CONTRIBUTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS

 

                                                                 Exhibit 10.23.1

 

 

                             CONTRIBUTION AGREEMENT

                          AND JOINT ESCROW INSTRUCTIONS

 

      THIS CONTRIBUTION 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"); OAK PARK INVESTMENT, L.P., a Delaware limited

partnership ("Property Owner") and the general and limited partners of Property

Owner listed on Schedule I hereto (the "Contributors"), which term shall also

include any limited partnership or limited liability company [a "Family Entity"]

formed by one or more of the parties listed on Schedule I to hold their "LLC

Interests" [defined below]).

 

                                   WITNESSETH:

 

      WHEREAS, Property Owner is the owner of Oak Park Mall, a regional retail

shopping center, and related land, improvements and property located in Overland

Park, Johnson County, Kansas, which is more particularly described in, and is

the subject of, this Agreement; and

 

      WHEREAS, Contributors consist of all of the general and limited partners

of Property Owner; and

 

      WHEREAS, Contributors intend to (i) cause Property Owner to form a new

Delaware limited liability company under a name approved by CBL/OP (the

"Company"); (ii) cause Property Owner to contribute the Shopping Center to the

Company; and (iii) cause the Property Owner to be liquidated and to distribute

one hundred percent (100%) of the membership interests in the Company (the "LLC

Interests") to the Contributors; and

 

      WHEREAS, CBL/OP is a Delaware limited partnership which desires to acquire

the LLC Interests; and

 

      WHEREAS, Contributors desire to contribute the LLC Interests to CBL/OP in

exchange for either limited partnership interests in CBL/OP (as described

hereinbelow) or cash consideration, or a combination of the foregoing, as

described in this Agreement; and

 

      WHEREAS, Contributors intend to cause Company to refinance its existing

mortgage indebtedness and to distribute the excess refinancing proceeds to

Contributors prior to the contribution of the LLC Interests to CBL/OP; and

 

      WHEREAS, CBL/OP desires to acquire the LLC Interests from Contributors in

exchange for the Total Consideration (as defined hereinafter), subject to and

upon all of the terms, covenants and conditions of this Agreement; and

 

      WHEREAS, it is expected that the exchange of the LLC Interests for

partnership interests will qualify for Federal income tax purposes as a tax free

transfer pursuant to Section 721 of the Code, and will not be subject to Section

707(a)(2)(B) of the Code, and the parties will file their tax returns and keep

their books and records in a manner consistent with this expectation.

 

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      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 Ground Lease (as both lessee and lessor thereunder),

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

Overland Park, Kansas, which are described in Exhibit A attached hereto.

 

1.1.2 "Ground Lease" means that certain Amendment and Restatement of Lease dated

December 18, 1992, between Property Owner, as Tenant, and Challenger, Inc., a

Kansas corporation ("Challenger"), as Landlord, demising the Land, as modified

by Supplemental Agreement dated December 18, 1992, among Property Owner,

Challenger and J. C. Nichols Company, a Missouri corporation, and Amendment of

Restriction Agreement and Supplemental Agreement dated August 8, 2003, among

Highwoods Realty Limited Partnership (successor-in-interest to J. C. Nichols

Company), Challenger and Property Owner. Notice of the Ground Lease is imparted

by Memorandum of Lease dated December 18, 1992, between Property Owner and

Challenger, recorded in the Official Records on December 28, 1992, in Vol. 3808

at Page 728. Property Owner acquired fee title to the Land from Challenger by

Special Warranty Deed dated August 8, 2003, recorded in the Official Records on

August 8, 2003, in Book 9361 at Page 875, at which time Property Owner elected

to have the Ground Lease continue in existence and not allow its leasehold

estate thereunder to merge with its fee title, as evidenced by Statement of

Intent Regarding Ground Lease dated August 8, 2003, recorded in the Official

Records on August 8, 2003, in Book 9361 at Page 903.

 

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, including, without

limitation, those under the Operating Agreement.

 

1.1.4 "Improvements" means all buildings, structures, improvements and fixtures

located on the Land.

 

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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.

