Exhibit 10.23.5
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this 17th day of October, 2005 (the
"Effective Date") by and among CBL & ASSOCIATES LIMITED PARTNERSHIP, a Delaware
limited partnership ("CBL/OP"); HP-SP Associates, L.L.C., a Missouri limited
liability company, and Hickory Point Mall, Limited Partnership, a Delaware
limited partnership (collectively, "Property Owner").
WITNESSETH:
WHEREAS, Property Owner is the owner of Hickory Point Park Mall, a
regional retail shopping center, and related land, improvements and property
located in Forsyth, Macon County, Illinois, which is more particularly described
in, and is the subject of, this Agreement; and
WHEREAS, CBL/OP is a Delaware limited partnership which desires to acquire
the "Property" (described below) on the terms described in this Agreement; and
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings in this Agreement, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND FUNDAMENTAL PROVISIONS
This Article I sets forth certain definitions and fundamental provisions
for purposes of this Agreement. An index of defined terms used in this Agreement
is included with the Table of Contents of this Agreement.
1.1 "Property" means, collectively, all of Property Owner's right, title and
interest in the Land, the Appurtenances, the Improvements, the Service
Contracts, the Intangible Property, the Tenant Leases, the Personal Property
and the Tenant Security Deposits, as such terms are defined below.
1.1.1 "Land" means, collectively, those certain parcels of land located in
Forsyth, Illinois, which are described in Exhibit A attached hereto.
1.1.2 Intentionally Omitted"
1.1.3 "Appurtenances" means all right, title and interest, if any, of Property
Owner in and to the following: (a) all land lying in the bed of any street,
highway, road or avenue, open or proposed, public or private, in front of or
adjoining the Land, to the center line thereof; (b) all rights of way, highways,
public places, easements, appendages, appurtenances, sidewalks, alleys, strips
and gores of land adjoining or appurtenant to the Land which are now or
hereafter may be used in connection with the Property; (c) all awards to be made
in lieu of any of the foregoing or for damages to the Land by reason of the
change of grade of any street, highway, road or avenue; and (d) all easements,
rights and privileges benefiting the applicable Land.
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1.1.4 "Improvements" means all buildings, structures, improvements and fixtures
located on the Land.
1.1.5 "Service Contracts" means any service, supply, maintenance, repair,
construction and management contracts to which Property Owner is a party
relating to the Real Property (as defined below).
1.1.6 "Intangible Property" means all assignable intangible personal property,
if any, now or through the date of Closing owned by Property Owner and arising
out of or in connection with Property Owner's ownership of the Real Property,
the Service Contracts, Tenant Leases and the Personal Property, including (to
the extent any such items exist) (a) Property Owner's rights to use any plans,
specifications and drawings relating to the Improvements (subject to the rights
of the parties who prepared the same), (b) Property Owner's rights to any
current names, logos, designs, trademarks, service marks, copyrights, and trade
names used solely in connection with the Real Property (including but not
limited to any internet domain names), (c) the goodwill of Property Owner in
connection with the Real Property, (e) all advertising materials, marketing
programs and strategies, and other similar rights relating solely to Property
Owner's use and operation of the Real Property, the Service Contracts, Tenant
Leases and the Personal Property, (f) any transferable licenses, permits and
certificates of occupancy issued by governmental authorities relating solely to
the use, maintenance, occupancy and/or operation of the Real Property, (g) any
presently effective and assignable warranties and guaranties issued solely with
respect to the Real Property, the Service Contracts, Tenant Leases and the
Personal Property, and (h) the Books and Records (as defined below).
1.1.7 "Tenant Leases" means any and all space leases, licenses, concessions or
other such arrangements for use of space within the Real Property. Such leases
include, without limitation, the agreements listed and described on Exhibit I,
hereinafter referred to as the "Lease Schedule/Rent Roll" attached hereto and by
this reference incorporated herein and made a part hereof.
1.1.8 "Personal Property" means, to the extent any such items exist, any
apparatus, furniture, appliances, building supplies, equipment, machinery and
other tangible items of personal property owned by Property Owner and presently
affixed, attached to, placed or situated upon the Real Property and used
exclusively in connection with the ownership, operation and occupancy of the
Real Property. Personal Property does not include any items of personal property
leased to Property Owner or otherwise owned by third parties, or any of the
Excluded Property referred to in Section 2.2 below.
1.1.9 "Real Property" means collectively the Land, the Improvements and the
Appurtenances.
1.1.10 "Tenant Security Deposits" means all refundable security deposits,
letters of credit, advance rental payments and other deposits of tenants
("Tenants") under Tenant Leases which, as of the Closing Date, have not been
applied and are then held by and are in the possession of Property Owner.
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1.1.11 "Anchor Stores" means the following: (i) Kohl's Illinois, Inc., a Nevada
corporation, successor-in-interest to Kohl's Department Stores, a division of
Brown & Williamson Tobacco Corporation, a Delaware corporation ("Kohl's"); (ii)
Sears, Roebuck and Co., a New York corporation ("Sears"); (iii) Von Maur, Inc.,
an Iowa corporation, successor-in-interest to Carson Pirie Scott & Company, a
Delaware corporation ("Von Maur"); (iv) J. C. Penney Corporation, Inc., a
Delaware corporation ("J.C. Penney"); and (v) McRil, LLC, a Virginia limited
liability company, successor-in-interest to P.A. Bergner and Co., an Illinois
corporation ("Bergner")
1.1.12 "Books and Records" means all site and as built plans, surveys, soil and
substrata studies, architectural renderings, plans and specifications,
engineering plans and studies, floor plans, landscape plans and other plans,
diagrams or studies of any kind, if any, now in the possession or reasonable
control of Property Owner or Property Owner's Property Manager which relate to
the Land, the Improvements or the Personal Property, and all of Property Owner's
right, title and interest in and to operating manuals, marketing brochures,
market studies, tenant data sheets and other books, records and materials of any
kind now in the possession or reasonable control of Property Owner or Property
Owner's Property Manager and required in connection with the continuing
ownership, operation and management of the Improvements, and all financial and
accounting records of the Property Owner for all periods from and after January
1, 1998.
1.2 "Final Approval Date" means the Effective Date.
1.3 "Title Objection Deadline" means 5:00 p.m., Kansas City, Missouri time (it
being agreed that all times in this Agreement shall be deemed to refer to
Kansas City, Missouri time) on the later to occur of (i) the Effective date and
(ii) the fifth (5th) Business day after CBL/OP's receipt of all of the Title
Documents.
1.4 "Closing Date" means the (A) date that is the earlier of: (i) three (3)
business days after the conditions set forth in Sections 5.2.11 and 5.3.7 of
the Oak Park Contract and the Eastland Contract have been satisfied pursuant to
their terms, and (ii) November 30, 2005, or (B) any earlier date upon which
Property Owner and CBL/OP mutually agree.
1.5 "Title Company" means Fidelity National Title Insurance Company whose
address is:
1800 Parkway Place
Two Parkway Center, Suite 700
Atlanta, Georgia 30067
Attention: Linda R. Thurman
Telephone: (770) 850-9600
Facsimile: (770) 850-8222
1.6 "CBL/OP's Address" means:
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CBL & Associates Limited Partnership
c/o CBL and Associates Properties, Inc.
2030 Hamilton Place Boulevard
CBL Center, Suite 500
Chattanooga, Tennessee 37421-6000
Attention: Jay Wiseman
Facsimile: (423) 490-8626
With a copy to:
Shumacker Witt Gaither & Whitaker, P.C.
2030 Hamilton Place Boulevard
CBL Center, Suite 210
Chattanooga, Tennessee 37421
Attention: Ralph M. Killebrew, Jr.
Telephone: (423) 425-7209
Facsimile: (423) 899-1278
and to
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0185
Attention: Yaacov M. Gross
Telephone: (212) 468-8012
Facsimile: (212) 468-7900
1.7 "Property Owner's Address" means:
Hickory Point Mall, Limited Partnership
c/o Copaken, White & Blitt
8900 State Line Rd., Suite 333
Leawood, Kansas 66206
Attention: Keith Copaken
Facsimile: (913) 381-5624
Telephone No.: (913) 381-3840
With a copy to:
Lewis, Rice & Fingersh
1010 Walnut, Suite 500
Kansas City, Missouri 64106
Attention: Peter DiGiovanni
Facsimile: (816) 460-6504
Telephone No.: (816) 472-2504
1.8 "Property Owner's Property Manager" means Copaken, White & Blitt, LLC
whose address is 8900 State Line Rd., Suite 333, Leawood, KS. 66206.
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1.9 "Official Records" means the Official Records of the Register of Deeds
for Macon County, Illinois.
1.10 "Shopping Center" means that certain regional shopping center commonly
known as "Hickory Point Mall" located in Forsyth, Illinois and comprised of,
collectively, the Land, the Appurtenances, the Improvements, the Personal
Property, the Intangible Personal Property, the Service Contracts, the Tenant
Leases, the Tenant Security Deposits and all other property being sold by
Property Owner to CBL/OP under the terms of this Agreement.
1.11 "Purchase Price " means the sum of $44,000,000.00.
1.12 "Escrow Agent" means Fidelity National Title Insurance Company
of New York, having its office at 1800 Parkway Place, Two Parkway Center,
Suite 700, Atlanta, Georgia 30067; Attention: Linda Thurman.
1.13 "Other Mall Contributors" means those parties identified and defined as
"Contributors" in the Oak Park Contract and the Eastland Contract.
ARTICLE II
PURCHASE AND SALE
2.1 Agreement. In consideration of the mutual agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Property Owner agrees to sell the
Property to CBL/OP, and CBL/OP agrees to purchase the Property, for the
Purchase Price and upon the terms and conditions set forth in this Agreement.
2.2 Excluded Property. Notwithstanding anything to the contrary contained in
this Agreement, the term "Property" shall not include any of the following
items, all of which are excluded from the transfer by Property Owner to CBL/OP
hereunder: (a) all cash on hand, checks, money orders or accounts receivable,
(b) any operating accounts, replacement or reserve accounts or other accounts
maintained by or on behalf of Property Owner or Property Owner's affiliates
with respect to the Property, other than those for which an adjustment is made
pursuant to the last sentence of Section 6.3 below; (c) any refundable cash or
other security deposits or any bonds posted by or on behalf of Property Owner
with any governmental authorities, utilities or other parties, other than those
for which an adjustment is made pursuant to the last sentence of Section 6.3
below; (d) Intentionally Omitted; (e) subject to Article XI below, any claims
under Property Owner's insurance policies; (f) any rents, operating expense and
tax reimbursements, additional rentals or other sums or amounts due Property
Owner from prior tenants or sub-tenants who are not subject to Tenant Leases;
(g) any judgments which have been entered in favor of Property Owner as of the
Effective Date for Delinquent Rentals; (h) the Excluded Documents; and (i)
Property Owner's accounting software, provided however, that if such software
is subject to a license that prohibits its commercial transfer, Property Owner
shall, for up to ninety (90) days following the Closing Date, reasonably assist
CBL/OP in reviewing and copying, at CBL/OP's expense (by hard copy as well as
electronically) all Books and Records provided to CBL/OP hereunder in
electronic form and to the transfer of such electronic Books and Records to
CBL/OP's accounting and property management systems.
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2.3 Other Mall Contribution Agreements.
2.3.1 Definitions of other Malls and Purchase Agreements. For purposes hereof,
(i) "Oak Park Contract" shall mean that certain Contribution Agreement of even
date herewith by and between Oak Park Investment, L.P., a Delaware limited
partnership ("Oak Park Property Owner"), and its partners, as contributors, and
CBL/OP, with respect to the property commonly known as Oak Park Mall, Overland
Park, Kansas, herein "Oak Park Mall"; (ii) "Eastland Contract" shall mean that
certain Contribution Agreement of even date herewith by and between B-M-J
Development, Limited Partnership, a Delaware limited partnership ("Eastland
Property Owner"), and its partners, as contributors, and CBL/OP, with respect to
the property commonly known as Eastland Mall, Bloomington, Illinois, herein
"Eastland Mall" and (iii) "Eastland Medical Building Contract" shall mean that
certain Purchase and Sale Agreement of even date herewith by and between BMJ
Medical, LLC, a Missouri limited liability company ("Eastland Medical Building
Property Owner"), as seller, and CBL/OP, as buyer, with respect to the medical
office building and related land, improvements and property located in
Bloomington, McLean County, Illinois, herein "Eastland Medical Building." The
Oak Park Contract, the Eastland Medical Building Contract and the Eastland
Contract are sometimes collectively referred to herein as the "Other Mall
Contracts," and Oak Park Mall, Eastland Medical Building and Eastland Mall are
sometimes collectively referred to herein as the "Other Malls."
2.3.2 Other Mall Contracts; Cross Default; Cross Termination. (A) Any default or
material breach of a representation or warranty by the property owner and/or
contributors under either of the Other Mall Contracts shall constitute a default
of Property Owner under this Agreement, and any proper termination prior to
Closing by CBL/OP of either of the Other Mall Contracts as a result of a default
or material breach of a representation or warranty by the property owner and/or
contributors thereunder, shall constitute CBL/OP's proper election to terminate
this Agreement and recover the Letter of Credit or Deposit, as applicable; and
(B) any default or material breach of a representation or warranty by CBL/OP
under either of the Other Mall Contracts shall constitute a default of CBL/OP
under this Agreement, and any proper termination prior to Closing by the
property owner of either of the Other Mall Contracts as a result of a default or
material breach of a representation or warranty by CBL/OP thereunder, shall
constitute Property Owner's proper election to terminate this Agreement that
entitles Oak Park Property Owner to draw on the Letter of Credit and receive
payment of the Deposit.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. Subject to the terms of this Agreement, the Purchase Price
to be received by Property Owner for the sale of the Property to CBL/OP shall
be Forty-four Million Dollars ($44,000,000.00), payable by wire transfer of
immediately available funds at the Closing.
3.2 Intentionally Omitted
3.3 Intentionally Omitted
3.4 Intentionally Omitted
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3.5 Delivery of Deposit. Within two (2) Business Days following the full
execution of this Agreement, CBL/OP shall deliver to Oak Park Property Owner
the Letter of Credit, defined below. As used herein, the term "Deposit" shall
mean any proceeds of, or moneys paid in connection with, the Letter of Credit,
including, without limitation, any interest thereon. The term "Letter of
Credit" shall mean an irrevocable standby letter of credit (i) in the form
attached hereto as Exhibit Q and made a part hereof (which shall be same Letter
of Credit for the Oak Park Contract and the Eastland Contract, (ii) in the face
amount of Ten Million Dollars ($10,000,000), (iii) naming the Oak Park Property
Owner as beneficiary, (iv) issued for the benefit of Property Owner, Eastland
Property Owner and Oak Park Property Owner with the ability to draw by Oak Park
Property Owner pursuant to the terms of this Agreement, (v) issued by and drawn
upon First Tennessee Bank, N.A. or Wells Fargo Bank, N.A., and (vi) issued for
a term of sixty (60) days from its date of issuance with a right, upon ten (10)
days notice prior to the expiration of such sixty (60) day term, for CBL/OP to
extend the term of the Letter of Credit for an additional sixty (60) days.
Property Owner will only be permitted to draw on the Letter of Credit in the
event (1) of a default by CBL/OP under this Agreement or under either of the
Other Mall Contracts, or (2) the Letter of Credit has not been renewed or
extended and less than ten (10) days remain prior to the expiration thereof. In
the event of any drawing on any Letter of Credit by Oak Park Property Owner,
the proceeds will be payable exclusively to Escrow Agent, and such proceeds
will be held as the Deposit under this Agreement and will be subject to
disposition by the Escrow Agent in accordance with the terms and conditions of
this Agreement. The Deposit shall be non-refundable and the proceeds shall be
disbursed 76% to Oak Park Property Owner, 15.46% to Eastland Property Owner and
8.54% to Property Owner in the event of a termination of this Agreement or
failure to close by CBL/OP, subject to the exceptions provided in Section 3.6
below.
3.6 Disposition of Deposit. If the transaction contemplated hereby is
consummated in accordance with the terms and provisions hereof, the Letter of
Credit shall be returned to CBL/OP at Closing (or if the Letter of Credit is
converted to the Deposit before Closing, the Deposit will be applied to the
Purchase Price at Closing). If this Agreement is terminated by Property Owner
or CBL/OP pursuant to Section 4.3.2, Section 4.3.3, Section 4.3.6, Section 5.2,
Section 5.3, Section 8.3, Section 10.2, Section 11.1, or Section 11.3, the
Letter of Credit or Deposit, as applicable, shall be returned to CBL/OP as
provided in the relevant Section pertaining to such termination. Additionally,
if this Agreement is terminated by CBL/OP pursuant to Section 2.3.2, by reason
of a default under the Other Mall Contracts by Eastland Property Owner,
Eastland Medical Building Property Owner, Oak Park Property Owner, or the Other
Mall Contributors, the Letter of Credit or Deposit, as applicable, shall be
returned to CBL/OP as provided in Section 2.3.2.
3.7 Purchase Price Payment. CBL/OP shall deposit the Purchase Price into Escrow
no later than the Business Day immediately preceding the Closing Date in
sufficient time such that the Closing may occur and Escrow Holder will be able
to deliver good funds to Property Owner no later than 1:00 p.m. on the Closing
Date.
ARTICLE IV
INSPECTION AND TITLE REVIEW
4.1 CBL/OP's Inspections.
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4.1.1 Inspections, Tests and Studies. CBL/OP acknowledges that prior to the
Final Approval Date, CBL/OP and CBL/OP's authorized agents, consultants,
contractors and representatives have been afforded access to the Real Property
to inspect and conduct such tests and studies of the Real Property as CBL/OP has
deemed appropriate to determine the suitability of the Property for CBL/OP's
purposes, and that CBL/OP has performed all such investigations as CBL/OP deems
necessary. CBL/OP and CBL/OP's authorized agents, consultants, contractors and
representatives may continue to have reasonable access to the Real Property at
all reasonable times during normal business hours to inspect and conduct
reasonably necessary non-invasive tests and studies of the Real Property and the
Improvements, but notwithstanding anything to the contrary contained in this
Agreement, CBL/OP shall have no right to terminate this Agreement by reason of
any matter revealed by any such entry, inspection, tests and studies. CBL/OP
shall not conduct any invasive inspections, tests or studies of the Real
Property without the specific prior written approval of Property Owner, which
approval shall not be unreasonably withheld by Property Owner. If CBL/OP desires
access to the Real Property, CBL/OP shall give at least 24 hours prior written
or oral notice to Property Owner and Property Owner's Property Manager of
CBL/OP's intention to enter the Real Property. Property Owner may impose
reasonable conditions on any inspections, tests and studies to be conducted by
CBL/OP or CBL/OP's authorized agents, consultants, contractors and
representatives to ensure that CBL/OP takes all appropriate safety precautions
and observes the requirements of Section 4.4 below. At Property Owner's option,
a representative of Property Owner may be present for any such inspection, test
or study. CBL/OP shall bear the cost of all inspections, tests and studies
conducted by or on behalf of CBL/OP.
4.1.2 CBL/OP's Delivery of Information to Property Owner. Upon Property Owner's
request, CBL/OP agrees to deliver to Property Owner, promptly following the
receipt thereof by CBL/OP and at no cost to Property Owner, copies of any and
all reports, tests, studies and test results obtained by CBL/OP from independent
third parties by or on behalf of CBL/OP with respect to the Property before or
after the execution and delivery of this Agreement, including those involving
the structural, geologic, environmental or other condition of the Property or
otherwise relating to the Property (collectively, "CBL/OP's Information").
Property Owner hereby acknowledges that CBL/OP has not made and does not make
any warranty or representation regarding the truth or accuracy of any CBL/OP's
Information, and Property Owner shall not have the right to rely on the same
unless it obtains the written permission to do so from the preparer thereof.
Nothing contained in this Section 4.1.2 shall be deemed to obligate CBL/OP to
deliver to Property Owner any CBL/OP's Information which CBL/OP obtains
following the Closing.
4.1.3 Tenant and Governmental Authority Inquiries. Subject to the provisions of
this Section and Section 4.4 below, CBL/OP shall have the right, as part of
CBL/OP's due diligence investigation, to contact the Tenants, the Anchor Stores,
Property Owner's Property Manager and governmental authorities about various
aspects of the Property. CBL/OP shall provide Property Owner with at least 24
hours prior written or oral notice of each such inquiry, contact, interview and
meeting and Property Owner shall have the right to have a representative of
Property Owner present and otherwise participate in all such inquiries,
contacts, interviews and meetings. Property Owner shall not be liable or bound
in any manner by any oral or written statements, representations or information
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provided by any Tenant, any Anchor Store, Property Owner's Property Manager, any
governmental authority or any of such parties' personnel, employees or
contractors (including any on site building manager or building engineer).
4.2 Document Review.
4.2.1 Property Records. Following the Effective Date, Property Owner shall make
available to CBL/OP either at the Real Property or at Property Owner's and
Property Owner's Property Manager's offices in Leawood, Kansas, copies of those
documents and property records relating solely to the Property, other than the
Excluded Documents, which are within the possession of Property Owner or
Property Owner's affiliates and advisors. Following the Effective Date, Property
Owner shall direct Property Owner's Property Manager to make available to CBL/OP
at the Property Manager's office, or at the on-site management office at the
Real Property, all of those documents and property records relating solely to
the Property, other than the Excluded Documents, which are in the possession of
Property Owner's Property Manager. All of such documents, reports, tests,
studies and property records delivered to, made available to, copied and/or
reviewed by or on behalf of CBL/OP in connection with the Property (whether
before or after the Effective Date and specifically including all Tenant Leases
and Service Contracts), other than the Excluded Documents, are sometimes
referred to collectively herein as the "Property Records."
4.2.2 Excluded Documents. As used herein, "Excluded Documents" shall mean (a)
any purchase and escrow agreements and correspondence pertaining to Property
Owner's acquisition of the Property (other than documents pertaining to the
physical or environmental condition of the Real Property), (b) any documents
pertaining to the potential acquisition of the Property by any past or
prospective purchasers (other than documents relating to the physical or
environmental condition of the Real Property), (c) any third party purchase
inquiries and correspondence, appraisals or economic evaluations of the
Property, (d) Property Owner's organizational documents and records, internal
budgets, financial projections, reports or correspondence prepared by Property
Owner or by Property Owner's advisor exclusively for Property Owner or Property
Owner's constituent principals and any other internal documents (other than
documents relating to the physical, financial or environmental condition of the
Real Property), (e) any personnel records and files maintained by or on behalf
of Property Owner with respect to individuals, if any, employed at or in
connection with the Real Property which Property Owner is obligated by law or
otherwise to keep confidential, and (f) any documents or materials which are the
subject of a confidentiality obligation. If any document or material subject to
a confidentiality obligation will be binding on CBL/OP after the Closing,
Property Owner shall use its best efforts to obtain any required consents to
disclose the same to CBL/OP and will notify CBL/OP if there are any such
documents or materials for which it has not been able to obtain such consent.
