
Net income available to common shareholders, as reported $22,776 $17,384
Compensation expense determined under fair value method (153) (114)
------------- --------------
Pro forma net income available to common shareholders $22,623 $17,270
============= ==============
Earnings per share:
Basic, as reported $ 0.76 $ 0.66
============= ==============
Basic, pro forma $ 0.76 $ 0.66
============= ==============
Diluted, as reported $ 0.74 $ 0.64
============= ==============
Diluted, pro forma $ 0.74 $ 0.64
============= ==============
Note 10 - Recent Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 requires that the costs
associated with exit or disposal activity be recognized and measured at fair
value when the liability is incurred. The provisions of SFAS No. 146 are
effective for exit or disposal activities initiated after December 31, 2002.
Since the Company typically does not engage in significant disposal activities,
the implementation of SFAS No. 146 in 2003 did not have a significant impact on
the Company's reported financial results.
11
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an interpretation of SFAS No. 5, 57, and
107, and rescission of FASB Interpretation No. 34." The interpretation
elaborates on the disclosures to be made by a guarantor in its financial
statements. It also requires a guarantor to recognize a liability for the fair
value of the obligation undertaken in issuing the guarantee at the inception of
a guarantee, which is effective for guarantees issued or modified after December
31, 2002. The Company adopted the disclosure provisions of FASB Interpretation
No. 45 in the fourth quarter of 2002. In accordance with the interpretation, the
Company adopted the remaining provisions of FASB Interpretation No. 45 effective
January 1, 2003, which did not have a material effect on the financial position
and results of operations of the Company since the Company did not enter into or
modify any guarantees during the three months ended March 31, 2003.
Note 11 - Reclassifications
Certain reclassifications have been made to prior periods' financial
information to conform to the current period presentation.
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and accompanying notes that are included in this Form 10-Q.
Certain statements made in this section or elsewhere in this report may be
deemed "forward looking statements" within the meaning of the federal securities
laws. Although the Company believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, the Company can
give no assurance that these expectations will be attained, and it is possible
that actual results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and uncertainties. Such
risks and uncertainties include, without limitation, general industry, economic
and business conditions, interest rate fluctuations, costs of capital and
capital requirements, availability of real estate properties, inability to
consummate acquisition opportunities, competition from other companies and
retail formats, changes in retail rental rates in the Company's markets, shifts
in customer demands, tenant bankruptcies or store closings, changes in vacancy
rates at the Company's properties, changes in operating expenses, changes in
applicable laws, rules and regulations, the ability to obtain suitable equity
and/or debt financing and the continued availability of financing in the amounts
and on the terms necessary to support the Company's future business. The Company
disclaims any obligation to update or revise any forward-looking statements to
reflect actual results or changes in the factors affecting the forward-looking
information.
GENERAL BACKGROUND
CBL & Associates Properties, Inc.'s consolidated financial statements and
accompanying notes reflect the consolidated financial results of CBL &
Associates Limited Partnership (the "Operating Partnership"), which owns
interests in a portfolio of properties consisting of:
|X| 54 regional malls, of which four are accounted for as unconsolidated
affiliates using the equity method,
|X| 20 associated centers, of which two are accounted for as unconsolidated
affiliates using the equity method,
12
|X| 63 community centers, of which two are accounted for as unconsolidated
affiliates using the equity method,
|X| mortgages on 11 properties that are secured by first mortgages or
wrap-around mortgages on the underlying real estate and related
improvements,
|X| one mall, which is owned in a unconsolidated joint venture, one associated
center and three community centers currently under construction, and
|X| options to acquire certain shopping center development sites.
The consolidated financial statements also include the accounts of CBL &
Associates Management, Inc. (the "Management Company"). CBL & Associates
Properties, Inc., the Operating Partnership and the Management Company are
referred to collectively as the "Company".
The Company classifies its regional malls into two categories - malls that
have completed their initial lease-up ("Stabilized Malls") and malls that are in
their initial lease-up phase ("Non-Stabilized Malls"). The Non-Stabilized Mall
category is presently comprised of The Lakes Mall in Muskegon, Michigan, which
opened in August 2001, and Parkway Place Mall in Huntsville, Alabama, which
opened in October 2002.
RESULTS OF OPERATIONS
The following significant transactions impact the comparison of the results
of operations for the three months ended March 31, 2003 to the comparable period
ended March 31, 2002:
|X| The Company has opened or acquired five properties subsequent to the first
quarter of 2002. Therefore, the three months ended March 31, 2003, includes
a full period of operations for these properties while the comparable
period a year ago did not include any operations for them. The properties
opened or acquired are as follows:
Open/Acquisition
Project Name Location Type of Addition Date
--------------------------- ------------------- ------------------- -----------------
Richland Mall Waco, TX Acquisition May 2002
Panama City Mall Panama City, FL Acquisition May 2002
Parkdale Crossing Beaumont, TX New development November 2002
Westmoreland Mall Greensburg, PA Acquisition December 2002
Westmoreland Crossing Greensburg, PA Acquisition December 2002
|X| In December 2002, the Company acquired the remaining ownership interest in
East Towne Mall, West Towne Mall and West Towne Crossing in Madison, WI.
These properties were consolidated during the first quarter of 2003 while
they were accounted for as unconsolidated affiliates in the first quarter
of 2002.
13
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003
TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002
(Dollars in Thousands)
2003 2002 $ Variance % Variance
---------- ---------- ----------- -----------
Total revenues $166,546 $144,917 $21,629 14.9%
---------- ---------- ----------- -----------
Expenses:
Property operating, real estate taxes and
maintenance and repairs 52,822 42,409 10,413 24.6%
Depreciation and amortization 26,312 22,481 3,831 17.0%
General and administrative 6,353 5,741 612 10.7%
Interest expense 36,956 36,787 169 0.5%
Loss on extinguishment of debt -- 1,948 (1,948) (100.0)%
Other 2,341 3,747 (1,406) (37.5)%
---------- ---------- ----------- -----------
Total expenses 124,784 113,113 11,671 10.3%
---------- ---------- ----------- -----------
Income from operations 41,762 31,804 9,958 31.3%
Gain on sales of real estate assets 1,104 415 689 166.0%
Equity in earnings of unconsolidated affiliates 1,757 2,087 (330) (15.8)%
Minority interest in earnings:
Operating partnership (20,637) (16,197) (4,440) 27.4%
Shopping center properties (540) (917) 377 (41.1)%
---------- ---------- ----------- -----------
Income before discontinued operations 23,446 17,192 6,254 36.4%
Income from discontinued operations 3,022 1,809 1,213 67.1%
---------- ---------- ----------- -----------
Net income 26,468 19,001 7,467 39.3%
Preferred dividends (3,692) (1,617) (2,075) 128.3%
---------- ---------- ----------- -----------
Net income available to common shareholders $22,776 $17,384 $5,392 31.0%
========== ========== =========== ===========
Revenues
The $21.6 million increase in revenues resulted from the following
significant factors:
[X] an increase in minimum rents and tenant reimbursements of $13.6
million attributable to the five properties opened or acquired since
the first quarter of 2002 and the three properties that are now
consolidated,
[X] an increase in minimum rents and tenant reimbursements of $12.1
million from the Company's remaining properties. The Company's cost
recovery percentage increased to 94.5% for the first quarter of 2003
compared to 91.0% for the first quarter of 2002,
[X] a reduction in percentage rents of $0.4 million, which resulted from a
decline at the Company's existing properties of $0.8 million due to
the overall decline in total tenant sales volume in the Company's
portfolio, offset by an increase of $0.4 million from the addition of
the properties discussed above, and
[X] a reduction in interest and other revenues of $1.8 million due to a
decrease in interest revenues because of the continued amortization of
mortgage notes receivable and a reduction in the revenues of the
Company's taxable REIT subsidiary.
14
Expenses
The $10.4 million increase in property operating expenses, including real
estate taxes and maintenance and repairs, resulted from:
[X] an increase of $5.8 million attributable to the five properties opened
or acquired since the first quarter of 2002 and the three properties
that are now consolidated and
[X] increases in general operating costs at the Company's remaining
properties.
The increase of $3.8 million in depreciation and amortization expense was
primarily due to:
[X] an increase of $2.3 million attributable to the five properties opened
or acquired since the first quarter of 2002 and the three properties
that are now consolidated and
[X] increases as a result of the ongoing capital expenditures made by the
Company for renovations, expansions, tenant allowances and deferred
maintenance.
General and administrative expenses increased $0.6 million primarily as a
result of additional salaries and benefits related to personnel added to manage
newly opened or acquired properties, as well as salaries and benefits of
existing personnel.
Interest expense increased by only $0.2 million. Although the Company's
outstanding debt increased to $2.44 billion as of March 31, 2003 compared to
$2.19 billion as of March 31, 2002, the Company's weighted average interest rate
declined to 6.28% as of March 31, 2003 compared to 7.37% as of March 31, 2002.
Additionally, the March 31, 2002, debt balance reflects a reduction from the
retirement of $114.7 million of debt from the proceeds of the Company's
follow-on offering of common stock in March 2002.
The Company did not recognize any loss on extinguishment of debt during the
first quarter of 2003 as it did not repay any debt prior to its scheduled
maturity. The loss on extinguishment of debt in the first quarter of 2002
consisted of prepayment penalties of $1.9 million and the write-off of $0.1
million of unamortized deferred financing costs.
Other expense decreased due to a reduction in operating expenses of the
Company's taxable REIT subsidiary.
Gain on Sales of Real Estate Assets
The gain on sales of $1.1 million in the first quarter of 2003 was
primarily from gains on sales of three outparcels. The gain on sales of $0.4
million in the first quarter of 2002 resulted from gains on sales of three
outparcels offset by losses on two outparcels.
Equity in Earnings of Unconsolidated Affiliates
The decrease in equity in earnings of unconsolidated affiliates of $0.3
million was due to a reduction of $0.8 million related to the three properties
above that are now consolidated, offset by improvements in the operations of the
remaining unconsolidated affiliates.
15
Discontinued Operations
The Company sold Capital Crossing, a community center in Raleigh, NC,
during the first quarter of 2003. Discontinued operations includes income from
discontinued operations of $0.1 million and $0.6 million for the quarters ended
March 31, 2003 and 2002, respectively. Discontinued operations also includes
gain on discontinued operations of $2.9 million and $1.2 million for the
quarters ended March 31, 2003 and 2002, respectively.
PERFORMANCE MEASUREMENTS
The shopping center business is, to some extent, seasonal in nature with
tenants achieving the highest levels of sales during the fourth quarter because
of the holiday season. The malls earn most of their "temporary" rents (rents
from short-term tenants), during the holiday period. Thus, occupancy levels and
revenue production are generally the highest in the fourth quarter of each year.
Results of operations realized in any one quarter may not be indicative of the
results likely to be experienced over the course of the fiscal year.
The Company's consolidated revenues were derived from the Company's
property types as follows for the three months ended March 31, 2003:
Malls 84.9%
Associated centers 2.6%
Community centers 9.1%
Mortgages, office building and other 3.4%
Sales and Occupancy Costs
For those tenants who occupy 10,000 square feet or less and have reported
sales, mall shop sales in the 52 Stabilized Malls decreased by 3.0% on a
comparable per square foot basis to $62.17 per square foot for the three months
ended March 31, 2003 from $64.11 per square foot for the three months ended
March 31, 2002.
Total sales volume in the mall portfolio, including Non-Stabilized Malls,
decreased 1.5% to $660.2 million for the three months ended March 31, 2003 from
$670.5 million for the three months ended March 31, 2002.
Sales were negatively impacted by severe winter weather, the effects of the
war in Iraq and the fact that the Easter holiday fell in the second quarter of
2003, whereas it fell in the first quarter of 2002.
Occupancy costs as a percentage of sales for the Stabilized Malls for the
three months ended March 31, 2003 and 2002, were 14.9% and 14.3%, respectively.
Occupancy costs as a percentage of sales are generally higher in the first three
quarters of the year as compared to the fourth quarter due to the seasonality of
retail sales.
16
Occupancy
Occupancy for the Company's portfolio was as follows:
At March 31,
---------------------------------
2003 2002
----------------- ---------------
Total portfolio occupancy 91.6% 91.9%
Total mall portfolio 90.6% 90.1%
Stabilized Malls (52) 91.0% 90.3%
Non-Stabilized Malls (2) 78.2% 87.3%
Associated centers 90.9% 96.2%
Community centers 94.3% 96.0%
Occupancy for the associated centers declined due to the acquisition of
Westmoreland Crossing in Greensburg, PA, in December 2002, which has a 68,000
square foot former Ames store that is vacant. Occupancy for the community
centers declined because Springdale in Mobile, AL, was moved from the
Non-Stabilized Mall category to the community center category since this
property was converted from a mall to a power center by adding big box tenants
over the past few years.
Average Base Rents
Average base rents per square foot for the portfolio were as follows:
At March 31,
---------------------------------
Percentage
2003 2002 Increase
----------------- --------------- -----------
Stabilized Malls $23.70 $23.10 2.6%
Non-Stabilized Malls 26.55 21.24 25.0%
Associated centers 10.01 9.65 3.7%
Community centers 9.85 9.59 2.7%
Leasing Results
The Company achieved the following results from renewal and new leasing for
the three months ended March 31, 2003, compared to the base rent at the end of
the lease term for spaces previously occupied:
Base Rent Base Rent
Per Square Per Square
Foot Foot Percentage
Prior Lease New Lease (1) Increase
-------------- -------------- ------------
Stabilized malls $21.42 $25.13 17.3%
Associated centers 14.46 15.77 9.1%
Community centers 12.15 13.76 13.3%
<FN>
(1) Average base rent over the term of the lease.
</FN>
17
CASH FLOWS
Cash provided by operating activities decreased $0.4 million due to larger
reduction in accounts payable and accrued liabilities in the first quarter of
2003 as compared to the same period in 2002. Additionally, tenant and other
receivables increased during the first quarter of 2003 compared to a reduction
in tenant and other receivables during the same period in 2002. These decreases
were offset by the additional operations of the five properties opened or
acquired since the first quarter of 2002 and the three properties that are now
consolidated.
Cash used in investing activities increased $45.9 million due to increases
in additions to real estate assets and other capital expenditures and a
reduction in distributions in excess of earnings of unconsolidated affiliates.
There was also a decrease in the amount of proceeds received on sales of real
estate assets due to fewer transactions in the current year period as compared
to the prior year period.
Cash provided by financing activities was $0.1 million in 2003 as compared
to cash used in financing activities of $44.3 million in 2002. The change was
due to a significant decrease in the amount of loan repayments, a significant
decrease in proceeds from issuances of common stock, an increase in borrowings,
an increase in distributions to minority investors and an increase in the amount
of dividends paid.
LIQUIDITY AND CAPITAL RESOURCES
The principal uses of the Company's liquidity and capital resources have
historically been for property development, expansions, renovations,
acquisitions, debt repayment and distributions to shareholders. In order to
maintain its qualification as a real estate investment trust for federal income
tax purposes, the Company is required to distribute at least 90% of its taxable
income, computed without regard to net capital gains or the dividends-paid
deduction, to its shareholders.
The Company's current capital structure includes:
|X| property specific mortgages, which are generally non-recourse,
construction loans, term loans, and revolving lines of credit, which
are recourse to the Company,
|X| common stock and preferred stock,
|X| joint venture investments and
|X| a minority interest in the Operating Partnership.
The Company anticipates that the combination of its equity and debt sources
will, for the foreseeable future, provide adequate liquidity to continue its
capital programs substantially as in the past and make distributions to its
shareholders in accordance with the requirements applicable to real estate
investment trusts.
The Company's policy is to maintain a conservative debt-to-total-market
capitalization ratio in order to enhance its access to the broadest range of
capital markets, both public and private. Based on the Company's share of total
consolidated and unconsolidated debt and the market value of equity described
below, the Company's debt-to-total-market capitalization (debt plus market value
equity) ratio was 50.7% at March 31, 2003.
Equity
As a publicly traded company, the Company has access to capital through
both the public equity and debt markets. The Company has an effective shelf
registration statement authorizing it to publicly issue shares of its preferred
stock, common stock and warrants to purchase shares of common stock with an
aggregate public offering amount of up to $350 million, of which approximately
$62.3 million remains available at March 31, 2003.
18
The Company filed a new shelf registration statement with the Securities
and Exchange Commission, that authorizes the Company to publicly issue shares of
preferred stock and common stock, preferred and common stock represented by
depository shares and warrants to purchase shares of common stock up to $562.0
million, which includes the $62.3 million that is available under the previously
filed shelf registration statement discussed above.
As of March 31, 2003, the minority interest in the Operating Partnership
includes the 15.9% ownership interest in the Operating Partnership held by the
Company's executive and senior officers that may be exchanged for approximately
8.8 million shares of common stock. Additionally, executive and senior officers
and directors own approximately 2.2 million shares of the Company's outstanding
common stock, for a combined total interest in the Operating Partnership of
approximately 19.7%.
Limited partnership interests issued to acquire the Richard E. Jacobs
Group's interest in a portfolio of properties in January 2001 and March 2002,
may be exchanged for approximately 12.0 million shares of common stock, which
represents a 21.5% interest in the Operating Partnership. Other third-party
interests may be exchanged for approximately 5.0 million shares of common stock,
which represents an 9.0% interest in the Operating Partnership.
Assuming the exchange of all limited partnership interests in the Operating
Partnership for common stock, there would be approximately 55.6 million shares
of common stock outstanding with a market value of approximately $2.26 billion
at March 31, 2003 (based on the closing price of $40.59 per share on March 31,
2003). The Company's total market equity is $2.42 billion, which includes 2.675
million shares of Series A preferred stock ($66.9 million based on a liquidation
preference of $25.00 per share) and 2.0 million shares of Series B preferred
stock ($100.0 million based on a liquidation preference of $50.00 per share).
The Company's executive and senior officers' and directors' ownership interests
had a market value of approximately $443.5 million at March 31, 2003.
Debt
The Company's share of mortgage debt on consolidated properties, adjusted
for minority investors' interests in consolidated properties, and its pro rata
share of mortgage debt on unconsolidated properties, consisted of the following
at March 31, 2003 (in thousands):
Minority
Company's Share Investors' Company's Weighted
of Share of Total Average
Consolidated Unconsolidated Consolidated Share Interest
Debt Debt Debt of Debt Rate(1)
------------- ---------------- ------------ ------------ ---------
Fixed-rate debt:
Non-recourse loans on operating properties $1,943,722 $38,033 $(19,992) $1,961,763 7.09%
--------------- ---------------- ----------- -------------
Variable-rate debt:
Recourse term loans on operating properties 281,057 28,229 -- 309,286 3.81%
Lines of credit 186,525 -- -- 186,525 2.31%
Construction loans 32,178 -- -- 32,178 2.98%
--------------- ---------------- ----------- -------------
Total variable-rate debt 499,760 28,229 -- 527,989 3.23%
--------------- ---------------- ----------- -------------
Total $2,443,482 $66,262 $(19,992) $2,489,752 6.27%
=============== ================ =========== =============
<FN>
(1) Weighted-average interest rate before amortization of deferred financing costs.
</FN>
On February 28, 2003, the Company entered into a new secured credit
facility for $255.0 million. This new credit facility replaced both the
Company's $130.0 million secured credit facility and its unsecured facility of
$105.3 million. The new credit facility bears interest at LIBOR plus 100 basis
points, expires in February 2006, and has a one-year extension, which is at the
Company's election. Six regional malls and three associated centers secure the
new credit facility.
19
The Company's credit facilities total $365.0 million, of which $178.5
million was available at March 31, 2003. Additionally, the Company had other
credit facilities totaling $14.6 million that are used only for issuances of
letters of credit, of which $1.6 million was available at March 31, 2003.
On February 26, 2003, the Company obtained an $85.0 million, non-recourse
loan that is secured by Westmoreland Mall and Westmoreland Crossing in
Greensburg, PA. The loan bears interest at 5.05% and has a term of ten years
with a 25-year amortization schedule.
As of March 31, 2003, total commitments under construction loans were $59.6
million, of which $27.4 million was available to be used for completion of
construction and redevelopment projects and replenishment of working capital
previously used for construction. The Company also had $9.1 million available in
unfunded construction loans on operating properties that can be used to
replenish working capital previously used for construction.
The Company has fixed the interest rate on $80.0 million of an operating
property's debt at a rate of 6.95% using an interest rate swap agreement that
expires in August 2003. The Company did not incur any fees for the swap
agreement.
The Company expects to refinance the majority of its mortgage notes payable
maturing over the next five years with replacement loans. Taking into
consideration extension options that are available to the Company, there are no
debt maturities through December 31, 2003, other than normal principal
amortization.
DEVELOPMENTS, EXPANSIONS, ACQUISITIONS AND DISPOSITIONS
The Company expects to continue to have access to the capital resources
necessary to expand and develop its business. Future development and acquisition
activities will be undertaken as suitable opportunities arise. The Company does
not expect to pursue these opportunities unless adequate sources of financing
are available and a satisfactory budget with targeted returns on investment has
been approved internally.
The Company intends to fund major development, expansion and acquisition
activities with traditional sources of construction and permanent debt financing
as well as other debt and equity financings, including public financings and the
lines of credit, in a manner consistent with its intention to operate with a
conservative debt-to-total-market capitalization ratio.
20
Developments and Expansions
The following development projects are currently under construction:
Projected
Property Location GLA Opening Date
- ------------------------------------ ----------------------------- ------------ -------------------------
MALL
Coastal Grand
(50/50 Joint Venture)* Myrtle Beach, SC 1,500,000 March 2004
ASSOCIATED CENTER
The Shoppes at Hamilton Place Chattanooga, TN 110,000 May 2003
COMMUNITY CENTERS
Cobblestone Village St. Augustine, FL 261,000 May 2003
Waterford Commons
(75/25 Joint Venture)** Waterford, CT 353,900 September 2003
Wilkes-Barre Township Marketplace Wilkes-Barre Township, PA 308,000 May 2004
<FN>
* Joint venture development. Initial phase will be 1,000,000 million square feet.
** The Company will own at least 75% of the joint venture.
</FN>
The following renovation projects are currently under construction:
Projected
Property Location Completion Date
- ---------------------- ------------------------ ----------------
Parkdale Mall Beaumont, TX August 2003
Jefferson Mall Louisville, KY October 2003
Eastgate Mall Cincinnati, OH November 2003
East Towne Mall Madison, WI November 2003
West Towne Mall Madison, WI November 2003
St. Clair Square Fairview Heights, IL November 2003
The Company has entered into a number of option agreements for the
development of future regional malls and community centers. Except for the
projects discussed under Developments and Expansions above and Acquisitions
below, the Company does not have any other material capital commitments.
Acquisitions
On May 1, 2003, the Company acquired Sunrise Mall, a 740,000 square foot
regional mall, and Sunrise Commons, a 225,000 square foot associated center, in
Brownsville, TX, for a total purchase price of $80.7 million. The total purchase
price consisted of $40.7 million in cash and the assumption of a non-recourse
loan of $40.0 million that bears interest at 300 basis points over LIBOR, with a
minimum rate of 4.90% and a maximum rate of 5.50%.
Dispositions
On February 28,, 2003, the Company sold Capital Crossing, a community
center in Raleigh, NC, for $7.8 million and recognized a net gain on
discontinued operations of $2.9 million.
In addition, the Company sold three outparcels and recognized gains of $1.1
million during the three months ended March 31, 2003.
21
OTHER CAPITAL EXPENDITURES
The Company prepares an annual capital expenditure budget for each property
that is intended to provide for all necessary recurring and non-recurring
capital improvements. The Company believes that its operating cash flows will
provide the necessary funding for such capital improvements. These cash flows
will be sufficient to cover tenant finish costs associated with tenant leases
and capital expenditures necessary for the enhancement and maintenance of the
properties.
Including its share of unconsolidated affiliates' capital expenditures and
excluding minority investors' share of capital expenditures, the Company spent
$8.8 million during the first three months of 2003 for tenant allowances, which
generate increased rents from tenants over the terms of their leases. Deferred
maintenance expenditures, a majority of which are recovered from tenants, were
$7.0 million for the first three months of 2003. Renovation expenditures, which
include some deferred maintenance items, were $11.9 million for the three months
ended March 31, 2003, a portion of which is recovered from tenants. Deferred
maintenance expenditures and renovation expenditures included $1.2 million for
the resurfacing and the improved lighting of parking lots and $0.9 million for
roof repairs and replacements.
Deferred maintenance expenditures are billed to tenants as common area
maintenance expense, and most are recovered over a 5- to 15-year period.
Renovation expenditures are primarily for remodeling and upgrades of malls, of
which approximately 30% is recovered from tenants over a 5- to 15-year period.
OTHER
The Company believes the Properties are in compliance, in all material
respects, with federal, state and local ordinances and regulations regarding the
handling, discharge and emission of hazardous or toxic substances. The Company
has not been notified by any governmental authority, and is not otherwise aware,
of any material noncompliance, liability or claim relating to hazardous or toxic
substances in connection with any of its present or former properties.
Therefore, the Company has not recorded any material liability in connection
with environmental matters.
ACCOUNTING FOR STOCK OPTIONS
Historically, the Company has accounted for stock options using the
intrinsic value method of APB No. 25, "Accounting for Stock Issued to
Employees". Effective January 1, 2003, the Company will begin recording the
22
expense associated with stock options granted after January 1, 2003, on a
prospective basis in accordance with the fair value and transition provisions of
Statement of Financial Accountings Standards No. 123, "Accounting for
Stock-Based Compensation." There were no stock options granted during the three
months ended March 31, 2003.
RECENT ACCOUNTING PRONOUNCEMENTS
As described in Note 10 to the unaudited consolidated financial statements,
the FASB has issued certain statements that were effective for the first quarter
of 2003.
IMPACT OF INFLATION
In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate. Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation. These provisions include clauses enabling the Company to
receive percentage rent based on tenant's gross sales, which generally increase
as prices rise, and/or escalation clauses, which generally increase rental rates
during the terms of the leases. In addition, many of the leases are for terms of
less than ten years, which may enable the Company to replace existing leases
with new leases at higher base and/or percentage rents if rents of the existing
leases are below the then existing market rate. Most of the leases require
tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.
FUNDS FROM OPERATIONS
Funds from Operations ("FFO") is defined by the National Association of
Real Estate Investments Trusts ("NAREIT") as net income (computed in accordance
with accounting principals generally accepted in the United States) excluding
gains or losses on sales of operating properties, plus depreciation and
amortization, and after adjustments for unconsolidated affiliates and joint
ventures. Adjustments for FFO from unconsolidated affiliates and joint ventures
are calculated on the same basis. The Company defines FFO available for
distribution to common shareholders as defined above by NAREIT less preferred
dividends. The Company computes FFO in accordance with the NAREIT recommendation
concerning finance costs and non-real estate depreciation. Beginning with the
first quarter of 2003, the Company includes gains on sales of outparcels in FFO
to comply with the Securities and Exchange Commissions rules related to
disclosure of non-GAAP financial measures. FFO for the first quarter of 2002 has
been restated to include gains on sales of outparcels.
The Company believes that FFO provides an additional indicator of the
financial performance of the Properties. The use of FFO as an indicator of
financial performance is influenced not only by the operations of the Properties
and interest rates, but also by the capital structures of the Company and the
Operating Partnership. Accordingly, FFO will be one of the significant factors
considered by the Board of Directors in determining the amount of cash
distributions the Operating Partnership will make to its partners, including the
REIT.
FFO does not represent cash flow from operations as defined by accounting
principals generally accepted in the United States, is not necessarily
indicative of cash available to fund all cash flow needs and should not be
considered as an alternative to net income for purposes of evaluating the
Company's operating performance or to cash flow as a measure of liquidity.
For the three months ended March 31, 2003, FFO increased by $11.8 million,
or 21.3%, to $67.3 million as compared to $55.5 million for the same period in
2002. The increase in FFO is primarily attributable to reduced interest expense,
the results of operations of the properties added to the portfolio and increases
in base rents and tenant reimbursements at the existing properties. These
increases were offset by reductions related to operating properties that were
23
sold or contributed to a joint venture. Lease termination fees were $0.4 million
in the first quarter of 2003 as compared to $0.9 million in the first quarter of
2002. Gains on sales of outparcels were $1.1 million in the first quarter of
2003 compared to $0.4 million in the first quarter of 2002.
The Company's calculation of FFO is as follows (in thousands):
Three Months Ended
March 31,
-------------------------------
2003 2002
--------------- --------------
Consolidated net income available to common shareholders $ 22,776 $ 17,384
Depreciation and amortization from consolidated properties 26,312 22,481
Depreciation and amortization from unconsolidated affiliates 896 924
Depreciation and amortization from discontinued operations 10 250
Minority interest in earnings of operating partnership 20,637 16,197
Minority investors' share of depreciation and amortization in
shopping center properties (266) (392)
Gain on discontinued operations (2,935) (1,243)
Depreciation and amortization of non-real estate assets (133) (111)
--------------- --------------
FUNDS FROM OPERATIONS $ 67,297 $ 55,490
=============== ==============
DILUTED WEIGHTED AVERAGE SHARES AND POTENTIAL DILUTIVE COMMON
SHARES WITH OPERATING PARTNERSHIP UNITS FULLY CONVERTED 56,486 51,813
Item 3: Quantitative and Qualitative
Disclosure About Market Risk
The Company has exposure to interest rate risk on its debt obligations and
interest rate instruments. Based on the Company's share of consolidated and
unconsolidated variable rate debt in place at March 31, 2003, excluding debt
fixed using an interest rate swap agreement, a 0.5% increase or decrease in
interest rates on this variable rate debt would decrease or increase annual cash
flows by approximately $2.2 million and, after the effect of capitalized
interest, annual earnings by approximately $2.0 million.
Item 4: Controls and Procedures
Within the 90 days prior to the filing date of this quarterly report, an
evaluation was performed under the supervision of the Company's Chief Executive
Officer and Chief Financial Officer and with the participation of the Company's
management, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
No significant changes have been made in the Company's internal controls or in
other factors that could significantly affect these internal controls subsequent
to the date of the evaluation.
24
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matter to a Vote of Security Holders
None
ITEM 5: Other Information
The Company presents its total share of consolidated and
unconsolidated debt because the Company believes that this amount provides
investors a clear understanding of the Company's total debt obligations.
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Sixth Amended and Restated Credit Agreement by and among the
Operating Partnership, CBL & Associates Properties, Inc.,
Wachovia Bank, National Association, Commerzbank AG, New York and
Grand Cayman branches, U.S. Bank National Association and Wells
Fargo Bank, National Association as contractual representative of
the lenders to the extent and in the manner provided in Article
XII, see page 29.
99.1 Certification pursuant to 18 U.S.C Section 1350 by the Chief
Executive Officer, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, see page 131.
99.2 Certification pursuant to 18 U.S.C. Section 1350 by the Chief
Financial Officer as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, see page 132.
B. Reports on Form 8-K
The following items were reported:
The outline from the Company's April 24, 2003 conference call with
analysts and investors regarding earnings, the Company's earnings
release and the Company's supplemental information package (Items 9
and 12) were furnished on April 24, 2003.