 

1.1.11 "Operating Agreement" means the Construction, Operation and Reciprocal

Easement Agreement dated May 20, 1974, recorded in the Official Records on June

28, 1974, in Vol. 981 at Page 170, as amended by Amendment to Construction,

Operation and Reciprocal Easement Agreement and Adoptive Agreement dated January

9, 1975, recorded in the Official Records on February 11, 1975, in Vol. 1015 at

Page 150; Second Amendment to Construction, Operation

 

 

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and Reciprocal Easement

Agreement dated July 27, 1976, recorded in the Official Records on August 30,

1976, in Vol. 1145 at Page 309; Third Amendment to Construction, Operation and

Reciprocal Easement Agreement dated February 13, 1986, recorded in the Official

Records on June 19, 1987, in Vol. 2611 at Page 1; Fourth Amendment to

Construction, Operation and Reciprocal Easement Agreement dated January 1, 1993,

recorded in the Official Records on January 14, 1994, in Vol. 4217 at Page 486;

Release of Street Right-of-Way from Construction, Operation and Reciprocal

Easement Agreement dated September 10, 1996, recorded in the Official Records on

September 30, 1996, in Book 5001 at Page 202; Release of Street Right-of-way

from Construction, Operation and Reciprocal Easement Agreement dated September

19, 1996, recorded in the Official Records on October 1, 1996, in Book 5003 at

Page 256; Fifth Amendment to Construction, Operation and Reciprocal Easement

Agreement dated December 19, 1996, recorded in the Official Records on December

27, 1996, in Vol. 5070 at Page 600; Release of Street Right-of-Way from

Construction, Operation and Reciprocal Easement Agreement dated July 18, 1997,

recorded in the Official Records on January 27, 1998, in Book 5440 at Page 236;

Amendment to Release of Street Right-of-Way from Construction, Operation and

Reciprocal Easement Agreement dated July 18, 1997, recorded in the Official

Records on September 21, 2005 in Book 20050921 at Page 0008456 and Release of

Street Right-of-Way from Construction, Operation and Reciprocal Easement

Agreement dated __________, 2005, recorded in the Official Records on

__________, 2005, in Book 200508 at Page 001177. The Operating Agreement

concerns the operation and maintenance of the Shopping Center (as defined

hereinafter). The present parties to the Operating Agreement are Property Owner,

Dillard Store Services, Inc., an Arizona corporation ("Dillard"), as to each of

its two stores in the Shopping Mall, Nordstrom, Inc., a Washington corporation

("Nordstrom"), The May Department Stores Company, a New York corporation

("May"), and J. C. Penney Properties, Inc., a Delaware corporation ("Penney").

Dillard, Nordstrom, May and Penney are referred to herein collectively as the

"Anchor Stores."

 

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 Company and Property Owner for all periods from and

after January 1, 1998.

 

1.2 "Total Consideration" means $392,030,000.00 less the principal balance and

accrued interest outstanding on the Closing Date Debt as of the Closing Date,

and as adjusted as provided in Article VI.

 

1.3    "Final Approval Date" means the Effective Date.

 

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1.4 "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.

 

1.5 "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 below

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.

 

1.6 "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

 

1.7    "CBL/OP's Address" means:

 

              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

 

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1.8    "Property Owner's Address" means:

 

              Oak Park Investment, L.P.

              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

 

1.9 "Property Owner's Property Manager" means Park Properties, a Kansas general

partnership, whose address is 11519 West 95th Street, Overland Park, Kansas

66214.

 

1.10 "Official   Records" means the Official Records of the Register of Deeds for

Johnson County, Kansas.

 

1.11 "Shopping Center" means that certain regional shopping center commonly

known as "Oak Park Mall" located in Overland Park, Kansas 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 transferred or

contributed by Property Owner to the Company under the terms of this Agreement.

 

1.12 "Cash Consideration" means an amount equal to the Total Consideration less

the K-SCU Amount (as defined hereinafter).

 

1.13 "K-SCU Amount" means the aggregate amount of the Election Amounts (as

hereinafter defined) (taking into account any reductions in the amounts of such

elections provided for in Section 3.2) of all Electing Contributors (as

hereinafter defined) (not including any Contributor whose election to be an

Electing Contributor is nullified pursuant to the provisions of Section 3.2).

 

1.14 "K-SCUs" means limited partnership units denoted as Series K Special Common

Units ("K-SCUs") which shall have the attributes described in the Description of

Partnership Interests (K-SCUs) set forth in Exhibit L and attached to this

Agreement.

 

1.15 "Partnership Interests" means K-SCUs, and any other limited partnership

interests in CBL/OP to which or for which they may be converted, as described on

Exhibit L hereto.

 

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1.16 "CBL/OP Partnership Agreement" means the Third Amended and Restated

Agreement of Limited Partnership of CBL & Associates Limited Partnership dated

June 15, 2005, (i) as amended by the First Amendment to Third Amended and

Restated Agreement of Limited Partnership of CBL & Associates Limited

Partnership to be executed at Closing and (ii) as the same may be further

amended from time to time.