Notwithstanding anything in this Section 4.2 to the contrary, Property Owner
shall have no obligation to make available to CBL/OP and CBL/OP's authorized
agents, consultants, contractors and representatives, and CBL/OP and CBL/OP's
authorized agents and representatives shall have no right to inspect or make
copies of, any of the Excluded Documents.
4.2.3 Proprietary Information. CBL/OP acknowledges and agrees that the Property
Records are proprietary and confidential in nature and have been or will be made
available to CBL/OP solely to assist CBL/OP in determining the feasibility of
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purchasing the Property. CBL/OP agrees, prior to the Closing, not to disclose
the Property Records, any of the CBL/OP's Information, or any analyses,
compilations, studies or other documents or records prepared by or on behalf of
CBL/OP from any of the Property Records or the CBL/OP's Information
(collectively, the "Proprietary Information") to any party outside of CBL/OP's
organization except (a) as necessary to CBL/OP's agents, consultants,
contractors, representatives, attorneys, accountants, lenders, prospective
lenders, investors and/or prospective investors (collectively, the "Permitted
Outside Parties"), or (b) as may be required by any law applicable to CBL/OP.
CBL/OP further agrees to notify all Permitted Outside Parties that, prior to the
Closing, the Proprietary Information is to be kept confidential and not
disclosed to third parties. In permitting CBL/OP and the Permitted Outside
Parties to review the Property Records to assist CBL/OP, Property Owner has not
waived any privilege or claim of confidentiality with respect thereto, and no
third party benefits or relationships of any kind, either expressed or implied,
have been offered, intended or created by Property Owner and any such claims are
expressly rejected by Property Owner and waived by CBL/OP.
4.2.4 Return of Property Records. At such time as this Agreement is terminated
for any reason, CBL/OP shall return to Property Owner the copies of all of the
Property Records delivered to CBL/OP by or on behalf of Property Owner, and
CBL/OP shall destroy, and instruct all Permitted Outside Parties in writing to
destroy, any and all copies CBL/OP or the Permitted Outside Parties have made of
the Property Records.
4.2.5 No Representation or Warranty By Property Owner. CBL/OP acknowledges that
many of the Property Records were prepared by third parties other than Property
Owner. CBL/OP further acknowledges and agrees that, except as expressly set
forth in this Agreement, (a) neither Property Owner nor any of Property Owner's
respective agents, advisors, employees or contractors has made any warranty or
representation regarding the truth, accuracy or completeness of the Property
Records, (b) Property Owner expressly disclaims any such representation or
warranty, and (c) Property Owner has not undertaken any independent
investigation as to the truth, accuracy or completeness of the Property Records
and Property Owner is providing the Property Records or making the Property
Records available to CBL/OP solely as an accommodation to CBL/OP.
4.2.6 Remedies. In addition to any other remedies available to Property Owner,
Property Owner shall have the right to seek equitable relief (including specific
performance and injunctive relief) against CBL/OP and CBL/OP's agents,
consultants, contractors and representatives to enforce the provisions of
Section 4.2.3 and Section 4.2.4.
4.3 Title.
4.3.1 Title Documents. Prior to the execution and delivery of this Agreement,
CBL/OP received copies of the following items (collectively, the "Title
Documents"): (a) that certain Title Commitment Nos. 1612 120105084, 1612
120105142 and ____________ issued effective August 9, 2005 by Chicago Title
Insurance Company, as agent for the Title Company with respect to the Real
Property (the "Title Commitment"); (b) all documents referred to in the Schedule
B exceptions shown on the Title Commitment; (c) that certain ALTA Survey,
Hickory Point Mall, Forsyth, Illinois, prepared by SKS Engineers, Inc. as
Project No. 59701, uncertified, but with a drawn date of August 31, 2005 (the
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"ALTA Survey"); and (d) an update and/or modification and recertification of the
ALTA Survey which has been ordered by CBL/OP, at CBL/OP's sole cost and
expense(the "Updated Survey"). CBL/OP shall promptly request and deliver to the
Title Company the Updated Survey in sufficient time prior to the Title Objection
Deadline so that any title exception for discrepancies, conflicts in boundary
lines, shortages in area, encroachments, easements or claims of easements and
other matters which would be disclosed by a physical inspection of the Real
Property, the ALTA Survey or by the Updated Survey (collectively, "Survey
Exceptions") shall be addressed as Title Objections pursuant to Section 4.3.2
below.
4.3.2 Review of Title. All matters shown in the Title Documents which are not
objected to by CBL/OP by delivery of written notice thereof ("CBL/OP's Title
Objection Notice") to Property Owner on or before the Title Objection Deadline
shall be conclusively deemed to be accepted by CBL/OP. If CBL/OP timely delivers
CBL/OP's Title Objection Notice to Property Owner prior to the Title Objection
Deadline specifying CBL/OP's objection to any title exception pertaining to the
Real Property shown in the Title Documents (each a "Title Objection" and
collectively the "Title Objections"), Property Owner may, but except for
Voluntary Title Encumbrances, shall not be obligated to, remove from the Title
Policy or insure against (by title endorsement from the Title Company or
otherwise) some or all of such Title Objections. If Property Owner is able and
willing to remove or insure against some or all of the Title Objections,
Property Owner shall notify CBL/OP in writing within 5 days after the Title
Objection Deadline ("Property Owner's Notice Period") of those Title Objections
which Property Owner intends to attempt to remove or insure against on or before
the Closing Date (said notice hereinafter called "Property Owner's Title
Notice"). Without the necessity of objection by CBL/OP, Property Owner shall
comply with all of the requirements set forth in Schedule C of the Title
Commitment. Except for Voluntary Title Encumbrances, Property Owner shall have
no obligation whatsoever to remove or insure against any Title Objections. If
Property Owner delivers Property Owner's Title Notice and thereafter Property
Owner is unable to remove or insure against any Title Objection as indicated in
Property Owner's Title Notice, Property Owner shall have no liability to CBL/OP
and CBL/OP's sole remedy in such event shall be to either waive such Title
Objections and proceed with the Closing or terminate this Agreement. If Property
Owner does not deliver Property Owner's Title Notice to CBL/OP within Property
Owner's Notice Period, Property Owner shall be deemed to have notified CBL/OP
that Property Owner is unable or unwilling to remove or insure against the Title
Objections. If Property Owner notifies or is deemed to have notified CBL/OP that
Property Owner is unable or unwilling to remove or insure against any particular
Title Objection, CBL/OP shall be deemed to have waived those Title Objections
which Property Owner is unable or unwilling to remove or insure against unless
on or before the later to occur of (i) the Final Approval Date or (ii) 5 days
following receipt of the Property Owner's Title Notice (or 5 days following the
last day of the Property Owner's Notice Period if the Property Owner does not
give a Property Owner's Title Notice), CBL/OP delivers to Property Owner and
Escrow Holder written notice terminating this Agreement. If CBL/OP so elects to
terminate this Agreement by written notice to Property Owner and Escrow Holder
as provided in the preceding sentence, CBL/OP shall be entitled to a return of
the Letter of Credit or the Deposit, as applicable, and neither party shall have
any further rights or obligations under this Agreement, except for those
obligations of CBL/OP under this Agreement which expressly survive the
termination of this Agreement ("CBL/OP's Surviving Obligations").
11
4.3.3 Additional Title Objections. CBL/OP shall have the right to object to any
new title exceptions (other than Permitted Exceptions as defined in Section
4.3.7 below) first raised by the Title Company in any modification, update,
recertification or amendment to the Title Commitment which is issued after the
Effective Date of this Agreement by giving written notice ("CBL/OP's Additional
Title Objection Notice") to Property Owner within 5 days after CBL/OP's receipt
of any such modification, update, recertification or amendment, but in any event
no later than the Closing Date. If CBL/OP timely delivers CBL/OP's Additional
Title Objection Notice to Property Owner specifying CBL/OP's objection to any
new title exception first raised in a modification, update, recertification or
amendment to the Title Commitment which is issued after the Effective Date of
this Agreement (each an "Additional Title Objection" and collectively the
"Additional Title Objections"), Property Owner may, but except for Voluntary
Title Encumbrances, shall not be obligated to attempt to remove from the Title
Commitment or otherwise insure (at Property Owner's expense) against some or all
of such Additional Title Objections set forth in any CBL/OP's Additional Title
Objection Notice. If Property Owner does not notify CBL/OP in writing within 5
days after Property Owner's receipt of CBL/OP's Additional Title Objection
Notice (but in any event prior to the Closing Date) that Property Owner is
willing to so remove or otherwise insure against any Additional Title
Objections, Property Owner shall be deemed to have notified CBL/OP that Property
Owner is unable or unwilling to remove or otherwise insure against such
Additional Title Objections. If Property Owner does notify CBL/OP that Property
Owner is willing to remove or otherwise insure against any Additional Title
Objections and thereafter Property Owner is unable to remove or otherwise insure
against any Additional Title Objections as indicated in Property Owner's notice,
Property Owner shall have no liability to CBL/OP and CBL/OP's sole remedy in
such event shall be to either waive such Additional Title Objection and proceed
with the Closing or terminate this Agreement. If Property Owner notifies or is
deemed to have notified CBL/OP that Property Owner is unable or unwilling to
remove or insure against any particular Additional Title Objection, CBL/OP shall
be entitled to terminate this Agreement by delivering within 10 days after the
CBL/OP's Additional Title Objection Notice written notice to Property Owner and
Escrow Holder terminating this Agreement. CBL/OP's failure to deliver such
written notice electing to terminate this Agreement to Property Owner and Escrow
Holder within such 10 day period shall be deemed CBL/OP's waiver of the
particular Additional Title Objection which Property Owner is unable or
unwilling to remove from the Title Policy or otherwise insure against. If this
Agreement is terminated on or before the Closing Date by reason of an Additional
Title Objection, the Letter of Credit or the Deposit, as applicable, shall be
returned to CBL/OP (including all interest which has accrued thereon while the
Deposit was held by Escrow Holder, but not any interest which has accrued
thereon while held by Property Owner) and neither party shall have any further
rights or obligations under this Agreement, except for the CBL/OP's Surviving
Obligations. Notwithstanding anything herein to the contrary, if CBL/OP's right
to terminate this Agreement pursuant to the foregoing provisions of this Section
4.3.3 has not expired prior thereto, it shall expire upon the Closing Date. If
CBL/OP is first notified of any new title exception (other than Permitted
Exceptions) less than 15 days prior to the Closing Date, the Closing shall be
extended until 5 days after the disposition of such new title exception is
determined pursuant to this Section 4.3.3.
4.3.4 Voluntary Title Encumbrances. As used herein "Voluntary Title
Encumbrances" means liens or encumbrances against the Property that are created
by Property Owner or which result from Property Owner's failure to pay for an
12
obligation of Property Owner after the Effective Date and that can be removed or
insured against solely by the payment of a liquidated sum of money; provided,
however, that the term "Voluntary Title Encumbrances" as used in this Agreement
shall not include the following: (a) any Permitted Exceptions; (b) any action
taken or matter of title created by any tenants or Anchor Stores pursuant to the
terms and provisions of the Tenant Leases; (c) Tenant Leases or any liens or
encumbrances against the Property created pursuant to a Tenant Lease by the
Tenant thereunder; (d) any liens or encumbrances against the Property that are
approved by CBL/OP or deemed approved by CBL/OP in accordance with the
provisions of this Agreement; or (e) any liens or encumbrances against the
Property which, pursuant to a Tenant Lease or otherwise, are to be discharged by
any Anchor Store, a Tenant or any other occupant of the Real Property.
Notwithstanding anything to the contrary contained in Section 4.3.2 or Section
4.3.3 above, Property Owner shall remove from the Title Policy or otherwise
insure against all Voluntary Title Encumbrances on or before the Closing. If
from time to time prior to the Closing, either Property Owner or CBL/OP shall
become aware of any Voluntary Title Encumbrances, then Property Owner or CBL/OP
shall promptly notify the other party thereof, which notice shall describe in
reasonable detail the Voluntary Title Encumbrance(s) at issue and Property Owner
shall remove from the Title Policy or otherwise insure against all such
Voluntary Title Encumbrance(s) on or prior to Closing.
4.3.5 Use of Purchase Price to Discharge Liens. At the Closing, Property Owner
may, at Property Owner's option, use the proceeds of the Purchase Price to
discharge any monetary lien or encumbrance which Property Owner elects to pay or
discharge; provided, however, the preceding shall not be construed as obligating
Property Owner to satisfy any lien or encumbrance on the Property other than
Voluntary Title Encumbrances. Any lien or encumbrance or apparent lien or
encumbrance appearing of record against the Property which can be discharged by
the payment of money shall not be an objection to title if Property Owner, at
Property Owner's sole option, shall at the Closing cause to be delivered either
(a) a duly executed and acknowledged satisfaction along with the filing fee, or
(b) a payoff letter or demand and the appropriate funds to satisfy the lien or
encumbrance.
4.3.6 Title Policy. CBL/OP's obligation to consummate the transactions
contemplated by this Agreement shall be subject to and conditioned upon the
Title Company's willingness to issue, upon the condition of the payment of the
Title Company's premium and the delivery of the documents referred to in Section
5.6 below, an ALTA Extended Coverage Owner's Policy of Title Insurance (referred
to herein as the "Title Policy"), insuring CBL/OP in the amount of the Purchase
Price that fee title to the Real Property is vested in CBL/OP as of the Closing,
subject only to the title policy form conditions, exclusions from coverage and
exceptions, and the Permitted Exceptions. Notwithstanding the immediately
preceding sentence, the issuance of ALTA Extended Coverage and any title
endorsements as part of the Title Policy shall not be a condition precedent to
the Closing unless (a) CBL/OP has delivered to the Title Company prior to the
Closing Date, any necessary modification, update or recertification of the ALTA
Survey in current insurable form and otherwise satisfactory to the Title
Company, (b) the Title Company confirms in writing to CBL/OP and Property Owner
prior to the Title Objection Deadline the Title Company's willingness to issue
ALTA Extended Coverage and those title endorsements which have been requested by
CBL/OP prior to the Title Objection Deadline, and (c) CBL/OP pays for all costs
of such ALTA Extended Coverage in excess of ALTA Standard Coverage and the costs
of any such title endorsements requested by CBL/OP (other than any endorsements
Property Owner has agreed to cause to be issued pursuant to a Property Owner's
13
Title Notice). If, prior to the Title Objection Deadline, CBL/OP has not
delivered any necessary modification, update or recertification of the ALTA
Survey in current insurable form satisfactory to the Title Company and the Title
Company has not confirmed in writing to CBL/OP and Property Owner prior to the
Title Objection Deadline the Title Company's willingness to issue ALTA Extended
Coverage and those title endorsements requested by CBL/OP, then the condition in
this Section 4.3.6 shall be the Title Company's willingness to issue an ALTA
Standard Coverage Owner's Policy of Title Insurance (with only those
endorsements the Title Company has affirmatively agreed in writing prior to the
Title Objection Deadline to issue) and all references in this Agreement to the
"Title Policy" shall mean and refer to such ALTA Standard Coverage Owner's
Policy of Title Insurance rather than an ALTA Extended Coverage Owner's Policy
of Title Insurance. In the event of any failure of the condition in this Section
4.3.6, CBL/OP shall have the right to terminate this Agreement by delivering
written notice thereof to Property Owner and Escrow Holder no later than the
Closing Date, and the failure by CBL/OP to timely deliver such notice of
termination shall be deemed CBL/OP's waiver of such condition. If such
termination notice is provided, Property Owner shall nonetheless have a period
of 10 days after receipt of such notice to satisfy such condition (and the
Closing Date shall be accordingly extended, if applicable), and if such
condition is remedied within such 10 day period, the Closing shall be
consummated in accordance with the provisions of this Agreement. In the event of
any such termination, the Letter of Credit or the Deposit, as applicable, shall
be returned to CBL/OP and neither party shall have any further rights or
obligations under this Agreement, except for the CBL/OP's Surviving Obligations.
The Title Company's willingness at Closing to issue the Title Policy to CBL/OP
shall only be a condition to CBL/OP's obligations and not a covenant of Property
Owner.
4.3.7 Permitted Exceptions. As used in this Agreement, the term "Permitted
Exceptions" shall mean (a) all matters disclosed in the Title Documents and to
which CBL/OP does not raise a Title Objection prior to the Title Objection
Deadline, or, having objected, CBL/OP waives or is deemed to have waived in
accordance with the provisions of Section 4.3.2 above; (b) any new title
exceptions first raised by the Title Company in any modification, update,
recertification or amendment to the Title Commitment issued after the Effective
Date and to which CBL/OP does not raise an Additional Title Objection within the
prescribed time, or, having objected, CBL/OP waives or is deemed to have waived
in accordance with the provisions of Section 4.3.3 above; (c) Intentionally
Omitted; (d) Intentionally Omitted; (e) all existing Tenant Leases, all new
Tenant Leases and amendments, modifications, supplements and extension to any of
the foregoing which are entered into following the Effective Date and are
permitted pursuant to this Agreement, and the rights of Tenants in possession
thereunder, as tenants only; (f) Intentionally Omitted; (g) any financing
statements, chattel mortgages or other liens and encumbrances relating to
financing obtained by Tenants and encumbering only the property of Tenants; (h)
any Survey Exceptions unless objected to by CBL/OP in accordance with Section
4.3.2 above; (i) non-delinquent Real Estate Taxes (including liens for community
facilities districts, business improvement districts or local improvement
districts) for the fiscal year in which the Closing occurs; (j) all zoning
restrictions, regulations and requirements, all building codes and all other
applicable laws, ordinances and governmental regulations affecting the Property;
and (k) all matters directly or indirectly caused by CBL/OP or arising through
CBL/OP. Notwithstanding anything to the contrary contained in this Agreement,
liens and encumbrances for the payment of any non-delinquent community
facilities district taxes, business improvement district charges and/or any
14
local improvement district levies and special assessments shall not be
discharged at Closing and shall not be an objection to title (subject to the
proration of the current installments thereof as provided in Section 6.2 below).
4.4 Inspection Obligations.
4.4.1 CBL/OP's Responsibilities. CBL/OP agrees that when entering the Real
Property and conducting any investigations, inspections, tests and studies of
the Property or the Property Records prior to or following the execution and
delivery of this Agreement, CBL/OP and CBL/OP's agents, consultants, contractors
and representatives shall be obligated to: (a) comply with all terms of the
Tenant Leases regarding entry rights and obligations of third parties and not
disturb the Anchor Stores, the Tenants or other occupants or interfere with the
Anchor Stores', the Tenants' or other occupants' right of quiet enjoyment or use
of the Property pursuant to any Tenant Leases or other occupancy rights; (b) not
unreasonably interfere with the operation, use and maintenance of the Property
or the remainder of the Shopping Center or any of the construction work being
performed at the Property or the remainder of the Shopping Center; (c) not
damage any part of the Property or the remainder of the Shopping Center or any
personal property owned or held by any Anchor Store, any Tenant or other
occupant of the Shopping Center or any third party; (d) not injure or otherwise
cause bodily harm to Property Owner, any Anchor Store, any Tenant or any other
occupant of the Shopping Center or any of their respective agents, contractors
and employees, or any other third party; (e) maintain commercial general
liability (occurrence) insurance in terms and amounts set forth in Section 4.4.3
covering any accident arising as a result of the presence of CBL/OP and CBL/OP's
agents, consultants, contractors and representatives on the Real Property and
deliver a certificate of insurance verifying such coverage to Property Owner
prior to any entry upon the Real Property (such insurance policy maintained by
or on behalf of CBL/OP shall insure the contractual liability of CBL/OP covering
the indemnities herein and shall (i) name the Property Owner and Property
Owner's Property Manager as additional insureds, (ii) contain a cross-liability
provision, and (iii) contain a provision that "the insurance provided by CBL/OP
hereunder shall be primary and non-contributing with any other insurance
available to Property Owner"); (f) promptly pay when due the costs of all tests,
investigations, studies and examinations done with regard to the Property; (g)
not permit any liens to attach to the Property or the remainder of the Shopping
Center by reason of the exercise of CBL/OP's rights hereunder and promptly
remove or cause to be removed (by bonding or otherwise) any such liens which
attach to the Property or the remainder of the Shopping Center; (h) fully
restore the Real Property and the Personal Property to the condition in which
the same was found before any such inspections, tests or studies were
undertaken; provided that CBL/OP shall have no obligation to remediate any
hazardous materials on the Property except to the extent CBL/OP introduced the
same onto the Property or exacerbated any pre-existing hazardous materials
condition at the Property; (i) comply with the confidentiality standards set
forth in Section 4.2 above; and (j) comply with the terms and provisions of
Section 4.1 above.
4.4.2 CBL/OP's Indemnity. CBL/OP shall indemnify, defend, protect and hold
Property Owner and Property Owner's respective agents, advisors, employees and
contractors harmless from and against any and all liens, claims, losses,
liabilities, damages, costs, causes of action and expenses (including reasonable
attorneys' fees and court costs) (collectively, "Claims") arising out of (a)
CBL/OP's negligence or willful misconduct or the negligence or willful
misconduct of CBL/OP's agents, advisors, employees and contractors in CBL/OP's
15
investigations, inspections, tests and studies of the Property and/or the
Property Records, and (b) any violation by CBL/OP or CBL/OP's agents or
representatives of the provisions of this Article IV, excluding, however, any
Claims arising from the sole negligence or intentional misconduct of a person to
be indemnified hereunder. Notwithstanding any provision to the contrary
contained in this Agreement, CBL/OP's obligations set forth in Sections 4.2.3
and 4.2.4 above and CBL/OP's indemnity set forth in this Section 4.4.2 shall
survive the Closing or earlier termination of this Agreement.
4.4.3 CBL/OP's Insurance. CBL/OP shall deliver to Property Owner a certificate
of insurance providing the following: (a) commercial general liability insurance
insuring Property Owner for bodily injury, property damage and personal injury
liability, each with a limit liability of $3,000,000 for each occurrence and in
the aggregate, (b) in like amount covering CBL/OP's contractual liability under
the aforesaid hold harmless provision, and automobile liability insurance limits
for each occurrence of not less than $1,000,000 with respect to personal injury
or death and $500,000 with respect to property damage, and (c) workers
compensation insurance or similar insurance in form and in amounts required by
law.
4.5 Intentionally omitted.
4.6 CBL/OP Deliveries Upon Termination. If this Agreement is terminated pursuant
to any of the applicable terms hereof for any reason other than a default
solely on the part of Property Owner, (i) the provisions of Section 4.1.2 shall
survive such termination for a period of one year and (ii) CBL/OP covenants and
agrees to deliver to Property Owner no later than 5 Business Days following the
date of such termination the originals of all Property Records, if any,
delivered to CBL/OP by or on behalf of Property Owner. In addition to any other
remedies available to Property Owner, Property Owner shall have the right to
seek equitable relief (including specific performance) against CBL/OP and
CBL/OP's representatives to enforce the provisions of this Section 4.6.
