-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KPPH+dW8dsVEnb5id5uaJ3LHzdNSWN3oxxq3pxXnlQBSAcmciVxc3tToCuEuGiZ6 rV/TRILtyAsW8p0pi4sA/w== 0000910612-98-000004.txt : 19980219 0000910612-98-000004.hdr.sgml : 19980219 ACCESSION NUMBER: 0000910612-98-000004 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980218 ITEM INFORMATION: FILED AS OF DATE: 19980218 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CBL & ASSOCIATES PROPERTIES INC CENTRAL INDEX KEY: 0000910612 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621545718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12494 FILM NUMBER: 98544901 BUSINESS ADDRESS: STREET 1: ONE PARK PLACE STREET 2: 6148 LEE HWY CITY: CHATTANOOGA STATE: TN ZIP: 37421 BUSINESS PHONE: 4238550001 MAIL ADDRESS: STREET 1: 61048 LEE HIGHWAY STREET 2: ONE PARK PLACE CITY: CHATTANOOGA STATE: TN ZIP: 37421 8-K/A 1 Securities Exchange Act of 1934 -- Form 8-K/A ========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report : February 18, 1998 - -------------------------------------------------------------------------- CBL & ASSOCIATES PROPERTIES, INC. - -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-12494 62-1545718 - ------------------ ----------------- -------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 6148 Lee Highway, Suite 300, Chattanooga, Tennessee 37421 - ------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (423) 855-0001 - ------------------------------------------------------------------------- CBL & ASSOCIATES PROPERTIES, INC. ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS ACQUISITION OF ASHEVILLE MALL ASHEVILLE, NORTH CAROLINA On January 2, 1998, Asheville, LLC, a North Carolina Limited Liability Corporation (the "Asheville LLC"), a majority-owned subsidiary of CBL & Associates Properties, Inc. (the "Registrant")acquired Asheville Mall, a regional shopping mall located in Asheville, North Carolina, containing approximately 823,916 square feet of total gross leasable area ("GLA") including 260,581 of mall store GLA from the R.B.R.& S.T. Limited Partnership, a subsidiary of the R.L. Coleman Company (the "R.L. Coleman Company") pursuant to a Purchase and Sale Agreement between R.L. Coleman Company and Asheville LLC (the "Purchase Agreement"). The assets acquired included, among other things, real property, the buildings, improvements, and fixtures located thereon, certain lease interests, personal property and rights related thereto. The aggregate purchase price, including closing costs, was approximately $65 million and was determined in good faith, arms length negotiations between Registrant and R.L. Coleman Company, an unrelated third party. In negotiating the purchase price the Registrant considered, among other facts, the mall's historical and projected cash flow, the nature and term of existing leases, the current operating costs, the physical condition of the property, and the terms and conditions of available financing. There were no independent appraisals obtained by the Registrant. The purchase price consisted of $65 million in cash. The cash consideration was paid from proceeds from the Registrant's lines of credit and proceeds from a promissory note in the amount of $48.9 million which Asheville LLC placed with Wells Fargo Bank N.A. The Registrant intends to continue operating the mall as currently operated and leasing space therein to national and local retailers. The description contained herein of the transaction described above does not purport to be complete and is qualified in its entirety by reference to the Purchase and Sale Agreement, which is filed as an exhibit to this document. 2 PAGE ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Report of Independent Public Accountants F-1 Statements of the excess of revenues over specific operating expenses for the year ended December 31, 1996 and for the nine months ended September 30, 1997 (unaudited) F-2 Notes to Financial Statements F-3 B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT Pro forma consolidated statement of operations for the nine months ended September 30, 1997 (unaudited) F-4 Pro forma consolidated statement of operations for the year ended December 31, 1996 (unaudited) F-6 Pro forma consolidated balance sheet as of September 30, 1997 (unaudited) F-8 3 A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of CBL & Associates Properties, Inc.: We have audited the accompanying statement of the excess of revenues over specific operating expenses of Asheville Mall for the year ended December 31, 1996. This statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of the excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and excludes certain material expenses that would not be comparable to those resulting from the proposed future operations of the Property described in Note 2 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of expenses described in Note 2) of Asheville Mall for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Arthur Andersen LLP Chattanooga, Tennessee December 10, 1997 F-1 PAGE ASHEVILLE MALL STATEMENTS OF THE EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) (In Thousands) Nine Year Ended Months Ended December 31, September 30, 1996 1997 ------------ ------------ (unaudited) Revenues: Rental revenues...................... $ 5,430 $ 4,065 Tenant reimbursements................ 