25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
---------------------------------------------------------------
Vice Chairman of the Board, Chief Financial Officer and
Treasurer
(Authorized Officer of the Registrant,
Principal Financial Officer)
Date: May 15, 2003
26
CERTIFICATIONS
I, Charles B. Lebovitz, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of CBL &
Associates Properties, Inc.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
(4) The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
(6) The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Charles B. Lebovitz
------------------------------------
Charles B. Lebovitz, Chief Executive Officer
27
I, John N. Foy, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of CBL &
Associates Properties, Inc.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
(4) The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
(6) The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ John N. Foy
-----------------------------------
John N. Foy, Chief Financial Officer
28
Exhibit 10.1
SIXTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 28, 2003
by and among
CBL & Associates Limited Partnership,
as Borrower,
CBL & Associates Properties, Inc.,
as Parent, solely for the limited
purposes set forth in Section 13.20.,
The financial institutions party hereto
and their assignees under Section 13.5.,
as Lenders
WACHOVIA BANK, NATIONAL ASSOCIATION
and
COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES,
each as Documentation Agent,
U.S. BANK NATIONAL ASSOCIATION,
as Syndication Agent,
and
WELLS FARGO Bank, National Association,
as Administrative Agent
29
TABLE OF CONTENTS
Article I. Definitions...........................................................................1
Section 1.1. Definitions...............................................................1
Section 1.2. General; References to San Francisco Time.................................19
Article II. Credit Facility......................................................................19
Section 2.1. Revolving Advances........................................................19
Section 2.2. Letters of Credit.........................................................20
Section 2.3. Swingline Loans...........................................................23
Section 2.4. Rates and Payment of Interest on Advances.................................25
Section 2.5. Number of Interest Periods................................................26
Section 2.6. Repayment of Advances.....................................................26
Section 2.7. Prepayments...............................................................26
Section 2.8. Late Charges..............................................................26
Section 2.9. Provisions Applicable to LIBOR Advances; Limitation on Base
Rate Advances...........................................................27
Section 2.10. Notes....................................................................28
Section 2.11. Increase in Commitments..................................................28
Section 2.12. Voluntary Reductions of the Commitment...................................29
Section 2.13. Extension of Termination Date............................................29
Section 2.14. Expiration or Maturity Date of Letters of Credit Past Termination Date...29
Section 2.15. Amount Limitations.......................................................30
Article III. Payments, Fees and Other General Provisions.........................................30
Section 3.1. Payments..................................................................30
Section 3.2. Pro Rata Treatment........................................................30
Section 3.3. Sharing of Payments, Etc..................................................31
Section 3.4. Several Obligations.......................................................31
Section 3.5. Fees......................................................................31
Section 3.6. Computations..............................................................32
Section 3.7. Usury.....................................................................32
Section 3.8. Defaulting Lenders........................................................33
Section 3.9. Taxes.....................................................................33
Article IV. Collateral Properties...............................................................35
Section 4.1. Eligibility of Properties.................................................35
Section 4.2. Release of Properties.....................................................36
Section 4.3. Frequency of Appraisals...................................................37
Section 4.4. Frequency of Calculations of Borrowing Base...............................37
Article V. Yield Protection, Etc.................................................................38
Section 5.1. Additional Costs; Capital Adequacy........................................38
Section 5.2. Suspension of LIBOR Advances..............................................39
Section 5.3. Illegality................................................................39
30
Section 5.4. Compensation..............................................................40
Section 5.5. Treatment of Affected Advances............................................40
Section 5.6. Affected Lenders..........................................................41
Section 5.7. Change of Lending Office..................................................41
Section 5.8. Assumptions Concerning Funding of LIBOR Advances..........................41
Article VI. Conditions Precedent.................................................................42
Section 6.1. Initial Conditions Precedent..............................................42
Section 6.2. Conditions Precedent to All Advances and Letters of Credit................44
Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.........44
Article VII. Representations and Warranties......................................................47
Section 7.1. Representations and Warranties............................................47
Section 7.2. Survival of Representations and Warranties, Etc...........................51
Article VIII. Affirmative Covenants..............................................................51
Section 8.1. Preservation of Existence and Similar Matters.............................51
Section 8.2. Compliance with Applicable Law............................................51
Section 8.3. Maintenance of Property...................................................51
Section 8.4. Insurance.................................................................51
Section 8.5. Payment of Taxes and Claims...............................................52
Section 8.6. Books and Records; Inspections............................................52
Section 8.7. Use of Proceeds...........................................................52
Section 8.8. Environmental Matters.....................................................52
Section 8.9. Further Assurances........................................................53
Section 8.10. REIT Status..............................................................53
Section 8.11. Exchange Listing.........................................................53
Section 8.12. Major Property-Level Agreements; Major Leases; SNDAs.....................53
Section 8.13. Single Asset Entities....................................................54
Article IX. Information..........................................................................54
Section 9.1. Quarterly Financial Statements............................................54
Section 9.2. Year-End Statements.......................................................54
Section 9.3. Compliance Certificate....................................................55
Section 9.4. Other Information.........................................................55
Article X. Negative Covenants....................................................................56
Section 10.1. Financial Covenants......................................................56
Section 10.2. Negative Pledge..........................................................58
Section 10.3. Restrictions on Intercompany Transfers...................................58
Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements............58
Section 10.5. Acquisitions.............................................................59
Section 10.6. Plans....................................................................59
Section 10.7. Fiscal Year..............................................................59
Section 10.8. Modifications of Organizational Documents................................59
Section 10.9. Major Construction.......................................................59
31
Section 10.10. Transactions with Affiliates............................................60
Article XI. Default..............................................................................60
Section 11.1. Events of Default........................................................60
Section 11.2. Remedies Upon Event of Default...........................................64
Section 11.3. Remedies Upon Default....................................................65
Section 11.4. Curing Defaults Under Collateral Documents...............................65
Section 11.5. Permitted Deficiency.....................................................65
Section 11.6. Marshaling; Payments Set Aside...........................................66
Section 11.7. Allocation of Proceeds...................................................66
Section 11.8. Performance by Agent.....................................................67
Section 11.9. Rights Cumulative........................................................67
Article XII. The Agent...........................................................................67
Section 12.1. Authorization and Action.................................................67
Section 12.2. Agent's Reliance, Etc....................................................68
Section 12.3. Notice of Defaults.......................................................69
Section 12.4. Wells Fargo as Lender....................................................69
Section 12.5. Approvals of Lenders.....................................................69
Section 12.6. Lender Credit Decision, Etc..............................................70
Section 12.7. Indemnification of Agent.................................................70
Section 12.8. Collateral Matters; Protective Advances..................................71
Section 12.9. Post-Foreclosure Plans...................................................72
Section 12.10. Successor Agent.........................................................73
Section 12.11. Titled Agents...........................................................73
Article XIII. Miscellaneous......................................................................73
Section 13.1. Notices..................................................................73
Section 13.2. Expenses.................................................................74
Section 13.3. Setoff...................................................................75
Section 13.4. Litigation; Jurisdiction; Other Matters; Waivers.........................75
Section 13.5. Successors and Assigns...................................................76
Section 13.6. Amendments and Waivers...................................................77
Section 13.7. Nonliability of Agent and Lenders........................................79
Section 13.8. Confidentiality..........................................................79
Section 13.9. Indemnification..........................................................79
Section 13.10. Termination; Survival...................................................81
Section 13.11. Severability of Provisions..............................................81
Section 13.12. GOVERNING LAW...........................................................81
Section 13.13. Counterparts............................................................81
Section 13.14. Obligations with Respect to Loan Parties................................81
Section 13.15. Independence of Covenants...............................................81
Section 13.16. Entire Agreement........................................................82
Section 13.17. Construction; Conflict of Terms.........................................82
Section 13.18. AMENDMENT, RESTATEMENT AND CONSOLIDATION; NO NOVATION...................82
32
Section 13.19. Limitation of Liability of Borrower's General Partner...................82
Section 13.20. Limited Nature of Parent's Obligations..................................83
Section 13.21. Limitation of Liability of Borrower's Directors, Officers, Etc..........83
Section 13.22. Replacement of Notes....................................................83
SCHEDULE 1.1.(A) Existing Debt Agreements
SCHEDULE 4.1. Initial Collateral Properties
SCHEDULE 7.1.(b) Ownership of Loan Parties
SCHEDULE 7.1.(f) Litigation
SCHEDULE 7.1.(s) Single Asset Entity Exceptions
EXHIBIT A Form of Assignment and Assumption Agreement
EXHIBIT B Form of Borrowing Base Certificate
EXHIBIT C Form of Environmental Indemnity Agreement
EXHIBIT D Form of Guaranty
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Notice of Continuation
EXHIBIT G Form of Notice of Conversion
EXHIBIT H Form of Notice of Swingline Borrowing
EXHIBIT I Form of Revolving Note
EXHIBIT J Form of Security Deed
EXHIBIT K Form of Swingline Note
EXHIBIT L Form of Opinion of Counsel
EXHIBIT M Form of Closing Certificate and Affidavit
EXHIBIT N Form of Compliance Certificate
33
THIS SIXTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 28,
2003 by and among CBL & Associates Limited Partnership, a limited partnership
organized under the laws of the State of Delaware (the "Borrower"), CBL &
Associates Properties, Inc., a corporation organized under the laws of the State
of Delaware (the "Parent"), joining in the execution of this Agreement solely
for the limited purposes set forth in Section 13.20., each of the financial
institutions initially a signatory hereto together with their assignees under
Section 13.5. (the "Lenders"), WACHOVIA BANK, NATIONAL ASSOCIATION and
COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, each as Documentation Agent
(each a "Documentation Agent"), U.S. BANK NATIONAL ASSOCIATION, as Syndication
Agent (the "Syndication Agent"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Wells Fargo") as contractual representative of the Lenders to the extent and
in the manner provided in Article XII. (in such capacity, the "Agent").
WHEREAS, certain of the Lenders and other financial institutions have made
available to the Borrower a secured revolving credit facility on the terms and
conditions contained in that certain Fifth Amended and Restated Credit Agreement
dated as of August 4, 2000 (as amended and in effect immediately prior to the
date hereof, the "Existing Credit Agreement") by and among the Borrower, such
Lenders, such other financial institutions, and Wells Fargo Bank, National
Association, as Agent;
WHEREAS, pursuant to the various documents, instruments and agreements
described in Part I of Schedule 1.1.(A) (as such documents, instruments and
agreements have been amended and are in effect immediately prior to the date
hereof, the "Existing Debt Agreements"), by and between the Borrower (or one of
other Loan Parties) and the financial institutions party thereto (the "Existing
Lenders"), the Existing Lenders have made various financial accommodations
available to such Loan Party, and such Loan Party's obligations owing under the
Existing Debt Agreements are secured by the various documents, instruments and
agreements described in Part II of Schedule 1.1.(A)(the "Existing Security
Documents"); WHEREAS, the Existing Lenders and Wells Fargo have entered into
various assignment documents dated as of the date hereof (the "Existing Debt
Assignment Agreements") pursuant to which such parties provided for, among other
things, the assignment by the Existing Lenders to Wells Fargo of each such
Existing Lender's rights and obligations under the applicable Existing Debt
Agreements and the other documents, instruments and agreements executed and
delivered by the applicable Loan Party in connection with such Existing Debt
Agreements;
WHEREAS, the Agent and the Lenders desire to amend and restate the Existing
Credit Agreement in order to make available to the Borrower a $255,000,000
secured revolving credit facility, which will include a swingline subfacility
and a letter of credit subfacility, on the terms and conditions contained
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree that the Existing Credit Agreement is amended and restated in its
entirety as follows:
(1) Article I. Definitions
Section 1.1. Definitions.
In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement:
"Additional Costs" has the meaning given that term in Section 5.1.
34
"Adjusted Asset Value" means, as of a given date, the sum of: (a)(i) EBITDA
attributable to malls and power centers for the fiscal quarter most recently
ended times (ii) 4; divided by (iii) 8.5% plus (b)(i) EBITDA attributable to all
other assets for the fiscal quarter most recently ended times (ii) 4; divided by
(iii) 9.25%. In determining Adjusted Asset Value (i) EBITDA attributable to real
estate properties acquired during such fiscal quarter, and EBITDA attributable
to Properties development of which was completed during such fiscal quarter,
shall be disregarded, (ii) EBITDA attributable to any Property which is
currently under development shall be excluded, (iii) with respect to any
Subsidiary that is not a Wholly Owned Subsidiary, only the Borrower's Ownership
Share of the EBITDA attributable to such Subsidiary shall be used when
determining Adjusted Asset Value, and (iv) EBITDA shall be attributed to malls
and power centers based on the ratio of (x) revenues less property operating
expenses (to be determined exclusive of interest expense, depreciation and
general and administrative expenses) of malls and power centers to (y) total
revenues less total property operating expenses (similarly determined), such
revenues and expenses to be determined on a quarterly basis in a manner
consistent with the Parent's method of reporting of segment information in the
notes to its financial statements for the fiscal quarter ended September 30,
2002 as filed with the Securities and Exchange Commission, and otherwise in a
manner reasonably acceptable to the Agent. In addition, in the case of any
operating Property acquired in the immediately preceding period of twelve
consecutive months for a purchase price indicative of a capitalization rate of
less than 8.5%, EBITDA attributable to such Property shall be excluded from the
determination of Adjusted Asset Value.
"Advance" means a Revolving Advance or a Swingline Loan.
"Affiliate" means any Person (other than the Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control with,
the Borrower; (b) directly or indirectly owning or holding ten percent (10.0%)
or more of any Equity Interest in the Borrower; or (c) ten percent (10.0%) or
more of whose voting stock or other Equity Interests are directly or indirectly
owned or held by the Borrower. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or by contract or
otherwise. The Affiliates of a Person shall include any officer or director of
such Person. In no event shall the Agent or any Lender be deemed to be an
Affiliate of the Borrower.
"Agent" means Wells Fargo Bank, National Association or any successor Agent
appointed pursuant to Section 12.10.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Appraisal" means, with respect to any Property, an M.A.I. appraisal
commissioned by and addressed to the Agent (acceptable to the Agent as to form,
substance and appraisal date), prepared by a professional appraiser acceptable
to the Agent, having at least the minimum qualifications required under
Applicable Law governing the Agent and the Lenders, including without
limitation, FIRREA, and determining the "as is" market value of such Property as
between a willing buyer and a willing seller.
"Appraised Value" means, with respect to any Collateral Property, the "as
is" market value of such Collateral Property as set forth in the most recent
Appraisal of such Collateral Property as the same may have been reasonably
adjusted by the Agent based upon its internal review of such Appraisal which is
35
based on criteria and factors then generally used and considered by the Agent in
determining the value of similar real estate properties, which review shall be
conducted prior to acceptance of such Appraisal by the Agent and in any event
within 7 Business Days after receipt by the Agent of such Appraisal. If an
Appraisal of a Property is performed after the occurrence of either (a) a
casualty affecting such Property or (b) a condemnation of a portion of such
Property which results in a loss of less than 10% of the acreage of the Property
and of no portion of the principal structures, but prior to complete restoration
of the same, the Appraised Value shall, to the extent permitted by applicable
regulations, be made on an "as-restored" basis.
"Assignee" has the meaning given that term in Section 13.5.(c).
"Assignment and Assumption" means an Assignment and Assumption Agreement
among a Lender, an Assignee and the Agent, substantially in the form of Exhibit
A.
"Assignment of Leases and Rents" means an assignment of leases and rents
executed by the Borrower or a Subsidiary of the Borrower in favor of the Agent
for the benefit of the Lenders in form and substance satisfactory to the Agent.
"Base Rate" means the Federal Funds Rate plus one percent (1.0%). Such rate
may not be the lowest rate charged by the Lender then acting as Agent or any of
the other Lenders on similar loans or extensions of credit. Each change in the
Base Rate shall become effective without prior notice to the Borrower or the
Lenders automatically as of the opening of business on the date of such change
in the Base Rate.
"Base Rate Advance" means a Revolving Advance bearing interest at a rate
based on the Base Rate.
"Borrower" has the meaning set forth in the introductory paragraph hereof
and shall include the Borrower's successors and permitted assigns.
"Borrowing Base" means an amount equal to the lesser of (a) 75% of the
Appraised Value of all Collateral Properties and (b) the Permanent Loan Estimate
of all Collateral Properties. So long as any of the following conditions exist
with respect to a Collateral Property, the amount of the Borrowing Base
attributable to a Collateral Property shall equal $0: (x) such Collateral
Property shall not be an Eligible Property, (y) the Agent shall not hold a valid
and perfected first priority Lien in such Property, or (z) an Event of Default
under and as defined under a Collateral Document encumbering such Collateral
Property shall exist.
"Borrowing Base Certificate" means a report in substantially the form of
Exhibit B, certified by a Senior Officer, the controller or the chief accounting
officer of the Borrower, setting forth the calculations required to establish
the Borrowing Base for all Collateral Properties as of a specified date, all in
form and detail satisfactory to the Agent.
"Business Day" means (a) any day other than a Saturday, Sunday or other
day on which banks in San Francisco, California are authorized or required to
close and (b) with reference to a LIBOR Advance, any such day that is also a day
on which dealings in Dollar deposits are carried out in the London interbank
market.
"Collateral" means any real or personal property, including, but not
limited to the Collateral Properties, directly or indirectly securing any of the
Obligations or any other obligation of a Person under or in respect of any Loan
Document to which it is a party, and includes, without limitation, all property
subject to a Lien created by a Collateral Document.
"Collateral Document" means any Guaranty, the Parent Guaranty, any Security
Deed, any Assignment of Leases and Rents, any Property Management Contract
Assignments, and any other security agreement, financing statement, or other
document, instrument or agreement creating, evidencing or perfecting the Agent's
Liens in any of the Collateral.
"Collateral Property" means a Property which satisfies the following
requirements as confirmed by the Agent: (a) pursuant to Section 4.1., the Agent
36
and the Requisite Lenders have agreed to include such property in calculations
of the Borrowing Base and (b) all of the conditions contained in Section 6.3.
have been satisfied with respect to such Property.
"Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Advances pursuant to Section 2.1., to participate in Letters of Credit
pursuant to Section 2.2.(i), and to participate in Swingline Loans pursuant to
Section 2.3.(e), in an amount up to, but not exceeding the amount set forth for
such Lender on its signature page hereto as such Lender's "Commitment Amount" or
as set forth in the applicable Assignment and Acceptance Agreement, as the same
may be reduced from time to time pursuant to Section 2.12. or otherwise pursuant
to the terms of this Agreement or as appropriate to reflect any assignments to
or by such Lender effected in accordance with Section 13.5.
"Commitment Percentage" as to each Lender, the ratio, expressed as a
percentage, of (a) the amount of such Lender's Commitment to (b) the aggregate
amount of the Commitments of all Lenders hereunder; provided, however, that if
at the time of determination the Commitments have terminated or been reduced to
zero, the "Commitment Percentage" of each Lender shall be the Commitment
Percentage of such Lender in effect immediately prior to such termination or
reduction.
"Compliance Certificate" has the meaning given that term in Section 9.3.
"Continue", "Continuation" and "Continued" each refers to the continuation
of a Revolving Advance which is a LIBOR Advance from one Interest Period to
another Interest Period pursuant to Section 2.9.(a).
"Convert", "Conversion" and "Converted" each refers to the conversion of a
Revolving Advance of one Type into a Revolving Advance of another Type pursuant
to Section 2.9.(b).
"Credit Event" means any of the following: (a) the making (or deemed
making) of any Advance, (b) the Conversion of a Revolving Advance, (c) the
Continuation of a LIBOR Advance and (d) the issuance of a Letter of Credit.
"Debt Service" means, with respect to a Person and for a given period, the
sum of the following: (a) such Person's Interest Expense for such period; (b)
regularly scheduled principal payments on Indebtedness of such Person made
during such period, other than any balloon, bullet or similar principal payment
payable on any Indebtedness of such Person which repays such Indebtedness in
full; and (c) such Person's Ownership Share of the amount of any payments of the
type described in the immediately preceding clause (b) of Unconsolidated
Affiliates of such Person.
"Default" means any of the events specified in Section 11.1., whether or
not there has been satisfied any requirement for the giving of notice, the lapse
of time, or both.
"Default Rate" means a rate per annum equal to the Prime Rate as in effect
from time to time plus two percent (2.0%).
"Defaulting Lender" has the meaning set forth in Section 3.8.
37
"Dollars" or "$" means the lawful currency of the United States of America.
"EBITDA" means, for any period, net income (loss) of the Parent and its
Subsidiaries determined on a consolidated basis for such period excluding the
following amounts (but only to the extent included in determining net income
(loss) for such period and without duplication):
(a) depreciation and amortization expense and other non-cash charges for
such period less depreciation and amortization expense allocable to minority
interest in Subsidiaries of the Borrower for such period;
(b) interest expense for such period less interest expense allocable to
minority interest in Subsidiaries of the Borrower for such period;
(c) minority interest in earnings of the Borrower for such period;
(d) extraordinary and nonrecurring net gains or losses (other than gains or
losses from the sale of outparcels of Properties) for such period and expense
relating to the extinguishments of Indebtedness for such period;
(e) net gains or losses on the disposal of discontinued operations for such
period;
(f) expenses incurred during such period with respect to any real estate
project abandoned by the Parent or any Subsidiary in such period;
(g) income tax expense in respect of such period;
(h) the Parent's Ownership Share of depreciation and amortization expense
and other non-cash charges of Unconsolidated Affiliates of the Parent for such
period; and
(i) the Parent's Ownership Share of interest expense of Unconsolidated
Affiliates of the Parent for such period.
"Effective Date" means the later of (a) the Agreement Date and (b) the date
on which all of the conditions precedent set forth in Section 6.1. shall have
been fulfilled or waived in accordance with the provisions of Section 13.6.
"Eligible Assignee" means any Person who is: (a) an existing Lender; (b) a
commercial bank, trust company, savings and loan association, savings bank,
insurance company, investment bank or pension fund organized under the laws of
the United States of America, any state thereof or the District of Columbia, and
having total assets in excess of $10,000,000,000; or (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Co-operation and Development, or a political
subdivision of any such country, and having total assets in excess of
$10,000,000,000, provided that such bank is acting through a branch or agency
located in the United States of America. If such entity is not currently a
Lender, such entity's (or in the case of a bank which is a subsidiary, such
bank's parent's) senior unsecured long term indebtedness must be rated BBB or
higher by Standard & Poor's Rating Services (a division of The McGraw-Hill
Companies, Inc.), Baa2 or higher by Moody's Investors Services, Inc. or the
equivalent or higher of either such rating by another rating agency acceptable
to the Agent.
"Eligible Property" means a Property which satisfies all of the following
requirements as confirmed by the Agent:
38
(a) such Property is owned in fee simple (or, with the consent of the
Requisite Lenders, leased) by the Borrower or a Wholly Owned Subsidiary;
(b) such Property is located in a State of the United States of America or
in the District of Columbia; and
(c) whether such Property is owned by the Borrower or a Wholly Owned
Subsidiary, the Borrower has the right directly, or indirectly through Wholly
Owned Subsidiaries, to take the following actions without the need to obtain the
consent of any Person: (i) to create Liens on such Property as security for
Indebtedness of the Borrower or such Subsidiary, as applicable, and (ii) to
sell, transfer or otherwise dispose of such Property.
"Environmental Indemnity Agreement" means an Environmental Indemnity
Agreement executed by the Borrower and any Wholly Owned Subsidiary of the
Borrower in favor of the Agent and the Lenders and substantially in the form of
Exhibit C.
"Environmental Laws" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Substances including, without limitation, the following: Clean Air Act, 42
U.S.C. ss. 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. ss. 1251
et seq.; Solid Waste Disposal Act, 42 U.S.C. ss. 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq.; National Environmental Policy Act, 42 U.S.C. ss. 4321 et seq.; regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial interpretation thereof relating primarily to the environment or
Hazardous Substances.
"Equity Interest" means, with respect to any Person, any share of capital
stock of (or other ownership or profit interests in) such Person, any warrant,
option or other right for the purchase or other acquisition from such Person of
any share of capital stock of (or other ownership or profit interests in) such
Person, any security convertible into or exchangeable for any share of capital
stock of (or other ownership or profit interests in) such Person or warrant,
right or option for the purchase or other acquisition from such Person of such
shares (or such other interests), and any other ownership or profit interest in
such Person (including, without limitation, partnership, member or trust
interests therein), whether voting or nonvoting, whether or not certificated and
whether or not such share, warrant, option, right or other interest is
authorized or otherwise existing on any date of determination.
"Equity Issuance" means any issuance or sale by a Person of any Equity
Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" means any of the events specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"Existing Credit Agreement" has the meaning given that term in the first
"WHEREAS" clause of this Agreement.
39
"Existing Debt Agreements" has the meaning given that term in the first
"WHEREAS" clause of this Agreement.
"Existing Debt Assignment Agreements" has the meaning given that term in
the second "WHEREAS" clause of this Agreement.
"Existing Lenders" has the meaning given that term in the second "WHEREAS"
clause of this Agreement.
"Existing Security Documents" has the meaning given that term in the second
"WHEREAS" clause of this Agreement.
"Extension of Credit" means, with respect to a Person, any of the
following, whether secured or unsecured: (a) loans to such Person, including
without limitation, lines of credit and mortgage loans; (b) bonds, debentures,
notes and similar instruments issued by such Person; (c) reimbursement
obligations of such Person under or in respect of any letter of credit; and (d)
any of the foregoing of other Persons, the payment of which such Person
Guaranteed or is otherwise recourse to such Person.
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward
to the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent by
federal funds dealers selected by the Agent on such day on such transaction as
determined by the Agent.
"Fees" means the fees and commissions provided for or referred to in
Section 3.5. and any other fees payable by the Borrower hereunder or under any
other Loan Document.
"FIRREA" means the Financial Institution Recovery, Reform and Enforcement
Act of 1989, as amended.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity, including without limitation, the Securities
and Exchange Commission, as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"General Partner" means CBL Holdings I, Inc., a Delaware corporation, and a
Wholly Owned Subsidiary of the Parent and the sole general partner of Borrower,
and shall include the General Partner's successors and permitted assigns
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
40
"Governmental Authority" means any United States national, state or local
government, any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body, agency, bureau, commission, board, department or other entity (including,
without limitation, the Federal Deposit Insurance Corporation, the Comptroller
of the Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.
"Gross Asset Value" means, at a given time, the sum (without duplication)
of the following:
(a) Adjusted Asset Value at such time;
(b) all cash and cash equivalents of the Parent and its Subsidiaries
determined on a consolidated basis as of the end of the fiscal quarter most
recently ended (excluding tenant deposits and other cash and cash equivalents
the disposition of which is restricted in any way (other than restrictions in
the nature of early withdrawal penalties));
(c) with respect to any Property which is under construction or the
development of which was completed during the fiscal quarter most recently
ended, the book value of construction in process as determined in accordance
with GAAP for all such Properties at such time (including without duplication
the Parent's Ownership Share of all construction in process of Unconsolidated
Affiliates of the Parent);
(d) the book value of all unimproved real property of the Parent and its
Subsidiaries determined on a consolidated basis;
(e) the purchase price paid by the Parent or any Subsidiary (less any
amounts paid to the Parent or such Subsidiary as a purchase price adjustment,
held in escrow, retained as a contingency reserve, or other similar
arrangements) as required to be disclosed in a consolidated balance sheet
(including the notes thereto) of the Parent for:
(i) any Property (other than a property under development)
acquired by the Parent or such Subsidiary during the Parent's fiscal
quarter most recently ended; and
(ii) any operating Property acquired in the immediately
preceding period of twelve consecutive months for a purchase price
indicative of a capitalization rate of less than 8.5%; provided, that
if the Parent or a Subsidiary acquired such Property together with
other Properties or other assets and paid an aggregate purchase price
for such Properties and other assets, then the Parent shall allocate
the portion of the aggregate purchase price attributable to such
Property in a manner consistent with reasonable accounting practices;
(f) with respect to any purchase obligation, repurchase obligation or
forward commitment evidenced by a binding contract included when determining the
Total Liabilities of the Parent and its Subsidiaries, the reasonably determined
value of any amount that would be payable, or property that would be
transferable, to the Parent or any Subsidiary if such contract were terminated
as of such date; and
(g) to the extent not included in the immediately preceding clauses (a)
through (f), the value of any real property owned by a Subsidiary (that is not a
Wholly Owned Subsidiary) of the Borrower or an Unconsolidated Affiliate of the
Borrower (such Subsidiary or Unconsolidated Affiliate being a "JV") and which
property secures Recourse Indebtedness of such JV. For purposes of this clause
(g):
41
(h) the value of such real property shall be the lesser of (A) the
Permanent Loan Estimate which would be applicable to such real property were
such property a Collateral Property and (B) the amount of Recourse Indebtedness
secured by such real property;
(i) in no event shall the aggregate value of such real property included in
Gross Asset Value pursuant to this clause (g) exceed $500,000,000.00; and
(j) the value of any such real property shall only be included in Gross
Asset Value if the organizational documents of such JV provide that if, and to
the extent, such Indebtedness is paid by the Borrower or a Subsidiary of the
Borrower or by resort to such real property, then the Borrower or a Subsidiary
of the Borrower shall automatically acquire, without the necessity of any
further payment or action, all Equity Interests in such JV not owned by the
Borrower or any Subsidiary.
"Guarantor" means any Person that has executed, or is required to execute,
a Guaranty as a "Guarantor."
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation
means and includes (a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation, or (b) an
agreement, direct or indirect, contingent or otherwise, and whether or not
constituting a guaranty, the practical effect of which is to assure the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation. As the context requires, "Guaranty" shall also
mean each guaranty executed and delivered pursuant to Section 6.1. or 6.3. and
substantially in the form of Exhibit D.
"Hazardous Substances" means any pollutant, contaminant, hazardous, toxic
or dangerous waste, substance or material, or any other substance or material
regulated or controlled pursuant to any Environmental Law, including, without
limiting the generality of the foregoing, asbestos, PCBs, petroleum products
(including crude oil, natural gas, natural gas liquids, liquefied natural gas or
synthetic gas) or any other substance defined as a "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "hazardous material,"
"hazardous chemical," "hazardous waste," "regulated substance," "toxic
chemical," "toxic substance" or other similar term in any Environmental Law.
"Indebtedness" means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication):
(a) all obligations of such Person in respect of money borrowed;
(b) all obligations of such Person (other than trade debt incurred in the
ordinary course of business), whether or not for money borrowed:
(i) represented by notes payable, or drafts accepted, in each
case representing extensions of credit,
(ii) evidenced by bonds, debentures, notes or similar
instruments, or
(iii) constituting purchase money indebtedness, conditional
sales contracts, title retention debt instruments or other similar
instruments, upon which interest charges are customarily paid or that
are issued or assumed as full or partial payment for property;
(c) capitalized lease obligations of such Person;
42
(d) all reimbursement obligations of such Person under or in respect of any
letters of credit or acceptances (whether or not the same have been presented
for payment); and
(e) all Indebtedness of other Persons which (i) such Person has Guaranteed
or is otherwise recourse to such Person or (ii) is secured by a Lien on any
property of such Person.
"Interest Expense" means, with respect to a Person and for any period,
(a) the total interest expense (including, without limitation, interest
expense attributable to capitalized lease obligations) of such Person and in any
event shall include all letter of credit fees amortized as interest expense and
all interest expense with respect to any Indebtedness in respect of which such
Person is wholly or partially liable whether pursuant to any repayment, interest
carry, performance Guarantee or otherwise, plus
(b) to the extent not already included in the foregoing clause (a) such
Person's Ownership Share of all paid or accrued interest expense for such period
of Unconsolidated Affiliates of such Person.
Interest Expense allocable to minority interest in Subsidiaries of the
Borrower shall be excluded from Interest Expense of the Parent and its
Subsidiaries when determined on a consolidated basis.
"Interest Period" means,
(a) with respect to any LIBOR Advance that is a Revolving Advance, each
period commencing on the date such LIBOR Advance is made or the last day of the
next preceding Interest Period for such Advance and ending on the numerically
corresponding day in the first, second, third, sixth or, if available, twelfth
calendar month thereafter, as the Borrower may select in a Notice of Borrowing,
Notice of Continuation or Notice of Conversion, as the case may be, except that
each such Interest Period that commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. In addition to such periods, with the
prior consent of each Lender in each case, the Interest Period of a LIBOR
Advance may have a duration of at least 7, but not more than 30, days; and
(b) with respect to any LIBOR Advance that is a Swingline Loan, each period
commencing on the date such LIBOR Advance is made and ending on the date 7
Business Days thereafter, as the Borrower may select in a Notice of Swingline
Borrowing.
Notwithstanding the foregoing: (i) if any Interest Period would otherwise
end after the Termination Date (or, in the case of a Swingline Loan, the
Swingline Termination Date), such Interest Period shall end on the Termination
Date (or, in the case of a Swingline Loan, the Swingline Termination Date));
(ii) each Interest Period that would otherwise end on a day which is not a
Business Day shall end on the next Business Day (or, if such next Business Day
falls in the following calendar month, then on the prior Business Day); and
(iii) notwithstanding the immediately preceding clauses (i) and (ii), except in
the case of Swingline Loans, no Interest Period shall have a duration of less
than one month and, if the Interest Period for any Advance would otherwise be a
shorter period, such Advance shall not be available hereunder for such period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Investment" means, with respect to any Person, any acquisition or
investment (whether or not of a controlling interest) by such Person, whether by
43
means of (a) the purchase or other acquisition of any Equity Interest in another
Person, (b) a loan, advance or extension of credit to, capital contribution to,
Guaranty of Indebtedness of, or purchase or other acquisition of any
Indebtedness of, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute the business or a division or operating unit of another Person. Any
commitment or option to make an Investment in any other Person shall constitute
an Investment. Except as expressly provided otherwise, for purposes of
determining compliance with any covenant contained in a Loan Document, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.
"Jacobs Credit Agreement" means that certain Loan Agreement dated as of
January 31, 2001 by and among the Borrower, the financial institutions party
thereto as "Lenders," and Wells Fargo, as Agent.
"L/C Commitment Amount" has the meaning given to that term in Section
2.2.(a).
"Lender" means each financial institution from time to time party hereto as
a "Lender", together with its respective successors and permitted assigns, and,
as the context requires, includes the Swingline Lender.
"Lending Office" means, for each Lender and for each Type of Advance, the
office of such Lender specified as such on its signature page hereto or in the
applicable Assignment and Assumption Agreement, or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.
"Letter of Credit" has the meaning given that term in Section 2.2.(a).
"Letter of Credit Documents" means, with respect to any Letter of Credit,
collectively, any application therefor, any certificate or other document
presented in connection with a drawing under such Letter of Credit and any other
agreement, instrument or other document governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations.
"Letter of Credit Liabilities" means, without duplication, at any time and
in respect of any Letter of Credit, the sum of (a) the Stated Amount of such
Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender (other than the Lender then acting as Agent) shall be deemed
to hold a Letter of Credit Liability in an amount equal to its participation
interest under Section 2.2.(i) in the related Letter of Credit, and the Lender
then acting as Agent shall be deemed to hold a Letter of Credit Liability in an
amount equal to its retained interest in the related Letter of Credit after
giving effect to the acquisition by the Lenders (other than the Lender then
acting as Agent of their participation interests under such Section).
"LIBOR" means, for any LIBOR Advance for any Interest Period therefor, the
average rate of interest per annum (rounded upwards, if necessary, to the next
highest 1/16th of 1%) at which deposits in immediately available funds in
Dollars are offered to the Lender then acting as Agent (at approximately 9:00
a.m. San Francisco time, two Business Days prior to the first day of such
Interest Period) by first class banks in the London interbank market where the
Eurodollar operations of the Lender then acting as Agent are customarily
conducted, for delivery on the first day of such Interest Period, such deposits
being for a period of time equal or comparable to such Interest Period and in an
amount equal to or comparable to the principal amount of the LIBOR Advance to
which such Interest Period relates. Each determination of LIBOR by the Lender
then acting as Agent shall, in the absence of demonstrable error, be conclusive
and binding.
"LIBOR Advance" means a Revolving Advance or Swingline Loan bearing
interest at a rate based on LIBOR.
44
"Lien" as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment
of leases and rents, pledge, lien, charge or lease constituting a capitalized
lease obligation, conditional sale or other title retention agreement, or other
security title or encumbrance of any kind in respect of any property of such
Person, or upon the income, rents or profits therefrom; (b) any arrangement,
express or implied, under which any property of such Person is transferred,
sequestered or otherwise identified for the purpose of subjecting the same to
the payment of Indebtedness or performance of any other obligation in priority
to the payment of the general, unsecured creditors of such Person; (c) the
filing of any financing statement under the UCC or its equivalent in any
jurisdiction; and (d) any agreement by such Person to grant, give or otherwise
convey any of the foregoing.
"Loan" means the aggregate principal amount of outstanding Advances and
Swingline Loans.
"Loan Document" means this Agreement, each Note, each Collateral Document,
each Letter of Credit Document, each Environmental Indemnity Agreement and each
other document or instrument now or hereafter executed and delivered by a Loan
Party or the Parent in connection with, pursuant to or relating to this
Agreement.
"Loan Party" means the Borrower, each Guarantor, the General Partner and
each other Person who guarantees all or a portion of the Obligations and/or who
pledges any Collateral to secure all or a portion of the Obligations.
"Major Leases" means, with respect to any Collateral Property, (i) any
lease of 50,000 or more leasable square feet, in the case of any Property which
is a regional mall, or 20,000 or more leasable square feet, in the case of any
Property which is a strip center, or (ii) collectively, the leases of space in
the Properties by one or more tenants which are affiliates and which operate
under separate leases of space within the Properties if the aggregate leasable
square footage leased by such affiliates is 50,000 or more leasable square feet,
in the case of any Property which is a regional mall, or 20,000 or more leasable
square feet, in the case of any Property which is a strip center.