4.7 Cancellation of Service Contracts. Subject to the Tenant Prospect Commission
Obligations as set forth below, Property Owner shall terminate effective as of
the Closing that certain leasing and management agreement dated July 1, 2000,
between Property Owner and Property Owner's Property Manager (the "Property
Management Agreement") and any other existing leasing listing agreement entered
into by Property Owner for the Real Property. Property Owner shall give notice
of cancellation of all Service Contracts except those identified on Exhibit J
attached hereto, which notice of termination by Property Owner shall be
effective as of the Closing and conditional upon the Closing taking place in a
timely manner in accordance with this Agreement. Property Owner and CBL/OP
agree as follows with respect to the cancellation fees, penalties, damages or
payments, if any, required to be paid for the cancellation of any Service
Contracts: (a) CBL/OP shall pay any cancellation fee, penalty, damages or
payment required for the cancellation of any Service Contract (other than the
Property Management Agreement or any other existing leasing listing agreement
entered into by Property Owner for the Real Property) in accordance with
CBL/OP's request; (b) Property Owner shall pay any cancellation fee, penalty,
damages or payment (other than the Tenant Prospect Commission Obligations)
required for the cancellation of the Property Management Agreement or any other
existing leasing listing agreement entered into by Property Owner with respect
to the Real Property, and (c) CBL/OP shall be responsible for the obligations
16
of Property Owner pursuant to the Property Management Agreement to pay, or
reimburse Property Owner for the payment of, a leasing commission to Property
Owner's Property Manager if following the termination of the Property
Management Agreement a lease is entered into with a party identified as a
prospective tenant, and disclosed in writing to CBL/OP at least 5 days prior to
the Closing Date, with whom Property Owner and/or Property Owner's Property
Manager had been negotiating prior to the termination of the Property
Management Agreement (the "Tenant Prospect Commission Obligations").
Notwithstanding anything to the contrary contained herein, Property Owner's
cancellation of any Service Contract (other than the Property Management
Agreement with Property Owner's Property Manager or any existing leasing
listing agreement entered into by Property Owner for the Real Property) shall
not be a condition to Closing or CBL/OP's obligations hereunder. At the
Closing, Property Owner shall terminate all Service Contracts other than those
identified on Exhibit J attached hereto. CBL/OP acknowledges that,
notwithstanding the foregoing, Property Owner shall have no obligation to
terminate and CBL/OP shall assume at Closing the Tenant Prospect Commission
Obligations of Property Owner pursuant to the Property Management Agreement.
ARTICLE V
ESCROW AND CLOSING
5.1 Escrow.
5.1.1 Opening of Escrow. Property Owner and CBL/OP shall open an escrow (the
"Escrow") with Escrow Agent for the consummation of the transaction contemplated
by this Agreement by delivering copies of this Agreement executed by the parties
to Escrow Agent at the Escrow Agent's address specified in Section 1.6 above.
Upon receipt of this Agreement executed by the parties, Escrow Agent shall (a)
execute and date the Joinder by Escrow Agent attached hereto solely in order to
evidence Escrow Agent's agreement to act as Escrow Agent in accordance with the
terms and provisions of this Agreement, (b) immediately notify Property Owner
and CBL/OP in writing by facsimile of the date Escrow Agent has executed the
attached Joinder by Escrow Agent and (c) immediately deliver to Property Owner
and CBL/OP by overnight courier ink-signed originals of this Agreement fully
executed in counterpart by Property Owner, CBL/OP and Escrow Agent.
5.1.2 Escrow Instructions. This Agreement, together with such supplementary or
further escrow instructions as Property Owner and CBL/OP shall provide to Escrow
Agent by written agreement, shall constitute the instructions to Escrow Agent
for the Escrow. Property Owner and CBL/OP hereby authorize their respective
attorneys to execute and deliver to Escrow Agent any additional or supplementary
instructions as may be necessary or convenient to close the transaction
contemplated hereby. Property Owner and CBL/OP also agree to execute, if
necessary, Escrow Agent's standard or pre-printed escrow instructions but only
to the extent such standard or pre-printed escrow instructions are consistent
with this Agreement (including Escrow Agent's duties contained herein) and are
reasonably acceptable to Property Owner and CBL/OP. Any such additional or
supplementary instructions and/or any pre-printed or standard instructions shall
not supersede or conflict with this Agreement and any such conflict shall be
governed by the terms of this Agreement.
17
5.1.3 Closing. As used in this Agreement, the "Closing" shall mean the
consummation of the purchase and sale transaction contemplated by this
Agreement, as evidenced by the recordation of the Special Warranty Deeds in the
Official Records. Each party shall timely deposit with Escrow Agent the funds,
documents and supplementary written escrow instructions required by this
Agreement in order to consummate the Closing of the sale and transfer of the
Property in accordance with this Agreement.
5.1.4 Closing Date. The Closing shall occur through Escrow on the Closing Date.
Property Owner and CBL/OP acknowledge and agree that time is expressly of the
essence with respect to the Closing Date specified in Section 1.5, and except as
otherwise provided in Sections 4.3.6 and Section 10.2, the failure of either
party to timely perform such party's obligations by such Closing Date shall
constitute a material breach of this Agreement.
5.2 Conditions Precedent to the Closing for the Benefit of CBL/OP. The Closing
and CBL/OP's obligation to consummate the transaction contemplated by this
Agreement are subject to the timely satisfaction or written waiver of the
following conditions precedent for CBL/OP's benefit set forth below in this
Section 5.2. The conditions precedent set forth below in Section 5.2.3 through
Section 5.2.12 are referred to as the "CBL/OP Closing Conditions." The CBL/OP
Closing Conditions must be satisfied or waived no later than the Closing Date.
5.2.1 Intentionally omitted.
5.2.2 Intentionally omitted.
5.2.3 Property Owner's Deliveries. On or before the Closing Date, Property
Owner shall have delivered to Escrow Agent the documents described in Section
5.4 below.
5.2.4 Representations and Warranties. All representations and warranties of
Property Owner contained in Section 7.1 of this Agreement shall be true and
correct in all material respects as of the date made and as of the Closing Date
with the same effect as if those representations and warranties were made at and
as of the Closing Date and Property Owner shall have delivered to CBL/OP a
certificate, dated as of the Closing Date, confirming (without material
exception or qualification) that all of the representations and warranties of
Property Owner contained in this Agreement, are true and correct in all material
respects as of the Closing Date as if made on and as of the Closing Date, and
certifying an updated Lease Schedule/Rent Roll in the same form as delivered
herewith (the "Property Owner's Closing Certificate"). If the Property Owner's
Closing Certificate shall contain any material exception or qualification, then
this condition shall not be deemed satisfied to such effect. Notwithstanding the
foregoing, it is agreed that: (a) any changes to the Lease Schedule/Rent Roll
due to any or all of the following shall not constitute material exceptions or
qualifications for the purposes of this condition: (i) any new Tenant Leases or
amendments, modifications, supplements, or extensions of existing Tenant Leases
entered into by Property Owner as permitted under Section 8.4 below, (ii)
terminations of any existing Tenant Leases either as entered into or effected by
Property Owner as permitted under Section 8.4 below or which do not require the
consent or agreement of the Property Owner, or (iii) defaults of any Tenants
under any Tenant Leases; and (b) any change in the physical condition of the
Real Property after the Final Approval Date shall not constitute material
exceptions or qualifications for the purposes of this condition unless such
18
change in physical condition (1) would cost CBL/OP in excess of One Million
Dollars ($1,000,000) to repair, or (2) is due to the failure of Property Owner
to perform any express covenant set forth in this Agreement. Nothing set forth
in this Section shall be deemed to modify the provisions of Article XI.
5.2.5 Covenants. As of the Closing Date, Property Owner shall have performed all
material covenants and/or agreements to be performed by Property Owner under
this Agreement and Property Owner shall not be in material default in the
performance of any material covenant or agreement to be performed by Property
Owner under this Agreement.
5.2.6 Tenant and Anchor Store Estoppel Certificates. On or before the Closing
Date, CBL/OP shall have received estoppel certificates, dated not earlier than
August 16, 2005, from (i) all of the Anchor Stores ("Anchor Estoppel
Certificates") and (ii) from a sufficient number of non-Anchor Tenants of the
Real Property (the "Tenant Estoppel Certificates") so that Tenant Estoppel
Certificates shall be received with respect to not less than 80% of the rentable
area of the Improvements covered by Tenant Leases of non-Anchor Tenants.
Property Owner shall submit Anchor Estoppel Certificates to the Anchor Stores
and the Tenant Estoppel Certificates to the Tenants for execution and use
commercially reasonable efforts (as hereinafter described in this Section 5.2.6
below) to obtain Anchor Estoppel Certificates in form approved by CBL/OP, and
Tenant Estoppel Certificates substantially in the form of Exhibit B attached
hereto; provided, however, that if the applicable Tenant Lease provides for a
Tenant Estoppel Certificate in a form which is different from that attached as
Exhibit B hereto or otherwise limits the information required to be certified by
the applicable Tenant, then a Tenant Estoppel Certificate in substantially the
form provided for in an applicable Tenant Lease, or setting forth only such
other information as is required of the applicable Tenant pursuant to the
applicable Tenant Lease, shall be deemed in acceptable form (subject to the
penultimate sentence of this Section 5.2.6), and an Anchor Estoppel shall be
deemed in acceptable form (subject to the final sentence of this Section 5.2.6)
if an Anchor Estoppel Certificate covers all matters as are required under the
Anchor Lease, or if no such matters are required, if an Anchor Estoppel
Certificate is in the form customarily used by the Anchor Store. Property
Owner's sole obligation hereunder shall be to utilize commercially reasonable
efforts to obtain such Tenant Estoppel Certificates and Anchor Estoppel
Certificates (such commercially reasonable efforts obligation not including any
obligation to institute legal proceedings, waive any rights, or to grant any
concessions or expend any monies therefor). Any executed Tenant Estoppel
Certificate received from a Tenant which has been modified by the Tenant to
allege a material default by Property Owner as landlord under such Tenant's
Tenant Lease or facts which are materially inconsistent with the information set
forth in the Tenant Estoppel Certificate delivered to such Tenant shall not, at
CBL/OP's election, be applied toward the eighty percent (80%) requirement set
forth above. Any executed Anchor Estoppel Certificate which alleges a material
default by Property Owner or facts which are materially inconsistent with the
information set forth in the Anchor Estoppel Certificate delivered to such
Anchor Store shall not, at CBL/OP's election, satisfy this closing condition.
5.2.7 Condemnation or Casualty. CBL/OP shall not have terminated this Agreement
by reason of the condemnation of a Material Portion of the Property in
accordance with Section 11.1 below and CBL/OP shall not have terminated this
Agreement by reason of Material Damage to the Real Property in accordance with
Section 11.3 below.
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5.2.8 Title Policy. As of the Closing Date, the Title Company shall have issued
or irrevocably committed to issue the Title Policy to CBL/OP as provided in
Section 4.3.6 above.
5.2.9 Intentionally Omitted.
5.2.10 Intentionally Omitted.
5.2.11 Intentionally Omitted.
5.2.12 Simultaneous Closings Under Other Mall Contracts. The transactions
contemplated under the Other Mall Contracts shall close simultaneously with the
Closing hereunder, except this shall not be a CBL/OP Closing Condition if the
closing under the Other Mall Contracts shall fail to occur by reason of the
default of CBL/OP, and in such case, the provisions of Section 2.3.2 shall
apply.
CBL/OP shall not willfully or in bad faith act or willfully or in bad
faith fail to act for the purpose of permitting any CBL/OP Closing Condition to
fail. In the event any of the foregoing CBL/OP Closing Conditions are not
satisfied (or otherwise waived by CBL/OP) on the Closing Date for any reason
other than a default by Property Owner or CBL/OP hereunder, and such failure of
condition is not remedied within 10 days after notice to Property Owner of such
failure of condition, this Agreement shall terminate, the Letter of Credit or
the Deposit, as applicable, shall be returned to CBL/OP and neither party shall
have any further rights or obligations under this Agreement, except for the
CBL/OP's Surviving Obligations; in the event the failure of any CBL/OP Closing
Condition is also a default by Property Owner, the provisions of Section 10.2
shall govern; and in the event the failure of any CBL/OP Closing Condition is
also a default by CBL/OP, the provisions of Section 10.1 shall govern. CBL/OP
shall at all times prior to the termination of this Agreement have the right to
waive any of the CBL/OP Closing Conditions. Except for those deemed waivers due
to CBL/OP's failure to timely deliver a notice of objection or termination, any
such waiver shall be in writing. Furthermore, the election by CBL/OP to proceed
with the Closing and the disbursement of the Purchase Price shall be deemed
CBL/OP's waiver of any CBL/OP Closing Condition to the extent any such CBL/OP
Closing Condition has not been previously satisfied or waived.
5.3 Conditions Precedent to the Closing for the Benefit of Property Owner. The
Closing and Property Owner's obligations with respect to the transaction
contemplated by this Agreement are subject to the timely satisfaction or
written waiver by the respective dates designated below of the following
conditions precedent for Property Owner's benefit set forth below in this
Section 5.3. The conditions precedent set forth below in this Section 5.3 are
referred to collectively as the "Property Owner's Conditions Precedent" and
individually as a "Property Owner's Condition Precedent."
5.3.1 CBL/OP's Deliveries. On or before the Closing Date, CBL/OP shall have
delivered to Escrow Agent all of the funds and documents as provided in Section
Section 3.7 and in Section 5.6 of this Agreement.
5.3.2 Intentionally omitted.
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5.3.3 Covenants. As of the Closing Date, CBL/OP shall have performed all
material covenants and/or agreements to be performed by CBL/OP under this
Agreement and CBL/OP shall not be in default in the performance of any material
covenant or agreement to be performed by CBL/OP under this Agreement.
5.3.4 Title Policy. As of the Closing Date, the Title Company shall have issued
or irrevocably committed to issue the Title Policy to CBL/OP and/or CBL/OP,
subject to the limitations provided in Section 4.3.6 above.
5.3.5 Representations and Warranties. All representations and warranties of
CBL/OP contained in Section 7.6 of this Agreement shall be true and correct in
all material respects as of the date made and as of the Closing Date with the
same effect as if those representations and warranties were made at and as of
the Closing Date and CBL/OP shall have delivered to Property Owner a
certificate, dated as of the Closing Date, confirming (without material
exception or qualification) that all of the representations and warranties of
CBL/OP contained in this Agreement, are true and correct in all material
respects as of the Closing Date as if made on and as of the Closing Date (the
"CBL/OP Closing Certificate"). If the CBL/OP Closing Certificate shall contain
any material exception or qualification, then this condition shall not be deemed
satisfied to such effect.
5.3.6 Intentionally Omitted.
5.3.7 Intentionally Omitted .
5.3.8 Simultaneous Closings Under Other Mall Contracts. The transactions
contemplated under the Other Mall Contracts shall close simultaneously with the
Closing hereunder, except this shall not be a Property Owner Closing Condition
if the closing under the Other Mall Contracts shall fail to occur by reason of
the default of Property Owner or the contributors thereunder, and in such case,
the provisions of Section 2.3.2 shall apply.
Property Owner shall not willfully or in bad faith act or willfully or in bad
faith fail to act for the purpose of permitting any Property Owner Condition
Precedent to fail. In the event any of the foregoing Property Owner Conditions
Precedent are not satisfied (or otherwise waived by Property Owner) by the
respective dates designated above in this Section 5.3 for any reason other than
a default by CBL/OP or Property Owner hereunder, this Agreement shall terminate,
the Letter of Credit or the Deposit, as applicable, shall be returned to CBL/OP
and neither party shall have any further rights or obligations under this
Agreement, except for the CBL/OP's Surviving Obligations; in the event the
failure of any CBL/OP Closing Condition is also a default by Property Owner, the
provisions of Section 10.2 shall govern; and in the event the failure of any
CBL/OP Closing Condition is also a default by CBL/OP, the provisions of Section
10.1 shall govern. Property Owner shall at all times prior to the termination of
this Agreement have the right to waive any of the Property Owner Conditions
Precedent. Any such waiver shall be in writing; provided, however, the election
by Property Owner to proceed with the Closing and the recording of the Special
Warranty Deed shall be deemed Property Owner's waiver of any Property Owner
Condition Precedent to the extent any such Property Owner Condition Precedent
has not been previously satisfied or waived.
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5.4 Property Owner's Deliveries. On or prior to the Closing Date, Property Owner
shall make the following deliveries to Escrow Agent:
5.4.1 Special Warranty Deed. Property Owner shall deliver a special warranty
deed in the form attached as Exhibit C hereto (the "Special Warranty Deed"),
executed and acknowledged by Property Owner, conveying the Real Property to
CBL/OP subject to the Permitted Exceptions, to all matters of record, and to
such facts as would be disclosed by an accurate survey.
5.4.2 Tenant Lease Assignment. Property Owner shall deliver two counterpart
originals of an assignment and assumption of leases in the form attached as
Exhibit D hereto (the "Assignment and Assumption of Tenant Leases"), executed by
Property Owner, as well as all tenant letters of credit.
5.4.3 Bill of Sale and General Assignment. Property Owner shall deliver two
counterpart originals of a bill of sale and general assignment in the form
attached as Exhibit E hereto (the "Bill of Sale and General Assignment"),
executed by Property Owner.
5.4.4 Non-Foreign Certificate. Property Owner shall deliver two counterpart
originals of a certification from Property Owner as required by the Foreign
Investors Real Property Tax Act, as amended, in the form attached as Exhibit F
hereto (the "FIRPTA Certificate"), executed by Property Owner.
5.4.5 Tenant Notices. Property Owner shall join with CBL/OP to execute a notice
in the form of Exhibit G hereto (the "Tenant/Anchor Notices") which CBL/OP shall
send to each Tenant under each of the Tenant Leases and to each Anchor Store
informing such Tenant or Anchor Store of the transfer of the Property and of the
assignment to CBL/OP of Property Owner's interest in, and obligations under, the
Tenant Leases (including, if applicable any Tenant Deposits) and directing that
all rent and other sums payable after Closing under each such Tenant Lease shall
be paid as set forth in the notice.
5.4.6 Estoppels. Property Owner shall deliver such Tenant Estoppel Certificates
and Anchor Estoppel Certificates as are in Property Owner's possession.
5.4.7 Closing Statement. Property Owner shall join with CBL/OP in delivering a
Closing Statement (defined hereinafter) reflecting the consideration paid at
Closing, with all adjustments as set forth herein, and all other costs of the
transaction that are customarily included on closing statements in the state
wherein the Property is located and pay any such net amount owing at Closing
after taking into account the credits and prorations set forth on the Proration
and Expense Schedule (as defined hereinafter).
5.4.8 Authority. Property Owner shall deliver evidence of the existence,
organization and authority of Property Owner and of the authority of the person
executing documents on behalf of Property Owner which evidence shall be subject
to the reasonable approval of CBL/OP.
5.4.9 Intentionally Omitted;
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5.4.10 Intentionally Omitted.
5.4.11 Intentionally Omitted
5.4.12 Intentionally Omitted
5.4.13 Original Documents. Property Owner shall deliver to CBL/OP the original
Tenant Leases, Service Contracts that CBL/OP has elected to assume pursuant to
Section 4.7 above and licenses and permits, if any, assigned to CBL/OP and in
the possession of Property Owner or Property Owner's agents or Property Owner's
Property Manager, together with such leasing and property files and records
which are material in connection with the continued operation, leasing and
maintenance of the Property and the Books and Records.
5.4.14 Possession. Subject to the rights of Tenants and the Anchor Stores,
Property Owner shall deliver possession and occupancy of the Property together
with any keys, electronic pass cards or devices (to the extent in Property
Owner's possession or control) to all entrance doors and doors to equipment and
utility rooms and vault boxes located in or related to the Property.
5.4.15 Contract Termination. Property Owner shall deliver to CBL/OP such
evidence satisfactory to CBL/OP that the Property Management Agreement has been
terminated, and copies of all correspondence sent and received by Property Owner
relating to the termination of those Service Contract that CBL/OP has not agreed
to assume.
5.4.16 Updated Lease Schedule/Rent Roll; Property Owner Closing Certificate.
Property Owner shall deliver to CBL/OP an updated Lease Schedule/Rent Roll for
the Property reflecting the then-current status of all Tenant Leases as of the
Closing Date, together with the Property Owner Closing Certificate.
5.4.17 Intentionally Omitted.
5.4.18 Intentionally Omitted
5.4.19 Owner's Affidavit. The general partners of Property Owner shall deliver
to an Owner's Affidavit which shall be substantially in the form attached hereto
as Exhibit S.
5.4.20 Other Documents. Property Owner shall deliver such other documents as may
be reasonably required by Escrow Agent or the Title Company (provided, however,
no such additional document shall expand any obligation, covenant,
representation or warranty of Property Owner or result in any new or additional
obligation, covenant, representation or warranty of Property Owner under this
Agreement beyond those expressly set forth in this Agreement).
5.5 Existing Property Owner Debt. Property Owner shall be responsible for any
prepayment penalties or other prepayment amounts owing to its current lender in
connection with the payment of its existing debt and described on Schedule II
hereof ("Existing Property Owner Debt").
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5.6 CBL/OP's Deliveries. Prior to the Closing Date, CBL/OP shall deliver to
Escrow Agent the following:
5.6.1 Funds. The Purchase Price, plus all net prorations, closing costs and
other funds required to be paid or provided by CBL/OP under this Agreement (all
monies CBL/OP is required to deliver shall be delivered by wire transfer of
immediately available funds to the account designated by Escrow Agent on the
Business Day immediately preceding the Closing Date so that the Closing may
occur and Escrow Agent will be able to disburse good funds to Property Owner no
later than 1:00 p.m. on the Closing Date).
5.6.2 Tenant Lease Assignment. CBL/OP shall deliver two counterpart originals of
the Assignment and Assumption of Tenant Lease executed by CBL/OP.
5.6.3 Bill of Sale and General Assignment. CBL/OP shall deliver two counterpart
originals of the Bill of Sale and General Assignment, executed by CBL/OP ; -
5.6.4 Closing Statement. Join with Property Owner in delivering a Closing
Statement reflecting the consideration paid at Closing, with all adjustments as
set forth herein, and all other costs of the transaction that are customarily
included on closing statements in the state wherein the Property is located and
pay any such net amount owing at Closing after taking into account the credits
and prorations set forth on the Proration and Expense Schedule.
5.6.5 CBL/OP Closing Certificate. CBL/OP shall deliver to Property Owner the
CBL/OP Closing Certificate.
5.6.6 Authority. Evidence of the existence, organization and authority of CBL/OP
and of the authority of the persons executing documents on behalf of CBL/OP
reasonably satisfactory to the Title Company.
5.6.7 Other Documents. Such other documents as may be reasonably required by
Escrow Agent, Property Owner or the Title Company (provided, however, no such
additional document shall expand any obligation, covenant, representation or
warranty of CBL/OP or result in any new or additional obligation, covenant,
representation or warranty of CBL/OP under this Agreement beyond those expressly
set forth in this Agreement).