1,594 1,522 ------- ------- Total revenues.............. 7,024 5,587 Specific Operating Expenses (Note 2): Property operating................... 733 450 Real estate taxes.................... 378 284 Maintenance & repairs................ 793 620 ------- ------- Excess of revenues over specific operating expenses................. $ 5,120 $ 4,233 ======= ======= The accompanying notes are an integral part of these statements. F-2 PAGE ASHEVILLE MALL NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 1. DESCRIPTION OF PROPERTY On January 2, 1998, Asheville, LLC, as assignee of Development Options, Inc., a majority-owned subsidiary of CBL & Associates Properties, Inc., acquired Asheville Mall (the "Property"), a regional shopping mall located in Asheville, North Carolina, containing approximately 823,916 square feet of total gross leasable area. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying statements of the excess of revenues over specific operating expenses are presented on the accrual basis. These statements have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired. Accordingly, the statements exclude certain historical expenses not comparable to the operations of the Property after acquisition, such as depreciation, interest expense and management fees. REVENUE RECOGNITION Rental revenue attributable to operating leases is recognized on a straight-line basis over the initial term of the related leases. Certain tenants are required to pay additional rent if sales volume exceeds specified amounts. The Property recognizes this additional rent as revenue when such amounts become determinable. TENANT REIMBURSEMENTS The Property receives reimbursements from tenants for certain costs as provided in the lease agreements. These costs consist of real estate taxes, common area maintenance and other recoverable costs. Tenant reimbursements are recognized as revenue in the period the costs are incurred. F-3 PAGE B. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS The unaudited pro forma consolidated statements of operations are presented as if the acquisition of Asheville Mall had taken place as of the beginning of each period presented. In management's opinion, all adjustments necessary to present fairly the effects of the acquisition have been made. The unaudited pro forma consolidated statements of operations are not necessarily indicative of what the actual results of operations of CBL & Associates Properties, Inc. (the "Company") would have been assuming the Company had acquired Asheville Mall as of the beginning of each period presented, nor do they purport to represent the results of operations for future periods. CBL & ASSOCIATES PROPERTIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (Unaudited And Amounts In Thousands, Except Per Share Amounts) CBL Asheville Pro Forma Pro Forma Historical Mall Adjustments Consolidated ---------- --------- ----------- ------------ REVENUES: Rentals: Minimum.................... $ 83,266 $ 3,497 $ - $ 86,763 Percentage................. 2,677 568 - 3,245 Other...................... 615 - - 615 Tenant reimbursements......... 36,622 1,522 - 38,144 Management and leasing fees... 1,765 - - 1,765 Interest and other............ 1,998 - - 1,998 -------- ------- ------- ------- Total revenues............. 126,943 5,587 - 132,530 -------- ------- ------- ------- EXPENSES: Property operating............ 22,038 450 - 22,488 Depreciation and amortization. 23,639 - 1,084(A) 24,723 Real estate taxes............. 10,450 284 - 10,734 Maintenance and repairs....... 7,270 620 - 7,890 General and administrative.... 6,352 - - 6,352 Interest...................... 27,081 - 3,447(B) 30,528 Other......................... 45 - - 45 -------- ------- ------- ------- Total expenses............. 96,875 1,354 4,531 102,760 -------- ------- ------- ------- INCOME FROM OPERATIONS........ 30,068 4,233 (4,531) 29,770 F-4 PAGE GAIN ON SALES OF REAL ESTATE ASSETS.............. 4,156 - - 4,156 EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES.. 1,514 - - 1,514 MINORITY INTEREST IN EARNINGS: Operating partnership......... (9,763) - 84(C) (9,679) Shopping center properties.... (405) - - (405) -------- ------- ------- -------- INCOME BEFORE EXTRAORDINARY ITEM....................... 25,570 4,233 (4,447) 25,356 EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT..... (928) - - (928) -------- ------- ------- ------- Net income......... $ 24,642 $4,233 $(4,447) $24,428 ======== ======= ======= ======= EARNINGS PER COMMON SHARE DATA: Income before extraordinary item....................... $ 1.06 $ 1.05 Extraordinary loss on extinguishment of debt..... (0.04) (0.04) -------- ------- Net income......... $ 1.02 $ 1.01 ======== ======= WEIGHTED AVERAGE SHARES OUTSTANDING................ 