 

1.17 "CBL/OP Partnership Agreement Amendment" means the First Amendment to Third

Amended and Restated Agreement of Limited Partnership of CBL & Associates

Limited Partnership to be executed at Closing.

 

1.18   "Code" means the Internal Revenue Code of 1986, as amended.

 

1.19 "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.

 

1.20 "Company LLC Agreement" means that certain limited liability agreement of

the Company to be executed at or prior to Closing.

 

1.21 "Closing Date Debt"1.1 means secured indebtedness of the Company in the

principal amount of no less than $266,560,000, and secured by a first mortgage

lien on the Shopping Center and the Guarantees.

 

1.22 "Other Mall Contributors" means those parties identified and defined as

"Contributors" in the Eastland Contract. A Contributor hereunder may also be an

Other Mall Contributor.

 

1.23 "Other Mall Electing Contributors" means those Other Mall Contributors that

elect to become "Electing Contributors" as defined in, and pursuant to, the

Eastland Contract. An Electing Contributor hereunder may also be an Other Mall

Electing Contributor.

 

1.24 "Other Mall Total   Consideration"   means the aggregate amount of the "Total

Consideration" as defined int he Eastland Contract.

 

 

                                   ARTICLE II

                                  CONTRIBUTION

 

2.1 Agreement to Contribute the LLC Interests. At or prior to the Closing,

Contributors shall (i) cause Property Owner to form the Company; (ii) cause

Property Owner to contribute the Property to the Company free and clear of any

liens or encumbrances except for indebtedness that will be refinanced with the

Closing Date Debt; (iii) promptly after making the contribution disclosed in

clause (ii), cause the Property Owner to be liquidated (but not dissolved) and

to distribute the LLC Interests to the Contributors, (iv) cause the Company to

refinance its existing mortgage indebtedness with the Closing Date Debt, and (v)

distribute the net refinancing proceeds from the Closing Date Debt to the

Contributors. Upon and subject to the terms and conditions of this Agreement, at

Closing, Contributors agree to transfer and contribute to CBL/OP and/or an

entity wholly owned by CBL/OP, the LLC Interests, and CBL/OP agrees to acquire,

and/or cause an entity wholly owned by CBL/OP to acquire, the

 

 

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LLC Interests from

Contributors in exchange for K-SCUs and/or cash in the aggregate amount of the

Total Consideration. Unless otherwise agreed by the Electing Contributors and

CBL/OP at least ten (10) days prior to the Closing Date, CBL/OP shall cause an

affiliate (that is not a disregarded entity for tax purposes with respect to

CBL/OP) to acquire at least 0.01% interest in the Company from one of the

Contributors that is not an Electing Contributor, which Contributor shall be

designated by the Electing Contributor at least ten (10) days prior to the

Closing Date, for the purpose of maintaining the Company as a partnership for

tax purposes following the Closing.

 

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 the

Company hereunder: (a) all cash on hand, other than a working capital reserve of

$30,000 (the "Operating Reserve"), 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

the Company and CBL/OP in reviewing and copying, at CBL/OP's expense (by hard

copy as well as electronically) all Books and Records provided to the Company or

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.

 

2.3    Other Mall Contribution Agreements.

 

2.3.1 Definitions of other Malls and Purchase Agreements. For purposes hereof,

(i) "Hickory Point Contract" shall mean that certain Purchase and Sale Agreement

of even date herewith by and between HP-SP Associates, L.L.C., a Missouri

limited liability company, and Hickory Point Mall, Limited Partnership, a

Delaware limited partnership (collectively, "Hickory Point Property Owner"), as

sellers, and CBL/OP, as buyer, with respect to the property commonly known as

Hickory Point Mall, Forsyth, Illinois, herein "Hickory Point 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

 

 

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office building and

related land, improvements and property located in Bloomington, McLean County,

Illinois, herein "Eastland Medical Building." The Hickory Point Contract, the

Eastland Medical Building Contract and the Eastland Contract are sometimes

collectively referred to herein as the "Other Mall Contracts," and Hickory Point

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 and/or Contributors 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 Property Owner to draw on the Letter

of Credit and receive payment of the Deposit.

 

                                  ARTICLE III_

                                TOTAL CONSIDERATION

 

3.1 Total Consideration. Subject to the terms of this Agreement, the Total

Consideration to be received by the Contributors for the contribution of the LLC

Interests to CBL/OP shall be Three Hundred Ninety-two Million Thirty Thousand

and 0/100 Dollars ($392,030,000) less the Closing Date Debt and be paid in the

form of (i) K-SCUs and (ii) the Cash Consideration, subject to any other

adjustments set forth in this Agreement. Each Contributor shall receive the

share of the Total Consideration indicated opposite its name on Schedule I

hereto. Subject to the limitations in Section 3.2 below, any Contributor may

elect to receive all or part of its share of the Total Consideration as K-SCUs.