"Major Property-Level Agreements" means (a) each operating, cross-easement,
restrictions or similar agreement encumbering or affecting a Collateral Property
and any adjoining property material to the use and operation of such Property;
(b) each management agreement with respect to a Collateral Property; and (c) any
other agreement which in any way relates to the use, occupancy, operation,
maintenance, enjoyment or ownership of a Collateral Property, the breach or loss
of which would have a material adverse effect on such Property.
"Management Company" means CBL & Associates Management, Inc., a Delaware
corporation, or any other Person that succeeds to the obligations of CBL &
Associates Management, Inc. to manage the Properties, together with its
successors and permitted assigns.
"Material Adverse Effect" means a materially adverse effect on (a) the
business, assets, liabilities, financial condition, or results of operations of
the Borrower and its Subsidiaries, or the Parent and its Subsidiaries, in either
case taken as a whole, (b) the ability of the Borrower, any other Loan Party or
the Parent to perform its obligations under any Loan Document to which it is a
party, (c) the validity or enforceability of any of the Loan Documents, (d) the
rights and remedies of the Lenders and the Agent under any of the Loan Documents
or (e) the timely payment of the principal of or interest on the Advances or
other amounts payable in connection therewith.
45
"Mortgage" means a mortgage, deed of trust, deed to secure debt or similar
security instrument made by a Person owning an interest in real property
granting a Lien on such interest in real property as security for the payment of
Indebtedness of such Person or another Person.
"Net Operating Income" means, for any Collateral Property and for the
period of twelve consecutive calendar months most recently ending, the sum of
the following (without duplication):
(a) rents and all other revenues received in the ordinary course from such
Property (including proceeds of rent loss insurance but excluding pre-paid rents
and revenues and security deposits except to the extent applied in satisfaction
of tenants' obligations for rent); minus
(b) all expenses paid related to the ownership, operation or maintenance of
such Property, including without limitation, taxes and assessments, insurance,
utilities, payroll costs, maintenance, repair and landscaping expenses,
marketing expenses; minus
(c) an amount equal to (i) the aggregate square footage of all owned space
of such Property times (ii) $0.20; minus ----- -----
(d) an imputed management fee in the amount of three percent (3.0%) of the
aggregate base rents and percentage rents received for such Property for such
period.
"Net Proceeds" means with respect to an Equity Issuance by a Person, the
aggregate amount of all cash received by such Person in respect of such Equity
Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.
"Nonrecourse Indebtedness" means, with respect to a Person, an Extension of
Credit or other Indebtedness in respect of which recourse for payment (except
for customary exceptions for fraud, misapplication of funds, environmental
indemnities, and other similar customary exceptions to recourse liability) is
contractually limited to specific assets of such Person encumbered by a Lien
securing such Extension of Credit or other Indebtedness.
"Note" means a Revolving Note or the Swingline Note.
"Notice of Borrowing" means a notice substantially in the form of Exhibit E
to be delivered to the Agent pursuant to Section 2.1.(b) evidencing the
Borrower's request for a borrowing of Revolving Advances.
"Notice of Continuation" means a notice substantially in the form of
Exhibit F to be delivered to the Agent pursuant to Section 2.9.(a) evidencing
the Borrower's request for the Continuation of a LIBOR Advance.
"Notice of Conversion" means a notice substantially in the form of Exhibit
G to be delivered to the Agent pursuant to Section 2.9.(b) evidencing the
Borrower's request for the Conversion of a Advance from one Type to another
Type.
"Notice of Swingline Borrowing" means a notice substantially in the form of
Exhibit H to be delivered to the Swingline Lender pursuant to Section 2.3.(b)
evidencing the Borrower's request for a Swingline Loan.
46
"Obligations" means, individually and collectively, without duplication:
(a) the aggregate principal balance of, and all accrued and unpaid interest on,
all Advances; (b) all Reimbursement Obligations and all other Letter of Credit
Liabilities; and (c) all other indebtedness, liabilities, obligations, covenants
and duties of the Borrower or any of the other Loan Parties owing to the Agent
or any Lender of every kind, nature and description, under or in respect of this
Agreement or any of the other Loan Documents, including, without limitation, the
Fees and indemnification obligations, whether direct or indirect, absolute or
contingent, due or not due, contractual or tortious, liquidated or unliquidated,
and whether or not evidenced by any promissory note.
"Off-Balance Sheet Liabilities" means liabilities and obligations of the
Parent, the Borrower, any Subsidiary or any other Person in respect of
"off-balance sheet arrangements" (as defined in the SEC Off-Balance Sheet Rules)
which the Parent would be required to disclose in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section of the
Parent's report on Form 10-Q or Form 10-K (or their equivalents) which the
Parent would be required to file with the Securities and Exchange Commission (or
any Governmental Authority substituted therefor). As used in this definition,
the term "SEC Off-Balance Sheet Rules" means the Disclosure in Management's
Discussion and Analysis About Off-Balance Sheet Arrangements, Securities Act
Release No. 33-8182, 68 Fed. Reg. 5982 (Feb. 5, 2003) (to be codified at 17 CFR
pts. 228, 229 and 249).
"Ownership Share" means, with respect to any Subsidiary of a Person (other
than a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the
greater of (a) such Person's relative nominal direct and indirect ownership
interest (expressed as a percentage) in such Subsidiary or Unconsolidated
Affiliate or (b) subject to compliance with Section 9.4.(i), such Person's
relative direct and indirect economic interest (calculated as a percentage) in
such Subsidiary or Unconsolidated Affiliate determined in accordance with the
applicable provisions of the declaration of trust, articles or certificate of
incorporation, articles of organization, partnership agreement, joint venture
agreement or other applicable organizational document of such Subsidiary or
Unconsolidated Affiliate.
"Parent" has the meaning set forth in the introductory paragraph hereof and
shall include the Parent's successors and permitted assigns.
"Parent Guaranty" means the Parent Guaranty executed and delivered by the
Parent in favor of the Agent and the Lenders and substantially in the form of
Exhibit D.
"Participant" has the meaning given that term in Section 13.5.(b).
"Permanent Loan Estimate" means, as of any date of determination and with
respect to any Collateral Property, an amount equal to (a) the Net Operating
Income of such Collateral Property divided by (b) the product of (i) 1.25 and
(ii) the mortgage constant for a 25-year loan bearing interest at a per annum
rate equal to the average rate published in the United States Federal Reserve
Statistical Release (H.15) for 10-year Treasury Constant Maturities during the
previous four fiscal quarters plus 1.5%.
"Permitted Deficiency" has the meaning given that term in Section 11.5.
"Permitted Liens" means, with respect to any asset or property of a Person,
(a) Liens securing taxes, assessments and other charges or levies imposed
by any Governmental Authority (excluding any Lien imposed pursuant to any of the
47
provisions of ERISA or pursuant to any Environmental Laws) or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business,
which are not at the time required to be paid or discharged under Section 8.5.;
(b) Liens consisting of deposits or pledges made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or similar Applicable Laws;
(c) Liens consisting of encumbrances in the nature of zoning restrictions,
easements, and rights or restrictions of record on the use of real property,
which do not materially detract from the value of such property or impair the
use thereof in the business of such Person;
(d) the rights of tenants under leases or subleases not interfering with
the ordinary conduct of business of such Person;
(e) Liens in favor of the Agent for the benefit of the Lenders; and
(f) in the case of any Collateral encumbered by a Collateral Document,
other Liens expressly permitted by such Collateral Document.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by the Lender then acting as Agent at its principal office as its
"prime rate" (which rate of interest may not be the lowest rate charged by Wells
Fargo Bank, National Association or any of the other Lenders on similar loans).
"Principal Office" means 120 E. Park Place, Suite 100, El Segundo,
California 90245, or such other office as the Agent may notify the Borrower.
"Principals" means (a) Charles B. Lebovitz, John N. Foy, Ben S. Landress,
Stephen Lebovitz, Michael Lebovitz and/or Ron Fullam, Jr., (b) any of such
individual's immediate family members consisting of his spouse and his lineal
descendants (whether natural or adopted), (c) a trust, partnership or other
similar entity of which any of the Persons identified in either of the
immediately preceding clauses (a) or (b) are the sole beneficiaries of all of
the interest therein, and (d) any Subsidiary of any of the Persons identified in
any of the immediately preceding clauses (a) through (c), so long as any of the
individuals identified in the immediately preceding clause (a) owns or controls
at least 10% of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation, partnership or
other entity (without regard to the occurrence of any contingency).
"Property" means a parcel (or group of related parcels) of real property
developed (or to be developed) for use as regional mall or retail strip shopping
center.
"Property Management Agreements" means, collectively, all agreements
entered into by the Borrower or any other Loan Party pursuant to which the
Borrower or such other Loan Party engages a Person to advise it with respect to
the management of a given Property.
"Property Management Contract Assignment" means a Property Management
Contract Assignment executed by the Borrower or any other Loan Party in favor of
48
the Agent for the benefit of the Lenders in form and substance satisfactory to
the Agent. Such document may, at the Agent's election, constitute a
subordination of Property Management Agreement, rather than an assignment
thereof.
"Protective Advance" means all sums expended as determined by the Agent to
be necessary or appropriate after the Borrower fails to do so when required: (a)
to protect the validity, enforceability, perfection or priority of the Liens in
any of the Collateral and the instruments evidencing the Obligations; or (b) to
protect any of the Collateral from being materially damaged, impaired,
mismanaged or taken, including, without limitation, any amounts expended in
connection therewith in accordance with Section 13.2.
"Recourse Indebtedness" means any Indebtedness other than Nonrecourse
Indebtedness.
"Regulatory Change" means, with respect to any Lender, any change effective
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Agent for any drawing
honored by the Agent under a Letter of Credit.
"REIT" means a Person qualifying for treatment as a "real estate investment
trust" under the Internal Revenue Code.
"Requisite Lenders" means, as of any date, Lenders having at least 66-2/3%
of the aggregate amount of the Commitments, or, if the Commitments have been
terminated or reduced to zero, such Lenders holding at least 66-2/3% of the
principal amount of the Advances and Letter of Credit Liabilities.
"Restricted Payment" means any of the following:
(a) any dividend or other distribution, direct or indirect, on account of
any shares of any class of stock or other Equity Interest of the Parent or any
of its Subsidiaries now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock or other Equity Interest to the holders
of that class;
(b) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock or other Equity Interest of the Parent or any
of its Subsidiaries now or hereafter outstanding;
(c) any payment or prepayment of principal of, premium, if any, or interest
on, redemption, conversion, exchange, purchase, retirement, defeasance, sinking
fund or similar payment with respect to, any Subordinated Debt; and
(d) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock or other Equity Interest of the Parent or any of its Subsidiaries now or
hereafter outstanding.
"Revolving Advance" means a loan made by a Lender to the Borrower pursuant
to Section 2.1.(a).
49
"Revolving Note" means a promissory note of the Borrower substantially in
the form of Exhibit I, payable to the order of a Lender in a principal amount
equal to the amount of such Lender's Commitment as originally in effect and
otherwise duly completed.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, together with all rules and regulations issued thereunder.
"Security Deed" means a Deed to Secure Debt, Deed of Trust or other
Mortgage executed by the Borrower or a Wholly Owned Subsidiary of the Borrower
in favor of the Agent substantially in the form of Exhibit J.
"Senior Officer" means the Chairman, Vice Chairman, President, an Executive
Vice President, Senior Vice President - Finance, Senior Vice President -
Accounting, Controller and the chief financial officer of the Borrower or the
Parent.
"Significant Subsidiary" means any Subsidiary which has assets having an
aggregate book value in excess of 10.0% of Gross Asset Value at any time.
"Solvent" means, when used with respect to any Person, that (a) the fair
value and the fair salable value of its assets (excluding any Indebtedness due
from any affiliate of such Person) are each in excess of the fair valuation of
its Total Liabilities (including all contingent liabilities); (b) such Person is
able to pay its debts or other obligations in the ordinary course as they
mature; and (c) such Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.
"Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased or
reduced from time to time in accordance with the terms of such Letter of Credit.
"Subordinated Debt" means Indebtedness for money borrowed of the Borrower
or any of its Subsidiaries that is subordinated in right of payment and
otherwise to the Advances and the other Obligations in a manner satisfactory to
the Agent in its sole and absolute discretion.
"Subsidiary" means, for any Person, any corporation, partnership, limited
liability company or other entity of which at least a majority of the securities
or other ownership interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions of such corporation, partnership or other entity (without
regard to the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Swingline Commitment" means the Swingline Lender's obligation to make
Swingline Loans pursuant to Section 2.3. in an amount up to, but not exceeding
the amount set forth in Section 2.3., as such amount may be reduced from time to
time in accordance with the terms hereof.
"Swingline Lender" means Wells Fargo Bank, National Association, together
with its respective successors and assigns.
"Swingline Loan" means a loan made by the Swingline Lender to the Borrower
pursuant to Section 2.3.
"Swingline Note" means a promissory note of the Borrower substantially in
the form of Exhibit K, payable to the order of the Swingline Lender in a
principal amount equal to the amount of the Swingline Commitment as originally
in effect and otherwise duly completed.
50
"Swingline Termination Date" means the date which is 7 Business Days prior
to the Termination Date.
"Tangible Net Worth" means, as of a given date, the stockholders' equity of
the Parent and its Subsidiaries determined on a consolidated basis plus (x)
increases in accumulated depreciation accrued after September 30, 2002 and (y)
minority interests in the Borrower minus (to the extent reflected in determining
stockholders' equity of the Parent and its Subsidiaries): (a) the amount of any
write-up in the book value of any assets contained in any balance sheet
resulting from revaluation thereof or any write-up in excess of the cost of such
assets acquired, and (b) all amounts appearing on the assets side of any such
balance sheet for assets which would be classified as intangible assets under
GAAP, all determined on a consolidated basis.
"Taxes" has the meaning given that term in Section 3.9.
"Termination Date" means February 28, 2006, or such later date to which
such date may be extended in accordance with Section 2.13.
"Tie-In Jurisdiction" means a jurisdiction in which a "tie-in" endorsement
may be obtained for a title insurance policy covering property located in such
jurisdiction which endorsement effectively ties coverage to other title
insurance policies covering properties located in other jurisdictions.
"Total Liabilities" means, as to any Person as of a given date, all
liabilities which would, in conformity with GAAP, be properly classified as a
liability on a consolidated balance sheet of such Person as of such date, and in
any event shall include (without duplication and whether or not a liability
under GAAP) all of the following:
(a) all letter of credits of such Person;
(b) all purchase and repurchase obligations and forward commitments
evidenced by binding contracts, including forward equity commitments and
contracts to purchase real property, reasonably determined to be owing under any
such contract assuming such contract were terminated as of such date;
(c) all quantifiable contingent obligations of such Person including,
without limitation, all Guarantees of Indebtedness by such Person and exposure
under swap agreements;
(d) all Off Balance Sheet Liabilities of such Person and the Ownership
Share of the Off Balance Sheet Liabilities of Unconsolidated Affiliates of such
Person;
(e) all Indebtedness of Subsidiaries of such Person, provided that
Indebtedness of a Subsidiary that is not a Wholly Owned Subsidiary shall be
included in Total Liabilities only to the extent of the Borrower's Ownership
Share of such Subsidiary (unless the Borrower or a Wholly Owned Subsidiary of
the Borrower is otherwise obligated in respect of such Indebtedness); and
(f) such Person's Ownership Share of the Indebtedness of any Unconsolidated
Affiliate of such Person.
For purposes of this definition:
51
(1) Total Liabilities shall not include Indebtedness with respect to
letters of credit if, and to the extent, such letters of credit are issued
(i) to secure obligations to municipalities to perform work in
connection with construction of projects, such exclusion under this
clause (i) to be to the extent there are reserves for such obligations
under the construction loan for the applicable project;
(ii) in support of permanent loan commitments, in lieu of a
deposit;
(iii) as a credit enhancement for Indebtedness incurred by an
Subsidiary of Borrower, but only to the extent such Indebtedness is
already included in Total Liabilities; or
(iv) as a credit enhancement for Indebtedness incurred by a
Person which is not an Affiliate of Borrower, such exclusion under this
clause (iv) to be to the extent of the value of any collateral provided
by such Person to secure such letter of credit.
(2) obligations under short-term repurchase agreements entered into as part
of a cash management program shall not be included as Total Liabilities.
"Type" with respect to any Advance, refers to whether such Advance is a
LIBOR Advance or Base Rate Advance.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"Unconsolidated Affiliate" means, with respect to any Person, any other
Person in whom such Person holds an Investment, which Investment is accounted
for in the financial statements of such Person on an equity basis of accounting
and whose financial results would not be consolidated under GAAP with the
financial results of such Person on the consolidated financial statements of
such Person.
"Wells Fargo" means Wells Fargo Bank, National Association, and its
successors and permitted assigns.
"Wholly Owned Subsidiary" means any Subsidiary of a Person in respect of
which all of the equity securities or other ownership interests (other than, in
the case of a corporation, directors' qualifying shares) are at the time
directly or indirectly owned or controlled by such Person or one or more other
Subsidiaries of such Person or by such Person and one or more other Subsidiaries
of such Person.
Section 1.2. General; References to San Francisco Time.
Unless otherwise indicated, all accounting terms, ratios and measurements
shall be interpreted or determined in accordance with GAAP in effect as of the
Agreement Date. References in this Agreement to "Sections", "Articles",
"Exhibits" and "Schedules" are to sections, articles, exhibits and schedules
herein and hereto unless otherwise indicated. references in this Agreement to
any document, instrument or agreement (a) shall include all exhibits, schedules
and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, to the extent permitted
hereby and (c) shall mean such document, instrument or agreement, or replacement
or predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent permitted hereby and in effect at any given
time. Wherever from the context it appears appropriate, each term stated in
52
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Unless explicitly set forth to the
contrary, a reference to "Subsidiary" means a Subsidiary of the Parent or the
Borrower (or a Subsidiary of such Subsidiary) and a reference to an "Affiliate"
means a reference to an Affiliate of the Borrower or the Parent. Titles and
captions of Articles, Sections, subsections and clauses in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement. Unless otherwise indicated, all references to time are references to
San Francisco, California time.
(2) Article II. Credit Facility
Section 2.1. Revolving Advances.
(a) Making of Revolving Advances. Subject to the terms and conditions set
forth in this Agreement, including without limitation, Section 2.15. below, each
Lender severally and not jointly agrees to make Revolving Advances to the
Borrower during the period from and including the Effective Date to but
excluding the Termination Date, in an aggregate principal amount at any one time
outstanding up to, but not exceeding, the lesser of (i) the amount of such
Lender's Commitment and (ii) such Lender's Commitment Percentage of the
Borrowing Base. Each borrowing of Revolving Advances shall be in an aggregate
principal amount of $100,000 and integral multiples of $1,000 in excess of that
amount (except that any borrowing of Revolving Advances may be in the aggregate
amount of the unused Commitments). Within the foregoing limits and subject to
the terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow Revolving Advances.
(b) Requests for Revolving Advances. Not later than 10:00 a.m. San
Francisco time at least 1 Business Day prior to a borrowing of Base Rate
Advances and not later than 10:00 a.m. San Francisco time at least 3 Business
Days prior to a borrowing of LIBOR Advances, the Borrower shall deliver to the
Agent a Notice of Borrowing. Each Notice of Borrowing shall specify the
aggregate principal amount of the Revolving Advances to be borrowed, the date
such Revolving Advances are to be borrowed (which must be a Business Day), the
Type of the requested Revolving Advances, and if such Revolving Advances are to
be LIBOR Advances, the initial Interest Period for such Revolving Advances. If
the Borrower fails to indicate the Type of Revolving Advances being borrowed in
a Notice of Borrowing, then the Borrower shall be deemed to have requested a
borrowing of LIBOR Advances having an Interest Period of one month. Prior to
delivering a Notice of Borrowing, the Borrower may request that the Agent
provide the Borrower with a current quote of LIBOR. The Agent shall provide such
quoted rate to the Borrower on the date of such request or as soon as possible
thereafter.
(c) Funding of Revolving Advances. Promptly after receipt of a Notice of
Borrowing under the immediately preceding subsection (b), the Agent shall notify
each Lender by telex or telecopy, or other similar form of transmission, of the
proposed borrowing. Each Lender shall deposit an amount equal to the Revolving
Advance to be made by such Lender to the Borrower with the Agent at the
Principal Office, in immediately available funds not later than 9:00 a.m. San
Francisco time on the date of such proposed Revolving Advances. Subject to
fulfillment of all applicable conditions set forth herein, the Agent shall make
available to the Borrower at the Principal Office, not later than 11:00 a.m. San
Francisco time on the date of the requested borrowing of Revolving Advances, the
proceeds of such amounts received by the Agent.
(d) Assumptions Regarding Funding by Lenders. With respect to Revolving
Advances to be made after the Effective Date, unless the Agent shall have been
notified by any Lender that such Lender will not make available to the Agent a
Revolving Advance to be made by such Lender, the Agent may assume that such
Lender will make the proceeds of such Revolving Advance available to the Agent
in accordance with this Section and the Agent may (but shall not be obligated
to), in reliance upon such assumption, make available to the Borrower the amount
of such Revolving Advance to be provided by such Lender.
53
Section 2.2. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, including without limitation, Section 2.15., the Agent, on behalf of
the Lenders, agrees to issue for the account of the Borrower during the period
from and including the Effective Date to, but excluding, the date 30 days prior
to the Termination Date, one or more standby letters of credit (each a "Letter
of Credit") up to a maximum aggregate Stated Amount at any one time outstanding
not to exceed $50,000,000 as such amount may be reduced from time to time in
accordance with the terms hereof (the "L/C Commitment Amount").
(b) Terms of Letters of Credit. At the time of issuance, the amount, form,
terms and conditions of each Letter of Credit, and of any drafts or acceptances
thereunder, shall be subject to approval by the Agent and the Borrower.
Notwithstanding the foregoing, in no event may (i) the expiration date of any
Letter of Credit extend beyond the Termination Date, (ii) any Letter of Credit
have an initial duration in excess of one year, or (iii) any Letter of Credit
contain an automatic renewal provision. The initial Stated Amount of each Letter
of Credit shall be at least $200,000.
(c) Requests for Issuance of Letters of Credit. The Borrower shall give the
Agent notice at least 4 Business Days prior to the requested date of issuance of
a Letter of Credit, such notice to describe in reasonable detail the proposed
terms of such Letter of Credit and the nature of the transactions or obligations
proposed to be supported by such Letter of Credit, and in any event shall set
forth with respect to such Letter of Credit the proposed (i) initial Stated
Amount, (ii) the beneficiary, and (iii) expiration date. The Borrower shall also
execute and deliver such customary applications and agreements for standby
letters of credit, and other forms as reasonably requested from time to time by
the Agent. Provided the Borrower has given the notice prescribed by the first
sentence of this subsection and delivered such application and agreements
referred to in the preceding sentence, subject to the other terms and conditions
of this Agreement, including the satisfaction of any applicable conditions
precedent set forth in Article 6.2., the Agent shall issue the requested Letter
of Credit on the requested date of issuance for the benefit of the stipulated
beneficiary but in any event no later than the date 4 Business Days following
the date after which the Agent has received all of the items required to be
delivered to it under this subsection. Upon the written request of the Borrower,
the Agent shall deliver to the Borrower a copy of (i) any Letter of Credit
proposed to be issued hereunder prior to the issuance thereof and (ii) each
issued Letter of Credit within a reasonable time after the date of issuance
thereof. To the extent any term of a Letter of Credit Document is inconsistent
with a term of any Loan Document, the term of such Loan Document shall control.
(d) Reimbursement Obligations. Upon receipt by the Agent from the
beneficiary of a Letter of Credit of any demand for payment under such Letter of
Credit, the Agent shall promptly notify the Borrower of the amount to be paid by
the Agent as a result of such demand and the date on which payment is to be made
by the Agent to such beneficiary in respect of such demand. The Borrower hereby
absolutely, unconditionally and irrevocably agrees to pay and reimburse the
Agent for the amount of each demand for payment under such Letter of Credit at
or prior to the date on which payment is to be made by the Agent to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind. Upon receipt by the Agent of any payment in respect of
any Reimbursement Obligation, the Agent shall promptly pay to each Lender that
has acquired a participation therein under the second sentence of the
immediately following subsection (i) such Lender's Commitment Percentage of such
payment.
(e) Manner of Reimbursement. Promptly after payment by the Agent of any
amount drawn under a Letter of Credit, the Agent shall give each Lender prompt
notice thereof including the amount of the payment, specifying such Lender's
Commitment Percentage of the amount of the payment and the provisions of
subsection (j) of this Section shall apply.
54
(f) Effect of Letters of Credit on Commitments. Upon the issuance by the
Agent of any Letter of Credit and until such Letter of Credit shall have expired
or been terminated, the Commitment of each Lender shall be deemed to be utilized
for all purposes of this Agreement in an amount equal to the product of (i) such
Lender's Commitment Percentage and (ii) the sum of (A) the Stated Amount of such
Letter of Credit plus (B) any related Reimbursement Obligations then
outstanding.
(g) Agent's Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement Obligations. In examining documents presented in connection with
drawings under Letters of Credit and making payments under such Letters of
Credit against such documents, the Agent shall only be required to use the same
standard of care as it uses in connection with examining documents presented in
connection with drawings under letters of credit in which it has not sold
participations and making payments under such letters of credit. The Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, neither the Agent nor any of
the Lenders shall be responsible for (i) the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
any Letter of Credit even if such document should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit, or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to draw upon
such Letter of Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telex, telecopy or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit, or of
the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter
of Credit, or of the proceeds of any drawing under any Letter of Credit; or
(viii) any consequences arising from causes beyond the control of the Agent or
the Lenders. None of the above shall affect, impair or prevent the vesting of
any of the Agent's rights or powers hereunder. Any action taken or omitted to be
taken by the Agent under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create against the Agent any liability to the Borrower or any Lender. In this
connection, the obligation of the Borrower to reimburse the Agent for any
drawing made under any Letter of Credit shall be absolute, unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement or any other applicable Letter of Credit Document under all
circumstances whatsoever, including without limitation, the following
circumstances: (A) any lack of validity or enforceability of any Letter of
Credit Document or any term or provisions therein; (B) any amendment or waiver
of or any consent to departure from all or any of the Letter of Credit
Documents; (C) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against the Agent, any Lender, any beneficiary
of a Letter of Credit or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or in the Letter of Credit
Documents or any unrelated transaction; (D) any breach of contract or dispute
between the Borrower, the Agent, any Lender or any other Person; (E) any demand,
statement or any other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein or made in connection therewith being untrue or inaccurate in any
respect whatsoever; (F) any non-application or misapplication by the beneficiary
of a Letter of Credit or of the proceeds of any drawing under such Letter of
Credit; (G) payment by the Agent under the Letter of Credit against presentation
of a draft or certificate which does not strictly comply, but which does
substantially comply, with the terms of the Letter of Credit; and (H) any other
act, omission to act, delay or circumstance whatsoever that might, but for the
provisions of this Section, constitute a legal or equitable defense to or
discharge of the Borrower's Reimbursement Obligations.
55
(h) Amendments, Etc. The issuance by the Agent of any amendment, supplement
or other modification to any Letter of Credit shall be subject to the same
conditions applicable under this Agreement to the issuance of new Letters of
Credit (including, without limitation, that the request therefor be made through
the Agent), and no such amendment, supplement or other modification shall be
issued unless either (i) the respective Letter of Credit affected thereby would
have complied with such conditions had it originally been issued hereunder in
such amended, supplemented or modified form or (ii) the Agent and Requisite
Lenders shall have consented thereto. In connection with any such amendment,
supplement or other modification, the Borrower shall pay the fees, if any,
payable under the last sentence of Section 3.5.(c).
(i) Lenders' Participation in Letters of Credit. Immediately upon the
issuance by the Agent of any Letter of Credit each Lender shall be deemed to
have absolutely, irrevocably and unconditionally purchased and received from the
Agent, without recourse or warranty, an undivided interest and participation to
the extent of such Lender's Commitment Percentage of the liability of the Agent
with respect to such Letter of Credit and each Lender thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Agent to pay and discharge when
due, such Lender's Commitment Percentage of the Agent's liability under such
Letter of Credit. In addition, upon the making of each payment by a Lender to
the Agent in respect of any Letter of Credit pursuant to the immediately
following subsection (j), such Lender shall, automatically and without any
further action on the part of the Agent or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Agent by the Borrower in respect of such Letter of Credit and (ii)
a participation in a percentage equal to such Lender's Commitment Percentage in
any interest or other amounts payable by the Borrower in respect of such
Reimbursement Obligation (other than the Fees payable to the Agent pursuant to
the last sentence of Section 3.5.(c)).
(j) Payment Obligation of Lenders. Each Lender severally agrees to pay to
the Agent on demand in immediately available funds in Dollars the amount of such
Lender's Commitment Percentage of each drawing paid by the Agent under each
Letter of Credit; provided, however, that in respect of any drawing under any
Letter of Credit, the maximum amount that any Lender shall be required to fund,
whether as a Revolving Advance or as a participation, shall not exceed such
Lender's Commitment Percentage of such drawing. The amount a Lender pays to the
Agent under this subsection shall be deemed to be an Advance by such Lender if,
at the time of such payment, the Borrower is not prohibited from obtaining
Advances under this Agreement. Further, any such Advance shall be a LIBOR
Advance having an Interest Period of one month unless otherwise prohibited by
this Agreement, including without limitation, the terms of Section 2.9., in
which case each such Advance shall be deemed to be a Base Rate Advance. Each
Lender's obligation to make such payments to the Agent under this subsection,
and the Agent's right to receive the same, shall be absolute, irrevocable and
unconditional and shall not be affected in any way by any circumstance
whatsoever, including without limitation, (i) the failure of any other Lender to
make its payment under this subsection, (ii) the financial condition of the
Borrower, any other Loan Party or the Parent, (iii) the existence of any Default
or Event of Default, including any Event of Default described in Sections
11.1.(e) or (f) or (iv) the termination of the Commitments. Each such payment to
the Agent shall be made without any offset, abatement, withholding or deduction
whatsoever.
(k) Information to Lenders. Promptly following any change in Letters of
Credit outstanding, the Agent shall deliver to each Lender and the Borrower a
notice describing the aggregate amount of all Letters of Credit outstanding at
such time. Upon the request of any Lender from time to time, the Agent shall
deliver any other information reasonably requested by such Lender with respect
to each Letter of Credit then outstanding. Other than as set forth in this
subsection, the Agent shall have no duty to notify the Lenders regarding the
issuance or other matters regarding Letters of Credit issued hereunder. The
56
failure of the Agent to perform its requirements under this subsection shall not
relieve any Lender from its obligations under the immediately preceding
subsection (j).
Section 2.3. Swingline Loans.
(a) Swingline Loans. Subject to the terms and conditions hereof, including
without limitation Section 2.15., the Swingline Lender agrees to make Swingline
Loans to the Borrower, during the period from the Effective Date to but
excluding the Swingline Termination Date, in an aggregate principal amount at
any one time outstanding up to, but not exceeding, $50,000,000, as such amount
may be reduced from time to time in accordance with the terms hereof. If at any
time the aggregate principal amount of the Swingline Loans outstanding at such
time exceeds the Swingline Commitment in effect at such time, the Borrower shall
no later than 2 days following the Agent's demand pay the Agent for the account
of the Swingline Lender the amount of such excess. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow
Swingline Loans hereunder.
(b) Procedure for Borrowing Swingline Loans. The Borrower shall give the
Agent and the Swingline Lender notice of a borrowing of a Swingline Loan
pursuant to a Notice of Swingline Borrowing delivered no later than 9:00 a.m.
San Francisco time on the proposed date of such borrowing. If the Borrower
intends to repay all or any portion of such Swingline Loan with the proceeds of
Revolving Advances, then the Borrower shall also deliver to the Agent together
with such Notice of Swingline Borrowing a Notice of Borrowing for such Revolving
Advances. Not later than 10:00 a.m. San Francisco time on the date of the
requested Swingline Loan and subject to satisfaction of the applicable
conditions set forth in Article 6.2. for such borrowing, the Swingline Lender
will make the proceeds of such Swingline Loan available to the Borrower in
Dollars, in immediately available funds, at the account specified by the
Borrower in the Notice of Swingline Borrowing.
(c) Interest. Swingline Loans shall bear interest at a per annum rate equal
to LIBOR (as such rate is referenced on the date such Swingline Loan is made)
with an Interest Period of 7 Business Days (as designated by the Borrower in the
Notice of Swingline Borrowing) plus one percent (1.0%), or at such other rate or
rates as the Borrower and the Swingline Lender may agree from time to time in
writing. All accrued and unpaid interest on Swingline Loans shall be payable on
the dates and in the manner provided in Section 2.4.
(d) Swingline Loan Amounts, Etc. Each Swingline Loan shall be in the
minimum amount of $100,000 and integral multiples of $1,000 in excess thereof,
or such other minimum amounts agreed to by the Swingline Lender and the
Borrower. Any voluntary prepayment of a Swingline Loan must be in integral
multiples of $1,000 or the aggregate principal amount of all outstanding
Swingline Loans (or such other minimum amounts upon which the Swingline Lender
and the Borrower may agree) and in connection with any such prepayment, the
Borrower must give the Swingline Lender prior notice thereof no later than 10:00
a.m. San Francisco time on the day prior to the date of such prepayment. The
Swingline Loans shall, in addition to this Agreement, be evidenced by the
Swingline Note.