24,104 24,104 ======== ======= (A) Reflects depreciation expense on the Asheville Mall acquisition computed on the straight-line method over the estimated useful life of 40 years. (B) Reflects interest expense associated with the $48,900 mortgage note payable and the $16,697 of borrowings under the Company's line of credit agreement, at LIBOR plus .9% (6.98%) and LIBOR plus 1.0% (7.08%), respectively, in connection with the acquisition of Asheville Mall. (C) Reflects the minority interests' share of the income from operations of Asheville Mall and the pro forma adjustments. F-5 PAGE CBL & ASSOCIATES PROPERTIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (Unaudited And Amounts In Thousands, Except Per Share Amounts) CBL Asheville Pro Forma Pro Forma Historical Mall Adjustments Consolidated ---------- --------- ----------- ------------ REVENUES: Rentals: Minimum.................... $ 93,217 $ 4,564 $ - $ 97,781 Percentage................. 2,724 866 - 3,590 Other...................... 1,758 - - 1,758 Tenant reimbursements......... 42,447 1,594 - 44,041 Management and leasing fees... 2,377 - - 2,377 Development fees.............. 7 - - 7 Interest and other............ 4,275 - - 4,275 -------- ------- ------- -------- Total revenues............ 146,805 7,024 - 153,829 -------- ------- ------- -------- EXPENSES: Property operating............ 24,232 733 - 24,965 Depreciation and amortization. 25,439 - 1,445(A) 26,884 Real estate taxes............. 11,587 378 - 11,965 Maintenance and repairs....... 8,957 793 - 9,750 General and administrative.... 8,467 - - 8,467 Interest...................... 31,684 - 4,399(B) 36,083 Other......................... 646 - - 646 -------- ------- ------- -------- Total expenses............ 111,012 1,904 5,844 118,760 -------- ------- ------- -------- INCOME FROM OPERATIONS........ 35,793 5,120 (5,844) 35,069 GAIN ON SALES OF REAL ESTATE ASSETS.............. 13,614 - - 13,614 EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES.. 1,831 - - 1,831 MINORITY INTEREST IN EARNINGS: Operating partnership......... (15,468) - 225(C) (15,243) Shopping center properties.... (527) - - (527) -------- ------- ------- -------- INCOME BEFORE EXTRAORDINARY ITEM....................... 35,243 5,120 (5,619) 34,744 EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT..... (820) - - (820) -------- ------- ------- -------- F-6 PAGE Net income........... $ 34,423 $ 5,120 $(5,619) $ 33,924 ======== ======= ======= ======== EARNINGS PER COMMON SHARE DATA: Income before extraordinary item...................... $ 1.69 $ 1.66 Extraordinary loss on extinguishment of debt.... (0.04) (0.04) Net income........... $ 1.65 $ 1.62 ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING......... 20,890 20,890 ======== ======== (A) Reflects depreciation expense on the Asheville Mall acquisition computed on the straight-line method over the estimated useful life of 40 years. (B) Reflects interest expense associated with the $48,900 mortgage note payable and the $16,697 of borrowings under the Company's line of credit agreement, at LIBOR plus .9% (6.68%) and LIBOR plus 1.0% (6.78%), respectively, in connection with the acquisition of Asheville Mall. If interest rates under the mortgage note payable and line of credit agreement fluctuated 0.125%, interest costs on the pro forma indebtedness would increase or decrease by approximately $82 on an annualized basis. (C) Reflects the minority interests' share of the income from operations of Asheville Mall and the pro forma adjustments. F-7 PAGE PROFORMA CONSOLIDATED BALANCE SHEET The unaudited pro forma consolidated balance sheet is presented as if the acquisition of Asheville Mall had occurred as of September 30, 1997. The unaudited pro forma consolidated balance sheet is not necessarily indicative of what the actual financial position would have been at September 30, 1997, nor does it purport to represent the future financial position of the Company. CBL & ASSOCIATES PROPERTIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1997 (Unaudited And Dollars In Thousands, Except Per Share Amounts) Pro Forma CBL Acquisition Company Historical Adjustments Pro Forma ---------- ----------- --------- ASSETS: (A) Real Estate Assets: Land............................ $ 152,961 $ 7,349 $ 160,310 Buildings and improvements...... 942,470 57,819 1,000,289 ---------- ----------- ---------- 1,095,431 65,168 1,160,599 Less: Accumulated depreciation.. (137,407) - (137,407) ---------- ----------- ---------- 958,024 65,168 1,023,192 ---------- ----------- ---------- Developments in progress........ 149,083 - 149,083 ---------- ----------- ---------- Net investment in real estate assets................ 1,107,107 65,168 1,172,275 Cash and cash equivalents.......... 6,202 - 6,202 Receivables: Tenant, net of allowance for doubtful accounts of $788.... 