Except to the extent a Contributor validly elects to receive all or a portion of

the Total Consideration payable to it in the form of K-SCUs pursuant to Section

3.2 below (and such election is not nullified pursuant to Section 3.2 below, and

after taking into account any reductions in the amounts of such elections

provided for in Section 3.2), each Contributor shall be paid its share of the

Total Consideration by wire transfer of immediately available funds at the

Closing.

 

3.2 K-SCUs. By written notice in the form of Exhibit X hereto ("Election

Notice"), given to CBL/OP and Property Owner no later than 5:00 p.m. on the

later of (i) 2 business days after the Effective Date, or (ii) October 3, 2005,

a Contributor (an "Electing Contributor") may elect to receive all or a part of

its share of the Total Consideration (as indicated in the Election Notice) in

the form of K-SCUs. Notwithstanding the foregoing, no Contributor may be an

Electing Contributor unless such Contributor properly completes, executes and

delivers to CBL/OP an Investor Questionnaire in the form of Exhibit Y hereto,

pursuant to which such Contributor shall represent and warrant to CBL/OP that

such Contributor is an "accredited investor" within the meaning of Regulation D

promulgated by the United States Securities and Exchange

 

 

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Commission under the

Securities Act of 1933, as amended. In addition, (i) the aggregate amount of the

portion of the Total Consideration payable pursuant to this Agreement in the

form of K-SCUs to Electing Contributors plus the aggregate amount of the portion

of the Other Mall Total Consideration payable under the Other Mall Contracts in

the form of K-SCUs to Other Mall Electing Contributors, shall not exceed 55% of

the aggregate amount of the Total Consideration payable hereunder plus the Other

Mall Total Consideration, and (ii) the aggregate number of record holders of the

K-SCUs to be issued to all Electing Contributors hereunder and all Other Mall

Electing Contributors shall not exceed 8. If the requirement set forth in clause

(ii) of the preceding sentence would be violated based on the elections by

Contributors to be Electing Contributors and the elections of Other Mall

Contributors to be Other Mall Electing Contributors (whether or not the

requirement in clause (i) of the preceding sentence would be violated or

satisfied), then the elections of certain Contributors hereunder to be Electing

Contributors and the elections of certain Other Mall Contributors under the

Other Mall Contracts to be Other Mall Electing Contributors shall be nullified

in their entirety starting with the Contributor or Other Mall Contributor that

would receive the smallest number of K-SCUs (and for any Contributor who is also

an Other Mall Contributor, the aggregate number of K-SCUs to be received by such

Contributor hereunder and under the Other Mall Contracts shall be taken into

account in determining the number of K-SCUs to be received by Contributors and

Other Mall Contributors), and proceeding to the Contributor or Other Mall

Contributor that would receive the next largest number of K-SCUs, and proceeding

in this manner to the Contributors or Other Mall Contributors that would receive

the next largest number of K-SCUs in ascending order, until the requirement in

clause (ii) of the preceding sentence is satisfied. If the requirement of clause

(i) of the second preceding sentence is not satisfied after taking into account

all nullifications, if any, of the elections of any Contributors hereunder to be

Electing Contributors and the elections of any Other Mall Contributors under the

Other Mall Contracts to be Other Mall Electing Contributors, pursuant to the

preceding sentence, the amount of the Total Consideration to be received by each

Electing Contributor in the form of K-SCUs and the amount of the Other Mall

Total Consideration to be received by each Other Mall Electing Contributor in

the form of K-SCUs shall be reduced pro rata (in proportion to the amount of the

election of each Electing Contributor and each Other Mall Electing Contributor),

by the amounts necessary for the requirement of clause (i) of the second

preceding sentence to be satisfied. Any Contributor whose election to be an

Electing Contributor is nullified in its entirety in accordance with the second

preceding sentence shall not be an Electing Contributor for any purpose

hereunder. For each Electing Contributor, the "Election Amount" shall be the

amount of the Total Consideration that will be paid to such Electing Contributor

pursuant to this Agreement in the form of K-SCUs in accordance with the election

of such Electing Contributor pursuant to this Section 3.2, taking into account

any reduction in the amount of such election pursuant to the preceding sentence.