(e) Repayment and Participations of Swingline Loans. The Borrower agrees to
repay each Swingline Loan within 2 Business Days of demand therefor by the
Swingline Lender and, in any event, within 7 Business Days after the date such
Swingline Loan was made; provided, however, that if such Swingline Loan is made
for the sole purpose of compensating for a deficiency in a requested Revolving
Advance created by a Defaulting Lender, or a Lender shall fail to purchase an
interest in a portion of a Swingline Loan required to be acquired by such Lender
hereunder, then such Swingline Loan (or portion thereof) must be repaid within
57
60 Business Days after the date such Swingline Loan was made. Notwithstanding
the foregoing, the Borrower shall repay the entire outstanding principal amount
of, and all accrued but unpaid interest on, the Swingline Loans on the Swingline
Termination Date (or such earlier date as the Swingline Lender and the Borrower
may agree in writing). In lieu of demanding repayment of any outstanding
Swingline Loan from the Borrower, the Swingline Lender may, on behalf of the
Borrower (which hereby irrevocably directs the Swingline Lender to act on its
behalf), request a borrowing of LIBOR Advances from the Lenders in an amount
equal to the principal balance of such Swingline Loan and having an initial
Interest Period of one month; provided, however, if at such time the Borrower is
not permitted to borrow LIBOR Advances, then such borrowing shall be Base Rate
Advances. The amount limitations contained in the second sentence of Section
2.1. shall not apply to any borrowing of Revolving Advances made pursuant to
this subsection. The Swingline Lender shall give notice to the Agent of any such
borrowing of Revolving Advances not later than 10:00 a.m. San Francisco time at
least one Business Day prior to the proposed date of such borrowing. Each Lender
will make available to the Agent at the Principal Office for the account of the
Swingline Lender, in immediately available funds, the proceeds of the Revolving
Advance to be made by such Lender. The Agent shall pay the proceeds of such
Revolving Advances to the Swingline Lender, which shall apply such proceeds to
repay such Swingline Loan. If the Lenders are prohibited from making Advances
required to be made under this subsection for any reason whatsoever, including
without limitation, the occurrence of any of the Defaults or Events of Default
described in Sections 11.1.(e) or (f), each Lender shall purchase from the
Swingline Lender, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Commitment Percentage of such
Swingline Loan, by directly purchasing a participation in such Swingline Loan in
such amount and paying the proceeds thereof to the Agent for the account of the
Swingline Lender in Dollars and in immediately available funds. A Lender's
obligation to purchase such a participation in a Swingline Loan shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including without limitation, (i) any claim of setoff, counterclaim,
recoupment, defense or other right which such Lender or any other Person may
have or claim against the Agent, the Swingline Lender or any other Person
whatsoever, (ii) the occurrence or continuation of a Default or Event of Default
(including without limitation, any of the Defaults or Events of Default
described in Sections 11.1.(e) or (f)), or the termination of any Lender's
Commitment, (iii) the existence (or alleged existence) of an event or condition
which has had or could have a Material Adverse Effect, (iv) any breach of any
Loan Document by the Agent, any Lender or the Borrower or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If such amount is not in fact made available to the Swingline
Lender by any Lender, the Swingline Lender shall be entitled to recover such
amount on demand from such Lender, together with accrued interest thereon for
each day from the date of demand thereof, at the Federal Funds Rate. If such
Lender does not pay such amount forthwith upon the Swingline Lender's demand
therefor, and until such time as such Lender makes the required payment, the
Swingline Lender shall be deemed to continue to have outstanding Swingline Loans
in the amount of such unpaid participation obligation for all purposes of the
Loan Documents (other than those provisions requiring the other Lenders to
purchase a participation therein). Further, such Lender shall be deemed to have
assigned any and all payments made of principal and interest on its Advances,
and any other amounts due it hereunder, to the Swingline Lender to fund
Swingline Loans in the amount of the participation in Swingline Loans that such
Lender failed to purchase pursuant to this Section until such amount has been
purchased (as a result of such assignment or otherwise).
Section 2.4. Rates and Payment of Interest on Advances.
(a) Rates. The Borrower promises to pay to the Agent for the account of
each Lender interest on the unpaid principal amount of each Revolving Advance
made by such Lender for the period from and including the date of the making of
such Revolving Advance to but excluding the date such Revolving Advance shall be
paid in full, at the following per annum rates:
(i) during such periods as such Revolving Advance is a Base
Rate Advance, at the Base Rate (as in effect from time to time); and
58
(ii) during such periods as such Revolving Advance is a LIBOR
Advance, at LIBOR for such Revolving Advance for the Interest Period
therefor, plus 1.0%.
Notwithstanding the foregoing, while any Event of Default shall exist, the
Borrower shall, upon and after the Agent's demand, pay to the Agent for the
account of each Lender interest at the Default Rate on the outstanding principal
amount of any Advance made by such Lender, on all Reimbursement Obligations and
on any other amount payable by the Borrower hereunder or under the Notes held by
such Lender to or for the account of such Lender (including without limitation,
accrued but unpaid interest to the extent permitted under Applicable Law).
(b) Payment of Interest. All accrued and unpaid interest on the outstanding
principal amount of each Advance shall be payable (i) monthly in arrears on the
first day of each month, commencing with the first full calendar month occurring
after the Effective Date and (ii) on any date on which the principal balance of
such Advance is due and payable in full (whether at maturity, due to
acceleration or otherwise). Interest payable at the Default Rate shall be
payable from time to time on demand. All determinations by the Agent of an
interest rate hereunder shall be conclusive and binding on the Lenders and the
Borrower for all purposes, absent manifest error.
Section 2.5. Number of Interest Periods.
Notwithstanding anything to the contrary contained in this Agreement, there
may be no more than 8 different Interest Periods outstanding at the same time.
Section 2.6. Repayment of Advances.
The Borrower shall repay the entire outstanding principal amount of, and
all accrued but unpaid interest on, the Revolving Advances on the Termination
Date.
Section 2.7. Prepayments.
(a) Optional. Subject to Section 5.4., the Borrower may prepay any Advance
at any time without premium or penalty. The Borrower shall give the Agent at
least 3 Business Days prior notice of the prepayment of any Advance. Each
voluntary prepayment of Revolving Advances shall be in an aggregate minimum
amount of $100,000 and integral multiples of $1,000 in excess thereof.
(b) Mandatory.
(i) Commitment Overadvance. If at any time the aggregate
principal amount of all outstanding Advances, together with the
aggregate amount of all Letter of Credit Liabilities, exceeds the
aggregate amount of the Commitments, the Borrower shall no later than 2
days following the Agent's demand, pay to the Agent for the account of
the Lenders, the amount of such excess.
(ii) Borrowing Base Overadvance. If at any time the aggregate
principal amount of all outstanding Advances, together with the
aggregate amount of all Letter of Credit Liabilities, exceeds the
Borrowing Base, the Borrower shall, within 30 days of the earlier of
(A) receipt by the Borrower of notice from the Agent stating that such
excess exists or (B) the date the Borrower delivers (or was required to
deliver) a Borrowing Base Certificate indicating the existence of such
excess, deliver to the Agent for prompt distribution to each Lender a
written plan acceptable to all of the Lenders to eliminate such excess.
If such excess is not eliminated within 90 days of the earlier of
59
receipt by the Borrower of such notice or the date the Borrower
delivers (or was required to deliver) such Borrowing Base Certificate,
an Event of Default shall be deemed to have occurred hereunder.
All payments under this subsection (b) shall be applied to pay all amounts
of excess principal outstanding on the applicable Advances and any applicable
Reimbursement Obligations in accordance with Section 3.2., and the remainder, if
any, shall be paid to the Borrower or whomever else may be legally entitled to
such remainder.
Section 2.8. Late Charges.
So long as the Default Rate is not payable with respect to the Obligations
as provided in Section 2.4., if any payment required under this Agreement is not
paid within 15 days after it becomes due and payable, the Borrower shall pay a
late charge for late payment to compensate the Lenders for the loss of use of
funds and for the expenses of handling the delinquent payment, in an amount
equal to three percent (3.0%) of such delinquent payment. Such 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
Obligations hereunder occurs or is accelerated pursuant to Section 11.2., this
Section shall apply only to payments overdue prior to the time of such
acceleration. This Section shall not be deemed to be a waiver of the Lenders'
right to accelerate payment of any of the Obligations as permitted under the
terms of this Agreement.
Section 2.9. Provisions Applicable to LIBOR Advances; Limitation on Base Rate
Advances.
(a) Continuation of LIBOR Advances. Subject to the other terms and
conditions of this Agreement, including without limitation, the immediately
following subsection (c), the Borrower may on any Business Day, with respect to
any LIBOR Advance, elect to maintain such LIBOR Advance or any portion thereof
as a LIBOR Advance by selecting a new Interest Period for such LIBOR Advance.
Each new Interest Period selected under this Section shall commence on the last
day of the immediately preceding Interest Period. Each selection of a new
Interest Period shall be made by the Borrower giving to the Agent a Notice of
Continuation not later than 10:00 a.m. San Francisco time on the third Business
Day prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation shall be in the form of a Notice of Continuation, specifying (i)
the proposed date of such Continuation, (ii) the LIBOR Advance and portion
thereof subject to such Continuation and (iii) the duration of the selected
Interest Period, all of which shall be specified in such manner as is necessary
to comply with all limitations on Advances outstanding hereunder. Each
Continuation of LIBOR Advances shall be in an aggregate minimum amount of
$100,000 and integral multiples of $1,000 in excess thereof. Promptly after
receipt of a Notice of Continuation, the Agent shall notify each Lender of the
proposed Continuation. If the Borrower shall fail to select in a timely manner a
new Interest Period for any LIBOR Advance in accordance with this Section, such
Advance will automatically, on the last day of the current Interest Period
therefor, Continue as a LIBOR Advance having an Interest Period of one month.
(b) Conversion of LIBOR Advances. Subject to the other terms and conditions
of this Agreement, including without limitation, the immediately following
subsection (c), the Borrower may on any Business Day, upon the Borrower's giving
of a Notice of Conversion to the Agent, Convert all or a portion of an Advance
of one Type into an Advance of another Type. Any Conversion of a LIBOR Advance
into a Base Rate Advance shall be made on, and only on, the last day of an
Interest Period for such LIBOR Advance. Each such Notice of Conversion shall be
given not later than 10:00 a.m. San Francisco time one Business Day prior to the
date of any proposed Conversion into Base Rate Advances and three Business Days
prior to the date of any proposed Conversion into LIBOR Advances. Promptly after
receipt of a Notice of Conversion, the Agent shall notify each Lender of the
proposed Conversion. Subject to the restrictions specified above, each Notice of
Conversion shall be in the form of a Notice of Conversion specifying (a) the
requested date of such Conversion, (b) the Type of Advance to be Converted, (c)
60
the portion of such Type of Advance to be Converted, (d) the Type of Advance
such Advance is to be Converted into and (e) if such Conversion is into a LIBOR
Advance, the requested duration of the Interest Period of such Advance. Each
Conversion of Base Rate Advances into LIBOR Advances shall be in an aggregate
minimum amount of $100,000 and integral multiples of $1,000 in excess thereof.
(c) Conditions to Conversion and Continuation. The effectiveness of (i) the
Continuation of a LIBOR Advance and (ii) the conversion of a Base Rate Advance
into a LIBOR Advance, is subject to the condition that:
(x) none of the following exists as of the date of such
Continuation or Conversion and none would exist immediately after
giving effect thereto: (A) any Default under subsection (a), (b)(i),
(e) or (f) of Section 11.1., (B) any other Default as to which the
Agent has given the Borrower notice and (C) an Event of Default; and
(y) such Continuation or Conversion is not otherwise
prohibited under this Agreement.
(d) Limitation on Interest Period Duration During Default. Notwithstanding
anything to the contrary contained in this Agreement, no LIBOR Advance that may
otherwise be made hereunder shall have an Interest Period longer than one month
if any Default exists.
(e) Limitation on Base Rate Advances. Notwithstanding anything to the
contrary contained in this Agreement, the Borrower may only request Base Rate
Advances, or Convert LIBOR Advances into Base Rate Advances, under the following
circumstances:
(i) if the Borrower has requested a borrowing of LIBOR
Advances having an Interest Period of at least 7, but not more than 30,
days and at least one Lender did not consent to such Interest Period,
then the Borrower may request that such borrowing of Advances be Base
Rate Advances; provided, however, that the Borrower shall repay such
Base Rate Advances in full no later than 7 calendar days after such
Advances have been made; and
(ii) if the obligation of any Lender to make LIBOR Advances or
to Continue, or to Convert Base Rate Advances into, LIBOR Advances
shall be suspended pursuant to Section 5.2. or Section 5.3., then
Borrower may borrow Base Rate Advances as provided in Section 5.5.
Section 2.10. Notes.
The Revolving Advances made by each Lender shall, in addition to this
Agreement, also be evidenced by a promissory note of the Borrower substantially
in the form of Exhibit I (each a "Revolving Note"), payable to the order of such
Lender in a principal amount equal to the amount of its Commitment as originally
in effect and otherwise duly completed.
Section 2.11. Increase in Commitments.
The Borrower shall have the right to request increases in the aggregate
amount of the Commitments by providing notice to the Agent; provided, however,
that after giving effect to any such increases the aggregate amount of the
Commitments shall not exceed $350,000,000. Each such increase in the Commitments
must be an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof. The Agent shall promptly notify each Lender of any
such request. No Lender shall be obligated in any way whatsoever to increase its
Commitment. If a new Lender becomes a party to this Agreement, or if any
existing Lender agrees to increase its Commitment, such Lender shall on the date
it becomes a Lender hereunder (or in the case of an existing Lender, increases
its Commitment) (and as a condition thereto) purchase from the other Lenders its
61
Commitment Percentage (determined with respect to the Lenders' relative
Commitments and after giving effect to the increase of Commitments) of any
outstanding Loans, by making available to the Agent for the account of such
other Lenders, in same day funds, an amount equal to the sum of (A) the portion
of the outstanding principal amount of such Loans to be purchased by such Lender
plus (B) interest accrued and unpaid to and as of such date on such portion of
the outstanding principal amount of such Loans. The Borrower shall pay to the
Lenders amounts payable, if any, to such Lenders under Section 5.4. as a result
of the prepayment of any such Loans. No increase of the Commitments may be
effected under this Section (x) unless no Default or Event of Default is in
existence on the effective date of such increase, (y) unless the Borrower can
demonstrate to the reasonable satisfaction of the Agent that, after giving
effect to such increase, the Borrower will be in compliance with Section 10.1.
and (z) if any representation or warranty made or deemed made by the Borrower,
any other Loan Party or the Parent, in any Loan Document to which such Person is
a party is not (or would not be) materially true or correct on the effective
date of such increase except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and except for changes in factual circumstances specifically
and expressly permitted hereunder. In connection with any increase in the
aggregate amount of the Commitments pursuant to this Section (a) any Lender
becoming a party hereto shall execute such documents and agreements as the Agent
may reasonably request, (b) the Agent shall make appropriate arrangements so
that the Borrower executes and delivers (which the Borrower agrees to do) a new
or replacement Note, as appropriate, in favor of each new Lender, and any
existing Lender increasing its Commitment, in the amount of such Lender's
Commitment at the time of the effectiveness of the applicable increase in the
aggregate amount of Commitments and (c) the Borrower shall, and shall cause each
Subsidiary that owns any Collateral Property, to execute such documents,
instruments and agreements as the Agent may reasonably deem necessary or
appropriate to preserve, protect, or maintain the priority of, any Lien
purported to be granted under any of the Collateral Documents.
Section 2.12. Voluntary Reductions of the Commitment.
The Borrower may terminate or reduce the unused amount of the Commitments
(for which purpose use of the Commitments shall be deemed to include the
aggregate amount of Letter of Credit Liabilities and Swingline Loans) at any
time and from time to time without penalty or premium upon not less than 5
Business Days prior notice to the Agent of each such reduction or termination,
which notice shall specify the effective date thereof and, in the case of a
reduction, the amount of such reduction (which shall not be less than $5,000,000
and integral multiples of $1,000,000 in excess of that amount in the aggregate)
and shall be effective only upon receipt by the Agent. Promptly after receipt of
any such notice the Agent shall notify each Lender of the proposed termination
or Commitment reduction. The Commitments, once reduced or terminated pursuant to
this Section, may not be increased or reinstated. The Borrower shall pay all
interest and fees, on the Advances accrued to the date of such reduction or
termination of the Commitments to the Agent for the account of the Lenders,
including but not limited to any applicable compensation due to each Lender in
accordance with Section 5.4. of this Agreement.
Section 2.13. Extension of Termination Date.
The Borrower may request that the Agent and the Lenders extend the current
Termination Date by one year by executing and delivering to the Agent at least
90 days but not more than 180 days prior to the current Termination Date, a
written request for such extension. The Agent shall forward to each Lender a
copy of such request delivered to the Agent promptly upon receipt thereof.
Subject to satisfaction of the following conditions, the Termination Date shall
be extended for one year: (a) immediately prior to such extension and
immediately after giving effect thereto, no Default or Event of Default shall or
would exist and (b) the Borrower shall have paid the Fees payable under Section
3.5.(d). The Termination Date may be extended only one time pursuant to this
subsection.
62
Section 2.14. Expiration or Maturity Date of Letters of Credit Past Termination
Date.
If on the date the Commitments are terminated (whether voluntarily, by
reason of the occurrence of an Event of Default or otherwise), there are any
Letters of Credit outstanding hereunder, the Borrower shall, on such date,
either (a) pay to the Agent an amount of money equal to the Stated Amount of
such Letter(s) of Credit to be held by the Agent in an interest bearing account
as cash collateral for the Letter of Credit Liabilities relating to such
Letter(s) of Credit or (b) deliver to the Agent one or more letters of credit,
each to be in form and substance, and issued by financial institutions,
reasonably satisfactory to the Agent, having an aggregate stated amount at least
equal to the Stated Amount of all such Letters of Credit less any amounts paid
to the Agent to be held as cash collateral under the immediately preceding
clause (a). If a drawing pursuant to any such Letter of Credit occurs on or
prior to the expiration date of such Letter of Credit, the Borrower authorizes
the Agent to use the monies paid to the Agent as cash collateral to make payment
to the beneficiary with respect to such drawing or the payee with respect to
such presentment. If no drawing occurs on or prior to the expiration date of
such Letter of Credit, the Agent shall pay to the Borrower (or to whomever else
may be legally entitled thereto) the monies paid to the Agent to be held as cash
collateral with respect to such outstanding Letter of Credit, together with all
interest accrued thereon, on or before the date 5 days after the expiration date
of such Letter of Credit.
Section 2.15. Amount Limitations.
Notwithstanding any other term of this Agreement or any other Loan
Document, no Lender shall be required to make any Advance, and the Agent shall
not be required to issue a Letter of Credit, if immediately after the making of
such Advance or issuance of such Letter of Credit the aggregate principal amount
of all outstanding Advances together with the aggregate amount of all Letter of
Credit Liabilities would exceed either (a) the aggregate amount of the
Commitments or (b) the Borrowing Base.
(3) Article III. Payments, Fees and Other General Provisions
Section 3.1. Payments.
Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement, the
Notes or any other Loan Document shall be made in Dollars, in immediately
available funds, without setoff, deduction or counterclaim, to the Agent at the
Principal Office, not later than 11:00 a.m. San Francisco time on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day). Subject to Section 11.7., the Borrower shall, at the time of making each
payment under this Agreement or any other Loan Document, specify to the Agent
the amounts payable by the Borrower hereunder to which such payment is to be
applied. Each payment received by the Agent for the account of a Lender under
this Agreement or any Note shall be paid to such Lender by wire transfer of
immediately available funds in accordance with the wiring instructions provided
by such Lender to the Agent from time to time, for the account of such Lender at
the applicable Lending Office of such Lender. In the event the Agent fails to
pay such amounts to such Lender within one Business Day of receipt of such
amounts, the Agent shall pay interest on such amount at a rate per annum equal
to the Federal Funds Rate from time to time in effect. If the due date of any
payment under this Agreement or any other Loan Document would otherwise fall on
a day which is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall continue to accrue at the rate, if
any, applicable to such payment for the period of such extension.
63
Section 3.2. Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from
Lenders under Section 2.1. shall be made from the Lenders, each payment of the
fees under Sections 3.5.(a), (b) and (d) and the first sentence of Section
3.5.(c) shall be made for the account of the Lenders, and each termination or
reduction of the amount of the Commitments under Section 2.12. shall be applied
to the respective Commitments of the Lenders, pro rata according to the amounts
of their respective Commitments; (b) each payment or prepayment of principal of
Revolving Advances by the Borrower shall be made for the account of the Lenders
pro rata in accordance with the respective unpaid principal amounts of the
Revolving Advances held by them, provided that if immediately prior to giving
effect to any such payment in respect of any Revolving Advances the outstanding
principal amount of the Revolving Advances shall not be held by the Lenders pro
rata in accordance with their respective Commitments in effect at the time such
Advances were made, then such payment shall be applied to the Revolving Advances
in such manner as shall result, as nearly as is practicable, in the outstanding
principal amount of the Revolving Advances being held by the Lenders pro rata in
accordance with their respective Commitments; (c) each payment of interest on
Revolving Advances by the Borrower shall be made for the account of the Lenders
pro rata in accordance with the amounts of interest on such Advances then due
and payable to the respective Lenders; and (d) the Conversion and Continuation
of Revolving Advances of a particular Type (other than Conversions provided for
by Section 5.5.) shall be made pro rata among the Lenders according to the
amounts of their respective Revolving Advances and the then current Interest
Period for each Lender's portion of each Revolving Advance of such Type shall be
coterminous; and (e) the Lenders' participation in, and payment obligations in
respect of, Swingline Loans under Section 2.3., shall be in accordance with
their respective Commitment Percentages; and (f) the Lenders' participation in,
and payment obligations in respect of, Letters of Credit under Section 2.2.,
shall be pro rata in accordance with their respective Commitment Percentages.
All payments of principal, interest, fees and other amounts in respect of the
Swingline Loans shall be for the account of the Swingline Lender only (except to
the extent any Lender shall have acquired a participating interest in any such
Swingline Loan pursuant to Section 2.3.(e)).
Section 3.3. Sharing of Payments, Etc.
If a Lender shall obtain payment of any principal of, or interest on, any
Advance under this Agreement or shall obtain payment on any other Obligation
owing by the Borrower or any other Loan Party through the exercise of any right
of banker's lien or counterclaim or similar right or otherwise or through
voluntary prepayments directly to a Lender or other payments made by the
Borrower or any other Loan Party to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to the Lenders in
accordance with Section 3.2. or Section 11.7., such Lender shall promptly
purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Advances made by the other
Lenders or other Obligations owed to such other Lenders in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Lenders shall share the benefit of such payment (net of any
reasonable expenses which may actually be incurred by such Lender in obtaining
or preserving such benefit) in accordance with the requirements of Section 3.2.
or Section 11.7., as applicable. To such end, all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Advances or other Obligations owed to such other Lenders may,
subject to the limitations of Section 13.3., exercise all rights of set-off,
banker's lien, counterclaim or similar rights with the respect to such
participation as fully as if such Lender were a direct holder of Advances in the
amount of such participation. Nothing contained herein shall require any Lender
to exercise any such right or shall affect the right of any Lender to exercise
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.
64
Section 3.4. Several Obligations.
No Lender shall be responsible for the failure of any other Lender to make
an Advance or to perform any other obligation to be made or performed by such
other Lender hereunder, and the failure of any Lender to make an Advance or to
perform any other obligation to be made or performed by it hereunder shall not
relieve the obligation of any other Lender to make any Advance or to perform any
other obligation to be made or performed by such other Lender.
Section 3.5. Fees.
(a) Closing Fees. On the Effective Date, the Borrower agrees to pay to the
Agent and each Lender all loan fees as have been agreed to in writing by the
Borrower and the Agent or each Lender, as applicable.
(b) Annual Unused Fee. During the period from the Effective Date to but
excluding the Termination Date, the Borrower agrees to pay to the Agent for the
account of the Lenders an unused facility fee equal to the sum of the average
daily amount by which the aggregate amount of the Commitments (as they may be
reduced from time to time pursuant to Section 2.12. or increased from time to
time in accordance with this Agreement) exceeds the aggregate outstanding
principal balance of Revolving Advances and Letter of Credit Liabilities set
forth in the table below multiplied by the corresponding per annum rate
applicable to the entire excess:
Amount by Which Commitments Exceeds Revolving Advances and Unused Fee
Letter of Credit Liabilities
$0 to and including an amount equal to 50% of the aggregate .125%
amount of Commitments
Greater than an amount equal to 50% of the aggregate amount .250%
of Commitments
Such fee shall be computed on a daily basis for each calendar quarter during the
term of this Agreement. Such fee shall be payable in arrears on the first day of
each December, March, June or September, as applicable, immediately following
each such calendar quarter. Any such accrued and unpaid fee shall also be
payable on the Termination Date or any earlier date of termination of the
Commitments or reduction of the Commitments to zero.
(c) Letter of Credit Fees. The Borrower agrees to pay to the Agent for the
account of each Lender a letter of credit fee at a rate per annum equal to one
percent (1.0%) of the daily average Stated Amount of each Letter of Credit for
the period from and including the date of issuance of such Letter of Credit (x)
to and including the date such Letter of Credit expires or is terminated or (y)
to but excluding the date such Letter of Credit is drawn in full; provided,
however, in no event shall the aggregate amount of such fee in respect of any
Letter of Credit be less than $1,000. Such fee shall be nonrefundable and
payable in arrears (i) quarterly on the first day of January, April, July and
October, (ii) on the Termination Date, (iii) on the date the Commitments are
terminated or reduced to zero and (iv) thereafter from time to time on demand of
the Agent. The Borrower shall pay directly to the Agent from time to time on
demand all commissions, charges, costs and expenses in the amounts customarily
charged by the Agent from time to time in like circumstances with respect to the
issuance of each Letter of Credit, drawings, amendments and other transactions
relating thereto.
(d) Extension Fee. If, pursuant to Section 2.13., the Borrower exercises
its right to extend the Termination Date, the Borrower agrees to pay to the
Agent for the account of each Lender an extension fee equal to 0.15% of the
amount of such Lender's Commitment at such time. Such fee shall be paid to the
Agent prior to, and as a condition to, such extension.
65
(e) Administrative and Other Fees. The Borrower agrees to pay the
administrative and other fees of the Agent as may be agreed to in writing from
time to time.
Section 3.6. Computations.
Unless otherwise expressly set forth herein, any accrued interest on any
Advance, any Fees or other Obligations due hereunder shall be computed on the
basis of a year of 360 days and the actual number of days elapsed; provided,
however, fees in respect of Letters of Credit shall be computed on the basis of
a year of 365 or 366 days, as the case may be, and the actual number of days
elapsed.
Section 3.7. Usury.
In no event shall the amount of interest due or payable on the Advances or
other Obligations exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective Lender in writing that the Borrower elects to have
such excess sum returned to it forthwith. It is the express intent of the
parties hereto that the Borrower not pay and the Lenders not receive, directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower under Applicable Law. The parties hereto hereby
agree and stipulate that the only charge imposed upon the Borrower for the use
of money in connection with this Agreement is and shall be the interest
specifically described in Section 2.4.(a)(i) and (ii) and with respect to
Swingline Loans, in Section 2.3.(c). Notwithstanding the foregoing, the parties
hereto further agree and stipulate that all agency fees, syndication fees,
facility fees, letter of credit fees, underwriting fees, default charges, late
charges, funding or "breakage" charges, increased cost charges, attorneys' fees
and reimbursement for costs and expenses paid by the Agent or any Lender to
third parties or for damages incurred by the Agent or any Lender, are charges
made to compensate the Agent or any such Lender for underwriting or
administrative services and costs or losses performed or incurred, and to be
performed or incurred, by the Agent and the Lenders in connection with this
Agreement and shall under no circumstances be deemed to be charges for the use
of money. All charges other than charges for the use of money shall be fully
earned and nonrefundable when due.
Section 3.8. Defaulting Lenders.
If for any reason any Lender (a "Defaulting Lender") shall fail or refuse
to perform any of its obligations under this Agreement or any other Loan
Document to which it is a party within the time period specified for performance
of such obligation or, if no time period is specified, if such failure or
refusal continues for a period of 5 Business Days after notice from the Agent,
then, in addition to the rights and remedies that may be available to the Agent
or the Borrower under this Agreement or Applicable Law, such Defaulting Lender's
right to participate in the administration of the Advances, this Agreement and
the other Loan Documents, including without limitation, any right to vote in
respect of, to consent to or to direct any action or inaction of the Agent or to
be taken into account in the calculation of Requisite Lenders, shall be
suspended during the pendency of such failure or refusal. If for any reason a
Lender fails to make timely payment to the Agent of any amount required to be
paid to the Agent hereunder (without giving effect to any notice or cure
periods), in addition to other rights and remedies which the Agent or the
Borrower may have under the immediately preceding provisions or otherwise, the
Agent shall be entitled (i) to collect interest from such Defaulting Lender on
such delinquent payment for the period from the date on which the payment was
due until the date on which the payment is made at the Federal Funds Rate, (ii)
to withhold or setoff and to apply in satisfaction of the defaulted payment and
any related interest, any amounts otherwise payable to such Defaulting Lender
under this Agreement or any other Loan Document and (iii) to bring an action or
suit against such Defaulting Lender in a court of competent jurisdiction to
recover the defaulted amount and any related interest. The Agent shall give the
66
Borrower prompt notice of the failure of any Lender to make available to the
Agent the proceeds of any Advance required to be made available by such Lender.
Any amounts received by the Agent in respect of a Defaulting Lender's Advances
shall not be paid to such Defaulting Lender and shall be held by the Agent and
paid to such Defaulting Lender upon the Defaulting Lender's curing of its
default.
Section 3.9. Taxes.
(a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Advances and all other Obligations shall be made free and clear
of and without deduction for any present or future excise, stamp or other taxes,
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Agent or a Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Agent or such Lender pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any taxes imposed on or
measured by any Lender's assets, net income, receipts or branch profits and (iv)
any taxes arising after the Agreement Date solely as a result of or attributable
to a Lender changing its designated Lending Office after the date such Lender
becomes a party hereto (such non-excluded items being collectively called
"Taxes"). If any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
Applicable Law, then the Borrower will:
(i) pay directly to the relevant Governmental Authority the
full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or
amounts as is necessary to ensure that the net amount actually received
by the Agent or such Lender will equal the full amount that the Agent
or such Lender would have received had no such withholding or deduction
been required.
(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to
the appropriate Governmental Authority or fails to remit to the Agent, for its
account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
(c) Tax Forms. Prior to the date that any Lender or Participant organized
under the laws of a jurisdiction outside the United States of America becomes a
party hereto, such Person shall deliver to the Borrower and the Agent such
certificates, documents or other evidence, as required by the Internal Revenue
Code or Treasury Regulations issued pursuant thereto (including Internal Revenue
Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms),
properly completed, currently effective and duly executed by such Lender or
Participant establishing that payments to it hereunder and under the Notes are
(i) not subject to United States Federal backup withholding tax and (ii) not
subject to United States Federal withholding tax under the Code. Each such
Lender or Participant shall (x) deliver further copies of such forms or other
appropriate certifications on or before the date that any such forms expire or
become obsolete and after the occurrence of any event requiring a change in the
most recent form delivered to the Borrower and (y) obtain such extensions of the
67
time for filing, and renew such forms and certifications thereof, as may be
reasonably requested by the Borrower or the Agent. The Borrower shall not be
required to pay any amount pursuant to last sentence of subsection (a) above to
any Lender or Participant that is organized under the laws of a jurisdiction
outside of the United States of America or the Agent, if it is organized under
the laws of a jurisdiction outside of the United States of America, if such
Lender, Participant or the Agent, as applicable, fails to comply with the
requirements of this subsection. If any such Lender or Participant fails to
deliver the above forms or other documentation, then the Agent may withhold from
such payment to such Lender such amounts as are required by the Code. If any
Governmental Authority asserts that the Agent did not properly withhold or
backup withhold, as the case may be, any tax or other amount from payments made
to or for the account of any Lender, such Lender shall indemnify the Agent
therefor, including all penalties and interest, any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, and costs
and expenses (including all fees and disbursements of any law firm or other
external counsel and the allocated cost of internal legal services and all
disbursements of internal counsel) of the Agent. The obligation of the Lenders
under this Section shall survive the termination of the Commitments, repayment
of all Obligations and the resignation or replacement of the Agent.
(4) Article IV. Collateral Properties
Section 4.1. Eligibility of Properties.
(a) Initial Collateral Properties. As of the date hereof, the Lenders have
approved for inclusion in calculations of the Borrowing Base, the Properties
identified on Schedule 4.1. Upon satisfaction on or after the Effective Date of
the conditions set forth in Section 6.3. with respect to such Properties, such
Properties shall be deemed to be Collateral Properties.
(b) Additional Collateral Properties. If after the Effective Date the
Borrower desires that the Lenders include any additional Property as a
Collateral Property in calculations of the Borrowing Base, the Borrower shall so
notify the Agent in writing. No Property will be evaluated by the Lenders unless
and until the Borrower delivers to the Agent the following, in form and
substance satisfactory to the Agent:
(i) An executive summary of the Property including, at a
minimum, the following information relating to such Property: (A) a
description of such Property, such description to include the age,
location, site plan and current occupancy rate of such Property; (B) if
such Property is being acquired, the purchase price paid or to be paid
for such Property; and (C) the current projected capital plans and, if
applicable, current renovation plans for such Property;
(ii) Historical operating statements for such Property to the
extent reasonably available to the Borrower, and such projections and
other information concerning the anticipated operation of such Property
as the Agent may reasonably request; and
(iii) A current rent roll for such Property, and a three-year
occupancy history of such Property to the extent reasonably available
to the Borrower.
Upon receipt of the foregoing documents and information, the Agent shall
promptly forward a copy thereof to each Lender. Within 10 Business Days from the
date on which a Lender receives all such documents and information from the
Agent, such Lender shall notify the Agent whether or not such Lender
conditionally approves of such Property as a Collateral Property subject only to
such Lender's approval of the applicable Appraisal and other items as provided
in the immediately following subsection. If a Lender fails to give such notice
prior to the expiration of such 10-day period, such Lender shall be deemed to
have conditionally approved such Property as a Collateral Property. If the
Requisite Lenders (which for purposes of this subsection (b) must include the
Lender then acting as Agent) have not conditionally approved such Property as an
Collateral Property, the approval process shall terminate.