11,829 606 12,435 Other........................... 967 - 967 Mortgage notes receivable.......... 16,638 - 16,638 Other assets....................... 7,895 - 7,895 ---------- ----------- ---------- 1,150,638 65,774 1,216,412 ========== =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: Mortgage and other notes payable... 643,556 65,597 709,153 Accounts payable and accrued liabilities............. 30,375 177 30,552 ---------- ----------- ---------- F-8 PAGE Total liabilities........... 673,931 65,774 739,705 ---------- ----------- ---------- Commitments and contingencies...... - - - Distributions and losses in excess ofinvestment in unconsolidated affiliates...................... 7,142 - 7,142 ---------- ----------- ---------- Minority interest.................. 128,096 - 128,096 ---------- ----------- ---------- Shareholders' equity: Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued..................... - - - Common stock, $0.01 par value, 95,000,000 shares authorized, 24,043,890 shares issued and outstanding at September 30, 1997.............. 240 - 240 Excess stock, $0.01 par value, 100,000,000 shares authorized, none issued..................... - - - Additional paid-in capital......... 359,044 - 359,044 Accumulated deficit................ (17,444) - (17,444) Deferred compensation.............. (371) - (371) ---------- ----------- ---------- Total shareholders' equity.. 341,469 - 341,469 ---------- ----------- ---------- $1,150,638 $ 65,774 $1,216,412 ========== =========== ========== (A) Reflects the acquisition of Asheville Mall through the issuance of a $48,900 mortgage note payable, borrowings of $16,697 under the Company's line of credit agreement, and the assumption of certain assets and liabilities. F-9 PAGE C) EXHIBITS Purchase and Sale Agreement dated November 12, 1997 between R.B.R.& S.T. Limited Partnership, a North Carolina limited partnership (seller) and Development Options, Inc., a Wyoming corporation (Purchaser) Promissory Note between Asheville, LLC and Wells Fargo Bank National Association in the amount of $48,900,000 Consent of Arthur Andersen LLP PAGE SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CBL & ASSOCIATES PROPERTIES, INC. John N. Foy ----------------------------- John N. Foy Executive Vice President, Chief Financial Officer and Secretary (Authorized Officer of the Registrant, Principal Financial Officer and Principal Accounting Officer) Date: February 18, 1997 PAGE EXHIBITS INDEX Exhibit: 2.1 Purchase and Sale Agreement dated November 12, 1997 between R.B.R.& S.T. Limited Partnership, a North Carolina limited partnership (seller) and Development Options, Inc., a Wyoming corporation (Purchaser) 2.2 Promissory Note between Asheville, LLC and Wells Fargo Bank National Association in the amount of $48,900,000 2.3 Consent of Arthur Andersen LLP EX-2.1 2 PURCHASE AND SALE AGREEMENT AGREEMENT OF PURCHASE AND SALE BETWEEN R.B.R.&S.T. LIMITED PARTNERSHIP, a North Carolina limited partnership as Seller AND DEVELOPMENT OPTIONS, INC., a Wyoming corporation as Purchaser dated November 12, 1997 List of Exhibits Exhibit A: Description of Land Exhibit B: Deposit Provisions Exhibit C-1: Form of Tenant Estoppel Exhibit C-2: Second Form of Tenant Estoppel Exhibit D: The Rent Roll Exhibit E: List of Pending Litigation Exhibit T-1: Permitted Exceptions Exhibit T-2: Mechanic's Liens and Other Title Matters AGREEMENT OF PURCHASE AND SALE THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made and entered into by and between R.B.R.&S.T. LIMITED PARTNERSHIP, a North Carolina limited partnership, ("Seller"), and DEVELOPMENT OPTIONS, INC., a Wyoming Corporation ("Purchaser"), as of the "Effective Date" (as hereinafter defined). W I T N E S S E T H: For and in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows: Article 1. Property Seller hereby agrees to sell, and Purchaser hereby agrees to purchase, all of the following property: (a) an approximately 26.18 acre parcel or tract of real property (the "Main Parcel") together with all and singular easements, covenants, agreements, rights, privileges, tenements, hereditaments and appurtenances thereunto now or hereafter belonging or appertaining, together with an approximately 14 acre adjacent parcel or tract of real property (collectively with the Main Parcel, the "Land") subject to a ground lease in favor of Belk of Asheville Mall, Inc., all located in the City of Asheville, Buncombe County, North Carolina, more particularly described on Exhibit "A" attached to this Agreement; (b) the enclosed regional shopping mall (the "Building") located on the Main Parcel, and all other improvements of every kind located in, upon or over the Main Parcel, generally known as "Asheville Mall" (collectively, the "Improvements"); (c) all of Seller's right, title and interest in and to the tenant leases relating to the Improvements, the ground leases pertaining to the Land, all occupancy agreements, reciprocal