5.7 Intentionally Omitted.
5.8 Closing Costs.
5.8.1 Property's Owner's Closing Costs. Property Owner shall pay (a) the portion
of the premium for the Title Policy attributable to an ALTA Standard Coverage
Title Policy (as well as any endorsements which Property Owner agrees to have
issued to cure a Title Objection), (b) all legal and professional fees and fees
of other consultants incurred by Property Owner, (c) Intentionally Omitted, (d)
one-half of all Escrow fees and Escrow costs related to the sale of the Property
to CBL/OP (as opposed to any Escrow fees and Escrow costs related to any
financing obtained by CBL/OP which shall be paid by CBL/OP), (e) the payment to
Property Owner's Broker as provided in Section 5.9 below, and (f) any
24
pre-payment penalties or yield maintenance charges payable on any indebtedness
of Property Owner that is not a Permitted Exception.
5.8.2 CBL/OP's Closing Costs. CBL/OP shall pay (a) the excess portion of the
premium for the Title Policy attributable to an ALTA Extended Coverage Title
Policy (if the Title Policy is an ALTA Extended Coverage Title Policy), (b) the
cost of any endorsements to the Title Policy requested by CBL/OP (if the Title
Policy includes any endorsements) other than any endorsements which Property
Owner agrees to cause to be issued to cure a Title Objection, (c) any cost of
obtaining the Updated Survey, (d) the county and city transfer/recording taxes,
if any, assessed on the recording of the Special Warranty Deed conveying the
Property to CBL/OP, (e) all legal and professional fees and fees of other
consultants incurred by CBL/OP, (f) any and all Escrow fees and costs and any
other costs and expenses whatsoever related to any financing obtained by CBL/OP,
(g) all recording fees and charges, (h) one-half of all Escrow fees and Escrow
costs related to the sale of the Property to CBL/OP, and (i) all fees, costs,
charges, points, title insurance premiums, recording fees, mortgage registration
taxes for any financing obtained by CBL/OP and other costs and expenses incurred
in connection with the such financing.
5.8.3 General Allocation. Any other closing costs and expenses which are not
addressed in Section 5.8.1 and Section 5.8.2 above shall be allocated between
CBL/OP and Property Owner in accordance with the customary practice in the
jurisdiction in which the Property is located.
5.9 Real Estate Commissions. Property Owner shall be responsible for any
commission, fee or other payment which may be due to Eastdil Realty Company,
L.L.C., a New York limited liability company ("Property Owner's Broker") at
Closing in connection with the transactions contemplated by this Agreement.
Except for any commission that may be payable to Property Owner's Broker as set
forth above, each party hereto hereby represents and warrants to the other
party that no real estate brokerage commission is payable to any person or
entity in connection with the transaction contemplated herein based upon any
dealings or actions by the party making such representation. Each party further
agrees to and shall indemnify, protect, defend and hold the other party
harmless from and against the payment of any commission to any person or entity
claiming by, through or under the indemnifying party. This indemnification
shall extend to any and all claims, liabilities, costs, losses, damages, causes
of action and expenses (including reasonable attorneys' fees and court costs)
arising as a result of such claims and shall survive the Closing or any
termination of this Agreement.
5.10 Real Estate Reporting Person. Escrow Agent is hereby designated the "real
estate reporting person" for purposes of Section 6045 of Title 26 of the United
States Code and Treasury Regulation 1.6045 4 and any settlement statement
prepared by the Title Company shall so provide. Upon the Closing, CBL/OP and
Property Owner shall cause Escrow Agent to file a Form 1099 information return
and send the statement to each party as required under the aforementioned
statute and regulation.
5.11 Post-Closing Access to Records. CBL/OP, Property Owner, and Property
Owner's Property Manager shall cooperate with each other after Closing in case
of either's need in response to any legal requirement, regulatory audit
25
requirement, tax audit, tax return preparation, audit of common area
maintenance or other charges assessed against Tenants or Anchor Stores or
litigation threatened or brought against either the CBL/OP or Property Owner or
other legitimate business reason, by allowing the other party and its agents or
representatives access, upon reasonable advance notice (which notice shall
identify the nature of the information sought by such party), at reasonable
times to examine and make copies of any and all instruments, files and records
pertaining to the Property with respect to any period of time prior to the
Closing (including the Books and Records), which right shall survive Closing
for a period of 7 years.
5.12 SEC Reporting Requirements. For the period commencing on the Execution Date
and continuing through the first anniversary of the Closing Date, and without
limitation of other document production otherwise required of Property Owner's
Property Manager hereunder, Property Owner shall, or shall cause Property
Owner's Property Manager to, from time to time, upon reasonable advance written
notice from CBL/OP, provide CBL/OP and its representatives with (i) all
financial, leasing and other information pertaining to the period of Property
Owner's ownership and operation of the Property that is relevant and reasonably
necessary, in the opinion of CBL/OP's outside, third party accountants (the
"Accountants"), to enable CBL/OP and its Accountants to prepare financial
statements and conduct audits of such financial statements in accordance with
generally accepted auditing standards such that CBL/OP shall be in compliance
with any or all of (a) Rule 3-05 (but only to the extent such Rule 3-05
references Rule 3-14 of Regulation S-X of the regulations of the Securities and
Exchange Commission (the "Commission")) and Rule 3-14 of Regulation S-X of the
regulations of the Commission, as applicable; (b) any other rule issued by the
Commission and applicable to CBL/OP; and (c) any registration statement, report
or disclosure statement filed with the Commission by or on behalf of CBL/OP;
and (ii) a representation letter, signed by the individual(s) responsible for
Property Owner's financial reporting, in the form prescribed by generally
accepted auditing standards promulgated by the Auditing Standards Division of
the American Institute of Certified Public Accountants, if such representation
letter is required by the Accountants to render an opinion concerning Property
Owner's financial statements.
ARTICLE VI
PRORATIONS
6.1 General. The following items set forth below in this Article VI are to be
adjusted and prorated between Property Owner and CBL/OP as of 12:01 a.m. on the
Closing Date (the "Adjustment Time"). All prorations shall be calculated as if
the Property had been sold by Property Owner to CBL/OP on the Closing Date such
that CBL/OP shall be deemed to own the Property, and therefore entitled to any
revenues and responsible for any expenses, for the entire day upon which the
Closing occurs). Such adjustments and prorations shall be calculated on the
actual days of the applicable month and all annual prorations shall be based
upon a 365 day year. The net amount resulting from the prorations and
adjustments provided for in this Article VI (along with the allocation of
Closing costs in accordance with Section 5.8 above) shall be added to (if such
net amount is in Property Owner's favor) or deducted from (if such net amount
is in CBL/OP's favor) the amount of the Purchase Price.
6.2 Real Estate Taxes. Real estate or ad valorem real property taxes,
assessments (including installments of business improvement district charges
and principal and interest installments due on any local improvement district
26
liens, if any) and personal property taxes with respect to the Property
(collectively, "Real Estate Taxes") shall be prorated based upon the latest
available tax bill, such that Property Owner shall be responsible for all Real
Estate Taxes levied against the Property for the period prior to the Adjustment
Time and CBL/OP shall be responsible for all Real Estate Taxes levied against
the Property for the period from and after the Adjustment Time. If the latest
available tax bill is not the bill for the current tax year, then Real Estate
Taxes shall be prorated based upon the latest tax information then available
(including previous tax bills, current assessments and other information
available from the taxing authorities) and CBL/OP and Property Owner shall
re-prorate the Real Estate Taxes following the Closing as soon as the current
tax bill or other current information becomes available. Any increase in Real
Estate Taxes which is assessed following the Closing arising out of the sale of
the Real Property to CBL/OP or a subsequent sale or change in ownership
thereafter, and/or arising out of any construction or improvements to the Real
Property prior to or following the Closing, shall be paid by CBL/OP when
assessed. Refunds of Real Estate Taxes for the Real Estate Tax year in which
the Closing occurs, net of the costs of pursuing any tax contest or protest
proceedings and collecting such refunds, shall be prorated in proportion to the
respective shares of such Real Estate Taxes borne by Property Owner and CBL/OP
hereunder. The rights of Property Owner and CBL/OP to their respective shares
of any refund of Real Estate Taxes shall be subject to the rights of the
Tenants under the Tenant Leases in regard to Overage Rents, and any portion of
any refund to which any Tenant is entitled shall be paid to CBL/OP (even if the
refund pertains to a period prior to Closing) and CBL/OP covenants to promptly
refund (or, in CBL/OP's case, credit) to the Tenants any refund of Real Estate
Taxes due the Tenants. Notwithstanding any statement herein to the contrary,
the parties agree that taxes shall be prorated on the basis that Property Owner
is responsible for taxes and assessments relating to periods prior to the
Closing and CBL/OP is responsible for taxes and assessments relating to periods
from the Closing and thereafter, and the parties further agree that this tax
proration shall apply regardless of whether the taxing authority assesses taxes
in arrears, currently or prospectively.
6.3 Operating Expenses. As used herein, "Operating Expenses" means all fees and
charges for sewer, water, electricity, heat and air-conditioning service and
other utilities; common area maintenance charges; rental taxes, personal
property taxes, business occupational taxes and municipal taxes other than Real
Estate Taxes; landlord's contributions to merchant or project associations or
to promotional funds; periodic charges payable under Service Contracts assigned
to and assumed by CBL/OP; periodic fees payable under transferable licenses and
permits for the operation (as opposed to the construction) of the Property; and
any other costs and expenses with respect to the operation and maintenance of
the Property. Subject to the provisions of Section 6.4.3 below, Operating
Expenses shall be prorated as of the Adjustment Time such that Property Owner
shall be responsible for all Operating Expenses attributable on an accrual
basis to the period prior to the Adjustment Time and CBL/OP shall be
responsible for all Operating Expenses attributable on an accrual basis to the
period from and after the Adjustment Time. If invoices or bills for any of such
costs and expenses are unavailable on or before the Closing Date, such costs
and expenses shall be estimated and prorated at Closing based upon the latest
information available (including prior bills and operating history) and a final
and conclusive readjustment of any cost and expense item shall be made upon
receipt of the actual invoice or bill, but in all events no later than 90 days
following the Closing. CBL/OP shall take all steps necessary to effectuate the
transfer of all utilities to CBL/OP's name as of the date of Closing, and where
necessary, open a new account in CBL/OP's name and post deposits with the
27
utility companies. CBL/OP and Property Owner's Property Manager shall cooperate
to have all utility meters read by the appropriate utility companies as of the
date of Closing. If CBL/OP and Property Owner's Property Manager are unable to
obtain final meter readings as of the Closing Date from all applicable meters,
such expenses shall be estimated at Closing based upon the operating history of
the Property subject to the final adjustment in all events no later than 90
days following the Closing as provided above in this Section 6.3. Property
Owner shall be entitled to recover any and all deposits held by any utility
companies as of the date of Closing, and if any such deposits are not returned
to Property Owner on or before the Closing Date and are assigned to CBL/OP,
such amounts shall be credited to Property Owner's account and increase the
amount of funds payable by CBL/OP at Closing.
6.4 Rentals.
6.4.1 Certain Defined Terms. For purposes of this Agreement, the following terms
shall have the meanings set forth below in this Section 6.4.1:
(a) "Base Rents" means all fixed rents, base rents, minimum rents or basic
rentals payable in fixed installments for stated periods by Tenants under Tenant
Leases.
(b) "Overage Rents" means any additional rent, expense reimbursements, utility
charges, management charges, common area maintenance or "CAM" charges,
escalation rents, operating cost "pass-throughs," and "common area expenses"
payable by Tenants under Tenant Leases (whether based upon increases in
Operating Expenses, Real Estate Taxes, insurance costs or other operating
expenses or taxes or based upon increases in labor costs or cost of living or
porter's wages), together with any other additional rent payments based upon
Real Estate Taxes or Operating Expenses.
(c) "Percentage Rentals" means rents payable by a Tenant under a Tenant Lease
which are expressed as a fixed percentage or percentages of the gross receipts
or gross sales of the Tenant.
(d) "Rentals" means, collectively, all Base Rents, Overage Rents, Percentage
Rentals and other amounts paid or payable by Tenants under their respective
Tenant Leases in connection with their occupancy of the Property. "Rentals"
shall not include Tenant Security Deposits.
6.4.2 General. Property Owner shall be entitled to all Rentals attributable to
the period prior to the Adjustment Time and CBL/OP shall be entitled to all
Rentals attributable to the period from and after the Adjustment Time. The
amount of any Rentals collected by Property Owner prior to the Adjustment Time
and applicable to the period from and after the Adjustment Time shall be
credited to CBL/OP at the Closing. Any Rentals (other than Delinquent Rentals to
which Property Owner is entitled pursuant to Section 6.5 below) which are
received by Property Owner's Property Manager or the Property Owner
Representative subsequent to the Adjustment Time shall be promptly delivered to
CBL/OP. The provisions of this Section 6.4.2 are subject to Section 6.4.3,
Section 6.4.4 and Section 6.5 below.
6.4.3 Overage Rents. Overage Rents shall be separately prorated as of the
Adjustment Time in the manner provided in this Section 6.4.3. Such proration
28
shall be made on a Tenant Lease-by-Tenant Lease basis and shall be based upon
the total annual Overage Rents due under each Tenant Lease for the calendar year
or the appropriate fiscal year as applicable under such Tenant Lease. The actual
fiscal year for Overage Rents under each Tenant Lease during which the Closing
occurs is hereinafter referred to as the "Applicable Overage Rent Year."
Non-delinquent Overage Rent collections for the month in which Closing occurs
shall be prorated in the same manner as other Rents. Subject to the preceding
sentence, to the extent a Tenant makes advance monthly installments or other
interim payments on account of projected Overage Rents, Property Owner shall
initially retain all such advance monthly installments or other interim payments
of projected Overage Rents received by Property Owner or Property Owner's
Property Manager on or prior to the Closing Date and CBL/OP shall initially
retain all such advance monthly installments or other interim payments of
projected Overage Rents received by CBL/OP following Closing. Upon the
expiration of the Applicable Overage Rent Year and the determination of the
actual Overage Rents due for the Applicable Overage Rent Year, CBL/OP and
Property Owner shall prorate the Overage Rents for the Applicable Overage Rents
Year as follows: (a) Property Owner shall be entitled to the portion of the
total annual Overage Rents due from each Tenant for the Applicable Overage Rent
Year equal to the product obtained by multiplying such total annual Overage
Rents by a fraction, the numerator of which fraction is the total amount of
Operating Expenses incurred by Property Owner which are to be reimbursed by
Tenants through Overage Rent for the portion of the Applicable Overage Rent Year
preceding the Adjustment Time and the denominator of which fraction is the total
amount of Operating Expenses incurred by Property Owner and CBL/OP which are to
be reimbursed by Tenants through Overage Rent for the Applicable Overage Rent
Year; and (b) CBL/OP shall be entitled to the portion of the total annual
Overage Rents due from each Tenant for the Applicable Overage Rent Year equal to
the product obtained by multiplying such total annual Overage Rents by a
fraction, the numerator of which fraction is the total amount of Operating
Expenses incurred by CBL/OP which are to be reimbursed by Tenants through
Overage Rent for the portion of the Applicable Overage Rent Year after the
Adjustment Time and the denominator of which fraction is the total amount of
Operating Expenses incurred by Property Owner and CBL/OP which are to be
reimbursed by Tenants through Overage Rent for the Applicable Overage Rent Year.
To the extent Property Owner has collected in advance monthly installments or
other interim payments of projected Overage Rents from a Tenant for the
Applicable Overage Rent Year which are in excess of the amount of Overage Rents
for such Tenant to which Property Owner is entitled hereunder, Property Owner
shall, within 10 Business Days after the year-end adjustment of Overage Rents,
reimburse CBL/OP for any part of such excess and upon such reimbursement CBL/OP
shall be responsible for any refunds and reimbursements due to the Tenant. To
the extent Property Owner has collected in advance monthly installments or other
interim payments of projected Overage Rents from a Tenant for the Applicable
Overage Rent Year which are less than the amount of Overage Rents for such
Tenant to which Property Owner is entitled hereunder, CBL/OP shall, to the
extent collected by CBL/OP, within 10 Business Days after the year-end
adjustment of Overage Rents, reimburse Property Owner the amount of any such
shortfall.
Any Overage Rent dispute involving (A) a claim by a Tenant for
reimbursement or (B) disputing the amount of the expenses, and in the case of
either (A) or (B), relating to any period prior to Closing, shall be the
Property Owner's responsibility as to any sums owed to such Tenant, and any sums
deemed due from such Tenant for such periods shall likewise be the Property
Owner's. CBL/OP shall be responsible for such matters for periods from the date
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of Closing and thereafter. CBL/OP shall be in control of all Overage Rent
disputes following the Closing but the parties agree to cooperate in any Overage
Rent dispute involving periods prior to the Closing and to provide information
and to assist each other in any litigation or other procedures that may ensue
with respect to such Overage Rent disputes. Any settlement of a CAM dispute for
periods prior to Closing shall require Property Owner's prior approval. Property
Owner shall be responsible for all court costs, legal fees (including CBL/OP's
attorney's fees and costs) and other costs in any such Overage Rent dispute
relating to periods prior to Closing, and CBL/OP shall be responsible for all
court costs, legal fees (including Property Owner's attorney's fees and costs)
and other costs in any such Overage Rent dispute relating to periods from the
date of Closing and thereafter. In the case of a multi-year Overage Rent dispute
in which a portion of the period at issue relates to periods prior to the
Closing and a portion relates to periods following the Closing, Property Owner
and CBL/OP shall each bear a pro rata share of the court costs, legal fees
(including CBL/OP's and Property Owner's attorney's fees) and other costs based
on the period involved (i.e., in the case of a CAM dispute involving 3 years, 2
prior to Closing and 1 following Closing, Property Owner shall be responsible
for 2/3 of the referenced costs and CBL/OP shall be responsible for 1/3).
Notwithstanding the foregoing, with respect to any multi-year Overage Rent
dispute relating to both periods prior to the Closing and periods after the
Closing, Property Owner shall have the right to settle such dispute with respect
to periods prior to the Closing, and upon consummation of such settlement, if
CBL/OP does not settle such dispute with respect to periods after the Closing
simultaneously, Property Owner shall have no obligation to bear any share of
court costs, legal fees or other costs pertaining to such dispute incurred after
consummation of such settlement.
6.4.4 Percentage Rentals. Percentage Rentals payable by Tenants under Tenant
Leases shall be separately prorated as of the Adjustment Time between CBL/OP and
Property Owner in the manner provided in this Section 6.4.4. Such proration
shall preliminarily be based on 105% of the Percentage Rentals received by
Property Owner for the year period preceding the Adjustment Time (the "Projected
Percentage Rentals"), with such amount being allocated in the following manner:
Property Owner shall be entitled to an amount equal to the product obtained by
multiplying the Projected Percentage Rentals by a fraction, the numerator of
which is the number of days between January 1, 2005 and the day preceding the
Adjustment Time, and the denominator of which is 365, and CBL/OP shall be
entitled to the balance of the Projected Percentage Rentals (the "Preliminary
Percentage Rent Proration"). Subsequent to the Closing Date, the Preliminary
Percentage Rent Proration shall be adjusted in the following manner: the
proration of Percentage Rentals shall be made on a Tenant Lease-by-Tenant Lease
basis and shall be based upon the fiscal year set forth in each applicable
Tenant Lease for the determination of Percentage Rental. The actual fiscal year
for Percentage Rental during which the Closing occurs is hereinafter referred to
as the "Applicable Percentage Rental Fiscal Year." Upon the expiration of the
Applicable Percentage Rental Fiscal Year, CBL/OP and Property Owner shall
prorate the total annual Percentage Rental due from a Tenant for such Tenant's
Applicable Percentage Rental Fiscal Year as follows: (a) Property Owner shall be
entitled to the portion of the Percentage Rental paid by each Tenant equal to
the product obtained by multiplying the total annual Percentage Rental paid by
such Tenant by a fraction, the numerator of which fraction is the number of days
in the Applicable Percentage Rental Fiscal Year preceding the Adjustment Time
and the denominator of which is the total number of days in the Applicable
Percentage Rental Fiscal Year; and (b) CBL/OP shall be entitled to the portion
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of the Percentage Rental paid by each Tenant equal to the product obtained by
multiplying the total annual Percentage Rental paid by such Tenant by a
fraction, the numerator of which fraction is the total number of days in the
Applicable Percentage Rental Fiscal Year after the Adjustment Time and the
denominator of which is the number of days in the Applicable Percentage Rental
Fiscal Year. Any resulting adjustment shall be effected in conformance with
Section 6.9.
6.5 Delinquent Rentals. As used herein, "Delinquent Rentals" means Base Rents
which are due and payable prior to or on the day of the Closing but which have
not actually been collected by Property Owner as of the day of the Closing.
Property Owner's account shall not be credited at the Closing for any
Delinquent Rentals but Property Owner shall retain all right, title and
interest to any Delinquent Rentals and CBL/OP shall have no rights to any
Delinquent Rentals. From and after the Closing, Property Owner's Representative
shall be entitled to institute legal proceedings and otherwise attempt to
collect any Delinquent Rentals (but without seeking to evict the Tenant) and
CBL/OP agrees, at the expense of Property Owner, to cooperate with Property
Owner in connection with such collection efforts by Property Owner
Representative. Any Delinquent Rentals received by CBL/OP subsequent to the
Closing Date shall be first applied to accrued Rents (whether current or that
became delinquent following the Closing) owing by the Tenant to CBL/OP, and the
balance of Delinquent Rentals shall be promptly remitted to Property Owner.
6.6 Security Deposits. At the Closing, Property Owner shall retain the amount of
any Security Deposits which are in cash form and CBL/OP shall receive a credit
toward the Purchase Price for such cash Security Deposits. To the extent
Property Owner is holding any Security Deposits in the form of a letter of
credit, marketable security or other form of non-cash instrument, then, prior
to the Closing, Property Owner shall deliver to the Escrow Agent the original
letter of credit or other instrument and, at Property Owner's expense or the
expense of the applicable Tenant, Property Owner's assignment of the letter of
credit, marketable security or other form of non-cash instrument to CBL/OP and
an undertaking by Property Owner, until such time as CBL/OP can reasonably
obtain a replacement naming CBL/OP as the beneficiary thereof, to draw on or
redeem the letter of credit, marketable security or other form of non-cash
instrument which names Property Owner as beneficiary or payee at the direction
and for the benefit of CBL/OP and at no cost, expense or liability to Property
Owner.
6.7 Anchor Store Payments. Prorations of income and expenses attributable to the
Anchor Stores shall be made in the same manner as Tenant Leases .
6.8 Tenant Installation Expenses. As used herein, "Leasing Costs" means,
collectively, any and all fees, costs, expenses and charges of the landlord
arising out of or in connection with entering into any Tenant Lease, any new
Tenant Lease for space at the Property and any extensions, renewals or
expansions under any Tenant Lease, including (a) brokerage commissions and fees
to effect any such leasing transaction (including any fees and commissions owed
to Property Owner's Property Manager), (b) expenses ("Tenant Improvement
Costs") incurred for repairs, improvements, equipment, painting, decorating,
partitioning and other items to satisfy the Tenant's initial construction
requirements with regard to such leasing transaction (including any
improvements to the Property which are mandated pursuant to applicable building
codes and other applicable governmental regulations solely by reason of the
tenant improvements being made at the landlord's expense in connection with the
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leasing transaction), (c) reasonable legal fees for services in connection with
the preparation of documents and other services rendered in connection with the
effectuation of the leasing transaction, and (d) if there are any Rental
concessions covering any period that the Tenant has the right to be in
possession of the demised space, the Rentals that would have accrued during the
period of such concession. With respect to the Pending Transactions (as defined
below) and other Tenant Lease transactions approved by CBL/OP pursuant to
Section 8.4, CBL/OP agrees that the commissions payable by CBL/OP shall be at
the following rates: $5.00 per square foot for new Tenant Leases; $2.50 per
square foot for Tenant Lease renewals; $1,000.00 for kiosk Tenant Leases.