68
(c) Appraisal; Final Approval. Upon the earlier of (i) written request by
the Borrower or (ii) the Requisite Lenders' conditional approval of a Property
as a Collateral Property pursuant to the immediately preceding subsection (b),
the Agent shall commission, at the Borrower's expense, an Appraisal of such
Property, to be in form and substance satisfactory to the Agent. Within 7
Business Days of receipt of such Appraisal, the Agent shall review such
Appraisal and shall determine the Appraised Value of such Property. If after
such review and determination the Agent is unwilling to recommend acceptance of
such Property as a Collateral Property, the Agent shall promptly notify the
Borrower and the Lenders and the consideration by the Agent and the Lenders of
such Property shall cease. If after such review and determination the Agent
remains prepared to recommend acceptance of such Property as a Collateral
Property, the Agent shall promptly forward a copy of such Appraisal to the
Lenders together with notice of such Appraised Value. Each Lender which
previously conditionally approved such Property as a Collateral Property shall
notify the Agent in writing whether or not such Lender accepts such Appraisal
and Appraised Value within 7 Business Days from the date of receipt by such
Lender of such Appraisal and Appraised Value. If a Lender fails to give such
notice prior to the expiration of such 7-Business Day period, such Lender shall
be deemed to have accepted and approved such Appraisal and Appraised Value. Such
Property shall become a Collateral Property upon approval of the Requisite
Lenders (which for purposes of this subsection (c) must include the Lender then
acting as Agent) and upon execution and delivery to the Agent of the documents
and items described in Section 6.3., and such other items or documents as may be
appropriate under the circumstances, and satisfaction of all other closing
requirements reasonably imposed by the Agent.
Section 4.2. Release of Properties.
The Borrower may request, upon not less than 10 Business Days prior notice
to the Agent, that any Collateral Property, or portion thereof, be released from
the Liens created by the Collateral Documents applicable thereto, which release
(the "Property Release") shall be effected by the Agent if the Agent determines
all of the following conditions are satisfied as of the date of such Property
Release:
(a) subject to the terms of Section 11.4., no Default or Event of Default
exists or will exist immediately after giving effect to such Property Release
and the reduction in the Borrowing Base by reason of the release of such
Property;
(b) the Borrower shall have delivered to the Agent a Borrowing Base
Certificate and the Agent shall have determined to its satisfaction (which
determination may be based on Appraisals ordered pursuant to Section
4.3.(b)(iii)), that the outstanding principal balance of the Advances, together
with the Letter of Credit Liabilities, will not exceed the Borrowing Base after
giving effect to such request and any prepayment to be made and/or the
acceptance of any Property as an additional or replacement Collateral Property
to be given concurrently with such request;
(c) the Borrower shall have delivered to the Agent all documents and
instruments reasonably requested by the Agent in connection with such Property
Release including, without limitation, the following:
(i) in the case of the release of a portion of a Collateral
Property, a survey of such portion;
(ii) the quitclaim deed, release, partial release or other
instrument to be used to effect such Property Release; and
69
(iii) an appropriate endorsement to the mortgagee title
insurance policy in effect with respect to the affected Collateral
Property;
(d) after giving effect to such Property Release, each of Post Oak Mall,
Georgia Square Mall, Madison Square Mall, and Richland Mall (or any regional
mall which is a Collateral Property and is determined by the Requisite Lenders
to be of equivalent financial strength to any of the foregoing malls), will
remain as a Collateral Property in the Borrowing Base; provided, however, if at
the time of such Property Release, the Collateral Properties consist only of the
malls referred to above, then the provisions of this clause (d) shall not apply;
and
(e) the Agent shall have reasonably determined that the market values of
the remaining Collateral Properties have not materially deteriorated since the
respective dates of acceptance as Collateral Properties.
In connection with any Property Release of an entire Collateral Property
owned by a Subsidiary, the Agent shall release such Subsidiary from the Guaranty
to which it is a party so long as no Default or Event of Default shall then be
in existence or would occur as a result of such release. Except as set forth in
this Section 4.2., no Collateral Property shall be released from the Liens
created by the Collateral Documents applicable thereto.
Section 4.3. Frequency of Appraisals.
The Appraised Value of a Collateral Property shall be determined or
redetermined, as applicable, under each of the following circumstances:
(a) In connection with the acceptance of a Property as a Collateral
Property, the Agent will determine the Appraised Value thereof as provided in
Section 4.1.; or
(b) From time to time upon at least 5 Business Days notice to the Borrower
and at the Borrower's expense (except as provided below), the Agent may (and
shall at the direction of the Requisite Lenders) redetermine the Appraised Value
of a Collateral Property (based on a new Appraisal obtained by the Agent) in any
of the following circumstances:
(i) if a material adverse change occurs with respect to such
Collateral Property, including, without limitation, a material
deterioration in the Net Operating Income of such Property, a major
casualty at such Property that is not fully covered by insurance, a
material condemnation of any part of such Property or a material
decrease in the leasing level of such Property; or
(ii) at the Lenders' expense, if necessary in order to comply
with FIRREA or other Applicable Law relating to the Agent or the
Lenders; or
(iii) at the Lenders' expense, if the Agent determines an
Appraisal of such Property is necessary in connection with its
determination under Section 4.2.(b) regarding the release of a
Collateral Property; or
(c) At any time and from time to time but no more than once prior to the
initial Termination Date, the Agent may (and shall at the written direction of
the Requisite Lenders) redetermine the Appraised Value of each Collateral
Property (based on a new Appraisal obtained by the Agent), all at the Borrower's
expense; or
(d) At any time and from time to time but no more than once during any
one-year period, the Agent may (and shall at the written direction of the
Requisite Lenders) redetermine the Appraised Value of each Collateral Property
(based on a new Appraisal obtained by the Agent), all at the Lenders' expense.
70
Section 4.4. Frequency of Calculations of Borrowing Base.
Initially, the Borrowing Base shall be the amount set forth as such in the
Borrowing Base Certificate delivered under Section 6.1. Thereafter, the
Borrowing Base shall be the amount set forth as such in the Borrowing Base
Certificate most recently delivered under Section 9.4.(b) or 4.2.(b). Subject to
Section 9.4.(b), any increase in the Borrowing Base shall become effective as of
the next determination of the Borrowing Base as provided in this Section,
provided that prior to such date of determination (a) if such increase is the
result of an increase in (i) the Appraised Value of a Collateral Property, the
Requisite Lenders shall have given their written approval of such increase or
(ii) the Permanent Loan Estimate of a Collateral Property, the applicable
Borrowing Base Certificate substantiates such increase and (b) the Borrower
delivers to the Agent the following: (i) if such increase is the result of an
increase in the Appraised Value of any Collateral Property that is not located
in a Tie-In Jurisdiction, an endorsement to the title insurance policy in favor
of the Agent with respect to each such Collateral Property increasing the
coverage amount thereof as related to such Collateral Property to not less than
100% of the Appraised Value for such Collateral Property and (ii) if any such
Collateral Property is located in a Tie-In Jurisdiction, an endorsement to the
title insurance policy in favor of the Agent with respect to each such
Collateral Property increasing the coverage amount thereof as related to such
Collateral Property to not less than the portion of the Borrowing Base
attributable to such Collateral Property, as well as endorsements to all other
existing title insurance policies issued to the Agent with respect to all other
Collateral Properties located in Tie-In Jurisdictions reflecting an increase in
the aggregate insured amount under the "tie-in" endorsements to an amount equal
to the Borrowing Base (including each Collateral Property to which the increase
in the Borrowing Base is attributable) but in no event in an amount in excess of
the aggregate amount of the Commitments.
(5) Article V. Yield Protection, Etc.
Section 5.1. Additional Costs; Capital Adequacy.
(a) Additional Costs. The Borrower shall promptly pay to the Agent for the
account of a Lender from time to time such amounts as such Lender may reasonably
determine to be necessary to compensate such Lender for any costs incurred by
such Lender that it reasonably determines are attributable to its making or
maintaining of any LIBOR Advances or its obligation to make any LIBOR Advances
hereunder, any reduction in any amount receivable by such Lender under this
Agreement or any of the other Loan Documents in respect of any of such LIBOR
Advances or such obligation or the maintenance by such Lender of capital in
respect of its LIBOR Advances or its Commitment (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that: (i) changes the basis of taxation of
any amounts payable to such Lender under this Agreement or any of the other Loan
Documents in respect of any of such LIBOR Advances or its Commitment (other than
taxes imposed on or measured by the overall net income of such Lender or of its
Lending Office for any of such LIBOR Advances by the jurisdiction in which such
Lender has its principal office or such Lending Office), or (ii) imposes or
modifies any reserve, special deposit or similar requirements (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve System
or other similar reserve requirement applicable to any other category of
liabilities or category of extensions of credit or other assets by reference to
which the interest rate on LIBOR Advances is determined) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, or other credit extended by, or any other acquisition of funds
by such Lender (or its parent corporation), or any commitment of such Lender
(including, without limitation, the Commitment of such Lender hereunder) or
(iii) has or would have the effect of reducing the rate of return on capital of
such Lender to a level below that which such Lender could have achieved but for
such Regulatory Change (taking into consideration such Lender's policies with
respect to capital adequacy).
71
(b) Lender's Suspension of LIBOR Advances. Without limiting the effect of
the provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Advances is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes LIBOR Advances or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert Base Rate Advances
into, LIBOR Advances hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provision of Section 5.5. shall
apply).
(c) Additional Costs in Respect of Letters of Credit. Without limiting the
obligations of the Borrower under the preceding subsections of this Section (but
without duplication), if as a result of any Regulatory Change or any risk-based
capital guideline or other requirement heretofore or hereafter issued by any
Governmental Authority there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit, capital adequacy or similar requirement against
or with respect to or measured by reference to Letters of Credit and the result
shall be to increase the cost to the Agent of issuing (or any Lender of
purchasing participations in) or maintaining its obligation hereunder to issue
(or purchase participations in) any Letter of Credit or reduce any amount
receivable by the Agent or any Lender hereunder in respect of any Letter of
Credit, then, upon demand by the Agent or such Lender, the Borrower shall pay
immediately to the Agent for its account or the account of such Lender, as
applicable, from time to time as specified by the Agent or a Lender, such
additional amounts as shall be sufficient to compensate the Agent or such Lender
for such increased costs or reductions in amount.
(d) Notification and Determination of Additional Costs. Each of the Agent
and each Lender, as the case may be, agrees to notify the Borrower of any event
occurring after the Agreement Date entitling the Agent or such Lender to
compensation under any of the preceding subsections of this Section as promptly
as practicable; provided, however, that if the Agent or a Lender shall fail to
give such notice within 45 days after it obtains actual knowledge of such event,
then the Agent or such Lender, as the case may be, shall only be entitled to
compensation under any of the preceding subsections for compensable amounts
attributable to such event arising following the date the Agent or such Lender,
as the case may be, obtains actual knowledge of such event. The Agent and each
Lender, as the case may be, agrees to furnish to the Borrower (and in the case
of a Lender to the Agent as well) a certificate setting forth the basis and
amount of each request for compensation under this Section. Determinations by
the Agent or such Lender, as the case may be, of the effect of any Regulatory
Change shall be conclusive, provided that such determinations are made on a
reasonable basis and in good faith.
Section 5.2. Suspension of LIBOR Advances.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR for any Interest Period:
(a) the Agent reasonably determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of LIBOR are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest for
LIBOR Advances as provided herein or is otherwise unable to determine LIBOR, or
72
(b) the Agent reasonably determines (which determination shall be
conclusive) that the relevant rates of interest referred to in the definition of
LIBOR upon the basis of which the rate of interest for LIBOR Advances for such
Interest Period is to be determined are not likely to adequately cover the cost
to any Lender of making or maintaining LIBOR Advances for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Advances, Continue LIBOR
Advances or Convert Advances into LIBOR Advances and the Borrower shall, on the
last day of each current Interest Period for each outstanding LIBOR Advance,
either prepay such Advance or Convert such Advance into a Base Rate Advance.
Section 5.3. Illegality.
Notwithstanding any other provision of this Agreement, if any Lender shall
determine (which determination shall be conclusive and binding) that it is
unlawful for such Lender to honor its obligation to make or maintain LIBOR
Advances hereunder, then such Lender shall promptly notify the Borrower thereof
(with a copy of such notice to the Agent) and such Lender's obligation to make
or Continue, or to Convert Revolving Advances of any other Type into, LIBOR
Advances shall be suspended until such time as such Lender may again make and
maintain LIBOR Advances (in which case the provisions of Section 5.5. shall be
applicable).
Section 5.4. Compensation.
The Borrower shall pay to the Agent for account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient to compensate such Lender for any loss, cost or expense that such
Lender reasonably determines is attributable to:
(a) any payment or prepayment (whether mandatory or optional) of a LIBOR
Advance or Conversion of a LIBOR Advance, made by such Lender for any reason
(including, without limitation, acceleration) on a date other than the last day
of the Interest Period for such Advance; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the applicable conditions precedent specified
in Article 6.2. to be satisfied) to borrow a LIBOR Advance from such Lender on
the date for such borrowing, or to Convert a Base Rate Advance into a LIBOR
Advance or Continue a LIBOR Advance on the requested date of such Conversion or
Continuation.
Not in limitation of the foregoing, such compensation shall include,
without limitation; in the case of a LIBOR Advance, an amount equal to the then
present value of (A) the amount of interest that would have accrued on such
LIBOR Advance for the remainder of the Interest Period at the rate applicable to
such LIBOR Advance, less (B) the amount of interest that would accrue on the
same LIBOR Advance for the same period if LIBOR were set on the date on which
such LIBOR Advance was repaid, prepaid or Converted or the date on which the
Borrower failed to borrow, Convert or Continue such LIBOR Advance, as
applicable, calculating present value by using as a discount rate LIBOR quoted
on such date. Upon Borrower's request (made through the Agent), any Lender
seeking compensation under this Section shall provide the Borrower with a
statement setting forth the basis for requesting such compensation and the
method for determining the amount thereof. Any such statement shall be
conclusive absent manifest error.
73
Section 5.5. Treatment of Affected Advances.
If the obligation of any Lender to make LIBOR Advances or to Continue, or
to Convert Base Rate Advances into, LIBOR Advances shall be suspended pursuant
to Section 5.2. or Section 5.3. then such Lender's LIBOR Advances shall be
automatically Converted into Base Rate Advances on the last day(s) of the then
current Interest Period(s) for LIBOR Advances (or, in the case of a Conversion
required by Section 5.2. on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 5.1.,
Section 5.2. or 5.3. that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's LIBOR Advances have been so Converted,
all payments and prepayments of principal that would otherwise be applied to
such Lender's LIBOR Advances shall be applied instead to its Base Rate Advances;
and
(b) all Revolving Advances that would otherwise be made or Continued by
such Lender as LIBOR Advances shall be made or Continued instead as Base Rate
Advances, and all Base Rate Advances of such Lender that would otherwise be
Converted into LIBOR Advances shall remain as Base Rate Advances.
If such Lender gives notice to the Borrower (with a copy to the Agent) that
the circumstances specified in Section 5.1. or 5.3. that gave rise to the
Conversion of such Lender's LIBOR Advances pursuant to this Section no longer
exist (which such Lender agrees to do promptly upon such circumstances ceasing
to exist) at a time when LIBOR Advances made by other Lenders are outstanding,
then such Lender's Base Rate Advances shall be automatically Converted, on the
first day(s) of the next succeeding Interest Period(s) for such outstanding
LIBOR Advances, to the extent necessary so that, after giving effect thereto,
all Advances held by the Lenders holding LIBOR Advances and by such Lender are
held pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.
Section 5.6. Affected Lenders.
If (a) a Lender (other than the Lender then acting as the Agent) requests
compensation pursuant to Section 3.9. or 5.1., and the Requisite Lenders are not
also doing the same, or (b) the obligation of any Lender (other than the Lender
then acting as the Agent) to make LIBOR Advances that are Revolving Advances or
to Continue, or to Convert Base Rate Advances into, LIBOR Advances that are
Revolving Advances shall be suspended pursuant to Section 5.1.(b) or 5.3. but
the obligation of the Requisite Lenders shall not have been suspended under such
Sections, then, so long as there does not then exist any Default or Event of
Default, the Borrower may demand that such Lender (the "Affected Lender"), and
upon such demand the Affected Lender shall promptly, assign its Commitments to
an Eligible Assignee subject to and in accordance with the provisions of Section
13.5.(c) for a purchase price equal to the aggregate principal balance of
Advances then owing to the Affected Lender plus any accrued but unpaid interest
thereon and accrued but unpaid fees owing to the Affected Lender. Each of the
Agent and the Affected Lender shall reasonably cooperate in effectuating the
replacement of such Affected Lender under this Section, but at no time shall the
Agent, such Affected Lender nor any other Lender be obligated in any way
whatsoever to initiate any such replacement or to assist in finding an Eligible
Assignee. The exercise by the Borrower of its rights under this Section shall be
at the Borrower's sole cost and expenses and at no cost or expense to the Agent,
the Affected Lender or any of the other Lenders; provided, however, the Borrower
shall not be obligated to reimburse or otherwise pay an Affected Lender's
administrative or legal costs incurred as a result of the Borrower's exercise of
its rights under this Section. The terms of this Section shall not in any way
limit the Borrower's obligation to pay to any Affected Lender compensation owing
to such Affected Lender pursuant to Section 3.9. or 5.1. with respect to any
matters or events existing on or prior to the date an Affected Lender ceases to
be a party to this Agreement.
74
Section 5.7. Change of Lending Office.
Each Lender agrees that it will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate an alternate
Lending Office with respect to any of its Advances affected by the matters or
circumstances described in Sections 3.9., 5.1. or 5.3. to reduce the liability
of the Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such Lender
in its sole discretion, except that such Lender shall have no obligation to
designate a Lending Office located in the United States of America.
Section 5.8. Assumptions Concerning Funding of LIBOR Advances.
Calculation of all amounts payable to a Lender under this Article V. shall
be made as though such Lender had actually funded LIBOR Advances through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Advances in an amount equal to the amount of the LIBOR
Advances and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Advances in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article V.
(6) Article VI. Conditions Precedent
Section 6.1. Initial Conditions Precedent.
The obligation of the Lenders to effect or permit the occurrence of the
first Credit Event hereunder; whether as the making of an Advance or the
issuance of a Letter of Credit, is subject to the satisfaction or waiver of the
following conditions precedent:
(a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
(i) counterparts of this Agreement executed by each of the
parties hereto;
(ii) Revolving Notes executed by the Borrower, payable to each
Lender and complying with the terms of Section 2.10.; and the Swingline
Note executed by the Borrower;
(iii) the Parent Guaranty executed by the Parent;
(iv) an opinion of counsel of the Parent and the Loan Parties,
addressed to the Agent and the Lenders and covering the matters set
forth in Exhibit L;
(v) the certificate or articles of incorporation, articles of
organization, certificate of limited partnership, declaration of trust
or other comparable organizational instrument (if any) of each Loan
Party and the Parent certified as of a recent date by the Secretary of
State of the state of formation of such Person or by the Secretary or
Assistant Secretary (or other individual performing similar functions);
(vi) a certificate of good standing (or certificate of similar
meaning) with respect to each Loan Party and the Parent issued as of a
recent date by the Secretary of State of the state of formation of each
such Person and certificates of qualification to transact business or
other comparable certificates issued by each Secretary of State (and
any state department of taxation, as applicable) of each state in which
such Person is required to be so qualified;
75
(vii) a certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar functions)
of each Loan Party and the Parent with respect to each of the officers
of such Person authorized to execute and deliver the Loan Documents to
which such Person is a party, and in the case of the Borrower,
authorized to execute and deliver on behalf of the Borrower Notices of
Borrowing, Notices of Swingline Borrowing, requests for Letters of
Credit, Notices of Conversion and Notices of Continuation;
(viii) copies certified by the Secretary or Assistant
Secretary of each Loan Party and the Parent (or other individual
performing similar functions) of (i) the by-laws of such Person, if a
corporation, the operating agreement, if a limited liability company,
the partnership agreement, if a limited or general partnership, or
other comparable document in the case of any other form of legal entity
and (ii) all corporate, partnership, member or other necessary action
taken by such Person to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
(ix) a Borrowing Base Certificate calculated as of September
30, 2002;
(x) a Compliance Certificate calculated for the Borrower's
fiscal quarter ending September 30, 2002;
(xi) with respect to each Property identified on Schedule
4.1., each of the items referred to in Section 6.3. required to be
delivered in connection with any Collateral Property (except to the
extent the Agent waives any such requirement);
(xii) evidence that the Fees then due and payable under
Section 3.5., together with all other fees, expenses and reimbursement
amounts due and payable to the Agent and any of the Lenders have been
paid;
(xiii) evidence that the Jacobs Credit Agreement has been
terminated and all amounts owing thereunder have been paid in full;
(xiv) a fully-executed copy of each of the Existing Debt
Agreements, including all amendments thereto, certified as true,
correct and complete by an authorized officer of the Borrower;
(xv) each of the Existing Debt Assignment Agreements executed
and delivered by the parties thereto;
(xvi) the originals of each outstanding promissory note held
by any Existing Lender and evidencing any of the indebtedness owing
under any of the Existing Debt Agreements, duly endorsed to the order
of the Agent;
(xvii) copies (or originals, if available) of each of the
Existing Security Documents, including all amendments thereto, showing
all recording information thereon, certified as true, correct and
complete by an authorized officer of the Borrower;
(xviii) assignments of each of the Existing Security Documents
executed by the applicable Existing Lender;
(xix) such other documents and instruments as the Agent may
reasonably request; and
76
(b) In the good faith judgment of the Agent:
(i) there shall not have occurred or become known to the Agent
or any of the Lenders any event, condition, situation or status since
the date of the information contained in the financial and business
projections, budgets, pro forma data and forecasts concerning the
Parent, the Borrower and their Subsidiaries delivered to the Agent and
the Lenders prior to the Agreement Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be expected to (A) result in a
Material Adverse Effect or (B) restrain or enjoin, impose materially
burdensome conditions on, or otherwise materially and adversely affect,
the ability of any Loan Party or the Parent to fulfill its obligations
under the Loan Documents to which it is a party; and
(iii) the Parent, the Borrower and the other Loan Parties
shall have received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the occurrence
of any default under, conflict with or violation of (A) any Applicable
Law or (B) any agreement, document or instrument to which any Loan
Party or the Parent is a party or by which any of them or their
respective properties is bound, except for such approvals, consents,
waivers, filings and notices the receipt, making or giving of which, or
the failure to make, give or receive which, would not reasonably be
likely to (1) have a Material Adverse Effect, or (2) restrain or
enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of the Borrower, or any
other Loan Party or the Parent to fulfill its obligations under the
Loan Documents to which it is a party.
Section 6.2. Conditions Precedent to All Advances and Letters of Credit.
The obligations of (i) Lenders to make any Advances and (ii) the Agent to
issue Letters of Credit, are each subject to the further conditions precedent
that:
(a) in the case of the making of an Advance, (x) no Default under
subsections (a), (b)(i), (e) or (f) of Section 11.1., (y) no other Default as to
which the Agent has given the Borrower notice and (z) no Event of Default, shall
exist as of the date of the making of such Advance or would exist immediately
after giving effect thereto;
(b) in the case of the issuance of a Letter of Credit, no Default or Event
of Default shall exist as of the date of the issuance of such Letter of Credit
or would exist immediately after giving effect thereto
(c) none of the conditions described in Section 2.15. would exist after
giving effect to the making of such Advance or Swingline Loan or the issuance of
such Letter of Credit;
(d) the representations and warranties made or deemed made by the Parent,
the Borrower and each other Loan Party in the Loan Documents to which any of
them is a party, shall be true and correct on and as of the date of the making
of such Advance or date of issuance of such Letter of Credit with the same force
and effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically and expressly permitted hereunder; and
77
(e) in the case of the borrowing of Revolving Advances, the Agent shall
have received a timely Notice of Borrowing, or in the case of a Swingline Loan,
the Swingline Lender shall have received a timely Notice of Swingline Borrowing.
The occurrence of each Credit Event shall constitute a certification by the
Borrower to the effect set forth in the immediately preceding subsections (a)
through (d) (both as of the date of the giving of notice relating to such Credit
Event and, unless the Borrower otherwise notifies the Agent prior to the date of
such Credit Event, as of the date of the occurrence of such Credit Event). In
addition, the Borrower shall be deemed to have represented to the Agent and the
Lenders at the time such Advance or Swingline Loan is made or such Letter of
Credit is issued that to the best of the Borrower's knowledge all conditions to
the making of such Advance or Swingline Loan or issuing of such Letter of Credit
contained in this Article VI. have been satisfied.
Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.
No Property shall become a Collateral Property until the Borrower shall
have (or shall have caused to be) executed and delivered to the Agent all
documents and instruments required under Section 4.1., the Requisite Lenders
shall have approved of such Property as provided in such Section, and the
Borrower shall have (or shall cause to be) executed and delivered to the Agent
the following instruments, documents and agreements in respect of such Property,
each to be in form and substance reasonably satisfactory to the Agent (and the
Requisite Lenders (which for purposes of this Section must include the Lender
then acting as Agent) in the case of the items described in the immediately
following subsection (n)):
(a) a Security Deed encumbering such Property in favor of the Agent for the
benefit of the Lenders, the form of such Security Deed to be modified as
appropriate to conform to the Applicable Laws of the jurisdiction in which such
Property is located;
(b) if requested by the Agent, an Assignment of Leases and Rents, the form
of such Assignment of Leases and Rents to be modified as appropriate to conform
to the Applicable Laws of the jurisdiction in which such Property is located;
(c) an Environmental Indemnity Agreement substantially in the form of
Exhibit C;
(d) copies of all tenant leases with respect to such Property (or, if
acceptable to the Agent, a summary of the terms thereof);
(e) estoppel certificates and subordination, non-disturbance and attornment
agreements from each tenant leasing any of such Property under a Major Lease
(any such certificate or agreement substantially in the form of an estoppel
certificate or subordination, non-disturbance and attornment agreement
previously provided by such tenant and accepted by the Agent in connection with
the Existing Credit Agreement, shall, subject to appropriate conforming changes,
be in acceptable form for purposes of this Agreement);
(f) copies of all Property Management Agreements and all other Major
Property-Level Agreement, if any, relating to such Property;
(g) a Property Management Contract Assignment covering the Property
Management Agreement, if any, for such Property and if requested by the Agent,
collateral assignments of the other Major Property-Level Agreements relating to
such Property;
78
(h) an ALTA 1992 Form mortgagee's Policy of Title Insurance or other form
acceptable to the Agent in favor of the Agent for the benefit of the Lenders
with respect to such Property, including endorsements with respect to such items
of coverage as the Agent may reasonably request and which endorsements are
available, in the amount of coverage required in the following sentence, issued
by Fidelity National Title Insurance Co. or other title insurance company
acceptable to the Agent and with coinsurance or reinsurance (with direct access
agreements) with title insurance companies reasonably acceptable to the Agent,
showing the fee simple title (or leasehold estate, if applicable) to the land
and improvements described in the applicable Security Deed as vested in the
Borrower or a Subsidiary, and insuring that the Lien granted by such Security
Deed is a valid Lien against said property, subject only to such restrictions,
encumbrances, easements, reservations and other matters as are reasonably
acceptable to the Agent. The amount of coverage under such policy must equal (i)
100% of the Appraised Value of such Property (excluding the value of any
personal property located at such Property) if such Property is not located in a
Tie-In Jurisdiction or (ii) the amount of the Borrowing Base attributable to
such Property at such time if such Property is located in a Tie-In Jurisdiction;
(i) copies of all documents of record reflected in Schedule B of such
Policy of Title Insurance and a copy of the most recent real estate tax bill and
notice of assessment, if available;
(j) if such Property is located in a Tie-In Jurisdiction, endorsements to
all other existing title insurance policies issued to the Agent with respect to
all other Properties located in Tie-In Jurisdictions reflecting an increase in
the aggregate insured amount under the "tie-in" endorsements to an amount equal
to the aggregate amount of the Borrowing Base attributable to all such
Properties (including the Property to be included as a Collateral Property) but
in no event in an amount in excess of the aggregate amount of the Commitments;
(k) UCC, tax, judgment and lien search reports with respect to the Borrower
(or Subsidiary if the Property is owned by a Subsidiary) and such Property in
all necessary or appropriate jurisdictions indicating that there are no Liens of
record on such Property or any of the Collateral relating thereto other than
Permitted Liens;
(l) a current or currently certified survey of such Property certified by a
surveyor licensed in the applicable jurisdiction to have been prepared in
accordance with the then effective Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys;
(m) if not adequately covered by the survey certification provided for
above, a certificate from a licensed engineer or other professional satisfactory
to the Agent that such Property is not located in a Special Flood Hazard Area as
defined by the Federal Insurance Administration;
(n) a "Phase I" environmental assessment of such Property not more than 12
months old, which report (1) has been prepared by an environmental engineering
firm acceptable to the Agent and (2) complies with the requirements contained in
the Agent's guidelines adopted from time to time by the Agent to be used in its
lending practice generally and any other environmental assessments or other
reports relating to such Property, including any "Phase II" environmental
assessment prepared or recommended by such environmental engineering firm to be
prepared for such Property;
(o) Evidence that such Property complies with applicable zoning and land
use laws;
(p) a Closing Certificate and Affidavit substantially in the form of
Exhibit M executed by a Senior Officer of the Borrower;
(q) an opinion of counsel admitted to practice law in the jurisdiction in
which such Property is located and reasonably acceptable to the Agent, addressed
to the Agent and each Lender covering such legal matters relating to the
transactions contemplated hereby as the Agent may reasonably request;
79
(r) an opinion of counsel admitted to practice law in the jurisdiction in
which the Borrower is formed (and if the Property is owned by a Subsidiary, also
in the jurisdiction where such Subsidiary is formed, if other than Delaware)
reasonably acceptable to the Agent (which may be the Borrower's in-house counsel
so long as he or she is admitted to practice law in the applicable
jurisdictions), addressed to the Agent and each Lender covering such legal
matters relating to the formation and existence and power of the Person
executing documents, and the due authorization, execution and delivery of the
Collateral Documents and other documents for consummating the transactions
contemplated hereby as the Agent may reasonably request;
(s) a Borrowing Base Certificate showing the Borrowing Base after inclusion
of such Property as a Collateral Property;
(t) if such Property is owned by a Subsidiary of the Borrower, each of the
following:
(i) a Guaranty executed by such Subsidiary;
(ii) each of the items described in Sections 6.1.(a)(iv)
through (viii) that would have been required to have been delivered if
such Subsidiary had been a Loan Party on the Agreement Date
(u) final certificates of occupancy if in the possession of the Borrower or
one of its Subsidiaries and any other Governmental Approvals required for the
operation such Property; and
(v) such other instruments, documents, agreements, financing statements,
certificates, opinions and other Collateral Documents as the Agent may
reasonably request.
(7) Article VII. Representations and Warranties
Section 7.1. Representations and Warranties.
In order to induce the Agent and each Lender to enter into this Agreement
and to make Advances and, in the case of the Agent, to issue Letters of Credit,
and, in the case of the Lenders, to acquire participations in Letters of Credit
and Swingline Loans, the Borrower represents and warrants to the Agent and each
Lender as follows:
(a) Organization; Power; Qualification. Each of the Parent and the Loan
Parties is a corporation, partnership or other legal entity, duly organized or
formed, validly existing and in good standing under the jurisdiction of its
incorporation or formation, has the power and authority to own or lease its
respective properties and to carry on its respective business as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a domestic or foreign corporation, partnership or other legal entity, and
authorized to do business, in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization and where the failure to be so qualified or authorized could
reasonably be expected to have, in each instance, a Material Adverse Effect.
(b) Ownership of Loan Parties. Schedule 7.1.(b) is, as of the Agreement
Date, a complete and correct list of each Loan Party and each Subsidiary of the
Parent, directly or indirectly, holding an Equity Interest in any Loan Party,
setting forth for each such Person, (i) the jurisdiction of organization of such
Person, (ii) each Person holding any Equity Interest in such Person, (iii) the
nature of the Equity Interests held by each such Person and (iv) the percentage
of ownership of such Person represented by such Equity Interests. Except as
disclosed in such Schedule (A) each of the Parent, the Borrower and its
80
applicable Subsidiaries owns, free and clear of all Liens, and has the
unencumbered right to vote, all outstanding Equity Interests in each Person
shown to be held by it on such Schedule, (B) all of the issued and outstanding
capital stock of each such Person organized as a corporation is validly issued,
fully paid and nonassessable and (C) there are no outstanding subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including, without limitation, any stockholders' or voting trust agreements)
for the issuance, sale, registration or voting of, or outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, any such Person.
Exhibit 21 to the Parent's Form 10K for the fiscal year ended December 31, 2001
is an accurate list of the Subsidiaries of the Parent as of such date (excluding
those Subsidiaries that need not be disclosed on such Exhibit pursuant to
Regulation S-K of the Securities Act).
(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The
Borrower has the right and power, and has taken all necessary action to
authorize it, to obtain extensions of credit hereunder. The Borrower, each other
Loan Party and the Parent has the right and power, and has taken all necessary
action to authorize it, to execute, deliver and perform each of the Loan
Documents to which it is a party in accordance with their respective terms and
to consummate the transactions contemplated hereby and thereby. The Loan
Documents to which the Borrower, any other Loan Party or the Parent is a party
have been duly executed and delivered by the duly authorized officers of such
Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms, except
as the same may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and the availability of equitable
remedies for the enforcement of certain obligations contained herein or therein
may be limited by equitable principles generally.
(d) Compliance of Agreement, Etc. with Laws. The execution, delivery and
performance of this Agreement and the other Loan Documents to which any Loan
Party or the Parent is a party in accordance with their respective terms and the
borrowings and other extensions of credit hereunder do not and will not, by the
passage of time, the giving of notice, or both: (i) require any Governmental
Approval or violate any Applicable Law (including all Environmental Laws)
relating to any Loan Party or the Parent;(ii) conflict with, result in a breach
of or constitute a default under the organizational documents of the Borrower,
any other Loan Party or the Parent, or any indenture, agreement or other
instrument to which any Loan Party or the Parent is a party or by which it or
any of its respective properties may be bound; or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by any Loan Party or the Parent other than in favor
of the Agent for the benefit of the Lenders.
(e) Compliance with Law; Governmental Approvals. To the best of the
knowledge of the Parent and the Borrower after due inquiry, the Parent, each
Loan Party and each other Subsidiary is in compliance with each Governmental
Approval and all other Applicable Laws relating to it except for noncompliances
which, and Governmental Approvals the failure to possess which, could not,
individually or in the aggregate, reasonably be expected to cause a Default or
Event of Default or have a Material Adverse Effect.
(f) Litigation. Except as set forth on Schedule 7.1.(f), there are no
actions, suits or proceedings pending (nor, to the knowledge of any Loan Party
or the Parent, are there any actions, suits or proceedings threatened, nor is
there any basis therefor) against or in any other way relating adversely to or
affecting, or the Parent, any Loan Party, any other Subsidiary or any of their
respective property which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect.