The K-SCUs will be entitled to receive a basic distribution, on a quarterly

basis, in an amount equal to a six percent (6%) per annum yield on the K-SCU

Amount for the period commencing on the Closing Date and ending on the last day

of the calendar quarter during which the Closing Date occurs and the four (4)

succeeding calendar quarters, and thereafter a basic distribution, on a

quarterly basis, in an amount equal to a six and one-quarter percent (6.25%) per

annum yield on the K-SCU Amount. At the Closing, CBL/OP shall issue to each

Electing Contributor an aggregate number of K-SCUs in an amount equal to the

Election Amount for such Electing Contributor divided by the product of (x) 1.25

multiplied by (y) the average closing price of the common stock of CBL &

Associates Properties, Inc., a Delaware corporation and real estate

 

 

                                       10

<PAGE>

 

investment

trust ("CBL/REIT"), for the ten (10) day period during which the CBL/REIT common

stock is traded immediately prior to the Closing Date, as reported by the New

York Stock Exchange ("NYSE").

 

3.3 Informational Materials. A true and correct copy of the CBL/OP Partnership

Agreement (excluding the CBL/OP Partnership Agreement Amendment which shall be

in effect as of the Closing) has been furnished by CBL/OP to Contributors.

Contributors hereby acknowledge and agree that the ownership of Partnership

Interests and Contributors' rights and obligations as limited partners of CBL/OP

(including, without limitation the right to transfer, encumber, pledge and

exchange Partnership Interests) shall be subject to all of the express

limitations, terms, provisions and restrictions set forth in the CBL/OP

Partnership Agreement as modified by the CBL/OP Partnership Agreement Amendment.

In that regard, Contributors hereby covenant and agree that, at Closing,

Contributors shall execute any and all documentation reasonably required by

CBL/OP and CBL/REIT to formally memorialize the provisions of Sections 3.2 and

this 3.3. Contributors further acknowledge that they have access to or have

received and reviewed, prior to the date of this Agreement, any and all

information that Contributors have deemed necessary with respect to CBL/REIT and

Contributors' participation in CBL/OP as a limited partner thereof. Certain

materials and information referred to in this Section 3.3 are listed on Schedule

3.3 hereto and shall be collectively referred to as "Informational Materials."

 

3.4 Registration Rights. Contributors shall be entitled to the registration

rights, in respect of K-SCUs issued hereunder, that are set forth in a

registration rights agreement substantially in the form attached hereto as

Exhibit O (the "Registration Rights Agreement").

 

3.5 Delivery of Deposit. Within two (2) Business Days following the full

execution of this Agreement, CBL/OP shall deliver to 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

Hickory Point Contract and the Eastland Contract, (ii) in the face amount of Ten

Million Dollars ($10,000,000), (iii) naming the Property Owner as beneficiary,

(iv) issued for the benefit of Property Owner, Eastland Property Owner and

Hickory Point Property Owner with the ability to draw by 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 Property Owner, the proceeds will be payable exclusively to

Escrow Agent, and such proceeds will be held as the Deposit under this Agreement

and the Other Mall Contracts and will be subject to disposition by the Escrow

Agent in accordance with the terms and conditions of this Agreement and under

the Other Mall Contracts. The Deposit shall be non-refundable and the proceeds

shall be disbursed 76% to Property Owner, 15.46% to Eastland Property Owner and

8.54% to Hickory Point

 

 

                                       11

<PAGE>

 

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, Hickory Point 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 Cash Consideration Payment. The Cash Consideration shall be paid by wire

transfer of immediately available federal funds and allocated among Contributors

at the Closing, in accordance with Schedule I hereto, and shall be reduced by

the Election Amount for any Electing Contributor. CBL/OP shall deposit such

funds 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 Contributors or Contributors'

designees no later than 1:00 p.m. on the Closing Date.

 

                                   ARTICLE IV

                            INSPECTION AND TITLE REVIEW

 

4.1    CBL/OP's Inspections.

 

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

 

 

                                       12

<PAGE>

 

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 neither Property Owner nor any Contributor shall 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. Contributors shall not be liable or bound in

any manner by any oral or written statements, representations or information

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 offices

in Leawood, Kansas, or at the Property Manager's office in Overland Park,

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."

 

                                       13

<PAGE>

 

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 the Company 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

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.

 

                                       14

<PAGE>

 

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

and Contributors, Property Owner and Contributors 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 No. 020053243 issued effective

August 15, 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/ACSM Land Title Survey of the Real Property

dated June 22, 1998, prepared by Shafer, Kline & Warren, Inc., Overland Park,

Kansas as Job No. 101251 (the "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

 

 

                                       15

<PAGE>

 

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").