CBL/OP acknowledges that the benefits of Tenant Leases which are executed after
the Effective Date of this Agreement and any amendments, modifications,
supplements or extensions to existing Tenant Leases which are executed after
the Effective Date of this Agreement as well as the benefits of any options
under existing Tenant Leases which are exercised after the Effective Date of
this Agreement, as well as the consummation of those leasing transactions
("Pending Transactions") described on the attached Exhibit W (whether
consummated before or after the Effective Date) shall all primarily accrue to
the benefit of CBL/OP. Except for the Pending Transactions, Property Owner
shall be responsible for only (i) those Leasing Costs which are due and payable
in connection with Tenant Leases which have been executed prior to the
Effective Date of this Agreement, (ii) those Leasing Costs which are due and
payable in connection with amendments, modifications, supplements or extensions
to Tenant Leases which have been executed prior to the Effective Date of this
Agreement, and (iii) those Leasing Costs which are due and payable in
connection with options under Tenant Leases which have been exercised prior to
the Effective Date of this Agreement. CBL/OP shall be responsible for (1) all
Leasing Costs in connection with the Pending Transactions and with any Tenant
Leases which are executed after the Effective Date of this Agreement (with
CBL/OP's approval pursuant to Section 8.4 below); (2) all Leasing Costs in
connection with any amendments, modifications, supplements or extensions of
Tenant Leases which are executed following the Effective Date of this Agreement
(with CBL/OP's approval pursuant to Section 8.4 below); and (3) all Leasing
Costs as set forth in the applicable Tenant Lease in connection with options
under Tenant Leases which are exercised after the Effective Date of this
Agreement. Such Leasing Costs shall be apportioned at Closing to reflect the
foregoing responsibilities. CBL/OP shall assume at Closing all tenant
improvement construction contracts for tenant improvement work which is in
progress as of the Closing and, to the extent the cost thereof is to be borne
by the landlord under the applicable Tenant Lease, upon the Closing, CBL/OP
shall receive a credit toward payment of the Purchase Price for any amounts due
under such construction contracts assumed by CBL/OP and any other Leasing Costs
which are the responsibility of Property Owner pursuant to this Section 6.8.
CBL/OP acknowledges that tenant improvement and other work in connection with
Tenant Leases is being performed by third party contractors and nothing
contained in this Section 6.8 shall be deemed or construed to constitute any
representation or warranty by Property Owner with respect to Leasing Costs,
including the quality or workmanship of any tenant improvements under
construction or to be constructed under existing Tenant Leases, and Property
Owner hereby expressly disclaims any such representation or warranty. Without
limiting the foregoing, CBL/OP shall look solely to the third party contractor
to correct any defects or shortcomings in materials or workmanship and nothing
contained in this Section 6.8 shall make Property Owner responsible for any
such defects or shortcomings in any work performed in connection with Tenant
Leases.
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6.9 Adjustment Procedure. Not less than two Business Days prior to the Closing
Date, Property Owner and CBL/OP shall agree upon a schedule of the allocation
of costs and expenses to be made in accordance with Section 5.9 above and the
prorations to be made in accordance with this Article VI (the "Proration and
Expense Schedule"), which Proration and Expense Schedule shall be executed by
Property Owner and CBL/OP, become a schedule to the closing statement described
in Sections 5.4.7 and 5.6.4 (the "Closing Statement") and utilized for purposes
of making the adjustments to the Purchase Price at Closing for closing costs
and prorations. As soon as practicable following the Closing (but in no event
later than the first anniversary of the Closing, except that with respect to
Real Estate Taxes, in no event later than fifteen (15) business days after
receipt of the actual tax bill attributable for the calendar year 2005),
Property Owner and CBL/OP shall reprorate the income and expenses set forth in
this Article VI based upon actual bills or invoices received after the Closing
(if original prorations were based upon estimates) and any other items
necessary to effectuate the intent of the parties that all income and expense
items be prorated as provided above in this Article VI. Any reprorated items
shall be promptly paid to the party entitled thereto. Any payment by the
Property Owner to CBL/OP pursuant to the preceding sentence shall be in cash.
Any errors or omissions in computing adjustments at the Closing shall be
promptly corrected, provided that the party seeking to correct such error or
omission shall have notified the other party of such error or omission no later
than the first anniversary of the Closing. The provisions of this Article VI
shall survive the Closing.
6.10 Gift Certificates. At or prior to Closing, Property Owner shall terminate
the gift certificate program currently in effect with respect to the Shopping
Center ("Gift Certificate Program"). Gift certificates issued by Property Owner
or on Property Owner's account prior to Closing which are outstanding on the
Closing Date ("Outstanding Gift Certificates") shall be honored by CBL/OP after
the Closing Date. At Closing, (i) Property Owner shall transfer and assign to
CBL/OP any bank account or reserve established to cover the Outstanding Gift
Certificates, and (ii) to the extent such bank accounts or reserves are
insufficient to cover the Outstanding Gift Certificates, Property Owner s shall
pay CBL/OP at Closing the amount of such deficiency. Except for any termination
fee or damages payable in connection with the termination of the gift card
fulfillment contract (which termination fee and damages will be handled in the
manner descried in Section 4.7), Property Owner shall indemnify and hold
harmless CBL/OP from any Losses that the CBL/OP may incur as a result of: (i)
any claims, actions, suits or demands brought against the CBL/OP with respect
to the Gift Certificate Program and/or the operations thereunder (except to the
extent the CBL/OP fails to honor the Outstanding Gift Certificates after the
Closing), (ii) the value of Outstanding Gift Certificates exceeding, in the
aggregate, the total amount of the bank accounts or reserves assigned by
Property Owner to CBL/OP at the Closing plus the amount paid by Property Owner
to CBL/OP at the Closing in accordance with clause (ii) above). Such indemnity
shall entail the provision of a defense by Property Owner for CBL/OP and
payment of all attorneys fees and court costs associated therewith; and,
notwithstanding anything to the contrary contained in this Agreement, shall not
be subject to any limitations on liability or survival set forth in this
Agreement (including, without limitation, Sections 7.3, 10.5 and 10.6 below) or
subject to the provisions of the Indemnity Escrow Agreement. Property Owner's
obligations under this Section 6.10 shall survive Closing.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Property Owner. As a material inducement
to CBL/OP entering into this Agreement and consummating the transactions
contemplated hereby, Property Owner hereby makes the following representations
and warranties to CBL/OP as of the Effective Date, subject to the terms set
forth herein and subject to the items set forth on Schedule 7.1 attached hereto
and made a part hereof (the "Disclosure Schedule"):
7.1.1 Power and Authority of Property Owner. Property Owner has the right, power
and capacity to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Property Owner and constitutes Property Owner's legal,
valid and binding obligation, enforceable in accordance with its terms (except
as may be limited by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the right of contracting parties generally).
The execution, delivery and performance of this Agreement has been duly and
validly authorized by Property Owner. The execution, delivery and performance by
Property Owner of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which such Property Owner is subject, (ii) violate any order, judgment or
decree applicable to Property Owner, (iii) violate, conflict with, or result in
a breach or default under, or cause the termination of, any term or condition of
any court order, restriction, agreement, document or other instrument to which
Property Owner is a party or by which Property Owner may be bound, or (iv)
except as contemplated by this Agreement, result in the creation of any lien,
charge or encumbrance upon the Property or any part thereof.
7.1.2 Intentionally Omitted
7.1.3 Intentionally Omitted
7.1.4 [Intentionally Omitted]. .
7.1.5 Deliveries at Closing. All documents to be executed by Property Owner
which are to be delivered to CBL/OP at the Closing will be, duly authorized,
executed, and delivered by the Property Owner, will be legal, valid, and binding
obligations of Property Owner (except as limited by applicable bankruptcy,
insolvency, moratorium and other principles relating to or limiting the right of
contracting parties generally).
7.1.6 Requisite Action. All requisite action (corporate, trust, partnership or
otherwise) has been taken by Property Owner in connection with entering into
this Agreement, the instruments referenced herein, and the consummation of the
transaction contemplated hereby. No consent of any partner, shareholder,
trustee, trustor, beneficiary, creditor, investor, judicial or administrative
body, governmental authority or other party is required for Property Owner to
consummate the transactions contemplated by this Agreement, or if required, such
consent has been obtained.
34
7.1.7 Individuals Authority. The individuals executing this Agreement and the
instruments referenced herein on behalf of Property Owner have the legal power,
right, and actual authority to bind Property Owner to the terms and conditions
hereof and thereof.
7.1.8 Tenant Leases. As of the Effective Date, the Property Owner is the lessor
or landlord or the successor lessor or landlord under the Tenant Leases. The
Lease Schedule/Rent Roll is true, accurate and correct in all material respects
with respect to (i) the description of the Tenant Leases; (ii) to Property
Owner's knowledge, the identities of the Tenants under the Tenant Leases; (iii)
the space occupied by the Tenants; (iv) the expiration dates of the Tenant
Leases; (v) the monthly base rental payable thereunder; (vi) unpaid Leasing
Costs; (vii) commissions; (viii) the Tenant Security Deposits, and (ix) the
Lease/amendments dates. Except as set forth on the Lease Schedule/Rent Roll, the
Tenant Leases are in full force and effect and have not been modified. There are
no written or oral promises, understandings or commitments between Property
Owner and any Tenant other than those contained in the Tenant Leases. To
Property Owner's knowledge, none of the Tenants have asserted any defense,
set-off or counterclaim or raised any dispute with regard to its tenancy or its
Tenant Lease. Except as set forth in the Lease Schedule/Rent Roll, there are no
other leases or occupancy agreements to which Property Owner is a party
affecting the Property, no rents under any of the Tenant Leases have been
prepaid for more than one month, and there are no arrears in the payment of
rents for than one month. Other than Leasing Costs pursuant to the Pending
Transactions and other than the Tenant Leases or expansions or renewals between
the Effective Date and Closing which have been approved by CBL/OP, there are no
Leasing Costs for which CBL/OP shall become liable or that shall constitute a
lien on the Property after Closing. Property Owner has delivered to CBL/OP a
true, correct and complete copy of all Tenant Leases (including all amendments
thereto).
7.1.9 Contracts. Other than those which are cancelable on 30 days' notice
without payment of any fees, there are no service, supply, maintenance, repair,
construction or management contracts to which Property Owner is a party relating
to the Property which will be binding upon CBL/OP, or the Property following the
Closing, except as disclosed by the Title Documents and except as described in
Exhibit Z attached hereto.
7.1.10 Pending Actions. There is no pending (or to Property Owner's knowledge,
threatened) action, suit or proceeding before any court or other governmental
agency naming Property Owner as a party that arises out of Property Owner's
ownership of the Property (other than any pending proceeding to contest the Real
Estate Taxes assessment of the Property).
7.1.11 Governmental/Insurance Notices. Except as disclosed to CBL/OP in writing,
Property Owner has not received any written notice (a) from any city, county,
state or other governmental authority having jurisdiction over the Real Property
stating that the Real Property is in material violation of the laws, rules or
ordinances applicable to the Real Property including applicable parking ratios,
which violation has not been corrected prior to the Effective Date, or (b) from
Property Owner's insurance carriers regarding defects or material inadequacies
of all or any part of the Real Property or use or operation thereof, which
defects or inadequacies have not been corrected prior to the Effective Date.
35
7.1.12 Condemnation/Rezoning. Except as disclosed in the Title Documents or
otherwise disclosed to CBL/OP in writing, Property Owner has not received any
official notice from any governmental authority having jurisdiction over the
Real Property of (a) any actual or threatened condemnation of the Property or
any part thereof; or (b) any actual plan, study or effort to rezone the Real
Property or to widen, modify, regrade or realign any street or highway that
borders the Real Property. Except as set forth in the Property Records delivered
or made available to CBL/OP as provided in Section 4.2.1 above and except as
disclosed to CBL/OP in writing, Property Owner has not been served with any
complaint for any pending eminent domain proceeding with respect to the
Property.
7.1.13 Environmental Law Violations. Except as disclosed to CBL/OP in writing,
(a) Property Owner has not received any written notice of a material violation
of any federal, state, or local laws, ordinances, rules or regulations governing
the use, storage, treatment, transportation, generation or disposal of Hazardous
Substances with respect to the Real Property, and (b) to Property Owner's
knowledge, no person or entity has caused any Hazardous Substances to be
disposed of or released at the Real Property during Property Owner's period of
ownership of the Real Property, except for amounts of Hazardous Substances that
may be present in the ordinary course of the shopping center/retail business
conducted by Property Owner, Tenants, the Anchor Stores or other occupants of
the Real Property or in the ordinary course of the maintenance and operation of
the Real Property.
7.1.14 Lease Brokerage. Except as contemplated by Section 7.1.8, there are no
lease brokerage agreements, leasing commission agreements or other agreements
providing for payments by Property Owner or its successors or assigns of any
amounts for leasing activities or procuring Tenants with respect to the Property
including Tenant Lease renewals, expansions or modifications.
7.1.15 No Violations. To Property Owner's knowledge, (i) the Property is in
compliance with applicable fire, health, building, use, occupancy or zoning laws
(collectively, "Laws"), including but not limited to applicable parking ratios
and (ii) any work that is required by any Laws to be done upon or in connection
with the Property has been done except for such work that may remain outstanding
and, if unaddressed, would not have a material adverse effect on the use of the
Property as currently owned and operated.
7.1.16 Intentionally Omitted.
7.1.17 Taxes. To Property Owner's Knowledge, no application or proceeding is
pending seeking any increase or reduction in taxes or assessments for the
Property.
7.1.18 Financial/Operating Statements. The financial statements with respect to
the Property provided by Property Owner to CBL/OP (i) were materially accurate
as of the date and for the period(s) presented in such statements, and (ii)
accurately reflected the financial condition and results of operations of the
Property as of the period(s) presented.
7.1.19 Delivery of Environmental Reports and Property Condition Reports.
(i) Property Owner has delivered to CBL/OP or made available to CBL/OP all
environmental reports in the possession of Property Owner or Property Owners'
36
Property Manager (the "Existing Environmental Reports"). With respect to any
other environmental report not currently in Property Owner's possession, but
previously commissioned by or for the benefit of Property Owner or any lender to
Property Owner with respect to the Property or with respect to conditions that
may impact the Property (the "Prior Reports"), no such Prior Report contains
information which is materially inconsistent with the Existing Environmental
Reports.
(ii) Property Owner has delivered to CBL/OP or made available to CBL/OP all
reports in Property Owner's possession prepared within the five (5) year period
prior to the Effective Date that Property Owner has caused to be prepared or
that were prepared by or for any other person or entity with respect to the
Property or any portion of the Property that are in the nature of engineering
reports, reports of physical conditions of Improvements and/or any other reports
of other conditions at, on or impacting the Property that called for or
recommended repairs or capital expenditures in excess of $25,000.
7.1.20 Adjacent Property. Neither Property Owner nor any partner or affiliate of
Property Owner owns any interest in any real property that is adjacent to the
Land or that is within a one-mile radius of the Land.
7.1.21 Employees. Property Owner neither has, nor has ever had, any employees.
7.1.22 Intentionally Omitted.
7.2 Definition of Property Owner's Knowledge. For purposes of this Agreement,
whenever the phrase "to the knowledge of Property Owner" or words of similar
import are used, they shall be deemed to refer to the present actual (as
opposed to constructive or imputed) knowledge of either Troy Marquis or Irwin
Blitt, only, without any investigation or inquiry whatsoever by said
individuals. CBL/OP acknowledges that the individuals named above are named
solely for the purpose of defining and narrowing the scope of Property Owner's
knowledge and not for the purpose of imposing any liability on or creating any
duties running from such individual to CBL/OP. CBL/OP covenants that CBL/OP
will bring no action of any kind against such individual or any officer,
director, member, partner, shareholder, agent, representative, or advisor of
Property Owner in such capacity arising out of the representations and
warranties made by Property Owner in this Agreement.
7.3 Survival Period. The representations and warranties of Property Owner set
forth in Section 7.1 and the indemnification obligations under Section 10.4.2
shall survive until only the date which is one (1) year following the Closing
(the "Expiration Date") (other than those representations and warranties set
forth in Sections 7.1.1 through 7.1.7 and the indemnification obligations under
Section 10.4.2, but only to the extent the indemnification obligations cover
breaches of the representation and warranties set forth in Sections 7.1.1
through 7.1.7, which shall survive until the date which is five (5) years
following the Closing Date (the "Extended Expiration Date")) and shall
automatically expire upon the Expiration Date (or Extended Expiration Date, as
applicable) unless CBL/OP files a written claim against Property Owner with
respect to any alleged breach prior to the Expiration Date (or Extended
Expiration Date, as applicable) and commences suit within six (6) months
following the filing of such claim (and, in the event any such suit is timely
37
commenced by CBL/OP against Property Owner, shall survive thereafter only
insofar as the subject matter of the alleged breach specified in such suit is
concerned). If suit is not timely commenced by CBL/OP within the time period
stated above, then Property Owner's representations and warranties and
indemnifications obligations shall thereafter be void and of no force or
effect.
7.4 Third Party Information. Notwithstanding anything to the contrary contained
herein, and without limiting Article IX below, Property Owner shall not have
any liability, obligation or responsibility of any kind to CBL/OP, any of
CBL/OP's agents, members, partners, employees, representatives, related and
affiliated entities, successors and assigns, or any other party claiming by,
under or through CBL/OP (collectively, "CBL/OP Parties") with respect to the
following: (a) the content or accuracy of any report, study, opinion or
conclusion of any soils, toxic, environmental or other engineer or other person
or entity who has examined the Property or any aspect thereof; (b) the content
or accuracy of any information released to CBL/OP by an engineer or planner in
connection with the Property; (c) the availability of building or other permits
or approvals for the Property by any state or local governmental bodies with
jurisdiction over the Property; (d) any of the items delivered or made
available to CBL/OP pursuant to CBL/OP's review of the Property or the Property
Records or the condition of the Property which have been prepared by anyone
other than Property Owner (including any of the Title Documents); or (e) the
content or accuracy of any other development or construction cost, projection,
financial or marketing analysis given to CBL/OP by Property Owner or reviewed
by CBL/OP with respect to the Property; provided that, in each case stated
above, to the extent that Property Owner furnished or made available any
documents or materials to CBL/OP, Property Owner represents and warrants that,
to Property Owner's knowledge, such documents and materials are true and
correct copies of those documents and materials contained in Property Owner's
files. Under no circumstances whatsoever shall information possessed by or
known to any person or entity other than Property Owner (including Property
Owner's consultants, attorneys, agents and advisors or their respective
employees or representatives) be imputed or attributed to Property Owner.
7.5 CBL/OP's Knowledge. For purposes of this Agreement, whenever the phrase "to
the knowledge of CBL/OP" or "CBL/OP has actual knowledge" or words of similar
import are used, they shall be deemed to refer to the present actual (as
opposed to constructive or imputed) knowledge of Stephen Lebovitz, Keith
Honnold and/or Jay Wiseman without any investigation or inquiry whatsoever by
said individual. Property Owner acknowledges that the individual named above is
named solely for the purpose of defining and narrowing the scope of CBL/OP's
knowledge and not for the purpose of imposing any liability on or creating any
duties running from such individual to Property Owner. Property Owner covenant
that they will bring no action of any kind against such individual or any
officer, director, member, partner, shareholder, agent, representative, or
advisor of CBL/OP arising out of the representations and warranties made by
CBL/OP in this Agreement. Notwithstanding anything to the contrary contained in
this Agreement, Property Owner shall not have any liability, obligation or
responsibility of any kind to CBL/OP or any other CBL/OP Party with respect to
any representation or warranty contained in Section 7.1 above if, prior to the
Closing, CBL/OP has actual knowledge that such representation or warranty is
untrue or incorrect, or to the extent that any Tenant Estoppel Certificate or
Anchor Estoppel Certificate received by CBL/OP prior to Closing discloses
information which is inconsistent with such representations and warranties.
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7.6 Representations and Warranties of CBL/OP. CBL/OP represents and warrants to
Property Owner that upon approval of CBL/REIT's Board of Directors as described
in Section 13.2 hereof, the following matters are true and correct as of the
Effective Date:
7.6.1 Legal Power. CBL/OP will have the legal power, right and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transaction contemplated hereby.
7.6.2 Duly Authorized. This Agreement is, and all the documents executed by
CBL/OP which are to be delivered to Property Owner at the Closing will be, duly
authorized, executed, and delivered by CBL/OP, and is and will be legal, valid,
and binding obligations of CBL/OP (except as may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or limiting
the right of contracting parties generally).
7.6.3 Requisite Action. All requisite action (corporate, trust, partnership or
otherwise) has been taken by CBL/OP in connection with entering into this
Agreement and the instruments referenced herein and by the Closing all such
necessary action will have been taken to authorize the consummation of the
transaction contemplated hereby. By the Closing no additional consent of any
partner, shareholder, trustee, trustor, beneficiary, creditor, investor,
judicial or administrative body, governmental authority or other party shall be
required for CBL/OP to consummate the transaction contemplated by this
Agreement.
7.6.4 Individuals Authority. The individuals executing this Agreement and the
instruments referenced herein on behalf of CBL/OP have the legal power, right,
and actual authority to bind CBL/OP to the terms and conditions hereof and
thereof.
ARTICLE VIII
OPERATING COVENANTS
Property Owner hereby agrees to the following covenants:
8.1 Insurance. Until the Closing, Property Owner shall keep the Property insured
against fire, vandalism and other loss, damage and destruction with the same
coverage, policy limits and deductible amounts as are currently maintained by
Property Owner.
8.2 Operation of Property. Until the Closing, Property Owner shall operate the
Property in the manner as Property Owner has previously done and Property Owner
shall maintain and repair the Property through the Closing in a manner
consistent with the manner in which Property Owner maintained and repaired the
Property prior to the date of this Agreement, subject to the limitations on
Property Owner's obligation to pay costs of repair and maintenance as set forth
in Section 8.3 below.