(g) Taxes. All federal, state and other tax returns of the Borrower and the
Parent required by Applicable Law to be filed have been duly filed (other than
any return the filing date of which has been extended in accordance with
Applicable Law), and all federal, state and other taxes, assessments and other
governmental charges or levies upon, the Borrower and the Parent and each of
81
their respective properties, income, profits and assets which are due and
payable have been paid, except any such nonpayment or non-filing which is at the
time permitted under Section 8.5. As of the Agreement Date, none of the United
States income tax returns of either the Borrower or the Parent is under audit.
All charges, accruals and reserves on the books of the Borrower and the Parent
in respect of any taxes or other governmental charges are in accordance with
GAAP.
(h) Financial Statements. The Borrower has furnished to each Lender copies
of (i) the audited consolidated balance sheet of the Parent and its consolidated
Subsidiaries for the fiscal years ended December 31, 2000 and December 31, 2001,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the fiscal years ended on such dates, with the opinion thereon of
Arthur Andersen LLP, and (ii) the unaudited consolidated balance sheet of the
Parent and its consolidated Subsidiaries for the fiscal quarter ended September
30, 2002, and the related consolidated statements of operations and cash flows
of the Parent and its consolidated Subsidiaries for the three fiscal quarter
period ended on such date. Such balance sheets and statements (including in each
case related schedules and notes) are complete and correct in all material
respects and present fairly, in accordance with GAAP consistently applied
throughout the periods involved, the consolidated financial position of the
Borrower and its consolidated Subsidiaries as of their respective dates and the
results of operations and the cash flow for such periods (subject, as to interim
statements, to changes resulting from normal year-end audit adjustments).
Neither the Parent, the Borrower nor any Subsidiary owning a Collateral Property
has on the Agreement Date any material contingent liabilities, liabilities,
liabilities for taxes, unusual or long-term commitments or unrealized or forward
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in said financial statements.
(i) No Material Adverse Change. Since September 30, 2002, there has been no
material adverse change in the consolidated financial condition, results of
operations, business or prospects of the Parent and its Subsidiaries, or
Borrower and its Subsidiaries, in each case, taken as a whole. Each of the
Parent, the Borrower, the other Loan Parties and the other Subsidiaries is
Solvent.
(j) ERISA. Neither the Borrower nor any other member of the ERISA Group
(excluding the Management Company and ERMC, LP) (i) has ever maintained,
adopted, sponsored in whole or in part, or contributed to any pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, any other
written employee program, arrangement, or agreement, any medical, vision,
dental, or any other health plan, any life insurance plan, nor any other
employee benefit plan or fringe benefit plan, including, but not limited to, an
"employee benefit plan" (as defined in Section 3(3) of ERISA) or a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code); (ii)
has ever withdrawn from a multiemployer plan within the meaning of Section 3(37)
of ERISA; (iii) has incurred any liability under Title IV of ERISA with respect
to any ongoing, frozen, or terminated single-employer plan; or (iv) has any
employees. Neither the Management Company nor ERMC, LP (x) has ever maintained,
adopted, sponsored in whole or in part, or contributed to any Plan; (y) has ever
withdrawn from a multiemployer plan within the meaning of Section 3(37) of
ERISA; or (z) has incurred any liability under Title IV of ERISA with respect to
any ongoing, frozen, or terminated single-employer plan. For purposes of the
prior sentence the term "Plan" means an employee pension benefit plan (including
any multiemployer plan) covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue Code and either (A)
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (B) at any time within the preceding five years
been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
82
(k) Absence of Defaults. None of the Parent, the Loan Parties or the other
Subsidiaries is in default under its articles of incorporation, bylaws,
partnership agreement or other similar organizational documents, and no event
has occurred, which has not been remedied, cured or waived: (i) which
constitutes a Default or an Event of Default; or (ii) which constitutes, or
which with the passage of time, the giving of notice, or both, would constitute,
a default or event of default by, the Parent, any Loan Party or any other
Subsidiary under any agreement (other than this Agreement) or judgment, decree
or order to which any such Person is a party or by which any such Person or any
of its respective properties may be bound where such default or event of default
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(l) Environmental Laws. To the best of the knowledge of the Parent and the
Borrower after due inquiry, each of the Loan Parties and the other Subsidiaries
is in compliance with all applicable Environmental Laws and has obtained all
Governmental Approvals which are required under Environmental Laws and is in
compliance with all terms and conditions of such Governmental Approvals, where
with respect to each of the foregoing the failure to obtain or to comply with
could be reasonably expected to have a Material Adverse Effect. Except for any
of the following matters that could not be reasonably expected to have a
Material Adverse Effect, to the best of the knowledge of the Parent and the
Borrower after due inquiry, neither the Parent nor any Loan Party is aware of,
nor has it received notice of, any past or present events, conditions,
circumstances, activities, practices, incidents, actions, or plans which, with
respect to any Loan Party or any other Subsidiary, may unreasonably interfere
with or prevent compliance or continued compliance with Environmental Laws, or
may give rise to any common-law or legal liability, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling or the emission, discharge, release or threatened release
into the environment, of any Hazardous Substance; and there is no civil,
criminal, or administrative action, suit, demand, claim, hearing, notice, or
demand letter, notice of violation, investigation, or proceeding pending or
threatened, against any Loan Party or any other Subsidiary relating in any way
to Environmental Laws which, if determined adversely to such Loan Party or such
other Subsidiary, could be reasonably expected to have a Material Adverse
Effect.
(m) Legal Restrictions on Ability to Borrow. Neither the Parent nor any
Loan Party is subject to any Applicable Law which purports to regulate or
restrict its ability to borrow money or obtain other extensions of credit or to
consummate the transactions contemplated by this Agreement or to perform its
obligations under any Loan Document to which it is a party.
(n) Margin Stock. Neither the Parent nor any Loan Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System.
(o) Broker's Fees. No broker's or finder's fee, commission or similar
compensation will be payable with respect to the transactions contemplated
hereby. No other similar fees or commissions will be payable by the Parent or
any Loan Party for any other services rendered to the Parent or any Loan Party
ancillary to the transactions contemplated hereby.
(p) Accuracy and Completeness of Information. All written information,
reports and other papers and data furnished to the Agent or any Lender by, on
behalf of, or at the direction of, the Parent or any Loan Party were, at the
time the same were so furnished, complete and correct in all material respects,
to the extent necessary to give the recipient a true and accurate knowledge of
the subject matter, or, in the case of financial statements, present fairly, in
accordance with GAAP consistently applied throughout the periods involved, the
financial position of the Persons involved as at the date thereof and the
results of operations for such periods. No fact is known to the Parent or any
Loan Party which has had a Material Adverse Effect which has not been set forth
83
in the financial statements referred to in Section 7.1.(h) or in such
information, reports or other papers or data or otherwise disclosed in writing
to the Agent and the Lenders prior to the Effective Date. No document furnished
or written statement made to the Agent or any Lender in connection with the
negotiation, preparation or execution, or pursuant to, of this Agreement or any
of the other Loan Documents contains any untrue statement of a fact material to
the creditworthiness of any Loan Party or omits to state a material fact
necessary in order to make the statements contained therein not misleading.
(q) Not Plan Assets; No Prohibited Transactions. None of the assets of the
Parent or any Loan Party constitutes "plan assets" within the meaning of ERISA,
the Internal Revenue Code and the respective regulations promulgated thereunder.
The execution, delivery and performance of the Loan Documents by the Loan
Parties and the Parent, and the borrowing, obtaining of other credit extensions
and repayment of amounts thereunder, do not and will not constitute "prohibited
transactions" under ERISA or the Internal Revenue Code.
(r) Collateral. Each Property included in calculations of the Borrowing
Base satisfies all requirements under the Loan Documents for being a Collateral
Property, including those applicable to an Eligible Property.
(s) Single Asset Entities. Except as set forth on Schedule 7.1.(s), each
Subsidiary that owns a Collateral Property (i) owns no other assets (including
any Equity Interest in any Person) other than such Collateral Property and other
assets incidental to such Subsidiary's ownership of the Collateral Property and
(ii) is engaged only in the business of owning, operating and developing such
one Collateral Property.
Section 7.2. Survival of Representations and Warranties, Etc.
All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of any Loan Party or the Parent to the
Agent or any Lender pursuant to or in connection with this Agreement or any of
the other Loan Documents (including, but not limited to, any such statement made
in or in connection with any amendment thereto or any statement contained in any
certificate, financial statement or other instrument delivered by or on behalf
of any Loan Party or the Parent prior to the Agreement Date and delivered to the
Agent or any Lender in connection with the underwriting or closing the
transactions contemplated hereby) shall constitute representations and
warranties made by the Borrower under this Agreement. All representations and
warranties made under this Agreement and the other Loan Documents shall be
deemed to be made at and as of the Agreement Date, the Effective Date and at and
as of the date of the occurrence of each Credit Event, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and except for changes in factual
circumstances specifically permitted hereunder. All such representations and
warranties shall survive the effectiveness of this Agreement, the execution and
delivery of the Loan Documents and the making of the Advances and the issuance
of the Letters of Credit but shall terminate upon the termination of this
Agreement in accordance with, but subject to, the provisions of Section 13.10.
(8) Article VIII. Affirmative Covenants
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner provided for in Section 13.6., the Parent and the
Borrower, as applicable, shall comply with the following covenants:
Section 8.1. Preservation of Existence and Similar Matters.
Except as otherwise permitted under Section 10.4., the Parent and the
Borrower shall, and shall cause each other Loan Party and each other Subsidiary
to, preserve and maintain its respective existence, rights, franchises, licenses
and privileges in the jurisdiction of its incorporation or formation and qualify
84
and remain qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification and authorization and where the failure to be so authorized and
qualified could reasonably be expected to have a Material Adverse Effect.
Section 8.2. Compliance with Applicable Law.
The Parent and the Borrower shall, and shall cause each other Loan Party
and each other Subsidiary to, comply with all Applicable Law, including the
obtaining of all Governmental Approvals, the failure with which to comply could
reasonably be expected to have a Material Adverse Effect.
Section 8.3. Maintenance of Property.
In addition to the requirements of any of the other Loan Documents, the
Borrower shall, and shall cause each Subsidiary owning a Collateral Property, to
keep all Collateral in good working order and condition, ordinary wear and tear
and insured casualty losses excepted.
Section 8.4. Insurance.
The Borrower shall, and shall cause each Subsidiary owning a Collateral
Property to, maintain insurance with respect to Collateral in which such Loan
Party has an interest as required by the terms of any Collateral Document
relating to such Collateral.
Section 8.5. Payment of Taxes and Claims.
The Parent and the Borrower shall pay and discharge when due (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any properties belonging to it, and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of such Person, provided, however, that this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim which is (x) being contested in good faith by appropriate proceedings
which operate to suspend the collection thereof and for which adequate reserves
have been established on the books of such Person, or (y) bonded or otherwise
insured against to the reasonable satisfaction of the Agent.
Section 8.6. Books and Records; Inspections.
The Parent and the Borrower will, and will cause each other Loan Party and
each other Subsidiary to, keep proper books of record and account in which full,
true and correct entries shall be made of all dealings and transactions in
relation to its business and activities. The Parent and the Borrower will, and
the Borrower will cause each Subsidiary that owns a Collateral Property to,
permit representatives of the Agent or any Lender (with reasonable prior notice
so long as no Event of Default then exists) to visit and inspect any of their
respective properties, including without limitation, inspections of any
Collateral Property, for the purpose of determining the existence, location,
nature and magnitude of any past or present release or threatened release of any
Hazardous Substances into, onto, beneath or from such Property, to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times
during business hours and as often as may reasonably be requested; provided,
85
however, unless an Event of Default exists (a) only the Agent may exercise its
rights under this Section which shall be limited to one inspection during any
period of 12 consecutive months, (b) any discussions with the independent public
accountants of the Parent and Borrower may be conducted only in the presence of
the Borrower, (c) the Agent may not discuss the affairs, finances and accounts
of the Parent or the Borrower with their employees pursuant to this Section. The
Borrower shall reimburse the Agent and, if an Event of Default exists, the
Lenders, for their costs and expenses incurred in connection with the exercise
of their rights under this Section.
Section 8.7. Use of Proceeds.
The Borrower will only use the proceeds of Advances for purposes not
prohibited by Applicable Law or by this Agreement. The Borrower shall only use
Letters of Credit for the same purposes for which it may use the proceeds of
Advances. The Borrower shall not, and shall not permit any other Loan Party or
any other Subsidiary or the Parent to, use any part of such proceeds to purchase
or carry, or to reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock if, in any such case,
such use might result in any of the Advances or other Obligations being consider
to be "purpose credit" directly or indirectly secured by margin stock within the
meaning of Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System.
Section 8.8. Environmental Matters.
The Borrower shall, and shall cause each other Loan Party and each other
Subsidiary to, comply with all Environmental Laws the failure with which to
comply could reasonably be expected to have a Material Adverse Effect. If the
Parent, any Loan Party or any other Subsidiary shall (a) receive notice that any
violation of any Environmental Law has been committed by such Person, (b)
receive notice that any administrative or judicial complaint or order has been
filed or is about to be filed against any such Person alleging violations of any
Environmental Law or requiring any such Person to take any action in connection
with the release of Hazardous Substances or (c) receive any notice from a
Governmental Authority or private party alleging that any such Person may be
liable or responsible for costs associated with a response to or cleanup of a
release of Hazardous Substances or any damages caused thereby, and such notices,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, the Borrower shall provide the Agent with a copy of
such notice within 10 days after the receipt thereof by such Person or any of
the Subsidiaries.
Section 8.9. Further Assurances.
At the Borrower's cost and expense and upon request of the Agent, the
Borrower shall, and shall cause each Subsidiary that owns a Collateral Property
to, duly execute and deliver or cause to be duly executed and delivered, to the
Agent such further instruments, documents and certificates, and do and cause to
be done such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
Section 8.10. REIT Status.
The Parent shall at all times maintain its status as a REIT.
Section 8.11. Exchange Listing.
The Parent shall maintain outstanding at least one class of common shares
of the Parent having trading privileges on the New York Stock Exchange or the
American Stock Exchange or which is subject to price quotations on The NASDAQ
Stock Market's National Market System.
86
Section 8.12. Major Property-Level Agreements; Major Leases; SNDAs.
(a) Major Property-Level Agreement and Major Leases. Prior to the Borrower
or any Subsidiary owning a Collateral Property entering into a Major
Property-Level Agreement or Major Lease with respect to such Collateral
Property, the Borrower shall, or shall cause such Subsidiary, to deliver to the
Agent for the Agent's approval (not to be unreasonably withheld) a reasonably
detailed summary of the material terms of such Major Property-Level Agreement or
Major Lease. If requested by the Agent, the Borrower shall deliver a complete
copy of such Major Property-Level Agreement or Major Lease. If the Agent shall
fail to notify the Borrower whether the Agent has approved or not approved of
the terms of such Major Property-Level Agreement or Major Lease within 10
Business Day's of the Agent's receipt of the applicable summary of material
terms (or if the Agent has requested a copy of such Major Property-Level
Agreement or Major Lease, within 10 Business Days of the Agent's receipt of such
copy) then the Agent shall be deemed to have given its approval thereof.
(b) SNDAs. Within sixty (60) days after the execution of each Major Lease,
the Borrower agrees to use its best efforts to deliver or to cause to be
delivered to the Agent a fully executed and acknowledged non-disturbance,
attornment, estoppel and subordination agreement from the tenant under such
Major Lease. At the Agent's request, the Borrower shall also exercise diligent
efforts to deliver fully executed estoppel certificates executed by the parties
to the Major Property-Level Agreements. All agreements required under the terms
of this subsection shall be in form and substance reasonably satisfactory to the
Agent.
Section 8.13. Single Asset Entities.
Except as set forth on Schedule 7.1.(s), the Borrower shall not permit any
Subsidiary that owns a Collateral Property to (a) acquire any assets (including
Equity Interests in a Person) other than such Collateral Property and other
assets incidental to such Subsidiary's ownership of the Collateral Property, or
(b) engage in any other business other than the business of owning, operating
and developing the one Collateral Property. The Borrower shall not, and shall
not permit any Subsidiary to, sell, transfer, assign or otherwise dispose of any
Equity Interest in any Subsidiary that owns a Collateral Property to any Person
other than the Borrower or a Wholly Owned Subsidiary of the Borrower.
(9) Article IX. Information
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower shall furnish to
the Agent at the Principal Office for distribution to the Lenders:
Section 9.1. Quarterly Financial Statements.
Within 5 Business Days of the filing thereof, a copy of each report on Form
10-Q (or its equivalent) which the Parent shall file with the Securities and
Exchange Commission (or any Governmental Authority substituted therefor). If the
Parent ceases to file such reports, or if any such report filed does not contain
any of the following, then the Borrower shall deliver as soon as available and
in any event within 45 days after the close of each of the first, second and
third fiscal quarters of the Parent, the unaudited consolidated balance sheet of
the Parent and its Subsidiaries as at the end of such period and the related
unaudited consolidated statements of operations and cash flows of the Parent and
its Subsidiaries for such period, setting forth in each case in comparative form
the figures as of the end of and for the corresponding periods of the previous
fiscal year, all of which shall be certified by the chief financial officer,
controller, financial officer or accounting officer of the Parent, in his or her
87
opinion, to present fairly, in accordance with GAAP and in all material
respects, the consolidated financial position of the Parent and its Subsidiaries
as at the date thereof and the results of operations for such period (subject to
normal year-end audit adjustments).
Section 9.2. Year-End Statements.
Within 5 Business Days of the filing thereof, a copy of each report on Form
10-K (or its equivalent) which the Parent shall file with the Securities and
Exchange Commission (or any Governmental Authority substituted therefor). If the
Parent ceases to file such reports, or if any such report filed does not contain
any of the following, then the Borrower shall deliver as soon as available and
in any event within 120 days after the end of each fiscal year of the Parent,
the audited consolidated balance sheet of the Parent and its Subsidiaries as at
the end of such fiscal year and the related audited consolidated statements of
operations, shareholders' equity and cash flows of the Parent and its
Subsidiaries for such fiscal year, setting forth in comparative form the figures
as at the end of and for the previous fiscal year, all of which shall be
certified by (a) the chief financial officer or chief accounting officer of the
Parent, in his or her opinion, to present fairly, in accordance with GAAP, the
financial position of the Parent and its Subsidiaries as at the date thereof and
the result of operations for such period and (b) Deloitte & Touche or any other
independent certified public accountants of recognized national standing, whose
certificate shall be unqualified and in scope and substance required by
generally accepted auditing standards and who shall have authorized the Parent
to deliver such financial statements and certification thereof to the Agent and
the Lenders pursuant to this Agreement.
Section 9.3. Compliance Certificate.
At the time the financial statements are furnished pursuant to the
immediately preceding Sections 9.1. and 9.2., a certificate substantially in the
form of Exhibit N (a "Compliance Certificate") executed on behalf of the
Borrower by the chief financial officer, controller, financial officer or
accounting officer of the Borrower (a) setting forth as of the end of such
quarterly accounting period or fiscal year, as the case may be, the calculations
required to establish whether the Parent was in compliance with the covenants
contained in Section 10.1.; and (b) stating that, to the best of such officer's
knowledge, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred and
the steps being taken by the Parent with respect to such event, condition or
failure.
Section 9.4. Other Information.
(a) Within 10 Business Days of the filing thereof, notice of the filing,
and if the same are not available on-line free of charge from either the website
of the Securities and Exchange Commission or the website of the Parent, copies
of all registration statements (excluding the exhibits thereto and any
registration statements on Form S-8 or its equivalent), reports on Form 8-K (or
its equivalent) and all other periodic reports which the Parent, any Loan Party
or any other Subsidiary shall file with the Securities and Exchange Commission
(or any Governmental Authority substituted therefor) or any national securities
exchange;
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of the Borrower, a Borrowing Base Certificate setting forth
the information to be contained therein, including without limitation, a
calculation of the Permanent Loan Estimate of each Collateral Property, as of
the last day of such fiscal quarter; provided, however, that any change in the
Borrowing Base reflected in such Borrowing Base report shall not become
effective until Agent notifies Borrower in writing of Agent's approval of such
change in the Borrowing Base Certificate and satisfaction of the applicable
88
conditions contained in Section 4.4. If the Agent fails to notify the Borrower
whether or not the Agent approves of a change in the Borrowing Base report
within 5 Business Days after the Agent receives the applicable Borrowing Base
Certificate, then the Agent shall be deemed to have approved of such change;
(c) within 45 days after the end of each fiscal quarter of the Borrower, an
operating statement with respect to each Collateral Property, including without
limitation, a quarterly and year-to-date statement of Net Operating Income
determined on a cash basis and a current rent roll for such Property;
(d) no later than 60 days after the end of each fiscal year of the Parent
ending prior to the Termination Date, cash flow budgets (including sources and
uses of cash) of the Parent and its Subsidiaries on a consolidated basis for
each quarter of the next succeeding fiscal year, all itemized in reasonable
detail;
(e) no later than 30 days after the end of each fiscal year of the Borrower
ending prior to the Termination Date, a property budget for each Collateral
Property for the coming fiscal year of the Borrower;
(f) no more than 30 days following the consummation of any transaction of
acquisition, merger or purchase of assets, involving consideration, or valued,
in excess of $300,000,000 but less than $500,000,000, whether a single
transaction or related series of transactions, together with a reasonably
detailed description thereof;
(g) to the extent any Senior Officer is aware of the same, prompt notice of
the commencement of any proceeding or investigation by or before any
Governmental Authority and any action or proceeding in any court or other
tribunal or before any arbitrator against or in any other way relating adversely
to, or adversely affecting, the Parent, any Loan Party or any other Subsidiary
or any of their respective properties, assets or businesses which, if determined
or resolved adversely to such Person, could reasonably be expected to have a
Material Adverse Effect, and prompt notice of the receipt of notice that any
United States income tax returns of any Loan Party are being audited;
(h) prompt notice of any change in the Chairman, chief executive officer,
President or chief financial officer of the Parent, the Borrower, the Management
Company, or any other Loan Party and any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Parent or any Loan Party which has had or could reasonably be expected to
have Material Adverse Effect;
(i) promptly upon the request of the Agent, evidence of the Borrower's
calculation of the Ownership Share with respect to a Subsidiary or an
Unconsolidated Affiliate, such evidence to be in form and detail satisfactory to
the Agent; and
(j) from time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
any Property or the business, assets, liabilities, financial condition, results
of operations or business prospects of the Parent, the Borrower, any of their
respective Subsidiaries or the Management Company as the Agent or any Lender may
reasonably request.
(10) Article X. Negative Covenants
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower or the Parent, as
the case may be, shall comply with the following covenants:
Section 10.1. Financial Covenants.
(a) Minimum Tangible Net Worth. The Parent shall not permit Tangible Net
Worth at any time to be less than (i) $1,000,000,000 plus (ii) 50% of the Net
89
Proceeds of all Equity Issuances effected at any time after the Agreement Date
by the Parent or any of its Subsidiaries to any Person other than the Parent or
any of its Subsidiaries.
(b) Ratio of Total Liabilities to Gross Asset Value. The Parent shall not
permit the ratio of (i) Total Liabilities of the Parent and its Subsidiaries
determined on a consolidated basis to (ii) Gross Asset Value of the Parent and
its Subsidiaries determined on a consolidated basis, to exceed 0.650 to 1.00 at
any time.
(c) Ratio of EBITDA to Interest Expense. The Parent shall not permit the
ratio of (i) EBITDA of the Parent and its Subsidiaries determined on a
consolidated basis for the fiscal quarter most recently ending to (ii) Interest
Expense of the Parent and its Subsidiaries determined on a consolidated basis
for such period, to be less than 1.750 to 1.00.
(d) Ratio of EBITDA to Debt Service. The Parent shall not permit the ratio
of (i) EBITDA of the Parent and its Subsidiaries determined on a consolidated
basis for the fiscal quarter most recently ending to (ii) Debt Service of the
Parent and its Subsidiaries determined on a consolidated basis for such period,
to be less than 1.550 to 1.00.
(e) Dividends and Other Restricted Payments. If an Event of Default exists
or would exist following the making of a Restricted Payment, the Parent and the
Borrower will not declare or make, or permit any other Subsidiary to declare or
make, any Restricted Payment except that (i) the Parent may declare or make cash
distributions to its shareholders during any fiscal year in an aggregate amount
not to exceed the minimum amount necessary for the Parent to remain in
compliance with Section 8.10.; and (ii) the Parent may cause the Borrower
(directly or indirectly through any intermediate Subsidiaries) to make cash
distributions to the Parent and to other limited partners of the Borrower, and
the Parent may cause other Subsidiaries of the Parent to make cash distributions
to the Parent and to other holders of Equity Interests in such Subsidiaries, in
each case (x) in an aggregate amount not to exceed the amount of cash
distributions that the Parent is permitted to declare or distribute under the
immediately preceding clause (i) and (y) on a pro rata basis, such that the
aggregate amount distributed to the Parent does not exceed the amount that the
Parent is permitted to declare or distribute under the immediately preceding
clause (i). Notwithstanding the foregoing, if a Default or Event of Default
specified in Section 11.1.(a) resulting from the Borrower's failure to pay when
due the principal of, or interest on, any of the Advances or any Fees, Section
11.1.(e) or (f) shall have occurred and be continuing, or if as a result of the
occurrence of any other Event of Default the Obligations have been accelerated
pursuant to Section 11.2.(a), the Parent and the Borrower shall not, and shall
not permit any other Subsidiary to, make any Restricted Payments whatsoever.
(f) Permitted Investments. The Parent shall not, and shall not permit the
Borrower or other Subsidiary to, make an Investment in or otherwise own the
following items which would cause the aggregate value of such holdings of such
Persons to exceed the following percentages of Gross Asset Value:
(i) unimproved real estate such that the aggregate book value
of all such unimproved real estate exceeds 10% of Gross Asset Value
(for purposes of this clause (i) unimproved real estate shall not
include (w) raw land subject to a ground lease under which the Borrower
or a Subsidiary is the lessor and a Person not an Affiliate is the
lessee; (x) Properties under development; (y) land subject to a binding
contract of sale under which the Borrower or one of its Subsidiaries is
the seller and the buyer is not an Affiliate of Borrower and (z)
out-parcels held for lease or sale at Properties which are either
completed or where development has commenced);
(ii) developed real estate used primarily for non-retail
purposes (other than the real estate located at CBL Center, 2030
Hamilton Place Boulevard, Chattanooga, Tennessee), such that the
aggregate book value of such real estate exceeds 10% of Gross Asset
Value;
90
(iii) Investments in Unconsolidated Affiliates of the Borrower
or the Parent, such that the value of such Investments, determined in
accordance with GAAP, exceeds 20% of Gross Asset Value;
(iv) Investments in Persons that are neither Subsidiaries nor
Unconsolidated Affiliates of the Borrower or the Parent, such that the
book value of such Investments, determined in accordance with GAAP,
exceeds 10% of Gross Asset Value; provided, however, this clause (iv)
shall not apply to Investments in any Person whose Equity Interests are
publicly traded and in which the Parent or the Borrower is attempting
to acquire a controlling interest but only to the extent the aggregate
value of such Investments under this clause (iv), determined on the
basis of lower of cost or market value, does not exceed 10% of Gross
Asset Value (the aggregate amount of such excess to be subject to this
subsection (f)); or
(v) Mortgages in favor of the Borrower or any other Loan Party
(other than (A) Mortgages securing Indebtedness owed to the Borrower or
any Subsidiary on September 30,2002 and (B) Mortgages on assets owned
by the Parent, the Borrower or any Subsidiary), such that the aggregate
book value of Indebtedness secured by such Mortgages exceeds 10% of
Gross Asset Value.
In addition to the foregoing limitations, the aggregate value of the Investments
subject to the limitations in the preceding clauses (i) through (v) shall not
exceed 35% of Gross Asset Value.
(g) Value of Borrower Owned by Parent. The Parent shall not permit (i) more
than 5.0% of the book value of its assets to be attributable to assets not owned
by the Borrower or any Subsidiary of the Borrower or (ii) more than 10.0% of the
gross revenues of the Parent to be attributable to gross revenues of any Person
other than the Borrower or any Subsidiary of the Borrower.
Section 10.2. Negative Pledge.
The Borrower shall not, and shall not permit any other Loan Party to,
create, assume or suffer to exist any Lien on any Collateral Property or any of
the other Collateral, now owned or hereafter acquired, except for Permitted
Liens.
Section 10.3. Restrictions on Intercompany Transfers.
The Borrower shall not, and shall not permit any of its Subsidiaries (other
than CMBS Subsidiaries) to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to: (i) pay dividends or make any other distribution
on any of such Subsidiary's Equity Interests owned by the Borrower or any other
Subsidiary; (ii) pay any Indebtedness owed to the Borrower or any other
Subsidiary; (iii) make loans or advances to the Borrower or any other
Subsidiary; or (iv) transfer any of its property or assets to the Borrower or
any other Subsidiary. As used in this Section, the term "CMBS Subsidiary" means
any Subsidiary (a) formed for the specific purpose of holding title to assets
which are collateral for any Extension of Credit to such Subsidiary; (b) which
is prohibited from Guarantying Extension of Credit to any other Person pursuant
to (i) any document, instrument or agreement evidencing such Extension of Credit
or (ii) a provision of such Person's organizational documents which provision
was included in such Person's organizational documents as a condition to the
making of such Extension of Credit; and (c) for which none of the Parent, the
Borrower, any other Loan Party or any other Subsidiary (other than another CMBS
Subsidiary) has Guaranteed any Extensions of Credit to such Subsidiary or has
91
any direct obligation to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve any specified levels of
operating results, except for customary exceptions for fraud, misapplication of
funds, environmental indemnities, and other similar exceptions to recourse
liability.
Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements.
Without the prior written consent of the Requisite Lenders, such consent
not to be unreasonably withheld, the Parent and the Borrower shall not, and
shall not permit any other Loan Party or any other Subsidiary to, (a) enter into
any transaction of merger or consolidation; (b) liquidate, windup or dissolve
itself (or suffer any liquidation or dissolution); or (c) convey, sell, lease,
sublease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business or assets, or the
capital stock of or other Equity Interests in any of its Subsidiaries, whether
now owned or hereafter acquired; provided, however, that:
(i) any Subsidiary may merge with a Loan Party so long as such
Loan Party is the survivor;
(ii) any Subsidiary may sell, transfer or dispose of its
assets to a Loan Party;
(iii) the Borrower or the Parent may merge with another Person
so long as (x) the Borrower or the Parent, as the case may be, is the
survivor of such merger and (x) immediately prior to any such merger
and immediately thereafter and after giving effect thereto, no Event of
Default is or would be in existence;
(iv) any Subsidiary that is not (and is not required to be) a
Loan Party may enter into any transaction described in the introductory
paragraph of this Section, provided that immediately prior to any such
transaction and immediately thereafter and after giving effect thereto,
no Event of Default is or would be in existence;
(v) the Loan Parties and the other Subsidiaries may lease and
sublease their respective assets, as lessor or sublessor (as the case
may be), in the ordinary course of their business.
Notwithstanding the forgoing, without the prior written consent of all of the
Lenders (such consent not to be unreasonably withheld), neither the Borrower nor
the Parent may merge with another Person if such other Person is to be the
survivor of such merger.
Section 10.5. Acquisitions.
Neither Borrower nor any of its Subsidiaries shall acquire the business of
or all or substantially all of the assets or stock of any Person, or any
division of any Person, whether through Investment, purchase of assets, merger
or otherwise, in each case involving consideration, or valued, in excess of
$500,000,000 unless (a) no Default or Event of Default exists or would exist
immediately following the consummation of such acquisition and (b) the Borrower
has delivered to the Agent, at least 30 days prior to the date such acquisition
is consummated, (i) all information related to such acquisition as the Agent may
reasonably request and (ii) a Compliance Certificate, calculated on a pro forma
basis, evidencing continued compliance with the financial covenants contained in
Article 10.1., after giving effect to such acquisition.
92
Section 10.6. Plans.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
permit any of its respective assets to become or be deemed to be "plan assets"
within the meaning of ERISA, the Internal Revenue Code and the respective
regulations promulgated thereunder.
Section 10.7. Fiscal Year.
The Parent and the Borrower shall not, and shall not permit any Loan Party
or other Subsidiary to, change its fiscal year from that in effect as of the
Agreement Date.
Section 10.8. Modifications of Organizational Documents.
The Parent and the Borrower shall not, and shall not permit any Loan Party
or other Subsidiary to, amend, supplement, restate or otherwise modify its
articles or certificate of incorporation, by-laws, partnership agreement or
other similar organizational document which modification could reasonably be
expected to have a Material Adverse Effect without the prior written consent of
the Requisite Lenders unless such amendment, supplement, restatement or other
modification is (a) required under or as a result of the Internal Revenue Code
or other Applicable Law or (b) required to maintain the Parent's status as a
REIT.
Section 10.9. Major Construction.
The Borrower shall not, and shall not permit any Subsidiary owning a
Collateral Property to, commit to undertake any plan of renovation of any
Collateral Property when (a) the estimated cost of such renovation is in excess
of $10,000,000 and (b) such renovation will result in structural changes to such
Collateral Property, without first obtaining the prior written consent of the
Requisite Lenders (which consent shall not be unreasonably withheld). If the
Borrower delivers to the Agent any plans, specifications, information or other
materials relating to its request to renovate a Collateral Property, the Agent
will forward such materials to the Lenders within 15 Business Days from the date
the Agent receives such materials. Unless a Lender has given written notice to
the Agent that such Lender will not consent to such renovation within 15
Business Days of receipt of all plans, specification, information and other
materials relating to the Borrower's request, such Lender shall be deemed to
have consented to such renovation.
Section 10.10. Transactions with Affiliates.
The Borrower shall not permit to exist or enter into, and will not permit
any Loan Party or other Subsidiary to permit to exist or enter into, any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Borrower, except
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Borrower or any of its Subsidiaries and
upon fair and reasonable terms which are no less favorable to the Borrower or
such Subsidiary than would be obtained in a comparable arm's-length transaction
with a Person that is not an Affiliate.
(11) Article XI. Default
Section 11.1. Events of Default.
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
(a) Default in Payment. The Borrower shall fail to pay when due under this
Agreement or any other Loan Document (whether upon demand, at maturity, by
reason of acceleration or otherwise) the principal of, or any accrued interest
93
on, any of the Advances, or shall fail to pay any of the other payment
Obligations owing by the Borrower under this Agreement or any other Loan
Document, or any other Loan Party shall fail to pay when due any payment
obligation owing by such Loan Party under any Loan Document to which it is a
party, and in any such case, such failure continues for a period of 10 days
after the date the Agent gives the Borrower notice of such failure.