 

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

 

 

                                        16

<PAGE>

 

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

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 or the Operating Agreement; (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, including, but not limited to, the

Closing Date Debt; or (e) any liens or encumbrances against the Property which,

pursuant to the Operating Agreement, 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 Total Consideration to Discharge Liens. At the Closing, Property

Owner may, at Property Owner's/Contributors' option, use the proceeds of the

Total

 

 

                                       17

<PAGE>

 

Consideration 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 the Company in the amount of the

Total Consideration plus the Closing Date Debt that fee title to the Real

Property is vested in the Company 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 Title Notice),

provided that in any event issuance of a "Fairway" endorsement (with respect to

the transfer of the LLC Interests to CBL/OP) and a non-imputation endorsement

(with respect to any knowledge that might be imputed to the Company through

Property Owner or any Contributor) as part of the Title Policy shall be

conditions precedent to the Closing for the benefit of CBL/OP. 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

 

 

                                       18

<PAGE>

 

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; provided, however, that in no event shall such cure period extend

beyond the expiration of any commitment for the Closing Date Debt or expiration

date of any rate lock agreement for the Closing Date Debt (whichever is

earlier), as such dates may be extended by Property Owner at its sole cost and

expense, unless Property Owner borrows the Closing Date Debt prior to the

applicable expiration dates. 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) any liens or

encumbrances relating to the Closing Date Debt; (d) the Ground Lease; (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) the

Operating Agreement; (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; (k) all matters directly or indirectly

caused by CBL/OP or arising through CBL/OP; and (l) that Easement Agreement

attached hereto as Exhibit R. 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 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

Operating Agreement and the Tenant Leases regarding entry

 

 

                                       19

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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 the Operating

Agreement, 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

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

 

                                       20

<PAGE>

 

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 or Contributors, (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 oral leasing and management agreement 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) the Company shall be responsible for the

obligations 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

 

 

                                       21

<PAGE>

 

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 the Company 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, Contributors 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,

Contributors, CBL/OP and Escrow Agent.

 

5.1.2 Escrow Instructions. This Agreement, together with such supplementary or

further escrow instructions as Property Owner, Contributors and CBL/OP shall

provide to Escrow Agent by written agreement, shall constitute the instructions

to Escrow Agent for the Escrow. Property Owner, Contributors 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, Contributors 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, Contributors 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.

 

5.1.3 Closing. As used in this Agreement, the "Closing" shall mean the

consummation of the contribution of the LLC Interests and the other transactions

contemplated in this Agreement, as evidenced by the deliveries by Contributors

of the documents and other items set forth in Section 5.4 below and by the

deliveries by CBL/OP of the documents, funds and other items set forth in

Section 5.6 below. 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.

 

                                       22

<PAGE>

 

5.1.4 Closing Date. The Closing shall occur through Escrow on the Closing Date.

Contributors 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 and Contributors' Deliveries. On or before the Closing

Date, Property Owner and/or Contributors 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 and Contributors 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 Contributors (or the Contributor

Representative identified in Section 13.22 below, on behalf of the Contributors)

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 and Contributors 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 "Contributors

Closing Certificate"). If the Contributors 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 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.

 

                                       23

<PAGE>

 

5.2.5 Covenants. As of the Closing Date, Property Owner and Contributors shall

have performed all material covenants and/or agreements to be performed by

Property Owner and Contributors under this Agreement and Property Owner and

Contributors shall not be in material default in the performance of any material

covenant or agreement to be performed by Property Owner and Contributors 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 ("REA 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 REA 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 REA 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 REA Estoppel shall be deemed in acceptable form (subject

to the final sentence of this Section 5.2.6) if an REA Estoppel Certificate

covers all matters as are required under the Operating Agreement, or if no such

matters are required, if an REA 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 REA 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 REA Estoppel

Certificate which alleges a material default by Property Owner under the

Operating Agreement or facts which are materially inconsistent with the

information set forth in the REA 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.

 

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 the Company as provided in

Section 4.3.6 above.

 

                                       24

<PAGE>

 

5.2.9 Lender Approval. The lender of the Closing Date Debt shall have approved

of the contribution of the LLC Interests to CBL/OP.

 

5.2.10 Company LLC Agreement. CBL/OP and Property Owner shall have agreed

upon the form and content of the Company's limited liability company agreement

(including any special purpose provisions thereof) and such agreed upon form

shall be entered into by the members of the Company upon formation of the

Company and not be modified or amended prior to the contribution of the LLC

Interests to CBL/OP without CBL/OP's prior written consent.