8.3 Capital Improvements. Subject to Property Owner's obligations under Section
8.2 above, from and after the Effective Date until the Closing, Property Owner
shall not undertake any capital improvements or material alterations or
renovations to the Real Property (including any which are recommended in any of
the Property Records delivered or made available to CBL/OP or in any of the
CBL/OP's Information), except as may be required under Tenant Leases or
governmental regulations, without the prior written consent of CBL/OP. To the
39
extent Property Owner is required (whether pursuant to Section 8.2, or under
Tenant Leases, or governmental regulations) or Property Owner receives CBL/OP's
consent, pursuant to the foregoing sentence, to undertake any capital
improvements or material alterations to the Real Property, Property Owner shall
not be required to pay for capital improvements (excluding Tenant Improvement
Costs, which shall be borne by the parties as provided in Section 6.8 above,
and shall not be subject to the limitations in this Section 8.3) or maintenance
and repair expenses in excess of One Hundred Thousand Dollars ($100,000). If
the aggregate amount incurred by Property Owner for capital improvements
(excluding Tenant Improvement Costs) under this Section 8.3 and maintenance and
repair expenses under the Section 8.2 above, exceeds One Hundred Thousand
Dollars ($100,000), provided the Closing occurs, CBL/OP shall reimburse
Property Owner at Closing for the amount so expended in excess of One Hundred
Thousand Dollars ($100,000); provided, further, that if the total reimbursement
required of CBL/OP pursuant to this provision shall exceed Nine Hundred
Thousand Dollars ($900,000), CBL/OP shall have the right to terminate this
Agreement by written notice to Property Owner, in which event the Letter of
Credit or the Deposit, as applicable, shall be returned to CBL/OP.
8.4 Leasing. From and after the Effective Date, Property Owner shall not enter
into any new Tenant Leases or amend, modify, supplement, terminate or extend
the existing Tenant Leases without the prior written consent of CBL/OP. CBL/OP
shall have 5 Business Days following CBL/OP's receipt of any such draft of a
proposed new Tenant Lease or proposed amendment, modification, supplement,
termination or extension of a Tenant Lease to review and approve such draft,
which approval shall not be unreasonably withheld, delayed or conditioned with
respect to the Pending Transactions (subject to clause (c) below), and which
approval shall be in CBL/OP's sole discretion in all other cases (except as
provided in the last sentence of this Section 8.4). The failure of CBL/OP to
notify Property Owner in writing within 5 Business Days of CBL/OP's disapproval
of any draft delivered to CBL/OP shall be deemed to constitute CBL/OP's
approval thereof. Notwithstanding anything to the contrary contained herein,
CBL/OP shall not be entitled to disapprove any term, condition or other
provision of a subsequent draft of a proposed new Tenant Lease or a subsequent
draft of a proposed amendment, modification, supplement, termination or
extension of a Tenant Lease delivered to CBL/OP which (a) has not been changed
or modified from any prior draft approved or deemed approved by CBL/OP, or (b)
constitutes merely a clarification of a term or provision of a proposed new
Tenant Lease or proposed amendment, modification, supplement, termination or
extension of a Tenant Lease without changing the substance thereof or another
immaterial change or revision to a proposed new Tenant Lease or proposed
amendment, modification, supplement, termination or extension of a Tenant
Lease, or (c) is set forth on Exhibit W with respect to the Pending
Transactions.
8.5 New Contracts. Except as permitted under the terms of this Agreement,
Property Owner shall not enter into any new contract or other agreement
affecting the Property (including but not limited to any transfer of any
interest in the Property or placement or allowance of placement of any mortgage
or lien against the Property) which would survive the Closing (other than new
Tenant Leases pursuant to Section 8.4 above); provided that no consent of
CBL/OP shall be required as to any proposed contract or other agreement which
is entered into in the course of Property Owner's ordinary course of operating
and maintaining the Property and which provides it is terminable upon 30 days
(or less) notice without premium or penalty payable by CBL/OP.
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8.6 Liens. From the Effective Date until Closing, except for the Permitted
Exceptions, Property Owner shall not create or consent to the creation of any
security interests, liens, easements or other title conditions affecting any
portion of the Property, without the prior written consent of CBL/OP, which
shall not be unreasonably withheld.
8.7 Tenant Lease Defaults. From the Effective Date until Closing, Property Owner
shall promptly notify CBL/OP in writing of (i) the occurrence of any material
default under any Tenant Lease, which shall include, without limitation, any
monetary defaults by Tenants in excess of $50,000.00 in the aggregate
(regardless of whether Property Owner elects to declare a default) under the
Tenant Leases, and (ii) any notice or correspondence received by Property Owner
or Property Owner's Property Manager from a Tenant or an Anchor Store with
respect to the Property where such notice or correspondence includes any
notice, threat or reference by such Tenant or Anchor Store of any default or
breach or potential default or potential breach under a Lease or where such
notice or correspondence includes any notice of an intent or threat to
terminate a Tenant Lease.
8.8 Transfers. From the Effective Date until Closing, Property Owner shall not
(i) other than due to a casualty, condemnation or as required by law, offer to
sell, or sell, mortgage, pledge, hypothecate or otherwise transfer or dispose
of all or any part of the Property or any interest therein, or (ii) list the
Property or any part thereof with any broker (other than extending the existing
listing with Property Owner's Broker) or otherwise offer or solicit offers for
the sale or transfer of the Property to any person or entity other than the
CBL/OP.
8.9 Litigation. From the Effective Date until Closing, Property Owner shall give
CBL/OP prompt notice of the institution of any litigation, arbitration or other
administrative proceeding of which Property Owner becomes aware involving the
Property or that could impact Property Owner's interest in the Property and
will allow CBL/OP, if requested by CBL/OP, to participate in any decision to
settle such matters and CBL/OP shall be entitled to approve or disapprove any
settlement of such matters that, in the case of any of the foregoing, may have
any material adverse impact on the Property following the Closing (it being
agreed that a settlement which merely requires the payment of money by Property
Owner and/or its insurers, and does not impose any future obligations
concerning operation of the Property will be deemed not to have a material
adverse impact on the Property following the Closing).
8.10 Schedule and Exhibit Updates. Property Owner shall notify CBL/OP of (i) any
circumstance known to Property Owner that would result in a change to any
Schedule or Exhibit or (ii) any discovery (or remembrance) of facts which would
render any Schedule or Exhibit inaccurate or incomplete within a reasonable
time following Property Owner's knowledge of the occurrence of such
circumstance or discovery of such facts.
8.11 Intentionally Omitted
8.12 Employees of the Property Owner. By the Closing Date, Property Owner hereby
covenants to terminate all of the employees employed by the Property Owner in
connection with the operation of the Shopping Center at Property Owner's sole
cost and expense; and shall pay, at Property Owner's sole cost and expense, any
and all wages, severances, bonuses, retirement packages and other
considerations that such terminated employees are entitled to receive.
41
ARTICLE IX
"AS-IS" SALE
9.1 Disclaimer of Representations and Warranties by Property Owner.
Notwithstanding anything contained in this Agreement to the contrary, except
for those representations and warranties expressly made by Property Owner in
Section 7.1 above, it is understood and agreed that neither Property Owner nor
any of Property Owner's respective agents, employees, contractors or
representatives, nor any other person purporting to act on behalf of Property
Owner, has made and is not now making, and CBL/OP has not relied upon and will
not rely upon (directly or indirectly), any warranties or representations of
any kind or character, express or implied, oral or written, past, present or
future, with respect to the Property, including warranties or representations
as to (a) matters of title, (b) environmental matters relating to the Property
or any portion thereof, (c) geological conditions, including subsidence,
subsurface conditions, water table, underground water reservoirs, limitations
regarding the withdrawal of water and earthquake faults and the resulting
damage of past and/or future earthquakes, (d) whether, and to the extent to
which, the Property or any portion thereof is affected by any stream (surface
or underground), body of water, flood prone area, flood plain, floodway or
special flood hazard, (e) drainage, (f) soil conditions, including the
existence of instability, past soil repairs, soil additions or conditions of
soil fill, or susceptibility to landslides, or the sufficiency of any
undershoring, (g) zoning to which the Property or any portion thereof may be
subject, (h) the availability of any utilities to the Property or any portion
thereof including water, sewage, gas and electric, (i) usages of adjoining
property, (j) access to the Property or any portion thereof, (k) the value,
compliance with the plans and specifications, size, location, age, use, design,
quality, descriptions, suitability, seismic or other structural integrity,
operation, title to, or physical or financial condition of the improvements or
any other portion of the Property, (l) any income, expenses, charges, liens,
encumbrances, rights or claims on or affecting or pertaining to the Property or
any part thereof, (m) the presence of hazardous substances in or on, under or
in the vicinity of the Property, (n) the condition or use of the Property or
compliance of the Property with any or all past, present or future federal,
state or local ordinances, rules, regulations or laws, building, fire or zoning
ordinances, codes or other similar laws, (o) the existence or non-existence of
underground storage tanks, (p) any other matter affecting the stability or
integrity of the Real Property, (q) the potential for further development of
the Property, (r) the existence of vested land use, zoning or building
entitlements affecting the Property, (s) the merchantability of the Property or
fitness of the Property for any particular purpose (CBL/OP affirming that
CBL/OP has not relied on the skill or judgment of Property Owner, Property
Owner's Property manager, or any of their respective agents, employees,
contractors or representatives to select or furnish the Property for any
particular purpose, and that Property Owner does not make any warranty that the
Property is fit for any particular purpose) or (t) tax consequences (including
the amount, use or provisions relating to any tax credits). CBL/OP further
acknowledges that any information of any type which CBL/OP has received or may
receive from Property Owner or any of its agents, employees, contractors or
representatives, including any environmental reports and survey, is furnished
on the express condition that CBL/OP shall not rely thereon, but shall make an
independent verification of the accuracy of such information, all such
information being furnished without any representation or warranty whatsoever.
42
9.2 Sale "As Is". CBL/OP represents and warrants that CBL/OP is a knowledgeable,
experienced and sophisticated buyer of real estate and that CBL/OP has relied
and shall rely solely on (a) CBL/OP's own expertise and that of CBL/OP's
advisors and consultants in purchasing the Property, and (b) CBL/OP's own
knowledge of the Property based on CBL/OP's investigations and inspections of
the Property. CBL/OP has conducted such inspections and investigations of the
Property as CBL/OP deems necessary, including the physical and environmental
conditions thereof, and shall rely upon same. Upon Closing, CBL/OP shall assume
the risk that adverse matters, including adverse physical and environmental
conditions, may not have been revealed by CBL/OP's inspections and
investigations. CBL/OP acknowledges and agrees that upon Closing, Property
Owner shall convey to CBL/OP and CBL/OP shall accept the Property based on the
condition of the Property being "as is, where is," with all faults and defects
(latent and apparent). CBL/OP further acknowledges and agrees that there are no
oral agreements, warranties or representations with respect to the Property
made by Property Owner, or any agent, employee, contractor or representative of
either of them except for representations and warranties made by Property Owner
in this Agreement or any document delivered at or prior to Closing pursuant
hereto. The terms and conditions of Section 9.1 and this Section 9.2 shall
expressly survive the Closing, shall not merge with any Closing Documents.
Property Owner is not liable or bound in any manner by any oral or written
statements, representations or information pertaining to the Property furnished
by Property Owner's Property Manager, Property Owner's broker or any other real
estate broker, or any contractor, agent, or other third person. CBL/OP
acknowledges that the Purchase Price reflects the "as is" condition of the
Property and any faults, liabilities, defects or other adverse matters that may
be associated with the Property except for representations and warranties made
by Property Owner in this Agreement or any document delivered at or prior to
Closing pursuant hereto. CBL/OP has fully reviewed the disclaimers and waivers
set forth in this Agreement with CBL/OP's counsel and understands the
significance and effect thereof.
9.3 CBL/OP Acknowledgments. CBL/OP acknowledges and agrees that (a) to the
extent required to be operative, the disclaimers of warranties contained in
Section 9.1 and Section 9.2 above are "conspicuous" disclaimers for purposes of
all applicable laws and other legal requirements, and (b) the disclaimers and
other agreements set forth in Section 9.1 and Section 9.2 are an integral part
of this Agreement, that the Purchase Price has been adjusted to reflect the
same and that Property Owner would not have agreed to consummate the
transactions contemplated hereby without the disclaimers and other agreements
set forth in Section 9.1 and Section 9.2 above.
9.4 CBL/OP Represented by Counsel. CBL/OP hereby represents and warrants to
Property Owner that: (a) CBL/OP is not in a significantly disparate bargaining
position in relation to Property Owner; (b) CBL/OP is represented by legal
counsel in connection with the transaction contemplated by this Agreement; and
(c) CBL/OP is acquiring the Property for business, commercial, investment or
other similar purposes.
9.5 CBL/OP's Release of Property Owner.
9.5.1 Property Owner Released From Liability. Subject to those obligations
(including, without limitation, representations and warranties) of Property
Owner which this Agreement specifically provides shall survive the Closing,
43
CBL/OP hereby waives its and their right to recover from and fully and
irrevocably releases Property Owner, Property Owner's Property Manager and
Property Owner's employees, officers, directors, representatives, agents,
advisors, servants, attorneys, affiliates, parent, subsidiaries, successors and
assigns, and all persons, firms, corporations and organizations acting on
Property Owner's behalf (the "Released Parties") from any and all claims,
responsibility and/or liability that CBL/OP may now have or hereafter acquire
against any of the Released Parties for any costs, loss, liability, damage,
expenses, demand, action or cause of action arising from or related to (a) the
physical, environmental and structural condition (including any construction
defects, errors, omissions or other conditions, latent or otherwise), valuation,
salability or utility of the Property, or its suitability for any purpose
whatsoever, (b) the presence of any environmental problems, or the use,
presence, storage, release, discharge, or migration of Hazardous Substances on,
in, under or around the Property regardless of when such Hazardous Substances
were first introduced in, on or about the Property, and (c) the presence,
release and/or remediation of asbestos and asbestos containing materials in, on
or about the Property regardless of when such asbestos and asbestos containing
materials were first introduced in, on or about the Property. Notwithstanding
the foregoing, the Released Parties shall not be deemed to include contractors,
subcontractors and other persons who are unaffiliated with Property Owner and
who have supplied labor, materials or equipment to a work of improvement at the
Real Property. This release includes claims of which CBL/OP is presently unaware
or which CBL/OP does not presently suspect to exist which, if known by CBL/OP,
would materially affect CBL/OP's release of the Released Parties. CBL/OP
specifically waives the provision of any statute or principle of law, which
provides otherwise. In this connection and to the extent permitted by law,
CBL/OP agrees, represents and warrants that CBL/OP realizes and acknowledges
that factual matters now unknown to CBL/OP may have given or may hereafter give
rise to causes of action, claims, demands, debts, controversies, damages, costs,
losses and expenses which are presently unknown, unanticipated and unsuspected,
and CBL/OP further agrees, represents and warrants that the waivers and releases
herein have been negotiated and agreed upon in light of that realization and
that CBL/OP nevertheless hereby intends to release, discharge and acquit
Property Owner from any such unknown causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses.
9.5.2 Claims Under Environmental Laws. As used herein, (a) "Environmental Laws"
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.C. Section 9601 et seq.), as amended, or the Resource
Conservation and Recovery Act (42 U.S.C. Section 6902 et seq.), as amended, or
any similar federal, state or local law, ordinance, rule or regulation
applicable to the Property (including any principles of common law or common law
theories); and (b) "Hazardous Substances" means any hazardous, toxic or
dangerous waste, substance or material, any pollutant or contaminant, or any
substance which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous, or any substance
which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), radon gas, urea formaldehyde or asbestos; and
(c) "Unknown Environmental Liabilities" means future obligations to remediate
Hazardous Substances which are located on the Property prior to the Closing,
whether or not such Hazardous Substance is disclosed by any of the Property
Records, CBL/OP's Information or any other source prior to the Closing. Without
limiting the foregoing provisions of this Article IX and notwithstanding the
provisions of any Environmental Laws to the contrary, but subject to (and
without waiving in any respect) the representations and warranties made by
44
Property Owner in Sections 7.1.11, 7.1.13 and 7.1.19 above, (i) Unknown
Environmental Liabilities relating to the Property which exist on or before the
Closing shall be borne solely by CBL/OP, and (ii) Property Owner shall be deemed
to be released from all Unknown Environmental Liabilities pursuant to Section
9.5.1 above. Without limiting the foregoing, but subject to (and without waiving
in any respect) the representations and warranties made by Property Owner in
Sections 7.1.11, 7.1.13 and 7.1.19 above, CBL/OP hereby waives and agrees not to
commence any action, legal proceeding, cause of action or suits in law or
equity, of whatever kind or nature, including a private right of action under
the federal superfund laws, 42 U.S.C. Sections 9601 et seq. or any other
Environmental Laws (as such laws and statutes may be amended, supplemented or
replaced from time to time), directly or indirectly, against the Released
Parties in connection with Unknown Environmental Liabilities or any other claims
relating to Hazardous Substances at the Property or arising under Environmental
Laws with respect to the Property.
/s/ KLH
CBL/OP'S INITIALS
9.5.3 Survival. The foregoing provisions of this Article IX, including the
waivers and releases by CBL/OP, shall survive the Closing.
ARTICLE X
REMEDIES
10.1 Liquidated Damages; Property Owner's Remedies. In the event the Closing and
the consummation of the transaction contemplated herein do not occur as
provided herein by reason of any breach of CBL/OP, CBL/OP, and Property Owner
agree that it would be impractical and extremely difficult to estimate the
damages which Property Owner may suffer as a result thereof. Therefore, CBL/OP
and Property Owner do hereby agree that a reasonable estimate of the total net
detriment that Property Owner would suffer in the event that CBL/OP breaches
this Agreement and fails to complete the purchase of the Property is and shall
be, as Property Owner's sole and exclusive remedy (whether at law or in
equity), and as the full, agreed and liquidated damages for such breach, an
amount equal to the Deposit (it being agreed by Property Owner that such
Deposit shall be allocated among the Property Owner and the Other Mall
Contributors in the manner described in the Indemnity Escrow Agreement which is
attached hereto as Exhibit AA. Upon any such breach by CBL/OP, unless otherwise
specified, this Agreement shall be terminated and neither party shall have any
further rights or obligations hereunder, each to the other, except for the
right of Property Owner to collect and retain such liquidated damages from
CBL/OP and Escrow Agent and the obligation of CBL/OP to deliver to Property
Owner the delivery items pursuant to Section 4.6 above; provided, however, that
this liquidated damages provision shall not limit Property Owner's right to (a)
receive reimbursement for or recover damages in connection with CBL/OP's
indemnity of Property Owner and/or breach of CBL/OP's obligations pursuant to
Section 4.4.2 and Section 5.9 above, (b) recover attorneys' fees and court
costs pursuant to Section 10.3 below, (c) injunctive relief under Section 4.2.6
above, and/or (d) pursue any and all remedies available at law or in equity in
the event that following any termination of this Agreement, CBL/OP or any other
CBL/OP party asserts any claims or right to the Property that would otherwise
delay or prevent Property Owner from having clear, indefeasible and marketable
45
title to the Property. The parties acknowledge that the payment of such
liquidated damages is not intended as a forfeiture or penalty, but is intended
to constitute liquidated damages to Property Owner.
10.2 CBL/OP's Remedies. Subject to Section 10.5 below, in the event the Closing
and the consummation of the transaction contemplated herein do not occur as
provided herein by reason of any breach of Property Owner, then CBL/OP shall
elect, as CBL/OP's sole remedy, either to: (a) terminate this Agreement by
giving Property Owner timely written notice of such election prior to or upon
the Closing Date, and CBL/OP shall be entitled to recover from Escrow Agent or
Property Owner, as applicable, the Letter of Credit or the Deposit, as
applicable; or (b) enforce specific performance against Property Owner, in
which event there shall be no reduction of the Purchase Price and CBL/OP shall
not be entitled to recover any damages (whether actual, direct, indirect,
consequential, punitive or otherwise) notwithstanding such failure or breach by
Property Owner. Notwithstanding the foregoing, if Property Owner breaches any
of Property Owner's obligations which pursuant to this Agreement are to be
performed by Property Owner prior to the Closing Date, and instead of
terminating this Agreement pursuant to this Section 10.2, CBL/OP proceeds with
the Closing, then CBL/OP shall be deemed to have waived such default by
Property Owner, provided that CBL/OP has knowledge thereof prior to Closing.
CBL/OP shall be deemed to have elected to terminate this Agreement pursuant to
Clause (a) hereinabove if CBL/OP fails to commence an action to assert a claim
for specific performance against Property Owner on or before 30 days following
the Closing Date. Notwithstanding the foregoing to the contrary, no notice of
termination given by CBL/OP hereunder shall be of any force or effect if
Property Owner cures the default within 5 Business Days after Property Owner's
receipt of any such termination notice. If CBL/OP duly elects to terminate or
is deemed to have elected to terminate this Agreement pursuant to Clause (a)
hereinabove, then CBL/OP shall and hereby agrees in such event to waive any and
all right to file or record any lis pendens or any other lien or encumbrance
against the Property or to seek specific performance or other equitable relief
or to seek or recover from Property Owner any damages (including any actual
direct, indirect, consequential, punitive or other damages).
10.3 Attorneys' Fees. If any action is brought by either party against the other
party, relating to or arising out of this Agreement, the transaction described
herein or the enforcement hereof, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees, costs and expenses
incurred in connection with the prosecution or defense of such action. For
purposes of this Agreement, the term "attorneys' fees" or "attorneys' fees and
costs" shall mean the fees and expenses of counsel to the parties hereto, which
may include printing, photostatting, duplicating and other expenses, air
freight charges, and fees billed for law clerks, paralegals and other persons
not admitted to the bar but performing services under the supervision of an
attorney, and the costs and fees incurred in connection with the enforcement or
collection of any judgment obtained in any such proceeding. The provisions of
this Section 10.3 shall survive the Closing and any termination of this
Agreement and shall survive the entry of any judgment, and shall not merge, or
be deemed to have merged, into any judgment.
10.4 Mutual Post-Closing Indemnities.
10.4.1 Definition of Losses. For purposes of this Section, "Losses" shall mean
any and all claims, actions, suits, demands, losses, damages, liabilities,
obligations, judgments, settlements approved by the indemnifying party, awards,
46
penalties, costs or expenses, including, without limitation, reasonable
attorneys' and paralegals' fees and expenses (based on actual time spent and
normal billing rates, and without giving effect to any statutory presumption of
the amount of reasonable attorneys' fees that might apply) but excluding the
following but only insofar as the following do not or have not resulted in
actual monetary loss: any damage to reputation, mental or emotional distress or
interference with business operations.
10.4.2 Property Owner's Indemnity. Subject to the limitations set forth in
Section 7.3 above and Sections 10.5 and 10.6 below, Property Owner hereby agrees
to indemnify, hold harmless and defend CBL/OP and any officer, director,
partner, employee and/or agent of CBL/OP from and against any and all Losses
arising out of or resulting from (i) any default by Property Owner on or prior
to Closing under the Tenant Leases, or the Service Contracts; (ii) the breach or
inaccuracy of any representation or warranty made by Property Owner in this
Agreement or the Closing documents delivered by Property Owner; (iii) any third
party tort claim with respect to the Property that arises or arose as the result
of any injury or damage occurring on or prior to Closing; (iv) the failure of
Property Owner to perform any of their covenants (I) set forth in Article VIII
of this Agreement, (II) or such other covenants set forth in this Agreement that
are to be performed after the Closing; or (v) any claims by Property Owner's
employees, including, but not limited to, any claims related to any termination
of such employees' employment and any unpaid wages, severances, bonuses, and
retirement packages; provided, however, that nothing in this Section 10.4.2
shall obligate Property Owner to indemnify, hold harmless or defend CBL/OP with
regard to any Losses arising from (1) any continuing condition of the Property
as of the Closing Date which CBL/OP has agreed to accept in its "AS-IS,
WHERE-IS" condition as of the Closing Date, or (2) any matter for which CBL/OP
has agreed to release Property Owner pursuant to Section 9.5 of this Agreement,
or (3) any matter described in the last sentence of Section 7.5.