(b) Default in Performance.
(i) Any Loan Party or the Parent shall fail to perform or
observe any term, covenant, condition or agreement on its part to be
performed or observed and contained in Section 10.1. and such failure
continues for 90 calendar days after the earlier of (x) the date any
Senior Officer of the Borrower has actual knowledge of such failure or
(y) the date notice of such failure has been given to the Borrower by
the Agent; or
(ii) any Loan Party or the Parent shall fail to perform or
observe any term, covenant, condition or agreement contained in this
Agreement or any other Loan Document to which it is a party and not
otherwise mentioned in this Section and such failure shall continue for
a period of 30 calendar days after the earlier of (x) the date any
Senior Officer of the Borrower has actual knowledge of such failure or
(y) the date notice of such failure has been given to the Borrower by
the Agent; provided, however, that if such default is curable but
requires work to be performed, acts to be done or conditions to be
remedied which, by their nature, cannot be performed, done or remedied,
as the case may be, within such 30-day period, no Event of Default
shall be deemed to have occurred if such Loan Party or the Parent, as
the case may be, commences the same within such 30-day period and
thereafter diligently and continuously prosecutes the same to
completion, and the same is in fact completed, no later than the date
90 days following the earlier of the date such Senior Officer has
actual knowledge of such failure or the date the Agent gave notice of
such failure to the Borrower.
(c) Misrepresentations. Any written statement, representation or warranty
made or deemed made by or on behalf of any Loan Party or the Parent under this
Agreement or under any other Loan Document, or in any other writing or statement
at any time furnished by, or at the direction of, any Loan Party or the Parent
to the Agent or any Lender under or in connection with this Agreement or any
other Loan Document, shall at any time prove to have been incorrect or
misleading in any material respect when furnished or made or deemed made.
(d) Material Extension of Credit Cross-Default.
(i) Extensions of Credit Owed to Lender. Any of the following
events shall occur with respect to any Extension of Credit (other than
any of the Obligations and any Extension of Credit that is Nonrecourse
Indebtedness) owing to any Lender or affiliate of any Lender:
(A) Failure to Pay. Any Loan Party or the Parent
shall fail to pay when due and payable the principal of, or
interest on, any such Extension of Credit; or
(B) Acceleration. The maturity of any such Extension
of Credit shall have been accelerated in accordance with the
provisions of any indenture, contract or instrument
evidencing, providing for the creation of or otherwise
concerning such Extension of Credit; or
(C) Mandatory Repurchase. Any Loan Party or the
Parent shall have been required to prepay or repurchase, prior
94
to the stated maturity thereof, any such Extension of Credit
in accordance with the provisions of any indenture, contract
or instrument evidencing, providing for the creation of or
otherwise concerning such Extension of Credit.
(ii) Extension of Credit Owed to Third Parties. Either of the
following events shall occur with respect to any Extension of Credit
(other than any extension of credit that is Nonrecourse Indebtedness)
owing by any Loan Party or the Parent to any Person other than a Lender
or any affiliate of a Lender and having an aggregate outstanding
principal amount of $100,000,000 or more:
(A) Acceleration. The maturity of such Extension of
Credit shall have been accelerated in accordance with the
provisions of any indenture, contract or instrument
evidencing, providing for the creation of or otherwise
concerning such Extension of Credit; or
(B) Mandatory Repurchase. Any Loan Party or the
Parent shall have been required to prepay or repurchase, prior
to the stated maturity thereof, such Extension of Credit in
accordance with the provisions of any indenture, contract or
instrument evidencing, providing for the creation of or
otherwise concerning such Extension of Credit.
(e) Voluntary Bankruptcy Proceeding. Any Loan Party, the Parent or any
Significant Subsidiary shall: (i) commence a voluntary case under the Bankruptcy
Code of 1978, as amended, or other federal bankruptcy laws (as now or hereafter
in effect); (ii) file a petition seeking to take advantage of any other
Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; (iii) consent
to, or fail to contest in a timely and appropriate manner, any petition filed
against it in an involuntary case under such bankruptcy laws or other Applicable
Laws or consent to any proceeding or action described in the immediately
following subsection; (iv) apply for or consent to, or fail to contest in a
timely and appropriate manner, the appointment of, or the taking of possession
by, a receiver, custodian, trustee, or liquidator of itself or of a substantial
part of its property, domestic or foreign; (v) admit in writing its inability to
pay its debts as they become due; (vi) make a general assignment for the benefit
of creditors; (vii) make a conveyance fraudulent as to creditors under any
Applicable Law; or (viii) take any corporate, partnership or similar action for
the purpose of effecting any of the foregoing.
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Loan Party, the Parent or any Significant Subsidiary in
any court of competent jurisdiction seeking: (i) relief under the Bankruptcy
Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter
in effect) or under any other Applicable Laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Person, or of all or any substantial part of the assets,
domestic or foreign, of such Person, and in the case of either clause (i) or
(ii) such case or proceeding shall continue undismissed or unstayed for a period
of 90 consecutive calendar days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for relief
under such Bankruptcy Code or such other federal bankruptcy laws) shall be
entered.
(g) Revocation of Loan Documents. Any Loan Party or the Parent shall (or
shall attempt to) disavow, revoke or terminate any Loan Document to which it is
a party or shall otherwise challenge or contest in any action, suit or
proceeding in any court or before any Governmental Authority the validity or
enforceability of any Loan Document.
(h) Judgment. A judgment or order for the payment of money shall be entered
against any Loan Party, the Parent or any Significant Subsidiary, by any court
or other tribunal and (i) such judgment or order shall continue for a period of
60 days without being paid stayed or dismissed through appropriate appellate
95
proceedings and (ii) either (A) the amount for which insurance has not been
acknowledged in writing by the applicable insurance carrier exceeds,
individually or together with all other such judgments or orders entered against
the Loan Parties and Significant Subsidiaries, $25,000,000 or (B) such judgment
or order could reasonably be expected to have a Material Adverse Effect.
(i) Attachment. A warrant, writ of attachment, execution or similar process
shall be issued against any property of any Loan Party, the Parent or any
Significant Subsidiary, which exceeds, individually or together with all other
such warrants, writs, executions and processes, $25,000,000 and such warrant,
writ, execution or process shall not be paid, discharged, vacated, stayed or
bonded for a period of 60 days; provided, however, that if a bond has been
issued in favor of the claimant or other Person obtaining such warrant, writ,
execution or process, the issuer of such bond shall execute a waiver or
subordination agreement in form and substance satisfactory to the Agent pursuant
to which the issuer of such bond subordinates its right of reimbursement,
contribution or subrogation to the Obligations and waives or subordinates any
Lien it may have on the assets of any Loan Party or the Parent.
(j) Loan Documents. An Event of Default (as defined therein) shall occur
under any of the other Loan Documents.
(k) Change of Control/Change in Management.
(i) any Person (or two or more Persons acting in concert)
shall acquire "beneficial ownership" within the meaning of Rule 13d-3
of the Securities and Exchange Act of 1934, as amended, of the capital
stock or securities of the Parent representing 35% or more of the
aggregate voting power of all classes of capital stock and securities
of the Parent entitled to vote for the election of directors ("Parent
Voting Stock"); provided, however, this clause shall not apply to any
Parent Voting Stock acquired after the date hereof by a Person as a
result of the conversion of limited partnership interests in the
Borrower into Parent Voting Stock in accordance with Borrower's
partnership agreement;
(ii) during any twelve-month period (whether before or after
the Agreement Date), individuals who at the beginning of such period
were directors of the Parent shall cease for any reason (other than
death or mental or physical disability) to constitute a majority of the
board of directors of the Parent;
(iii) Charles B. Lebovitz shall cease for any reason to be
principally involved in the senior management of the Borrower, the
Management Company and the Parent and (A) 180 days following such
cessation the Borrower, the Management Company and the Parent shall
have failed to replace the resulting vacancy with an individual (or
individuals) reasonably acceptable to the Requisite Lenders and (B) at
least two of John N. Foy, Ben S. Landress, Stephen Lebovitz, Michael
Lebovitz and Ron Fullam, Jr. shall not be principally involved in the
senior management of the Borrower, the Management Company and the
Parent;
(iv) the Principals shall cease to beneficially own, directly
or indirectly, in the aggregate, at least 10.0% of the outstanding
common stock of the Parent or at least 10.0% of the outstanding
operating units of the Borrower (such ownership percentages to be
adjusted to reflect the effect of any division, reclassification, stock
or equity dividend and any other similar dilutive events);
(v) the Principals, the Parent or any combination thereof
shall cease to beneficially own, directly or indirectly, in the
aggregate, capital stock or securities of the Management Company
representing more than 50% of the aggregate voting power of all classes
96
of capital stock and securities of the Management Company entitled to
vote for the election of directors; provided, however, the provisions
of this clause shall no longer apply if the Management Company shall
have merged with the Borrower or the Parent; or
(vi) the general partner of the Borrower shall cease to be a
Wholly Owned Subsidiary of the Parent;
(l) Damage; Strike; Casualty. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than 30 consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities of the Borrower or its
Subsidiaries taken as a whole but only if any such event or circumstance could
reasonably be expected to have a material adverse effect on the Collateral
Properties taken as a whole.
Section 11.2. Remedies Upon Event of Default.
Upon the occurrence of an Event of Default the following provisions shall
apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default
specified in Sections 11.1.(e) or 11.1.(f), (1)(A) the principal of,
and all accrued interest on, the Advances and the Notes at the time
outstanding, (B) an amount equal to the Stated Amount of all Letters of
Credit outstanding as of the date of the occurrence of such Event of
Default and (C) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lenders
and the Agent under this Agreement, the Notes or any of the other Loan
Documents shall become immediately and automatically due and payable by
the Borrower without presentment, demand, protest, or other notice of
any kind, all of which are expressly waived by the Borrower, and (2)
the Commitments and the Swingline Commitment, the obligation of the
Lenders to make Advances hereunder, and the obligation of the Agent to
issue Letters of Credit hereunder, shall all immediately and
automatically terminate.
(ii) Optional. If any other Event of Default shall exist, the
Agent may, and at the direction of the Requisite Lenders shall: (1)
declare (A) the principal of, and accrued interest on, the Advances and
the Notes at the time outstanding, (B) an amount equal to the Stated
Amount of all Letters of Credit outstanding as of the date of the
occurrence of such Event of Default and (C) all of the other
Obligations, including, but not limited to, the other amounts owed to
the Lenders and the Agent under this Agreement, the Notes or any of the
other Loan Documents to be forthwith due and payable, whereupon the
same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived by the Borrower, and (2) terminate the Commitments and the
obligation of the Lenders to make Advances hereunder and the obligation
of the Agent to issue Letters of Credit hereunder. If the Agent has
exercised any of the rights provided under the preceding sentence, the
Swingline Lender shall: (x) declare the principal of, and accrued
interest on, the Swingline Loans and the Swingline Notes at the time
outstanding, and all of the other Obligations owing to the Swingline
Lender, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived by the
Borrower and (y) terminate the Swingline Commitment and the obligation
of the Swingline Lender to make Swingline Loans.
97
(b) Loan Documents. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise any and all of its rights under any and all
of the other Loan Documents.
(c) Applicable Law. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise all other rights and remedies it may have
under any Applicable Law.
(d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Agent and the Lenders shall be entitled to the appointment of a receiver for the
Collateral Properties, without notice of any kind whatsoever and without regard
to the adequacy of any security for the Obligations or the solvency of any party
bound for its payment, to take possession of all or any portion of the
Collateral Properties and/or the business operations of the Borrower and its
Subsidiaries related thereto and to exercise such power as the court shall
confer upon such receiver.
Section 11.3. Remedies Upon Default.
Upon the occurrence of a Default specified in Section 11.1.(f), the
Commitments shall immediately and automatically terminate.
Section 11.4. Curing Defaults Under Collateral Documents.
The Lenders agree that the Borrower may cure a Default occurring under
Section 11.1.(b)(ii) relating to any Collateral Document by causing the
Collateral Property to which such Collateral Document relates to be released
from the Liens of the applicable Collateral Document in accordance with the
terms of Section 4.2.; provided, however, the provisions of this Section shall
not apply (a) to a Default the circumstances giving rise to which constitute a
Default or Event of Default under any other provision of Section 11.1. or (b)
if, after giving effect to such release, the aggregate principal amount of all
outstanding Advances together with the aggregate amount of all Letter of Credit
Liabilities would exceed the Borrowing Base.
Section 11.5. Permitted Deficiency.
(a) Generally. Notwithstanding anything to the contrary set forth herein,
none of the following events shall constitute a Default or Event of Default, so
long as the conditions of the immediately following subsection (b) are
satisfied:
(i) failure of the Borrower or any other Person owning a
Collateral Property to:
(A) keep such Collateral Property or any portion
thereof in the condition required under Section 4.6 of the
Security Deed applicable thereto;
(B) to pay any Lien or other encumbrances on any
portion of such Collateral Property in the manner required
under Section 4.5 of the Security Deed applicable thereto;
(C) to comply with requirements of Applicable Law
applicable to any portion of such Collateral Property as
required under Section 3.9 of the Security Deed applicable
thereto;
(D) to prevent alterations to such Collateral
Property as required under Section 10.9 of this Agreement;
(E) to replace "Fixtures" or "Personalty" required
under, and as such terms are defined in, Section 5.3 of the
Security Deed applicable thereto; or
98
(F) to deposit with the Agent any "Casualty
Completion Deposit" or "Escrowed Sums" required under, and as
such terms are defined in, the Security Deed applicable
thereto; or
(ii) the existence of any non-consensual Lien on any of the
Collateral not permitted by Section 8.5. of this Agreement or by the
applicable terms of the Collateral Documents.
If the section numbering of a Security Deed differs from the section numbering
of the form of Security Deed attached hereto as Exhibit J, the references above
to specific sections of a Security Deed shall be deemed to refer to the section
in such Security Deed which most closely corresponds to the text of the
referenced section of the form of Security Deed attached hereto.
(b) The effectiveness of the immediately preceding subsection is subject to
satisfaction of all of the following conditions:
(i) the sum of the following amounts (such amounts being the
"Permitted Deficiency") does not exceed $10,000,000:
(A) the cost of correcting all failures described in
the immediately preceding subsection (a)(i), as determined by
Agent in its reasonable discretion;
(B) the amount secured by Liens described in
immediately preceding subsection (a)(ii); and
(C) the aggregate amount of unpaid "Casualty
Completion Deposit" and "Escrowed Sums" required under, and as
such terms are defined in, the Security Deeds applicable
thereto.
(ii) None of the circumstances giving rise to the Permitted
Deficiency would otherwise constitute a Default or Event of Default but
for the application of this Section; and
(iii) The Borrower is taking steps to eliminate the
circumstances giving rise to the Permitted Deficiency in a diligent
manner, and in all events eliminates (or bonds off to the reasonable
satisfaction of the Agent) each such circumstances prior to the earlier
of (A) 60 days after receipt of notice of the existence of such
circumstances from the Agent, or (B) the date which is 5 days prior to
the date on which any effected Collateral Property to which any such
circumstance relates could be sold for nonpayment.
Section 11.6. Marshaling; Payments Set Aside.
Neither the Agent nor any Lender shall be under any obligation to marshal
any assets in favor of any Loan Party or any other party or against or in
payment of any or all of the Obligations. To the extent that any Loan Party
makes a payment or payments to the Agent and/or any Lender, or the Agent and/or
any Lender enforce their security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
99
Section 11.7. Allocation of Proceeds.
If an Event of Default exists and maturity of any of the Obligations has
been accelerated, all payments received by the Agent under any of the Loan
Documents, in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower or any other Loan Party hereunder or
thereunder, shall be applied in the following order and priority:
(a) amounts due to the Agent and the Lenders in respect of Fees and
expenses due under Section 13.2.;
(b) amounts due to the Agent and the Lenders in respect of Protective
Advances;
(c) payments of interest on Swingline Loans;
(d) payments of interest on principal of all other Advances, to be applied
for the ratable benefit of the Lenders, in such order as the Lenders may
determine in their sole discretion;
(e) payment of principal on Swingline Loans;
(f) payments of principal of all other Advances, to be applied for the
ratable benefit of the Lenders, in such order as the Lenders may determine in
their sole discretion;
(g) amounts to be paid to the Agent to be held as cash collateral in
respect of Letters of Credit then outstanding;
(h) amounts due to the Agent and the Lenders pursuant to Sections 12.7. and
13.9.;
(i) payments of all other amounts due under any of the Loan Documents, if
any, to be applied for the ratable benefit of the Lenders; and
(j) any amount remaining after application as provided above, shall be paid
to the Borrower or whomever else may be legally entitled thereto.
Section 11.8. Performance by Agent.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may, but shall not be
obligated to, perform or attempt to perform such covenant, duty or agreement on
behalf of the Borrower after the expiration of any cure or grace periods set
forth herein. In such event, the Borrower shall, at the request of the Agent,
promptly pay any amount reasonably expended by the Agent in such performance or
attempted performance to the Agent, together with interest thereon at the
applicable Default Rate from the date of such expenditure until paid.
Notwithstanding the foregoing, neither the Agent nor any Lender shall have any
liability or responsibility whatsoever for the performance of any obligation of
the Borrower under this Agreement or any other Loan Document.
Section 11.9. Rights Cumulative.
The rights and remedies of the Agent and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of
100
any rights or remedies which any of them may otherwise have under Applicable
Law. In exercising their respective rights and remedies the Agent and the
Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
(12) Article XII. The Agent
Section 12.1. Authorization and Action.
Each Lender hereby irrevocably appoints and authorizes the Agent to take
such action as contractual representative on such Lender's behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Not in limitation of the
foregoing, each Lender authorizes and directs the Agent to enter into the Loan
Documents for the benefit of the Lenders. Each Lender hereby agrees that, except
as otherwise set forth herein, any action taken by the Requisite Lenders in
accordance with the provisions of this Agreement or the Loan Documents, and the
exercise by the Requisite Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. Nothing herein shall be
construed to deem the Agent a trustee or fiduciary for any Lender or to impose
on the Agent duties or obligations other than those expressly provided for
herein. Without limiting the generality of the foregoing, the use of the terms
"Agent", "agent" and similar terms in the Loan Documents with reference to the
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any Applicable Law. Instead, use of
such terms is merely a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties. The Agent shall deliver to each Lender, promptly upon receipt thereof
by the Agent, copies of each of the financial statements, certificates, notices
and other documents delivered to the Agent pursuant to Article IX. The Agent
will also furnish to any Lender, upon the request of such Lender, a copy (or,
where appropriate, an original) of any document, instrument, agreement,
certificate or notice furnished to the Agent by the Borrower, the Parent, any
Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or
any other Loan Document not already delivered to such Lender pursuant to the
terms of this Agreement or any such other Loan Document. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of any of the Obligations), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders (or all
of the Lenders if explicitly required under any other provision of this
Agreement), and such instructions shall be binding upon all Lenders and all
holders of any of the Obligations; provided, however, that, notwithstanding
anything in this Agreement to the contrary, the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or Applicable Law. Not in
limitation of the foregoing, the Agent shall not exercise any right or remedy it
may have under any Loan Document upon the occurrence of a Default or an Event of
Default if the Requisite Lenders have directed the Agent not to do so. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of the Requisite Lenders, or where applicable, all the Lenders.
Section 12.2. Agent's Reliance, Etc.
Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Agent nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or not taken by it
under or in connection with this Agreement or any other Loan Document, except
for its or their own gross negligence or willful misconduct in connection with
its duties expressly set forth herein or therein. Without limiting the
101
generality of the foregoing, the Agent: may consult with legal counsel
(including its own counsel or counsel for the Borrower, any other Loan Party or
the Parent), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts.
Neither the Agent nor any of its directors, officers, agents, employees or
counsel: (a) makes any warranty or representation to any Lender or any other
Person and shall be responsible to any Lender or any other Person for any
statement, warranty or representation made or deemed made by the Borrower, any
other Loan Party, the Parent or any other Person in or in connection with this
Agreement or any other Loan Document; (b) shall have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any other Loan Document or the satisfaction of
any conditions precedent under this Agreement or any Loan Document on the part
of the Borrower or other Persons or inspect the property, books or records of
the Borrower or any other Person; (c) shall be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document, any other instrument or
document furnished pursuant thereto or any Collateral covered thereby or the
perfection or priority of any Lien in favor of the Agent on behalf of the
Lenders in any such Collateral; (d) shall have any liability in respect of any
recitals, statements, certifications, representations or warranties contained in
any of the Loan Documents or any other document, instrument, agreement,
certificate or statement delivered in connection therewith; and (e) shall incur
any liability under or in respect of this Agreement or any other Loan Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telephone, telecopy or electronic mail) believed by it to be
genuine and signed, sent or given by the proper party or parties. The Agent may
execute any of its duties under the Loan Documents by or through agents,
employees or attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.
Section 12.3. Notice of Defaults.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or Event of Default unless the Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing with reasonable
specificity such Default or Event of Default and stating that such notice is a
"notice of default." If any Lender (excluding the Lender which is also serving
as the Agent) becomes aware of any Default or Event of Default, it shall
promptly send to the Agent such a "notice of default". Further, if the Agent
receives such a "notice of default," the Agent shall give prompt notice thereof
to the Lenders.
Section 12.4. Wells Fargo as Lender.
Wells Fargo, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include Wells Fargo in each case in its
individual capacity. Wells Fargo and its affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with the Borrower, any other Loan Party, the Parent or
any other affiliate thereof as if it were any other bank and without any duty to
account therefor to the other Lenders. Further, the Agent and any affiliate may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
other Lenders. The Lenders acknowledge that, pursuant to such activities, Wells
Fargo or its affiliates may receive information regarding the Parent, the
Borrower, other Loan Parties, other Subsidiaries and other Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Person) and acknowledge that the Agent shall be under no obligation to provide
such information to them.
102
Section 12.5. Approvals of Lenders.
All communications from the Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or issue as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where information, if any,
regarding such matter or issue may be inspected, or shall otherwise describe the
matter or issue to be resolved, (c) shall include, if reasonably requested by
such Lender and to the extent not previously provided to such Lender, written
materials provided to the Agent by the Borrower in respect of the matter or
issue to be resolved, and (d) shall include the Agent's recommended course of
action or determination in respect thereof. Unless a Lender shall give written
notice to the Agent that it specifically objects to the recommendation or
determination of the Agent (together with a reasonable written explanation of
the reasons behind such objection) within 10 Business Days (or such lesser or
greater period as may be specifically required under the express terms of the
Loan Documents) of receipt of such communication, such Lender shall be deemed to
have conclusively approved of or consented to such recommendation or
determination.
Section 12.6. Lender Credit Decision, Etc.
Each Lender expressly acknowledges and agrees that neither the Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact or
other affiliates has made any representations or warranties to such Lender and
that no act by the Agent hereafter taken, including any review of the affairs of
the Parent, the Borrower, any other Loan Party or any other Subsidiary or
Affiliate, shall be deemed to constitute any such representation or warranty by
the Agent to any Lender. Each Lender acknowledges that it has, independently and
without reliance upon the Agent, any other Lender or counsel to the Agent, or
any of their respective officers, directors, employees, agents or counsel, and
based on the financial statements of the Parent, the Borrower, the other Loan
Parties, the other Subsidiaries and other Affiliates, and inquiries of such
Persons, its independent due diligence of the business and affairs of the
Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other
Persons, its review of the Loan Documents, the legal opinions required to be
delivered to it hereunder, the advice of its own counsel and such other
documents and information as it has deemed appropriate, made its own credit and
legal analysis and decision to enter into this Agreement and the transactions
contemplated hereby. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent, any other Lender or counsel to the Agent or
any of their respective officers, directors, employees and agents, and based on
such review, advice, documents and information as it shall deem appropriate at
the time, continue to make its own decisions in taking or not taking action
under the Loan Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by the Parent, the Borrower or any
other Loan Party of the Loan Documents or any other document referred to or
provided for therein or to inspect the properties or books of, or make any other
investigation of, the Parent, the Borrower, any other Loan Party or any other
Subsidiary. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent under this
Agreement or any of the other Loan Documents, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Parent, the Borrower, any other Loan Party or any other
Affiliate thereof which may come into possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or other Affiliates.
Each Lender acknowledges that the Agent's legal counsel in connection with the
transactions contemplated by this Agreement is only acting as counsel to the
Agent and is not acting as counsel to such Lender.
103
Section 12.7. Indemnification of Agent.
Regardless of whether the transactions contemplated by this Agreement and
the other Loan Documents are consummated, each Lender agrees to indemnify the
Agent (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) pro rata in accordance with such Lender's
respective Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against the Agent (in its capacity as
Agent but not as a "Lender") in any way relating to or arising out of the Loan
Documents, any transaction contemplated hereby or thereby or any action taken or
omitted by the Agent under the Loan Documents (collectively, "Indemnifiable
Amounts"); provided, however, that no Lender shall be liable for any portion of
such Indemnifiable Amounts to the extent resulting from the Agent's gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, non-appealable judgment; provided, however, that no
action taken in accordance with the directions of the Requisite Lenders (or all
of the Lenders if expressly required hereunder) shall be deemed to constitute
gross negligence or willful misconduct for purposes of this Section. Without
limiting the generality of the foregoing, each Lender agrees to reimburse the
Agent (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) promptly upon demand for its ratable share
of any expenses (including the reasonable fees and expenses of the counsel to
the Agent) incurred by the Agent in connection with the preparation,
negotiation, execution, administration, or enforcement (whether through
negotiations, legal proceedings, or otherwise) of, or legal advice with respect
to the rights or responsibilities of the parties under, the Loan Documents, any
suit or action brought by the Agent to enforce the terms of the Loan Documents
and/or collect any Obligations, any "lender liability" suit or claim brought
against the Agent and/or the Lenders, and any claim or suit brought against the
Agent and/or the Lenders arising under any Environmental Laws. Such expenses
(including counsel fees) shall be advanced by the Lenders on the request of the
Agent notwithstanding any claim or assertion that the Agent is not entitled to
indemnification hereunder upon receipt of an undertaking by the Agent that the
Agent will reimburse the Lenders if it is actually and finally determined by a
court of competent jurisdiction that the Agent is not so entitled to
indemnification. The agreements in this Section shall survive the payment of the
Advances and all other amounts payable hereunder or under the other Loan
Documents and the termination of this Agreement. If the Borrower shall reimburse
the Agent for any Indemnifiable Amount following payment by any Lender to the
Agent in respect of such Indemnifiable Amount pursuant to this Section, the
Agent shall share such reimbursement on a ratable basis with each Lender making
any such payment.
Section 12.8. Collateral Matters; Protective Advances.
(a) Each Lender hereby authorizes the Agent, without the necessity of any
notice to or further consent from any Lender, while no Event of Default exists,
to take any action with respect to any Collateral or Loan Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to any of the Loan Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and indefeasible payment and
satisfaction in full of all of the Obligations; and (ii) as expressly permitted
by, but only in accordance with, the terms of the applicable Loan Document,
including without limitation, pursuant to Section 4.2. Upon request by the Agent
at any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this Section.
(c) Upon any sale and transfer of Collateral which is expressly permitted
pursuant to the terms of this Agreement, and upon at least 5 Business Days'
prior written request by the Borrower, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Lenders herein or pursuant hereto upon the Collateral that was
sold or transferred; provided, however, that (i) the Agent shall not be required
104
to execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of the Parent, the Borrower or any other Loan
Party in respect of) all interests retained by the Parent, the Borrower or any
other Loan Party, including (without limitation) the proceeds of such sale or
transfer, all of which shall continue to constitute part of the Collateral. In
the event of any sale or transfer of Collateral, or any foreclosure with respect
to any of the Collateral, the Agent shall be authorized to deduct all of the
expenses reasonably incurred by the Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) The Agent shall have no obligation whatsoever to the Lenders or to any
other Person to assure that the Collateral exists or is owned by the Borrower,
any other Loan Party or any other Subsidiary or is cared for, protected or
insured or that the Liens granted to the Agent herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to the Agent in this Section or in any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
the Lenders, except to the extent resulting from its gross negligence or willful
misconduct.
(e) The Agent may make, and shall be reimbursed by the Lenders (in
accordance with their Commitment Percentages) to the extent not reimbursed by
the Borrower for, Protective Advances during any one calendar year with respect
to each Property that is Collateral up to the sum of (i) amounts expended to pay
real estate taxes, assessments and governmental charges or levies imposed upon
such Property; (ii) amounts expended to pay insurance premiums for policies of
insurance related to such Property; and (iii) $500,000. Protective Advances in
excess of said sum during any calendar year for any Property that is Collateral
shall require the consent of the Requisite Lenders. The Borrower agrees to pay
on demand all Protective Advances.
Section 12.9. Post-Foreclosure Plans.
If all or any portion of the Collateral is acquired by the Agent or a
nominee or Subsidiary of the Agent or affiliate of the Agent as a result of a
foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or
is retained in satisfaction of all or any part of the Obligations, the title to
any such Collateral, or any portion thereof, shall be held in the name of the
Agent or a nominee or Subsidiary of the Agent or affiliate of the Agent, as
agent, for the ratable benefit of all Lenders. The Agent shall prepare a
recommended course of action for such Collateral (a "Post-Foreclosure Plan"),
which shall be subject to the approval of the Requisite Lenders. In accordance
with the approved Post-Foreclosure Plan, the Agent shall manage, operate,
repair, administer, complete, construct, restore or otherwise deal with the
Collateral acquired, and shall administer all transactions relating thereto,
including, without limitation, employing a management agent, leasing agent and
other agents, contractors and employees, including agents for the sale of such
Collateral, and the collecting of rents and other sums from such Collateral and
paying the expenses of such Collateral. Actions taken by the Agent with respect
to the Collateral, which are not specifically provided for in the approved
Post-Foreclosure Plan or reasonably incidental thereto, shall require the
written consent of the Requisite Lenders by way of supplement to such
Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will
contribute its share (based on its Commitment Percentage) of all reasonable
costs and expenses incurred by the Agent pursuant to the approved
Post-Foreclosure Plan in connection with the construction, operation,
management, maintenance, leasing and sale of such Collateral. In addition, the
Agent shall render or cause to be rendered to each Lender, on a monthly basis,
an income and expense statement for such Collateral, and each Lender shall
promptly contribute its Commitment Percentage of any operating loss for such
Collateral, and such other expenses and operating reserves as the Agent shall
deem reasonably necessary pursuant to and in accordance with the approved
105
Post-Foreclosure Plan. To the extent there is net operating income from such
Collateral, the Agent shall, in accordance with the approved Post-Foreclosure
Plan, determine the amount and timing of distributions to the Lenders. All such
distributions shall be made to the Lenders in accordance with their respective
Commitment Percentages. The Lenders acknowledge and agree that if title to any
Collateral is obtained by the Agent or its nominee, such Collateral will not be
held as a permanent investment but will be liquidated as soon as practicable.
The Agent shall undertake to sell such Collateral, at such price and upon such
terms and conditions as the Requisite Lenders reasonably shall determine to be
most advantageous to the Lenders. Any purchase money mortgage or deed of trust
taken in connection with the disposition of such Collateral in accordance with
the immediately preceding sentence shall name the Agent, as agent for the
Lenders, as the beneficiary or mortgagee. In such case, the Agent and the
Lenders shall enter into an agreement with respect to such purchase money
mortgage or deed of trust defining the rights of the Lenders in the same
Commitment Percentages as provided hereunder, which agreement shall be in all
material respects similar to this Article insofar as the same is appropriate or
applicable.
Section 12.10. Successor Agent.
The Agent may resign at any time as Agent under the Loan Documents by
giving notice thereof to the Lenders and the Borrower. In the event of a
material breach of its duties hereunder, the Agent may be removed as Agent under
the Loan Documents at any time by all of the Lenders (other than the Lender then
acting as Agent) and the Borrower upon 30-day's prior notice. Upon any such
resignation or removal, the Requisite Lenders (which, in the case of the removal
of the Agent as provided in the immediately preceding sentence, shall be
determined without regard to the Commitment of the Lender then acting as Agent)
shall have the right to appoint a successor Agent which appointment shall,
provided no Default or Event of Default exists, be subject to the Borrower's
approval, which approval shall not be unreasonably withheld or delayed. If no
successor Agent shall have been so appointed in accordance with the immediately
preceding sentence, and shall have accepted such appointment, within 30 days
after the current Agent's giving of notice of resignation or the Lender's
removal of the current Agent, then the current Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a Lender, if any Lender shall
be willing to serve, and otherwise shall be an Eligible Assignee. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the current Agent, and the current
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any Agent's resignation or removal hereunder as Agent, the
provisions of this Article XII. shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents. Notwithstanding anything contained herein to the contrary, the Agent
may assign its rights and duties under the Loan Documents to any of its
affiliates by giving the Borrower and each Lender prior notice.
Section 12.11. Titled Agents.
Each of the Syndication Agent and the Documentation Agents (each a "Titled
Agent") in each such respective capacity, assumes no responsibility or
obligation hereunder, including, without limitation, for servicing, enforcement
or collection of any of the Advances, nor any duties as an agent hereunder for
the Lenders. The titles given to the Titled Agents are solely honorific and
imply no fiduciary responsibility on the part of the Titled Agents to the Agent,
any Lender, the Parent, the Borrower or any other Loan Party and the use of such
titles does not impose on the Titled Agents any duties or obligations greater
than those of any other Lender or entitle the Titled Agents to any rights other
than those to which any other Lender is entitled.
(13) Article XIII. Miscellaneous
106
Section 13.1. Notices.
Unless otherwise provided herein, all notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied or
delivered as follows:
If to the Borrower:
CBL & Associates Limited Partnership
c/o CBL & Associates Properties, Inc.
2030 Hamilton Place Blvd., Suite 500
Chattanooga, Tennessee 37421-6000
Attention: Chief Financial Officer
Telecopy Number: (423) 490-8390
Telephone Number: (423) 855-0001
with an informational copy to:
CBL & Associates Limited Partnership
c/o CBL & Associates Properties, Inc.