 

5.2.11 Closing Date Debt. The Company shall have refinanced its existing

mortgage with the Closing Date Debt which shall comply with the requirements set

forth in Section 5.7 below.

 

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 Contributors 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 (provided, however, that in no event

shall such cure period extend beyond the expiration of any commitment for the

Closing Date Debt or expiration date of any rate lock agreement for the Closing

Date Debt (whichever is earlier), as such dates may be extended by Property

Owner at its sole cost and expense, unless Property Owner borrows the Closing

Date Debt prior to the applicable expiration dates), 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 or

Contributors, 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 Total Consideration 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 Contributors. The

Closing and Contributors' 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 Contributors' benefit set forth below in this Section 5.3.

 

 

                                       25

<PAGE>

 

The

conditions precedent set forth below in this Section 5.3 are referred to

collectively as the "Contributor Conditions Precedent" and individually as a

"Contributor 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

3.2, Section 3.7 and in Section 5.6 of this Agreement.

 

5.3.2 Intentionally omitted.

 

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 the Company 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 Contributors 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 Company LLC Agreement. CBL/OP and Property Owner shall have agreed upon

the form and content of the Company's limited liability company agreement

(including any special purpose provisions thereof).

 

5.3.7 Closing Date Debt. The Company shall have refinanced its existing mortgage

indebtedness with the Closing Date Debt which shall comply with the requirements

set forth in Section 5.7 below.

 

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 Contributor Closing Condition if

the closing under the Other Mall Contracts shall fail to occur by reason of the

default of Property Owner or Contributors, and in such case, the provisions of

Section 2.3.2 shall apply.

 

Neither Property Owner nor the Contributors shall willfully or in bad faith act

or willfully or in bad faith fail to act for the purpose of permitting any

Contributor Condition Precedent to fail. In the event any of the foregoing

Contributor Conditions Precedent are not satisfied (or otherwise waived by

Contributors) by the respective dates designated above in this Section 5.3 for

any reason other than a default by CBL/OP or Property Owner or Contributors

hereunder, this

 

 

                                       26

<PAGE>

 

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 or Contributors, 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.

Contributors shall at all times prior to the termination of this Agreement have

the right to waive any of the Contributor Conditions Precedent. Any such waiver

shall be in writing; provided, however, the election by Contributors to proceed

with the Closing and the delivery of the LLC Interests shall be deemed Property

Owner's and Contributors' waiver of any Contributor Condition Precedent to the

extent any such Contributor Condition Precedent has not been previously

satisfied or waived.

 

5.4 Property Owner's/Contributors' Deliveries. On or prior to the Closing Date,

Property Owner or Contributors 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 the

Company 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 and the Company 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 and the Company, 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 and the Company.

 

5.4.4 Non-Foreign Certificate. Each Contributor shall deliver two counterpart

originals of a certification from such Contributor 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 or on behalf of such Contributor.

 

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 the Company of Property Owner's interest in, and obligations

under, the Tenant Leases and the Operating Agreement (including, if applicable

any Tenant Deposits) and directing that all rent and other sums payable after

Closing under each such Tenant Lease and/or the Operating Agreement shall be

paid as set forth in the notice.

 

5.4.6 Estoppels. Contributors shall deliver such Tenant Estoppel Certificates

and REA Estoppel Certificates as are in Property Owner's possession.

 

                                        27

<PAGE>

 

5.4.7 Closing Statement. Contributors (or the Contributor Representative) 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. Each Contributor which is not a natural person shall deliver

evidence of the existence, organization and authority of such Contributor and of

the authority of the person executing documents on behalf of such Contributor

which evidence shall be in the form described on the attached Exhibit P, and

shall be subject to the reasonable approval of CBL/OP.

 

5.4.9 Intentionally Omitted.

 

5.4.10 Intentionally Omitted.

 

5.4.11 Operating Agreement Assignment. Property Owner and the Company shall

deliver the executed assignment and assumption agreement in the form of Exhibit

K attached hereto and by this reference incorporated herein and made a part

hereof, assigning to the Company Property Owner's interest in the Operating

Agreement.

 

5.4.12 Ground Lease Assignment. Property Owner and the Company shall

deliver two counterpart originals of an assignment and assumption of ground

lease in the form attached as Exhibit U hereto (the "Ground Lease Assignment"),

executed and acknowledged by Property Owner and the Company.