10.4.3 Sources for Satisfaction of Property Owner's Indemnity. At the Closing,
CBL/OP, Property Owner and the Other Mall Contributors shall establish with
Escrow Agent at Closing a single escrow account (the "Indemnity Escrow Fund")
for this Agreement and the Other Mall Contracts, into which $5,000,000 shall be
deposited by the Property Owner and the Other Mall Contributors and held and
administered by the Escrow Agent pursuant to the terms and conditions of the
Indemnity Escrow Agreement as the initial source for CBL/OP's claims for
indemnifications under this Agreement and under the Other Mall Contracts and for
any Percentage Rentals due and payable by Property Owner to CBL/OP after
reconciliation pursuant to Section 6.4.4 above. The amount to be deposited by
the Property Owner in the Indemnity Escrow Fund shall be the balance of
Indemnity Escrow Fund after the Other Mall Contributors have deposited their
required portion of the Indemnity Escrow Fund pursuant to the Other Mall
Contracts. The entire amount of the Indemnity Escrow Fund shall be available to
satisfy claims under this Agreement or either of the Other Mall Contracts,
without regard to what portion of such Indemnity Escrow Fund has been funded by
Property Owner hereunder or by Other Mall Contributors. At any time prior to the
"Expiration Date" specified in Section 7.3, CBL/OP shall be entitled to make a
claim against the Indemnity Escrow Fund for Losses incurred by CBL/OP and for
which it is entitled to be indemnified pursuant to Section 10.4.2 of this
Agreement and for Percentage Rentals due and payable by Property Owner to CBL/OP
after reconciliation pursuant to Section 6.4.4 above; provided however, with
respect to the "Unlimited Claims" set forth in Section 10.6, CBL/OP's remedy
shall not be limited to the amount of funds held in the Indemnity Escrow Fund,
47
and CBL/OP may make a claim directly against any Property Owner for payment
thereof. As of the Expiration Date, the funds remaining in the Indemnity Escrow
Fund shall be disbursed in the manner described in the Indemnity Escrow
Agreement, except to the extent that CBL/OP has made a claim hereunder which
remains outstanding, in which case, the amount in excess of such claim shall be
disbursed pursuant to the Indemnity Escrow Agreement, and the remaining amount,
if any, shall be disbursed upon the resolution of such claim.
10.4.4 CBL/OP's Indemnity. Subject to the limitations set forth herein, CBL/OP
agrees to indemnify, hold harmless and defend Property Owner and any officer,
director, member, employee and/or agent of Property Owner from and against any
and all costs, losses, damages and expenses, of any kind or nature whatsoever
(including attorneys' fees and costs) arising out of or resulting from (i) any
default by CBL/OP on or after Closing under the Tenant Leases or the Service
Contracts (whether or not assumed by CBL/OP), (ii) the breach or inaccuracy of
any representation or warranty made by CBL/OP in this Agreement or the Closing
documents delivered by CBL/OP, (iii) any third party tort claim with respect to
the Property that arises or arose as the result of any injury or damage
occurring after Closing, (iv) the failure of CBL/OP to perform any of its
covenants set forth in this Agreement, (v) any other liabilities relating to the
operation of the Property arising from and after Closing, or (vi) excluding the
matters for which the Property Owner has agreed to indemnify CBL/OP in Section
6.10 above, CBL/OP's failure to honor the Outstanding Gift Certificates (it
being agreed that the indemnity obligation in this clause [vi] shall not be
subject to the limitations in Section 10.5, and that CBL/OP's obligation under
this Section shall not be subject to any limitation on the survival period of
claims).
10.5 Minimum Amount Requirement for Damages. Notwithstanding anything to the
contrary contained in this Agreement, if the Closing is consummated, neither
party shall have any liability to the other party following the Closing with
respect to any breaches of indemnification obligations under Sections 10.4.2
and 10.4.4 (nor with respect to the breach of any obligation or warranty or
representation to which such indemnity applies [collectively, an
"Indemnification Obligation"]), unless and until the aggregate amount of the
actual general and compensatory damages suffered by the non-defaulting party by
reason of any such breaches of an Indemnification Obligation, exceeds the sum
of $250,000; but then in such event, the damages that the non-defaulting party
may collect shall begin with and include the first dollar of such loss. Unless
and until the amount of the actual damages suffered or incurred by the
non-defaulting party by reason of any such breaches of Indemnification
Obligations exceeds in the aggregate the sum of $250,000, the non-defaulting
party shall not be entitled to file an action or lawsuit or undertake any other
legal proceeding against the defaulting party by reason of any such breaches of
Indemnification Obligations. The provisions of this Section 10.5 shall survive
the Closing. The limitations set forth in this Section 10.5 shall not apply to
breaches of any covenants (other than the Indemnification Obligations), nor
apply to the prorations pursuant to Article VI.
10.6 Limitation of Property Owner's Liability. Subject to the limitations and
other provisions of this Agreement, Property Owner's total liability with
respect to a breach of any of Property Owner's representations or warranties
contained in this Agreement or in any document or instrument executed and
delivered by Property Owner at Closing or any breach of Property Owner's
Indemnification Obligations (other than the representations and warranties set
48
forth in Sections 7.1.1, 7.1.6, 7.1.7 or the indemnification obligations under
Sections 10.4.2 to the extent the same cover breaches of the representations
and warranties under Sections 7.1.1, 7.1.6, 7.1.7 [collectively, the "Unlimited
Claims"]) is limited to $5,000,000 in the aggregate for all such breaches
hereunder and all breaches of the comparable provisions of the Other Mall
Contracts. In computing the aggregate amount of claims for the foregoing
purpose, Property Owner's liability shall be in addition to the amount of any
insurance proceeds and any indemnity, contribution or similar payment received
by CBL/OP from any third party with respect thereto less expenses incurred by
CBL/OP in collecting any such insurance proceeds and third party payments. The
foregoing limitation on liability shall survive the Closing or any earlier
termination of this Agreement and shall not diminish or otherwise affect
CBL/OP's waivers and releases in Article IX of this Agreement.
10.7 Intentionally Omitted,
10.8 Limited Liability. CBL/OP hereby agrees that in no event or circumstance
shall any of the members, partners, shareholders, employees, representatives,
officers, directors, or agents of Property Owner or Property Owner's Property
Manager have any personal liability under this Agreement, or to any of CBL/OP's
creditors, or to any other party in connection with the Property. Property
Owner hereby agrees that in no event or circumstance shall any of the members,
partners, shareholders, employees, representatives, officers, directors, or
agents of CBL/OP have any personal liability under this Agreement, or to any of
Property Owner's creditors, or to any other party in connection with the
Property.
Notwithstanding anything contained herein to the contrary, this Article X
shall survive the Closing.
ARTICLE XI
CONDEMNATION/CASUALTY DAMAGE
11.1 Condemnation. If, prior to Closing, any governmental authority or other
entity having condemnation authority shall institute an eminent domain
proceeding or take any steps preliminary thereto (including the giving of any
direct or indirect notice of intent to institute such proceedings) with regard
to a "Material Portion" of the Land and Improvements (as defined below), and
the same is not dismissed prior to the Closing Date, CBL/OP shall be entitled,
as CBL/OP's sole remedy, to terminate this Agreement upon written notice to
Property Owner (a) within 15 Business Days following notice by Property Owner
to CBL/OP of such condemnation or the threatened condemnation or (b) on the
Closing Date, whichever occurs first. If CBL/OP does not terminate this
Agreement pursuant to the preceding sentence, CBL/OP shall be conclusively
deemed to have elected to accept such condemnation and waives any right to
terminate this Agreement as a result thereof. For purposes of this Section
11.1, a "Material Portion" shall mean that portion of the Land and Improvements
which, if taken or condemned, would reduce the value of the Property by more
than Two Million Dollars ($2,000,000). If CBL/OP elects to terminate this
Agreement under this Section 11.1, Escrow Agent or Property Owner, as
applicable, shall return the Letter of Credit or the Deposit, as applicable, to
CBL/OP and neither party shall have any further rights or obligations under
this Agreement, except for the CBL/OP's Surviving Obligations. If CBL/OP waives
(or is deemed to have waived) the right to terminate this Agreement as a result
49
of such a condemnation, then despite such condemnation, Property Owner and
CBL/OP shall proceed to Closing in accordance with the terms of this Agreement
with no reduction in the Purchase Price, and Property Owner shall assign to
CBL/OP at Closing, as part of the Intangible Property, all of Property Owner's
right, title and interest in and to all proceeds resulting or to result from
said condemnation and give a credit for any proceeds received prior to Closing.
11.2 Nonmaterial Condemnation. If, prior to Closing, a taking or condemnation
relating to the Property has occurred, or is threatened, which is not described
in Section 11.1 above, the Closing shall take place as provided in this
Agreement with no reduction of the Purchase Price, and Property Owner shall
assign to CBL/OP at Closing, as part of the Intangible Property, all of
Property Owner's right, title and interest in and to all proceeds resulting or
to result from said condemnation and give a credit for any proceeds received
prior to Closing.
11.3 Casualty Damage. If, prior to the Closing, any of the Improvements are
damaged by fire or other casualty (collectively, "Casualty"), as promptly as
possible after Property Owner learns of such Casualty, Property Owner shall
deliver to CBL/OP written notice thereof ("Casualty Loss Notice") together with
Property Owner's determination as to whether the damage constitutes a "Material
Damage" (as defined below). For the purposes of this Section 11.3, "Material
Damage" shall mean damage to the Improvements which is of such nature that the
cost of restoring the Improvements to their condition prior to the Casualty
will, in Property Owner's reasonable determination as provided in the Casualty
Loss Notice, exceed Two Million Dollars ($2,000,000), whether or not such
damage is covered by insurance. If, prior to the Closing, the Improvements
sustain Material Damage by a Casualty, CBL/OP may, at CBL/OP's option,
terminate this Agreement by delivering written notice thereof to Property Owner
and Escrow Agent within the earlier of (a) 10 Business Days after CBL/OP's
receipt of the Casualty Loss Notice or (b) the Closing Date. If the
Improvements are damaged by a Casualty which is not a Material Damage, or if
CBL/OP fails to deliver written notice of termination within the time period
set forth hereinabove for a Material Damage, then: (i) the parties shall
proceed to close this transaction in accordance with the terms of this
Agreement; (ii) at the Closing, CBL/OP shall receive a credit against the
Purchase Price in an amount equal to the deductible under Property Owner's
casualty insurance policy plus the amount of any proceeds received by Property
Owner prior to Closing to the extent the same exceed costs of restoration and
repair expended by Property Owner; and (iii) Property Owner shall, as part of
the Intangible Property, assign to CBL/OP all of Property Owner's rights in the
resulting casualty insurance proceeds; provided, however, that in no event
shall the sum of such credit for the deductible and the amount of the insurance
proceeds assigned to CBL/OP pursuant to Clauses (ii) and (iii) hereinabove
exceed the lesser of (1) the Purchase Price or (2) the cost to complete the
repair of the Casualty following the Closing; provided, however, CBL/OP shall
have no obligation to close with an assignment of casualty insurance proceeds
unless Property Owner shall provide to CBL/OP a statement from the insurance
company recognizing the casualty and the applicability of the insurance policy
thereto and noting the insurance carrier's acknowledgement of the coverages set
forth in the insurance policy to the particular casualty with no offsets,
exclusions or denials of coverage and the assignability of the policy to the
CBL/OP, and CBL/OP shall be reasonably satisfied that the insurance proceeds
are adequate to restore the damage, and if Property Owner fails to provide such
statement from the insurance company by the Closing Date, and Property Owner is
unwilling to escrow (on terms mutually satisfactory to the parties) the amount
required to restore the damage, CBL/OP may elect to terminate this Agreement,
50
by written notice to Property Owner. If CBL/OP elects to terminate this
Agreement under this Section 11.3, Escrow Agent or Property Owner, as
applicable, shall return the Letter of Credit or the Deposit, as applicable, to
CBL/OP and neither party shall have any further rights or obligations under
this Agreement, except for the CBL/OP's Surviving Obligations.
ARTICLE XII
INTENTIONALLY OMITTED
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement. This Agreement contains the entire agreement of the
parties hereto. There are no other agreements, oral or written, and this
Agreement can be amended only by written agreement signed by the parties
hereto, and by reference made a part hereof.
13.2 CBL/REIT Board Approval; Agreement Binding on Parties. The effectiveness of
this Agreement is subject to the approval of the Board of Directors of CBL/REIT
within 72 hours following execution thereof by CBL/OP. Subject only to such
Board approval, this Agreement, and the terms, covenants, and conditions
contained herein, shall inure to the benefit of and be binding upon the heirs,
personal representatives, successors, and assigns of each of the parties
hereto. CBL/OP may assign CBL/OP's rights under this Agreement only upon the
following conditions: (a) the assignee of CBL/OP must be an entity which is
directly owned or controlled by CBL/OP; (b) the Deposit must have been
delivered to Escrow Agent in accordance with Section 3.2.1 above; (c) CBL/OP
shall remain primarily liable for the performance of CBL/OP's obligations under
this Agreement; and (d) the assignee must expressly assume in writing all of
CBL/OP's obligations under this Agreement, and CBL/OP shall deliver to Property
Owner a copy of the fully executed written assignment and assumption agreement
between CBL/OP and such assignee at or before the Closing.
13.3 Notice. Any notice, communication, request, reply or advice (collectively,
"Notice") provided for or permitted by this Agreement to be made or accepted by
either party must be in writing. Notice may, unless otherwise provided herein,
be given or served (a) by delivering the same to such party, or an agent of
such party, in person or by commercial courier, (b) by facsimile transmission,
evidenced by confirmed receipt and concurrently followed by a "hard" copy of
same delivered to the party by personal delivery or overnight delivery pursuant
to Clauses (a) or (c) hereof, or (c) by depositing the same into custody of a
nationally recognized overnight delivery service such as Federal Express,
Overnight Express or Airborne Express. Notice given in any manner shall be
effective only if and when received by the party to be notified between the
hours of 8:00 a.m. and 5:00 p.m. of any Business Day with delivery made after
such hours to be deemed received the following Business Day. For the purposes
of notice, the addresses of Property Owner, CBL/OP, Escrow Agent and the Title
Company shall, until changed as hereinafter provided, be as set forth in
Article I. The parties hereto shall have the right from time to time to change
their respective addresses, and each shall have the right to specify as its
address any other address within the United States of America by at least 5
days written notice to the other party.
51
13.4 Time of the Essence. Time is of the essence in all things pertaining to the
performance of this Agreement.
13.5 Governing Law. This Agreement shall be construed in accordance with the
laws of the state of Illinois.
13.6 Currency. All dollar amounts are expressed in United States currency.
13.7 Section Headings. The section and article headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several sections hereof.
13.8 Business Days. If any date or any period provided for in this Agreement
shall end on a Saturday, Sunday or legal holiday, the applicable date or period
shall be extended to the first Business Day following such Saturday, Sunday or
legal holiday.
13.9 No Recordation. Without the prior written consent of Property Owner, there
shall be no recordation of either this Agreement or any memorandum hereof or
any affidavit pertaining hereto, and any such recordation of this Agreement or
memorandum hereof or affidavit pertaining hereto by CBL/OP without the prior
written consent of Property Owner shall constitute a material default hereunder
by CBL/OP, whereupon this Agreement shall, at the option of Property Owner,
terminate and be of no further force and effect. Upon such termination, the
Letter of Credit or the Deposit, as applicable, shall be immediately delivered
to Property Owner or Property Owner shall retain the Deposit, as the case may
be, whereupon neither CBL/OP, Property Owner shall not have any further rights
or obligations under this Agreement, except for the CBL/OP's Surviving
Obligations.
13.10 Multiple Counterparts; Facsimile. This Agreement may be executed in
multiple counterparts (each of which is to be deemed original for all
purposes). The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon so long as such
signature page is attached to any other counterpart of this Agreement identical
thereto except having additional signature pages executed by the other parties
to this Agreement attached thereto. CBL/OP and Property Owner agree that the
delivery of an executed copy of this Agreement by facsimile shall be legal and
binding and shall have the same full force and effect as if an original
executed copy of this Agreement had been delivered.
13.11 Severability. If any provision of this Agreement or application to any
party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
13.12 Limitations on Benefits. It is the explicit intention of CBL/OP and
Property Owner that no person or entity other than CBL/OPand Property Owner and
their permitted successors and assigns is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
52
CBL/OPand Property Owner or their respective successors and assigns as
permitted hereunder. Nothing contained in this Agreement shall under any
circumstances whatsoever be deemed or construed, or be interpreted, as making
any third party (including Property Owner's Property Manager, Property Owner's
Broker, CBL/OP's lender, any Anchor Store or any Tenant) a beneficiary of any
term or provision of this Agreement or any instrument or document delivered
pursuant hereto, and CBL/OP and Property Owner expressly reject any such
intent, construction or interpretation of this Agreement.
13.13 Interpretation. For purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires: (a) the terms
defined in Article I above and have the meanings assigned to them in Article I
above and include the plural as well as the singular, and the use of any gender
herein shall be deemed to include the other genders; (b) references herein to
"Articles," "Sections," subsections, paragraphs and other subdivisions without
reference to a document are to designated Articles, Sections, subsections,
paragraphs and other subdivisions of this Agreement; (c) a reference to a
subsection without further reference to a Section is a reference to such
subsection as contained in the same Section in which the reference appears, and
this rule shall also apply to paragraphs and other subdivisions; (d) the words
"hereof," "herein," "thereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; (e) the
word "including" or "includes" means "including, but not limited to" or
"includes but is not limited to"; (f) the words "approval," "consent" and
"notice" shall be deemed to be preceded by the word "written"; (g) any
reference to this Agreement or any Exhibits hereto and any other instruments,
documents and agreements shall include this Agreement, Exhibits and other
instruments, documents and agreements as originally executed or existing and as
the same may from time to time be supplemented, modified or amended; and (h)
unless otherwise specifically provided, all references in this Agreement to a
number of days shall mean calendar days rather than Business Days and (i)
"Business Days" shall mean any day other than a Saturday, a Sunday or a Federal
holiday on which banks are closed for business in New York, New York.
13.14 Further Actions. CBL/OP and Property Owner shall execute or cause to be
executed all such instruments or agreements as may be reasonably necessary in
order to carry out the purpose of this Agreement, and each party shall do all
other acts reasonably necessary or reasonably requested by the other to carry
out the intent and purpose of this Agreement.
13.15 No Other Inducements. The making, execution and delivery of this Agreement
by the parties hereto has been induced by no representations, statements,
warranties or agreements other than those expressly set forth herein.
13.16 Participation in Drafting. The language in all parts of this Agreement
shall be in all cases construed simply according to its fair meaning and not
strictly for or against any of the parties hereto. Property Owner and CBL/OP
each acknowledge that they participated equally in the drafting of this
Agreement and, accordingly, no court construing this Agreement shall construe
it more stringently against one party than any other.
13.17 Exhibits. Exhibit A through Exhibit AA and Schedules I, II, 3.3 and 7.1
are incorporated herein by reference.
53
13.18 No Partnership/Fiduciary Relationship. The parties acknowledge and agree
that the relationship created by this Agreement between Property Owner and
CBL/OP is one of contract only, and that no partnership, joint venture or other
fiduciary or quasi-fiduciary relationship is intended or in any way created
hereby.
13.19 Conditional Delivery. The submission by Property Owner to CBL/OP of this
Agreement in unsigned form shall be deemed to be a submission solely for
CBL/OP's consideration and not for acceptance and execution. Neither such
submission of this Agreement by Property Owner to CBL/OP nor any course of
conduct between CBL/OP and Property Owner nor any actions undertaken or sums
expended by CBL/OP shall confer any option or other right upon CBL/OP or impose
any obligation upon Property Owner irrespective of any reliance thereon, change
of position or partial performance. The submission by Property Owner of this
Agreement for execution by CBL/OP and the actual execution and delivery thereof
by CBL/OP to Property Owner shall similarly have no binding force and effect on
Property Owner unless and until Property Owner have executed and delivered a
counterpart of this Agreement to CBL/OP and the Deposit has been actually
received by Escrow Agent.
13.20 Survival. Except as expressly provided in this Agreement, the
representations, warranties and covenants set forth in this Agreement shall not
survive the Closing and shall be merged into the Special Warranty Deed and
other instruments and conveyances delivered at the Closing.
13.21 Public Disclosure. Prior to Closing, any release to the public of
information with respect to the sale contemplated herein or any matters set
forth in this Agreement will be made only in the form approved by CBL/OP and
Property Owner and their respective counsel.
13.22 Intentionally Omitted
13.23 Assignment. CBL/OP shall have the right, with notice to Property Owner
(but without the necessity of Property Owner's consent), to assign its right,
title and interest in and to this Agreement to one or more assignees affiliated
with CBL/OP at any time before the Closing Date, provided that in no event
shall CBL/OP be released from any of its obligations or liabilities hereunder.
13.24 Like-Kind Exchange
(a) It is understood and agreed that Property Owner shall have the
option, exercisable by giving notice to CBL/OP at any time prior to the Closing
Date, of effecting a like-kind exchange of all or any portion of the Property by
assigning (the "Assignment") its rights in this Agreement to a qualified
intermediary (the "Intermediary") who shall contract with Property Owner to
deliver to Property Owner in exchange therefor property or other consideration,
at such times as shall be designated in the contract between Property Owner and
the Intermediary. Upon the Assignment, the Intermediary shall be substituted for
Property Owner as the seller of the property. CBL/OP agrees to accept the
Property and all other required performance from the Intermediary and to render
its performance of all of its obligations to the Intermediary; provided, that
Property Owner shall, at the Intermediary's direction, nevertheless convey the
Property to CBL/OP in accordance with (and as limited by) the terms of this
Agreement.
54
(b) CBL/OP shall reasonably cooperate with Property Owner and execute
such documents (including the Assignment) as are reasonably necessary for
Property Owner to effect such exchange; provided, that (i) the CBL/OP is not
required to take title to any parcel of property other than the Property, (ii)
the contemplated exchange shall not delay or effect any of the time periods or
other obligations of Property Owner hereunder, including, without limitation,
those related to the Closing and the scheduled date for the same, and (iii)
CBL/OP is not required to incur any expense or liability of any nature
whatsoever not expressly contemplated by this Agreement.
(c) Notwithstanding anything herein to the contrary, Property Owner
may, in its sole discretion and in connection with a tax deferred like-kind
exchange contemplated hereby, require that any portion of the Purchase Price be
paid in one or more purchase money notes (each, a "Note") from CBL/OP to
Property Owner in a form reasonably agreed to by the parties, provided that each
such Note shall bear interest at the rate of 6% per annum, be payable in one or
more payments with the last occurring on January 2, 2006, and be retained by
Property Owner in connection with any such exchange with the Intermediary and
transferrable by Property Owner to its partners without CBL/OP's consent. Any
such Note may, at the request and expense of Property Owner, be secured by one
or more stand by letter(s) of credit issued by a bank designated by Property
Owner.