2030 Hamilton Place Blvd., Suite 500
Chattanooga, Tennessee 37421-6000
Attention: Finance Counsel
Telecopy Number: (423) 490-8390
Telephone Number: (423) 855-0001
_________If to the Agent or a Lender:
To the Agent's or such Lender's address or telecopy number, as
applicable, set forth on its signature page hereto or in the
applicable Assignment and Assumption Agreement.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section; provided, a Lender shall only be required to give notice of any such
other address to the Agent and the Borrower. All such notices and other
communications shall be effective (i) if mailed, when received; (ii) if
telecopied, upon confirmation of transmission; (iii) if hand delivered, when
delivered and (iv) if by overnight courier service, when delivered.
Notwithstanding the immediately preceding sentence, all notices or
communications to the Agent or any Lender under Articles II. and IV. shall be
effective only when actually received. Neither the Agent nor any Lender shall
incur any liability to the Parent, the Borrower or any other Loan Party (nor
shall the Agent incur any liability to the Lenders) for acting upon any notice
referred to in this Agreement which the Agent or such Lender, as the case may
be, believes in good faith to have been given by a Person authorized to deliver
such notice or for otherwise acting in good faith hereunder. In addition to the
Agent's Lending Office, the Borrower shall send copies of the notices described
in Article II. to the following address of the Agent:
107
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: Disbursement Administrator
Telecopy Number: (310) 615-1016
Telephone Number: (310) 335-9460
Section 13.2. Expenses.
The Borrower agrees (a) to pay or reimburse the Agent for all of the
Agent's reasonable costs and expenses incurred in connection with the
preparation, negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including due diligence expense and
reasonable travel expenses related to closing), and the consummation of the
transactions contemplated thereby, including the reasonable fees and
disbursements of counsel to the Agent and all third party costs and expenses
incurred by the Agent in connection with the review of Properties for inclusion
in calculations of the Borrowing Base and the Agent's other activities under
Article IV., including the cost of all Appraisals (except for Appraisals ordered
under Section 4.3.(b)(ii), 4.3.(b)(iii) or 4.3.(d)), structural, environmental
and engineering reports, title insurance and the reasonable fees and
disbursements of counsel to the Agent relating to all such activities, provided
the Borrower shall not be required to pay or reimburse the Agent for expenses
incurred by the Agent in connection with its review of any such Appraisal or any
environmental, structural or engineering report, (b) to pay or reimburse the
Agent and the Lenders for all their reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under the Loan
Documents, including the reasonable fees and disbursements of counsel retained
by the Agent and of one law firm retained by the Lenders, and any payments in
indemnification or otherwise payable by the Lenders to the Agent pursuant to the
Loan Documents, (c) to pay, and indemnify and hold harmless the Agent and the
Lenders from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any failure to pay or delay in paying,
documentary, stamp, intangible, excise and other similar taxes, if any, which
may be payable or determined to be payable in connection with the execution,
delivery, recording or enforcement of any of the Loan Documents, the perfection
of any Lien purported to be granted under any Loan Document, or consummation of
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Loan Document, and (d) to the extent not already covered by
any of the preceding subsections, to pay the reasonable fees and disbursements
of counsel to the Agent and any Lender incurred in connection with the
representation of the Agent or such Lender in any matter relating to or arising
out of any bankruptcy or other proceeding of the type described in Sections
11.1.(e) or 11.1.(f), including, without limitation (i) any motion for relief
from any stay or similar order, (ii) the negotiation, preparation, execution and
delivery of any document relating to the Obligations and (iii) the negotiation
and preparation of any debtor-in-possession financing or any plan of
reorganization of the Parent, the Borrower or any other Loan Party, whether
proposed by the Parent, the Borrower, such Loan Party, the Lenders or any other
Person, and whether such fees and expenses are incurred prior to, during or
after the commencement of such proceeding or the confirmation or conclusion of
any such proceeding.
Section 13.3. Setoff.
Each Lender hereby waives any right of set-off against the Obligations it
has with respect to any deposit account of the Borrower or any other Loan Party
maintained with such Lender or any other account or property of the Borrower or
any other Loan Party held by such Lender other than the Collateral; provided
however, that this waiver is not intended, and shall not be deemed, to waive any
right of set-off (a) any Lender has with respect to any account required to be
maintained pursuant to this Agreement or any other Loan Document or (b) arising
other than pursuant to this Agreement, the Collateral Documents or the other
Loan Documents.
108
Section 13.4. Litigation; Jurisdiction; Other Matters; Waivers.
(a)______EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE PARENT, THE AGENT OR ANY OF THE LENDERS WOULD
BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN
DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE LENDERS, THE AGENT, THE BORROWER AND THE PARENT
HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY
KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY
OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY
OTHER LOAN DOCUMENT OR IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN THEREIN OR
BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR
AMONG THE BORROWER, THE PARENT, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR
NATURE.
(b)______EACH OF THE BORROWER, THE PARENT, THE AGENT AND EACH LENDER HEREBY
AGREES THAT THE FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR,
AT THE OPTION OF THE AGENT, ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA,
SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR
AMONG THE BORROWER, THE PARENT, THE AGENT OR ANY OF THE LENDERS, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE ADVANCES AND LETTERS OF CREDIT,
THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR
THEREFROM OR THE COLLATERAL. THE BORROWER, THE PARENT, THE AGENT AND EACH OF THE
LENDERS EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. EACH PARTY FURTHER WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF
ANY ACTION BY THE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY
LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE
JURISDICTION.
(c)______THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY
WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL
CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE ADVANCES AND ALL
OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE
TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS
AGREEMENT.
Section 13.5. Successors and Assigns.
(a)______Generally. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise transfer any
of is rights under this Agreement without the prior written consent of all the
Lenders (and any such assignment or transfer to which all of the Lenders have
not consented shall be void).
109
(b)______Participations. Any Lender may at any time grant to an affiliate
of such Lender, or one or more banks or other financial institutions (each a
"Participant" ) participating interests in its Commitment or the Obligations
owing to such Lender. Except as otherwise provided in Section 13.3., no
Participant shall have any rights or benefits under this Agreement or any other
Loan Document. In the event of any such grant by a Lender of a participating
interest to a Participant, such Lender shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement pursuant to
which any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided however, such Lender may agree with the Participant that it will not,
without the consent of the Participant, agree to (i) increase such Lender's
Commitment, (ii) extend the date fixed for the payment of principal on the
Advances or portions thereof owing to such Lender, or (iii) reduce the rate at
which interest is payable thereon. An assignment or other transfer which is not
permitted by subsection (c) or (d) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c)Assignments. Any Lender may with the prior written consent of the Agent
and the Borrower (which consent in each case, shall not be unreasonably
withheld) at any time assign to one or more Eligible Assignees (each an
"Assignee") all or a portion of its rights and obligations under this Agreement
and the Notes; provided, however, (i) no such consent by the Borrower shall be
required (x) if a Default or Event of Default shall exist or (y) in the case of
an assignment to another Lender or an affiliate of another Lender; (ii) any
partial assignment shall be in an amount at least equal to $10,000,000 and after
giving effect to such assignment the assigning Lender retains a Commitment, or
if the Commitments have been terminated, holds Notes having an aggregate
outstanding principal balance, of at least $10,000,000, (iii) each such
assignment shall be effected by means of an Assignment and Assumption Agreement;
and (iv) so long as the Commitments remain in effect, after giving effect to any
such assignment by the Lender then acting as the Agent, the Lender then acting
as Agent shall retain a Commitment greater than or equal to the Commitment of
each other Lender as of the Effective Date unless the Requisite Lenders consent
otherwise (which consent shall not be unreasonably withheld or delayed). Upon
execution and delivery of such instrument and payment by such Assignee to such
transferor Lender of an amount equal to the purchase price agreed between such
transferor Lender and such Assignee, such Assignee shall be deemed to be a
Lender party to this Agreement and shall have all the rights and obligations of
a Lender with a Commitment as set forth in such Assignment and Assumption
Agreement, and the transferor Lender shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Lender, the Agent and the Borrower shall
make appropriate arrangement so the new Notes are issued to the Assignee and
such transferor Lender, as appropriate. In connection with any such assignment,
the transferor Lender shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,500. Anything in this Section to
the contrary notwithstanding, no Lender may assign or participate any interest
in any Advance held by it hereunder to the Borrower, or any of its respective
affiliates or Subsidiaries.
(d) Federal Reserve Bank Assignments. In addition to the assignments and
participations permitted under the foregoing provisions of this Section, and
without the need to comply with any of the formal or procedural requirements of
this Section, any Lender may at any time and from time to time, pledge and
assign all or any portion of its rights under all or any of the Loan Documents
to a Federal Reserve Bank; provided that no such pledge of assignment shall
release such Lender from its obligation thereunder. To facilitate any such
pledge or assignment, Agent shall, at the request of such Lender, enter into a
letter agreement with the Federal Reserve Bank in, or substantially in, the form
of the exhibit to Appendix C to the Federal Reserve Bank of New York Operating
Circular No 10, as amended from time to time. No such pledge or assignment shall
release the assigning Lender from its obligations hereunder.
110
(e) Information to Assignee, Etc. A Lender may furnish any information
concerning the Parent, the Borrower, any Subsidiary or any other Loan Party in
the possession of such Lender from time to time to Assignees and Participants
(including prospective Assignees and Participants).
Section 13.6. Amendments and Waivers.
(a) Generally. Except as otherwise expressly provided in this Agreement,
(i) any consent or approval required or permitted by this Agreement or in any
Loan Document to be given by the Lenders may be given, (ii) any term of this
Agreement or of any other Loan Document (other than any fee letter solely
between the Borrower and the Agent) may be amended, (iii) the performance or
observance by the Parent, the Borrower or any other Loan Party of any terms of
this Agreement or such other Loan Document (other than any fee letter solely
between the Borrower and the Agent) may be waived, and (iv) the continuance of
any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Requisite Lenders (or the Agent at the written
direction of the Requisite Lenders), and, in the case of an amendment to any
Loan Document, the written consent of each Loan Party which is party thereto.
(b) Unanimous Consent. Notwithstanding the foregoing, no amendment, waiver
or consent shall, unless in writing, and signed by all of the Lenders (or the
Agent at the written direction of the Lenders), do any of the following:
(i) increase the Commitments of the Lenders (excluding any
increase as a result of an assignment of Commitments permitted under
Section 13.5. or any increase of a Lender's Commitment effected in
accordance with Section 2.11.), or subject the Lenders to any
additional obligations;
(ii) reduce the principal of, or interest rates that have
accrued or that will be charged on the outstanding principal amount of,
any Advances or other Obligations;
(iii) reduce the amount of any Fees payable to the Lenders
hereunder; provided, however, the Agent shall be authorized on behalf
of all the Lenders, without the necessity of any notice to, or further
consent from, any Lender, to waive the imposition of the late fees
provided in Section 2.8., up to a maximum of 2 times per calendar year;
(iv) postpone any date fixed for any payment of principal of,
or interest on, any Advances or for the payment of Fees or any other
Obligations;
(v) change the Commitment Percentages (excluding any change as
a result of an assignment of Commitments permitted under Section 13.5.
or an increase of Commitments effected pursuant to Section 2.11.);
(vi) amend this Section or amend the definitions of the terms
used in this Agreement or the other Loan Documents insofar as such
definitions affect the substance of this Section;
(vii) modify the definition of the term "Requisite Lenders" or
modify in any other manner the number or percentage of the Lenders
required to make any determinations or waive any rights hereunder or to
modify any provision hereof;
111
(viii) modify the definition of the terms "Appraised Value,"
"Borrowing Base," "Eligible Property" and "Permanent Loan Estimate";
(ix) release any Guarantor from its obligations under the
Guaranty to which it is a party except as contemplated under Section
4.2. or release the Parent from its obligations under the Parent
Guaranty;
(x) waive a Default or Event of Default under Section
11.1.(a);
(xi) amend Section 10.1.(b) or modify the definition of the
terms "Adjusted Asset Value," "Gross Asset Value" and "Total
Liabilities"; or
(x) release or dispose of any Collateral unless released or
disposed of as permitted by, and in accordance with, Section 12.8. or
Section 4.2.
(c) Amendment of Duties of Agent or Swingline Lender. No amendment, waiver
or consent unless in writing and signed by the Agent, in addition to the Lenders
required hereinabove to take such action, shall affect the rights or duties of
the Agent under this Agreement or any of the other Loan Documents. Any
amendment, waiver or consent relating to Section 2.3. or the obligations of the
Swingline Lender under this Agreement or any other Loan Document shall, in
addition to the Lenders required hereinabove to take such action, require the
written consent of the Swingline Lender.
(d) Amendments and Waivers Generally. No waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent thereon and
any amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose set forth therein. No course of dealing or
delay or omission on the part of the Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event
of Default occurring hereunder shall continue to exist until such time as such
Event of Default is waived in writing in accordance with the terms of this
Section, notwithstanding any attempted cure or other action by the Parent, the
Borrower, any other Loan Party or any other Person subsequent to the occurrence
of such Event of Default. Except as otherwise explicitly provided for herein or
in any other Loan Document, no notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances.
Section 13.7. Nonliability of Agent and Lenders.
The relationship between the Borrower, on the one hand, and the Lenders and
the Agent, on the other hand, shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower and no provision in this Agreement or in any of the other Loan
Documents, and no course of dealing between or among any of the parties hereto,
shall be deemed to create any fiduciary duty owing by the Agent or any Lender to
any Lender, the Parent, the Borrower, any Subsidiary or any other Loan Party.
Neither the Agent nor any Lender undertakes any responsibility to the Borrower
or the Parent to review or inform the Borrower or the Parent of any matter in
connection with any phase of the business or operations of the Borrower, the
Parent or any of their respective Subsidiaries or Affiliates.
Section 13.8. Confidentiality.
Except as otherwise provided by Applicable Law, the Agent and each Lender
shall utilize all non-public information obtained pursuant to the requirements
of this Agreement which has been identified as confidential or proprietary by
the Borrower or the Parent in accordance with its customary procedure for
handling confidential information of this nature and in accordance with safe and
112
sound banking practices but in any event may make disclosure: (a) to any of
their respective affiliates (provided any such affiliate shall agree to keep
such information confidential in accordance with the terms of this Section); (b)
as reasonably requested by any bona fide Assignee, Participant or other
transferee in connection with the contemplated transfer of any Commitment,
Advance or participations therein as permitted hereunder (provided they shall
agree to keep such information confidential in accordance with the terms of this
Section); (c) as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process or in connection with any
legal proceedings; (d) to the Agent's or such Lender's independent auditors and
other professional advisors (provided they shall be notified of the confidential
nature of the information); (e) if an Event of Default exists, to any other
Person, in connection with the exercise by the Agent or the Lenders of rights
hereunder or under any of the other Loan Documents; and (f) to the extent such
information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Agent or any Lender on a
nonconfidential basis from a source other than the Borrower or any Affiliate.
Section 13.9. Indemnification.
(a) The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Agent, any affiliate of the Agent and each of the Lenders and their
respective directors, officers, agents, employees and counsel (each referred to
herein as an "Indemnified Party") from and against any and all losses, costs,
claims, damages, liabilities, deficiencies, judgments or expenses of every kind
and nature (including, without limitation, amounts paid in settlement, court
costs and the fees and disbursements of counsel incurred in connection with any
litigation, investigation, claim or proceeding or any advice rendered in
connection therewith, but excluding losses, costs, claims, damages, liabilities,
deficiencies, judgments or expenses indemnification in respect of which is
specifically covered by Section 3.9. or 5.1. or expressly excluded from the
coverage of such Sections) incurred by an Indemnified Party in connection with,
arising out of, or by reason of, any suit, cause of action, claim, arbitration,
investigation or settlement, consent decree or other proceeding (the foregoing
referred to herein as an "Indemnity Proceeding") which is in any way related to:
(i) this Agreement or any other Loan Document (including without limitation, the
Existing Debt Assignment Agreements) or the transactions contemplated thereby;
(ii) the making of any Advances or issuance of Letters of Credit hereunder;
(iii) any actual or proposed use by the Borrower of the proceeds of the Advances
or Letters of Credit; (iv) the Agent's or any Lender's entering into this
Agreement; (v) the fact that the Agent and the Lenders have established the
credit facility evidenced hereby in favor of the Borrower; (vi) the fact that
the Agent and the Lenders are creditors of the Borrower and have or are alleged
to have information regarding the financial condition, strategic plans or
business operations of the Borrower and the Subsidiaries; (vii) the fact that
the Agent and the Lenders are material creditors of the Borrower and are alleged
to influence directly or indirectly the business decisions or affairs of the
Borrower and the Subsidiaries or their financial condition; (viii) the exercise
of any right or remedy the Agent or the Lenders may have under this Agreement or
the other Loan Documents including, but not limited to, the foreclosure upon, or
seizure of, any Collateral or the exercise of any other rights of a secured
party; provided, however, that the Borrower shall not be obligated to indemnify
any Indemnified Party as set forth above for any acts or omissions of such
Indemnified Party in connection with matters described in this clause (viii)
that constitute gross negligence or willful misconduct; or (ix) any violation or
non-compliance by the Borrower or any Subsidiary of any Applicable Law
(including any Environmental Law) including, but not limited to, any Indemnity
Proceeding commenced by (A) the Internal Revenue Service or state taxing
authority or (B) any Governmental Authority or other Person under any
Environmental Law, including any Indemnity Proceeding commenced by a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower or its Subsidiaries (or its respective properties) (or the Agent
and/or the Lenders as successors to the Borrower) to be in compliance with such
Environmental Laws.
113
(b) The Borrower's indemnification obligations under this Section shall
apply to all Indemnity Proceedings arising out of, or related to, the foregoing
whether or not an Indemnified Party is a named party in such Indemnity
Proceeding. In this connection, this indemnification shall cover all reasonable
costs and expenses of any Indemnified Party in connection with any deposition of
any Indemnified Party or compliance with any subpoena (including any subpoena
requesting the production of documents). This indemnification shall, among other
things, apply to any Indemnity Proceeding commenced by other creditors of the
Borrower or any Subsidiary, any shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of the Borrower), any account
debtor of the Borrower or any Subsidiary or by any Governmental Authority.
(c) This indemnification shall apply to any Indemnity Proceeding arising
during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.
(d) An Indemnified Party may conduct its own investigation and defense of,
and may formulate its own strategy with respect to, any Indemnity Proceeding
covered by this Section and, as provided above, all costs and expenses incurred
by such Indemnified Party shall be reimbursed by the Borrower. No action taken
by legal counsel chosen by an Indemnified Party in investigating or defending
against any such Indemnity Proceeding shall vitiate or in any way impair the
obligations and duties of the Borrower hereunder to indemnify and hold harmless
each such Indemnified Party; provided, however, that (i) if the Borrower is
required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower
has provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnity
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnity Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).
(e) If and to the extent that the obligations of the Borrower hereunder are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.
(f) Subject to the immediately following Section 13.10., the Borrower's
obligations hereunder shall survive any termination of this Agreement and the
other Loan Documents and the payment in full in cash of the Obligations, and are
in addition to, and not in substitution of, any of the other obligations set
forth in this Agreement or any other Loan Document to which it is a party.
Section 13.10. Termination; Survival.
At such time as (a) all of the Commitments have been terminated, (b) none
of the Lenders is obligated any longer under this Agreement to make any Advances
and (c) all Obligations (other than obligations which survive as provided in the
following sentence) have been paid and satisfied in full, this Agreement shall
terminate. The indemnities to which the Agent and the Lenders are entitled under
the provisions of Sections 3.9., 5.1., 5.4., 12.7., 13.2. and 13.9. and any
other provision of this Agreement and the other Loan Documents, and the
provisions of Section 13.4., shall continue in full force and effect and shall
protect the Agent and the Lenders (i) notwithstanding any termination of this
Agreement, or of the other Loan Documents, against events arising after such
termination as well as before but not for a period in excess of three years
after the date this Agreement terminates in accordance with the preceding
sentence and (ii) at all times after any such party ceases to be a party to this
Agreement with respect to all matters and events existing on or prior to the
date such party ceased to be a party to this Agreement but not for a period in
excess of three years after any such party cease to be a party to this
Agreement.
114
Section 13.11. Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 13.12. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
Section 13.13. Counterparts.
This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.
Section 13.14. Obligations with Respect to Loan Parties.
The obligations of the Borrower to direct or prohibit the taking of certain
actions by the Parent or the other Loan Parties as specified herein shall be
absolute and not subject to any defense the Borrower may have that the Borrower
does not control the Parent or such Loan Parties.
Section 13.15. Independence of Covenants.
All covenants hereunder shall be given in any jurisdiction independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 13.16. Entire Agreement.
This Agreement, the Notes, and the other Loan Documents referred to herein
embody the final, entire agreement among the parties hereto and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and thereof and
may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto.
Section 13.17. Construction; Conflict of Terms.
The Agent, each Lender, the Borrower and the Parent acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the Agent, the Lenders, the Borrower
and the Parent. In the event of a conflict between the terms and provisions of
this Agreement and the terms and provisions of any of the other Loan Documents,
the terms of this Agreement shall govern; provided, however, that any term or
provision of any Collateral Document applicable to the Collateral shall be
deemed to be supplemental to, and not in conflict with, the terms and provisions
of this Agreement.
115
Section 13.18. AMENDMENT, RESTATEMENT AND CONSOLIDATION; NO NOVATION.
THE EXISTING CREDIT AGREEMENT AND THE EXISTING DEBT AGREEMENTS ARE being
amended, restated AND CONSOLIDATED in THEIR entirety by this agreement for the
convenience of the parties. This Agreement merely amends, modifies, restates AND
CONSOLIDATES the indebtedness, liabilities and obligations evidenced by the
Existing Credit Agreement, THE EXISTING DEBT AGREEMENTS and the other loan
documents (as defined in the existing credit agreement) and does not constitute,
and it is the express intent of the parties hereto that this Agreement does not
effect, a novation of the existing indebtedness, liabilities and obligations
owing by the Borrower pursuant to the Existing Credit Agreement OR THE EXISTING
DEBT AGREEMENTS. All such indebtedness, liabilities and obligations continue to
remain outstanding and evidenced by this agreement and the OTHER LOAN DOCUMENTS.
THE AMENDMENT, RESTATEMENT AND CONSOLIDATION EFFECTED HEREBY SHALL BE DEEMED TO
HAVE PROSPECTIVE APPLICATION ONLY FROM AND AFTER THE EFFECTIVE DATE, UNLESS
OTHERWISE EXPRESSLY STATED HEREIN.
Section 13.19. Limitation of Liability of Borrower's General Partner.
Subject to the exceptions and qualifications described below, the General
Partner, shall not be personally liable for the payment of the Obligations.
Notwithstanding the foregoing: (a) if an Event of Default occurs, nothing
contained herein shall in any way prevent or hinder the Agent or the Lenders in
the enforcement or foreclosure of any Lien securing any of the Obligations, or
in the pursuit or enforcement of any right, remedy or judgment against the
Borrower or any other Loan Party, or any of their respective assets; and (b) the
General Partner shall be fully liable to the Agent and the Lenders to the same
extent that the General Partner would be liable absent the foregoing provisions
of this Section: (i) for fraud or willful misrepresentation by the General
Partner, its Affiliates or predecessor general partner (i.e., the Parent), (to
the full extent of losses suffered by the Agent or any Lender by reason of such
fraud or willful misrepresentations); (ii) for the retention of any rental
income or other income in excess of operating expenses and capital expenses
arising with respect to any Collateral Property or any other Collateral and
collected by the Borrower after the Agent has given the Borrower notice (or any
Senior Officer of the Borrower has knowledge) that an Event of Default exists
and, as a result of such Event of Default, the Agent and/or the Lender have
elected to exercise any of their rights or remedies available to them as a
result thereof (to the full extent of the rental income or other income in
excess of such operating expenses and capital expenses collected by the Borrower
after the giving of any such notice or obtaining of such knowledge); (iii) for
the fair market value, as of the time of the giving of any notice (or obtaining
of any such knowledge) referred to in the immediately preceding clause (ii), of
any personalty or fixtures removed or disposed of by the Borrower (other than in
accordance with the terms of the Security Deed encumbering the same) after the
giving of any notice (or obtaining of any such knowledge) referred to in the
immediately preceding clause (ii); and (iv) for the misapplication by the
Borrower (contrary to the provisions of this Agreement or any of the other Loan
Documents) of (x) any proceeds paid under any insurance policy by reason of
damage, loss or destruction to any portion of the Collateral (to the full extent
of such proceeds so misapplied); or (y) any proceeds or awards resulting from
the condemnation of all or any part of any of the Collateral (to the full extent
of such proceeds or awards so misapplied). No subsequent owner of Collateral
shall be liable under the immediately preceding clause (b) for the acts and
omissions of any prior owner, provided such subsequent owner and any partner
therein or other party thereto is not an Affiliate of such prior owner or any
partner therein or other party thereto, and further provided that the Agent and
the Requisite Lenders have given their prior written approval to the transfer of
such Collateral to such subsequent owner, if such approval is required under the
Loan Documents.
116
Section 13.20. Limited Nature of Parent's Obligations.
THE LENDERS AND THE AGENT ACKNOWLEDGE AND AGREE THAT THE PARENT IS JOINING
IN THE EXECUTION OF THIS AGREEMENT SOLELY FOR THE LIMITED PURPOSE OF BEING BOUND
BY THE TERMS OF THE SECTIONS SPECIFICALLY APPLICABLE TO THE PARENT, INCLUDING
SECTIONS 8.1., 8.2., 8.6., 8.10., 8.11., 10.1., 10.4., 10.7., and 10.8. OF THIS
AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THE OCCURRENCE OF ANY
DEFAULT OR EVENT OF DEFAULT UNDER THIS AGREEMENT OR OTHER LOAN DOCUMENT
RESULTING FROM A BREACH BY THE PARENT OF, OR A MISREPRESENTATION BY THE PARENT
UNDER OR IN ANY WAY RELATING TO, ANY OF SUCH SECTIONS SHALL NOT CREATE ANY
PERSONAL LIABILITY ON THE PART OF THE PARENT FOR THE PAYMENT OF THE OBLIGATIONS.
NOTHING CONTAINED IN THIS SECTION IS INTENDED TO LIMIT THE OBLIGATIONS OF THE
PARENT UNDER THE PARENT GUARANTY.
Section 13.21. Limitation of Liability of Borrower's Directors, Officers, Etc.
The parties hereto acknowledge and agree that no director, officer,
shareholder, employee or agent of the Borrower shall be held to any personal
liability, jointly or severally, for any obligation of, or claim against, the
Borrower.
Section 13.22. Replacement of Notes.
In the event of the loss, theft, destruction, total or partial
obliteration, mutilation or inappropriate cancellation of any Note of a Lender,
or the placement of any inappropriate marking upon any such Note, and in the
case of any such loss, theft, destruction or total obliteration, upon delivery
to the Agent on behalf of such Lender of an indemnity agreement reasonably
satisfactory to and at no expense to the Borrower or, in the case of any such
partial obliteration, mutilation, inappropriate cancellation or inappropriate
marking, upon surrendering and cancellation of such Note to the Agent on behalf
of such Lender, the Borrower will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to such Note and dated as of
the date of such Note and upon such execution and delivery all references in
this Agreement to Notes shall be deemed to include such replacement Note.
[Signatures on Following Pages]
117
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amended and
Restated Credit Agreement to be executed by their authorized officers all as of
the day and year first above written.
Borrower:
CBL & Associates Limited Partnership
By: CBL Holdings I, Inc., its sole general partner
By: /s/ John N. Foy
------------------------------------------------
Name: John N. Foy
-----------------------------------------
Title: Vice Chairman
----------------------------------------
PARENT:
CBL & Associates Properties, Inc., solely for the limited purposes
set forth in Section 13.20.
By: /s/ John N. Foy
------------------------------------------------
Name: John N. Foy
-----------------------------------------
Title: Vice Chairman
----------------------------------------
[Signatures Continued on Next Page]
118
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
Wells Fargo Bank, National Association, as Agent and as a Lender
By: /s/ C. Jackson Hoover
---------------------------------------------------
Name: C. Jackson Hoover
------------------------------------------
Title: Vice President
------------------------------------------------
Commitment Amount:
$60,000,000
Lending Office (all Types of Advances) and
Address for Notices:
2859 Paces Ferry Road, Suite 1805
Atlanta, GA 30339
Attn: Loan Administration
Telecopier: (770) 435-2262
Telephone: (770) 435-3800
[Signatures Continued on Next Page]
119
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Michael A. Raarup
--------------------------------------------------
Name: Michael A. Rarrup
------------------------------------------
Title: Vice President
------------------------------------------------
Commitment Amount:
$50,000,000
Lending Office (all Types of Advances) and
Address for Notices:
400 City Center Complex Credits
Oshkosh, WI 54901
Attn: Brian Wloszcynski
Telecopier: (920) 237-7993
Telephone: (920) 237-7534
[Signatures Continued on Next Page]
120
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
COMMERZBANK AG, New York and Grand Cayman Branches
By: /s/ Steve Rosamilia
----------------------------------------------------
Name: Steve Rosamilia
-------------------------------------------
Title: Vice President
----------------------------------------------
By: /s/ Marcus Perry
-----------------------------------------------------
Name: Marcus Perry
------------------------------------------
Title: Assistant Vice President
------------------------------------
Commitment Amount:
$35,000,000
Lending Office (all Types of Advances) and
Address for Notices:
2 World Financial Center
New York, NY 10281
Attn: Massimo Ippolito
Telecopier: (212) 266-7707
Telephone: (212) 266-7772
[Signatures Continued on Next Page]
121
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Rex Rudy
-----------------------------------------------------
Name: Rex Rudy
---------------------------------------------
Title: Director
-----------------------------------------------
Commitment Amount:
$35,000,000
Lending Office (all Types of Advances) and
Address for Notices:
201 S. College St. 8th Floor
Charlotte, NC 28288
Attn: Rex E. Rudy, Director
Telecopier: (704) 383-7989
Telephone: (704) 383-5398
[Signatures Continued on Next Page]
122
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
KEYBANK NATIONAL ASSOCIATION
By: /s/ Ashley Smith Reiser
------------------------------------------------
Name: Ashley Smith Reiser
----------------------------------------
Title: Vice President
--------------------------------------------
Commitment Amount:
$25,000,000
Lending Office (all Types of Advances) and
Address for Notices:
KBNA 127 Public Sq. OH-01-27-0839
Cleveland, OH 44114
Attn: R. J. Quinn
Telecopier: (216) 689-4721
Telephone: (216) 689-3236
[Signatures Continued on Next Page]
123
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Wayne P. Robertson
------------------------------------------------
Name: Wayne P. Robertson
---------------------------------------
Title: Senior Vice President
----------------------------------------
Commitment Amount:
$25,000,000
Lending Office (all Types of Advances) and
Address for Notices:
One PNC Plaza, 19th Floor
249 Fifth Avenue
Mail Stop P1-POPP-19-2
Pittsburgh, PA 15222-2707
Attn: Carrie McDonough
Telecopier: (412) 768-5754
Telephone: (412) 768-4279
[Signatures Continued on Next Page]
124
[Signature Page to Sixth Amended and Restated Credit Agreement dated as of
February 28, 2003 with CBL & Associates Limited Partnership]
SUNTRUST BANK, a Georgia Banking Corporation
By: /s/ Bruce P. Tidwell
----------------------------------------------------
Name: Bruce P. Tidwell
-------------------------------------------
Title: Vice President
--------------------------------------------
Commitment Amount:
$25,000,000
Lending Office (all Types of Advances) and
Address for Notices:
736 Market Street
Chattanooga, TN 37402-4807
Attn: Sandy L. Sharp
Telecopier: (423) 757-3603
Telephone: (423) 757-3193
125
SCHEDULE 1.1(A)
Existing Debt Agreements
1. Loan Agreement between CBL/Richland Mall, L.P. and U.S. Bank National
Association, dated as of May 31, 2002.
2. Promissory Note from CBL/Richland Mall, L.P. to U.S. Bank National
Association, dated May 31, 2002 in the original principal
amount of $34,600,000.00.
3. Guaranty of CBL & Associates Limited Partnership in favor of U.S. Bank
National Association, dated as of May 31, 2002.
4. Combination Construction Deed of Trust, Security Agreement, Assignment
of Leases and Rents and Fixture Filing, dated as of May 31, 2002,
recorded under Clerk's File No. 2002019258, Official Records of
McLennan County, Texas; as amended by Amendment and Modification dated
June 20, 2002 and recorded under Clerk's File No. 2002023446,
aforesaid records.
5. U.C.C. Financial Statements showing CBL/Richland Mall, L.P. as debtor
and U.S. Bank National Association as secured party filed in the
aforesaid records and with the Texas Secretary of State.
6. Indemnification Agreement among CBL/Richland Mall, L.P., CBL &
Associates Limited Partnership and U.S. Bank National Association,
dated as of May 31, 2002.
7. Collateral Assignment and Agreement Relating to Property Management
Agreement among CBL/Richland Mall, L.P., CBL & Associates Management,
Inc. and U.S. Bank National Association, dated as of May 31, 2002.
127
SCHEDULE 4.1
Initial Collateral Properties
Project
<s>
1. (a) Georgia Square Mall,
Clark County, Georgia (a) Georgia Square Partnership, a Georgia limited partnership
(b) Georgia Square Cinema (b) Georgia Square Associates, Ltd., a Georgia limited partnership
2. Post Oak Mall
Brazos County, Texas (a) Post Oak Mall Associates Limited Partnership, a Texas limited partnership
(b) College Station Partners, Ltd., a Texas limited partnership
3. Twin Peaks Mall
Boulder County, Colorado Twin Peaks Mall Associates, Ltd., a Colorado limited partnership
4. Richland Mall
Waco, Texas CBL/Richland Mall, L.P., a Texas limited partnership
5. Frontier Mall
Cheyenne, Wyoming Frontier Mall Associates Limited Partnership, a Wyoming limited partnership
6. Frontier Square
Cheyenne, Wyoming CBL & Associates Limited Partnership, a Delaware limited partnership
7. Madison Square Mall
Huntsville, Alabama Madison Square Associates, Ltd., an Alabama limited partnership
8. Madison Plaza
Huntsville, Alabama Madison Plaza Associates, Ltd., an Alabama limited partnership
128
SCHEDULE 7.1.(f)
Litigation
None.
129
SCHEDULE 7.1.(s)
Single Asset Entity Exceptions
The Borrower is the owner of Frontier Square.
Georgia Square Associates, Ltd., the owner of the cinema parcel adjacent to
Georgia Square Mall, also owns a 1% general partnership interest in Georgia
Square Partnership, the owner of Georgia Square Mall.
130