 

5.4.13 Original Documents. Property Owner shall deliver to CBL/OP the

original Tenant Leases, Operating Agreement, Service Contracts that CBL/OP has

elected that the Company assume pursuant to Section 4.7 above and licenses and

permits, if any, assigned to the Company and in the possession of Contributors

or Contributors' 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. Contributors 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; Contributors Closing Certificate.

Contributors shall deliver to CBL/OP an updated Lease Schedule/Rent Roll for the

Property

 

 

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reflecting the then-current status of all Tenant Leases as of the

Closing Date, together with the Contributors Closing Certificate.

 

5.4.17 Assignment of LLC Interests. Each Contributor shall deliver to

CBL/OP an executed Assignment of the LLC Interests, in the form of Exhibit M

attached hereto and by this reference incorporated herein and made a part

hereof.

 

5.4.18 Partnership Interest Acknowledgement. Each Electing Contributor

shall deliver to CBL/OP an Acknowledgement Regarding Issuance of Partnership

Interests and Assumption of Partnership Agreement which shall be substantially

in the form attached hereto as Exhibit N.

 

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 and a Non-Imputation Affidavit which shall be

substantially in the form attached hereto as Exhibit T.

 

5.4.20 Other Documents. Property Owner and Contributors 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

Contributors or result in any new or additional obligation, covenant,

representation or warranty of Property Owner or Contributors 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").

 

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 Cash Consideration, 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 Contributors

(other than Electing Contributors) no later than 1:00 p.m. on the Closing Date).

 

5.6.2 Partnership Interests.   The K-SCUs in the K-SCU Amount.

 

5.6.3 CBL/OP Partnership Agreement.   Sufficient counterpart originals of a fully

executed   CBL/OP   Partnership   Agreement   Amendment   to provide one   counterpart

original for each Electing Contributor;

 

5.6.4 Closing Statement. Join with Contributors 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

 

 

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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 Contributors 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 Closing Date Debt. CBL/OP will attempt to obtain the Closing Date Debt for

the Company in the principal amount of $294,000,000 provided that if the loan

terms are too costly, in the sole opinion of CBL/OP, then CBL/OP will obtain

Closing Date Debt in a lower principal amount of not less than $266,560,000.

CBL/OP will pay the costs of securing this loan (other than any prepayment

penalty incurred by Property Owner in connection with the prepayment of its

existing indebtedness with the proceeds of the Closing Date Debt loan). Electing

Contributors shall guarantee the Closing Date Debt in an amount equal to their

percentage interest of such debt as indicated on Schedule I and otherwise on the

terms of the guarantee in the form of Exhibit V hereto ("Guarantees").

 

5.8    Closing Costs.

 

5.8.1 Contributors' Closing Costs. Contributors 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 and/or Contributors, (c) the county

and city transfer/recording taxes, if any, assessed on the recording of the

Special Warranty Deed, (d) one-half of all Escrow fees and Escrow costs related

to the contribution of the Property to the Company and the contribution of the

LLC Interests to CBL/OP (as opposed to any Escrow fees and Escrow costs related

to the Closing Date Debt 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

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 transfer of the LLC Interests to CBL/OP, (e) all legal

and professional fees

 

 

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<PAGE>

 

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 the Closing Date Debt, (g) all recording fees and charges, (h)

one-half of all Escrow fees and Escrow costs related to the contribution of the

Property to the Company and the contribution of the LLC Interests to CBL/OP of

the Property, and (i) all fees, costs, charges, points, title insurance

premiums, recording fees, mortgage registration taxes for the Closing Date Debt

and other costs and expenses incurred in connection with the Closing Date Debt.

 

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 Contributors in accordance with the customary practice in the

jurisdiction in which the Property is located.

 

5.9 Real Estate Commissions. Contributors 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 Contributors as required under the aforementioned

statute and regulation.

 

5.11 Post-Closing Access to Records. CBL/OP, Property Owner's Property Manager

(for so long as Property Owner's Property Manager is in existence) and

Contributors shall cooperate with each other after Closing in case of either's

need in response to any legal requirement, regulatory audit 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 Company 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 (or in the

case of Property Owner's Property Manager, for so long as such entity is in

existence).

 

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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, Contributors 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 Contributors 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 Contributors 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 Contributors' favor) or deducted from (if such net amount is in

CBL/OP's favor) the amount of the Total Consideration.

 

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 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 Contributors 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 Contributors shall re-prorate the Real Estate

Taxes following the

 

 

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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 Contributors and CBL/OP hereunder. The rights of

Contributors 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/Contributors is/are

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;

periodic charges under the Operating Agreement; 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 Contributors 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 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