(d) Property Owner shall indemnify, defend and hold CBL/OP harmless
from any liability, damage, loss, cost or other expense including, without
limitation, reasonable attorneys' fees and costs, resulting or arising solely
from the implementation of any such exchange or assignment. No such exchange or
assignment by Property Owner shall relieve Property Owner from any of its
obligations hereunder, nor shall Property Owner's ability to consummate a tax
deferred exchange be a condition to the performance of Property Owner's
obligations under this Agreement.
[END OF TEXT; SIGNATURES FOLLOW ON IMMEDIATELY SUCCEEDING PAGES]
55
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first indicated above.
PROPERTY OWNER: HP-SP ASSOCIATES, L.L.C.,
a Missouri limited liability company
By: HPM ASSOCIATES, L.L.C.,
a Missouri limited liability company, its manager
______By: HICKORY POINT MALL, LIMITED
PARTNERSHIP, a Delaware limited
partnership
______ By: CWB ASSOCIATES, INC., a Kansas
corporation, General Partner
______ By: /s/ Paul Cokaken
--------------------------------
Paul Copaken, President
______ By: FFC, INC., a Kansas corporation,
General Partner
______ By: /s/ Jack N. Fingersh
----------------------------
_ Jack N. Fingersh, President
______ By: BLITT MANAGEMENT, INC., a
Kansas corporation, General Partner
______ By: /s/ Irwin Blitt
------------------------------
_____ Irwin Blitt, President
[SIGNATURE PAGE TO
AGREEMENT OF SALE AND PURCHASE AND JOINT ESCROW INSTRUCTIONS]
56
PROPERTY OWNER HICKORY POINT MALL, LIMITED PARTNERSHIP,
a Delaware limited partnership
By:___CWB ASSOCIATES, INC., a Kansas corporation,
General Partner
______ By: /s/ Paul Copaken
------------------------------------
______ Paul Copaken, President
By:___FFC, INC., a Kansas corporation, General Partner
______By: /s/ Jack N. Fingersh
------------------------------------
______ Jack N. Fingersh, President
By:___BLITT MANAGEMENT, INC., a Kansas corporation,
General Partner
______By: /s/ Irwin Blitt
------------------------------------
______ Irwin Blitt, President
CBL/OP: CBL & ASSOCIATES LIMITED PARTNERSHIP
a Delaware limited partnership
By: CBL Holdings I, Inc., its general partner
By: /s/ Stephen D. Lebovitz___________
-------------------------------------------
Name: Stephen D. Lebovitz__________
-----------------------------------------
Title: President________
--------------------------------------
[SIGNATURE PAGE TO
AGREEMENT OF SALE AND PURCHASE AND JOINT ESCROW INSTRUCTIONS]
57
PROPERTY OWNER'S PROPERTY MANAGER'S EXECUTION:
The undersigned, being Property Owner's Property Manager of the Property,
as such terms are defined in this Agreement, executes this Agreement for the
sole and exclusive purposes of (i) noting the undersigned's agreement to comply
with any provision or term of this Agreement (A) requiring Property Owner's
Property Manager to assign or transfer rights or interests to CBL/OP and execute
certain documents and instruments at Closing and/or (B) requiring Property
Owner's Property Manager to do any other act or thing under this Agreement or
refrain from any act, with the undersigned acknowledging that it and/or its
affiliate(s) and/or equity owners shall receive other consideration sufficient
to provide adequate consideration to the undersigned for any transfers or
assignments or such acts or agreements by Property Owner's Property Manager
hereunder; (ii) noting Property Owner's Property Manager's acknowledgement that
except for amounts payable by CBL/OP pursuant to Section 6.8, it has received or
shall receive at Closing full and complete payment from Property Owner for any
and all sums that are due and owing to Property Owner's Property Manager with
respect to any aspect of the Property or its operations; (iii) noting the
undersigned's waiver of any lien or right to any lien with respect to the
Property for any services rendered or to be rendered by Property Owner's
Property Manager or for any claim that Property Owner's Property Manager may
have against the Property or Property Owner; and (iv) noting the undersigned's
acknowledgement and agreement that the Management Agreement, as defined herein,
shall terminate on or prior to the date of Closing. Executed to be effective as
of the date first above written.
COPAKEN, WHITE & BLITT, LLC
By: /s/ Troy Marquis
____________________________________
Name: Troy Marquis
Title: Administrative Manager
58
JOINDER BY ESCROW HOLDER
FIDELITY NATIONAL TITLE COMPANY, referred to in this Agreement as the
"Escrow Holder," hereby acknowledges that on the 17th day of October, 2005, it
received this Agreement executed and delivered by CBL/OP andProperty Owner, and
accepts the obligations of and instructions for the Escrow Holder as set forth
herein. Upon receipt thereof, the Escrow Holder hereby agrees to hold and
distribute the Letter of Credit or Deposit, as applicable, in accordance with
the terms and provisions of this Agreement.
Dated: October 17 , 2005
----
FIDELITY NATIONAL TITLE COMPANY
By: /s/ Shawn A. Tidwell____________________
---------------------------------------------
Name: Shawn A. Tidwell___________
---------------------------------------
Title: Vice President_______
------------------------------------
59
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS AND FUNDAMENTAL PROVISIONS.............................................2
ARTICLE II CONTRIBUTION...............................................................................7
2.1 Agreement to Contribute the LLC Interests......................................................7
2.2 Excluded Property..............................................................................8
2.3 Other Mall Contribution Agreements.............................................................8
2.3.1 Definitions of other Malls and Purchase Agreements....................................8
2.3.2 Other Mall Contracts; Cross Default; Cross Termination................................8
ARTICLE III TOTAL CONSIDERATION........................................................................9
3.1 Purchase Price.................................................................................9
3.2 K-SCUs.........................................................................................9
3.3 Informational Materials.......................................................................10
3.4 Registration Rights...........................................................................11
3.5 Delivery of Deposit...........................................................................11
3.6 Disposition of Deposit........................................................................11
3.7 Cash Consideration Payment....................................................................11
ARTICLE IV INSPECTION AND TITLE REVIEW...............................................................12
4.1 CBL/OP's Inspections..........................................................................12
4.1.1 Inspections, Tests and Studies.......................................................12
4.1.2 CBL/OP's Delivery of Information to Property Owner...................................12
4.1.3 Tenant and Governmental Authority Inquiries..........................................12
4.2 Document Review...............................................................................13
4.2.1 Property Records.....................................................................13
4.2.2 Excluded Documents...................................................................13
4.2.3 Proprietary Information..............................................................14
4.2.4 Return of Property Records...........................................................14
4.2.5 No Representation or Warranty By Property Owner......................................14
4.2.6 Remedies.............................................................................14
4.3 Title.........................................................................................14
4.3.1 Title Documents......................................................................14
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4.3.2 Review of Title......................................................................15
4.3.3 Additional Title Objections..........................................................16
4.3.4 Voluntary Title Encumbrances.........................................................17
4.3.5 Use of Purchase Price to Discharge Liens.............................................17
4.3.6 Title Policy.........................................................................17
4.3.7 Permitted Exceptions.................................................................18
4.4 Inspection Obligations........................................................................19
4.4.1 CBL/OP's Responsibilities............................................................19
4.4.2 CBL/OP's Indemnity...................................................................20
4.4.3 CBL/OP's Insurance...................................................................20
4.5 Intentionally omitted.........................................................................20
4.6 CBL/OP Deliveries Upon Termination............................................................20
4.7 Cancellation of Service Contracts.............................................................20
ARTICLE V ESCROW AND CLOSING........................................................................21
5.1 Escrow........................................................................................21
5.1.1 Opening of Escrow....................................................................21
5.1.2 Escrow Instructions..................................................................22
5.1.3 Closing..............................................................................22
5.1.4 Closing Date.........................................................................22
5.2 Conditions Precedent to the Closing for the Benefit of CBL/OP.................................22
5.2.1 Intentionally omitted................................................................22
5.2.2 Intentionally omitted................................................................22
5.2.3 Property Owner's Deliveries..........................................................22
5.2.4 Representations and Warranties.......................................................22
5.2.5 Covenants............................................................................23
5.2.6 Tenant and Anchor Store Estoppel Certificates........................................23
5.2.7 Condemnation or Casualty.............................................................24
5.2.8 Title Policy.........................................................................24
5.2.9 Lender Approval......................................................................24
5.2.10 Company LLC Agreement................................................................24
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5.2.11 Closing Date Debt....................................................................24
5.2.12 Simultaneous Closings Under Other Mall Contracts.....................................24
5.3 Conditions Precedent to the Closing for the Benefit of Property Owner.........................25
5.3.1 CBL/OP's Deliveries..................................................................25
5.3.2 Intentionally omitted................................................................25
5.3.3 Covenants............................................................................25
5.3.4 Title Policy.........................................................................25
5.3.5 Representations and Warranties.......................................................25
5.3.6 Company LLC Agreement................................................................26
5.3.7 Closing Date Debt....................................................................26
5.3.8 Simultaneous Closings Under Other Mall Contracts.....................................26
5.4 Property Owner's Deliveries...................................................................26
5.4.1 Special Warranty Deed................................................................26
5.4.2 Tenant Lease Assignment..............................................................26
5.4.3 Bill of Sale and General Assignment..................................................27
5.4.4 Non-Foreign Certificate..............................................................27
5.4.5 Tenant Notices.......................................................................27
5.4.6 Estoppels............................................................................27
5.4.7 Closing Statement....................................................................27
5.4.8 Authority............................................................................27
5.4.9 Property Manager's Estoppel..........................................................27
5.4.10 Intentionally Omitted................................................................27
5.4.11 Operating Agreement Assignment.......................................................27
5.4.12 Ground Lease Assignment..............................................................28
5.4.13 Original Documents...................................................................28
5.4.14 Possession...........................................................................28
5.4.15 Contract Termination.................................................................28
5.4.16 Updated Lease Schedule/Rent Roll; Closing Certificate................................28
5.4.17 Assignment of LLC Interests..........................................................28
5.4.18 Partnership Interest Acknowledgement.................................................28
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5.4.19 Owner's Affidavit....................................................................28
5.4.20 Other Documents......................................................................28
5.5 Existing Property Owner Debt..................................................................29
5.6 CBL/OP's Deliveries...........................................................................29
5.6.1 Funds................................................................................29
5.6.2 Partnership Interests................................................................29
5.6.3 CBL/OP Partnership Agreement.........................................................29
5.6.4 Closing Statement....................................................................29
5.6.5 CBL/OP Closing Certificate...........................................................29
5.6.6 Authority............................................................................29
5.6.7 Other Documents......................................................................29
5.7 Closing Date Debt.............................................................................29
5.8 Closing Costs.................................................................................30
5.8.1 Property Owner's Closing Costs.......................................................30
5.8.2 CBL/OP's Closing Costs...............................................................30
5.8.3 General Allocation...................................................................30
5.9 Real Estate Commissions.......................................................................30
5.10 Real Estate Reporting Person..................................................................31
5.11 Post-Closing Access to Records................................................................31
5.12 SEC Reporting Requirements....................................................................31
ARTICLE VI PRORATIONS................................................................................32
6.1 General.......................................................................................32
6.2 Real Estate Taxes.............................................................................32
6.3 Operating Expenses............................................................................33
6.4 Rentals.......................................................................................33
6.4.1 Certain Defined Terms................................................................33
6.4.2 General..............................................................................34
6.4.3 Overage Rents........................................................................34
6.4.4 Percentage Rentals...................................................................35
6.5 Delinquent Rentals............................................................................36
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6.6 Security Deposits.............................................................................36
6.7 Anchor Store Payments.........................................................................37
6.8 Tenant Installation Expenses..................................................................38
6.9 Adjustment Procedure..........................................................................39
6.10 Gift Certificates.............................................................................40
6.11 Operating Reserve............................................................................40
ARTICLE VII REPRESENTATIONS AND WARRANTIES............................................................40
7.1 Representations and Warranties of Property Owner..............................................40
7.1.1 Power and Authority of Property Owner................................................40
7.1.2 Intentionally Omitted................................................................41
7.1.3 Ownership of the Equity Interests....................................................41
7.1.4 [Intentionally Omitted]..............................................................41
7.1.5 Deliveries at Closing................................................................41
7.1.6 Requisite Action.....................................................................42
7.1.7 Individuals Authority................................................................42
7.1.8 Tenant Leases........................................................................42
7.1.9 Contracts............................................................................42
7.1.10 Pending Actions......................................................................43
7.1.11 Governmental/Insurance Notices.......................................................43
7.1.12 Condemnation/Rezoning................................................................43
7.1.13 Environmental Law Violations.........................................................43
7.1.14 Lease Brokerage......................................................................43
7.1.15 No Violations........................................................................43
7.1.16 Operating Agreement..................................................................44
7.1.17 Taxes................................................................................44
7.1.18 Financial/Operating Statements.......................................................44
7.1.19 Delivery of Environmental Reports and Property Condition Reports.....................44
7.1.20 Adjacent Property....................................................................45
7.1.21 Employees............................................................................45
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7.1.22 The Company..........................................................................45
7.2 Definition of Property Owner's Knowledge......................................................45
7.3 Survival Period...............................................................................46
7.4 Third Party Information.......................................................................46
7.5 CBL/OP's Knowledge............................................................................47
7.6 Representations and Warranties of CBL/OP......................................................47
7.6.1 Legal Power..........................................................................47
7.6.2 Duly Authorized......................................................................47
7.6.3 Requisite Action.....................................................................47
7.6.4 Individuals Authority................................................................47
ARTICLE VIII OPERATING COVENANTS.......................................................................48
8.1 Insurance.....................................................................................48
8.2 Operation of Property.........................................................................48
8.3 Capital Improvements..........................................................................48
8.4 Leasing.......................................................................................48
8.5 New Contracts.................................................................................49
8.6 Liens.........................................................................................49
8.7 Tenant Lease Defaults; Operating Agreement Defaults...........................................49
8.8 Transfers.....................................................................................49
8.9 Litigation....................................................................................50
8.10 Schedule and Exhibit Updates..................................................................50
8.11 Company Assets and Liabilities................................................................50
8.12 Employees of the Property Owner...............................................................50
ARTICLE IX "AS-IS" SALE..............................................................................50
9.1 Disclaimer of Representations and Warranties by Property Owner................................50
9.2 Sale "As Is"..................................................................................51
9.3 CBL/OP Acknowledgments........................................................................52
9.4 CBL/OP Represented by Counsel.................................................................52
9.5 CBL/OP's Release of Property Owner............................................................52
9.5.1 Property Owner Released From Liability...............................................52
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9.5.2 Claims Under Environmental Laws......................................................53
9.5.3 Survival.............................................................................54
ARTICLE X REMEDIES..................................................................................54
10.1 Liquidated Damages; Property Owner's Remedies.................................................54
10.2 CBL/OP's Remedies.............................................................................54
10.3 Attorneys' Fees...............................................................................55
10.4 Mutual Post-Closing Indemnities...............................................................55
10.4.1 Definition of Losses.................................................................55
10.4.2 Property Owner's Indemnity...........................................................55
10.4.3 Sources for Satisfaction of Property Owner's Indemnity...............................56
10.4.4 CBL/OP's Indemnity...................................................................56
10.5 Minimum Amount Requirement for Damages........................................................57
10.6 Limitation of Property Owner's Liability......................................................57
10.7 Limitation of CBL/OP's Liability..............................................................57
10.8 Limited Liability.............................................................................58
ARTICLE XI CONDEMNATION/CASUALTY DAMAGE..............................................................58
11.1 Condemnation..................................................................................58
11.2 Nonmaterial Condemnation......................................................................58
11.3 Casualty Damage...............................................................................59
ARTICLE XII INTENTIOALLY OMITTED......................................................................60
ARTICLE XIII MISCELLANEOUS.............................................................................63
13.1 Entire Agreement..............................................................................63
13.2 CBL/REIT Board Approval; Agreement Binding on Parties.........................................63
13.3 Notice........................................................................................63
13.4 Time of the Essence...........................................................................64
13.5 Governing Law.................................................................................64
13.6 Currency......................................................................................64
13.7 Section Headings..............................................................................64
13.8 Business Days.................................................................................64
13.9 No Recordation................................................................................64
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13.10 Multiple Counterparts; Facsimile..............................................................64
13.11 Severability..................................................................................65
13.12 Limitations on Benefits.......................................................................65
13.13 Interpretation................................................................................65
13.14 Further Actions...............................................................................65
13.15 No Other Inducements..........................................................................66
13.16 Participation in Drafting.....................................................................66
13.17 Exhibits......................................................................................66
13.18 No Partnership/Fiduciary Relationship.........................................................66
13.19 Conditional Delivery..........................................................................66
13.20 Survival......................................................................................66
13.21 Public Disclosure.............................................................................66
13.22 Intentionally Omitted
EXHIBITS AND SCHEDULES
Schedule I - Intentionally Omitted
Schedule II - Existing Property Owner Debt
Schedule 3.3 - Intentionally Omitted
Schedule 7.1 - Disclosure Schedule
Exhibit A - Legal Description of Land
Exhibit B - Tenant Estoppel Certificate
Exhibit C - Special Warranty Deed
Exhibit D - Assignment and Assumption of Leases
Exhibit E - Bill of Sale and General Assignment
Exhibit F - Federal Transferor's Certificate of Non-Foreign
Status
Exhibit G - Tenant Notification Letter
Exhibit H - Intentionally Omitted
Exhibit I - Lease Schedule/Rent Roll
Exhibit J - List of Service Agreements to be Assumed
Exhibit K - Intentionally Omitted
Exhibit L - Intentionally Omitted
Exhibit M - Intentionally Omitted
Exhibit N - Intentionally Omitted
Exhibit O - Intentionally Omitted
Exhibit P - Intentionally Omitted
Exhibit Q - Letter of Credit
Exhibit R - Intentionally Omitted
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Exhibit S - Owner's Affidavit
Exhibit T - Intentionally Omitted
Exhibit U - Intentionally Omitted
Exhibit V - Intentionally Omitted
Exhibit W - Pending Transactions
Exhibit X - Intentionally Omitted
Exhibit Y - Intentionally Omitted
Exhibit Z - List of Service Contracts
Exhibit AA - Indemnity Escrow Agreement
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Defined Term Page
Accountants......................................................................................................26
Additional Title Objection.......................................................................................12
Additional Title Objections......................................................................................12
Agreement.........................................................................................................1
ALTA Survey......................................................................................................11
Anchor Stores.....................................................................................................3
Applicable Overage Rent Year.....................................................................................29
Appurtenances.....................................................................................................1
Assignee..........................................................................................................1
Assignment........................................................................................................1
Assignment and Assumption of Tenant Leases.......................................................................22
Assignor..........................................................................................................1
Base Rents.......................................................................................................28
Bergner...........................................................................................................3
Books and Records..............................................................................................3, 2
Business Days....................................................................................................53
CBL/OP............................................................................................................1
CBL/OP Closing Certificate.......................................................................................21
CBL/OP Closing Conditions........................................................................................18
CBL/OP Parties...................................................................................................38
CBL/OP's Additional Title Objection Notice.......................................................................12
CBL/OP's Address..................................................................................................4
CBL/OP's Information..............................................................................................8
CBL/OP's Surviving Obligations...................................................................................12
CBL/OP's Title Objection Notice..................................................................................11
Claims...........................................................................................................16
Closing..........................................................................................................18
Closing Date......................................................................................................3
Closing Statement................................................................................................33
Commission.......................................................................................................26
Delinquent Rentals...............................................................................................31
Disclosure Schedule..............................................................................................34
Eastland Contract.................................................................................................6
Eastland Mall.....................................................................................................6
Eastland Property Owner...........................................................................................6
Effective.........................................................................................................1
Effective Date....................................................................................................1
Environmental Laws...............................................................................................44
Escrow...........................................................................................................17
Escrow Agent......................................................................................................5
Excluded Documents.............................................................................................9, 2
Excluded Property.................................................................................................2
Existing Environmental Reports...................................................................................37
Existing Property Owner Debt.....................................................................................24
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Defined Term Page
Final Approval Date...............................................................................................3
FIRPTA Certificate...............................................................................................22
Grantee...........................................................................................................1
Grantor...........................................................................................................1
Hazardous Substances.............................................................................................45
Improvements......................................................................................................2
Intangible Property............................................................................................2, 1
J.C. Penney.......................................................................................................3
Kohl's............................................................................................................3
Land..............................................................................................................1
Laws.............................................................................................................36
Lease Schedule/Rent Roll..........................................................................................2
Material Portion.................................................................................................50
Notice...........................................................................................................51
Oak Park Mall.....................................................................................................6
Oak Park Property Owner...........................................................................................6
Official Records..................................................................................................5
Operating Expenses...............................................................................................27
Operating Reserve.................................................................................................5
Other Mall Contracts..............................................................................................6
Other Malls.......................................................................................................6
Overage Rents....................................................................................................28
Percentage Rentals...............................................................................................28
Permitted Exceptions.............................................................................................14
Permitted Outside Parties........................................................................................10
Personal Property.................................................................................................2
Prior Reports....................................................................................................37
Property..........................................................................................................1
Property Management Agreement....................................................................................16
Property Owner....................................................................................................1
Property Owner's Address..........................................................................................4
Property Owner's Broker..........................................................................................25
Property Owner's Condition Precedent.............................................................................20
Property Owner's Notice Period...................................................................................11
Property Owner's Property Manager.................................................................................5
Property Owner's Title Notice....................................................................................11
Property Records..................................................................................................9
Proprietary Information..........................................................................................10
Proration and Expense Schedule...................................................................................33
Purchase Price....................................................................................................5
Real Estate Taxes................................................................................................27
Real Property..................................................................................................2, 1
Released Parties.................................................................................................44
Rentals..........................................................................................................28
Sears.............................................................................................................3
Service Contracts..............................................................................................2, 1
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Defined Term Page
Shopping Center...................................................................................................5
Special Exceptions................................................................................................1
Special Warranty Deed............................................................................................22
Survey Exceptions................................................................................................11
Tenant Leases..................................................................................................2, 1
Tenant Prospect Commission Obligations...........................................................................17
Tenant Security Deposits.......................................................................................2, 1
Tenant/Anchor Notices............................................................................................22
Tenants...........................................................................................................3
Title Commitment.................................................................................................10
Title Company.....................................................................................................3
Title Documents..................................................................................................10
Title Objection..................................................................................................11
Title Objection Deadline..........................................................................................3
Title Objections.................................................................................................11
Title Policy.....................................................................................................13
to the knowledge of Property Owner...............................................................................37
Transferee........................................................................................................1
Transferor........................................................................................................1
Unknown Environmental Liabilities................................................................................45
Updated Survey...................................................................................................11
Voluntary Title Encumbrances.....................................................................................13
Von Maur..........................................................................................................3
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