easement agreements, operating agreements, licenses or other agreements (collectively, the "Leases") conveying or permitting occupancy or possession of any part of the "Property", as hereafter defined, including without limitation, the tenant leases referred to on the "Rent Roll" (as hereinafter defined) (the Land, the Improvements, and the Leases are referred to herein collectively as the "Real Property"); and (d) all of Seller's right, title and interest in all fixtures, equipment, and other personal property of Seller which may be located upon the Land and Improvements and which is used exclusively in the operation of the business conducted thereon (both tangible and intangible, including, without limitation, all rents, issues and profits of the Property, all licenses, permits, parking rights, trade names (including the right to use the name "Asheville Mall"), any service and maintenance agreements applicable thereto owned by Seller and contained in or related to the Improvements (collectively the "Personal Property") (the Real Property and the Personal Property are sometimes referred to herein collectively as the "Property"). Article 2. Earnest Money Deposit and Purchase Price 2.1 Earnest Money Deposit. Purchaser shall deliver to Nelson Mullins Riley & Scarborough, L.L.P. ("Escrow Agent") the sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000.00) simultaneously with Purchaser's execution and delivery of this Agreement to Seller and Seller's acceptance of such offer by execution hereof, which sum shall be held by Escrow Agent (in a separate, interest bearing account) as earnest money and shall be hereinafter referred to as the "Deposit". The Deposit shall be non-refundable except as set forth on Exhibit "B", attached hereto but shall be applicable to the Purchase Price, as hereinafter defined. Escrow Agent shall hold, invest, and disburse the Deposit in accordance with Exhibit "B". 2.2 Purchase Price. The purchase price for the Property to be paid by Purchaser to Seller at the closing and consummation of the purchase and sale of the Property (the "Closing") as contemplated herein shall be SIXTY FIVE MILLION DOLLARS ($65,000,000.00), and shall be hereinafter referred to as the "Purchase Price." The Purchase Price, as adjusted to reflect a credit in the amount of the Deposit paid hereunder and as further adjusted to reflect the prorations between Purchaser and Seller described in Section 5 hereof, shall be paid by Purchaser to Seller at the Closing in immediately available funds by bank wire transfer received by Seller prior to 2:00 P.M. on the "Closing Date", as hereinafter defined. Article 3. Default by Purchaser or Seller 3.1 Purchaser's Default. If Seller shall have materially complied with all of the covenants and conditions contained in this Agreement, and Purchaser defaults in one or more of its obligations hereunder (including failing to consummate the purchase and sale contemplated herein or breaching any obligation, representation or warranty hereunder), then Seller shall be entitled to elect one of the following remedies: (a) Seller shall have the right to terminate this Agreement by written notice to Purchaser and to retain the Deposit plus any interest earned thereon in which event neither Purchaser nor Seller shall have any further rights or obligations with respect to the other under this Agreement, except for the "Surviving Covenants", as hereinafter defined; or (b) Seller shall have the right to seek specific performance against Purchaser. 3.2 Seller's Default. In the event that Purchaser has complied with all of the covenants and conditions contained herein and is ready, willing and able to take title to the Property in accordance with this Agreement on the Closing Date, and Seller defaults hereunder through breach of any representation or warranty set forth herein or otherwise defaults in performance of its obligations hereunder and fails to consummate this Agreement, then Purchaser shall be entitled to elect one of the following remedies: (a) Purchaser shall have the right to terminate this Agreement by written notice to Seller, in which event neither Purchaser nor Seller shall have any further rights or obligations with respect to the other under this Agreement, except for the Surviving Covenants; or (b) Purchaser shall have the right to seek specific performance against Seller but not the right to seek damages. If the remedy of specific performance is not capable of being achieved due to the nature of Seller's default, Purchaser's sole remedy shall be termination. In the event of Seller's default hereunder, the disbursement of the Deposit shall be governed by Exhibit "B". Article 4. Closing and Closing Deliveries 4.1 Closing. Seller and Purchaser agree to conduct the Closing of the purchase and sale of the Property at 11:00 a.m. Eastern Time on January 6, 1998 (the "Closing Date") in the Charlotte, North Carolina office of Nelson Mullins Riley & Scarborough, LLP, located at 100 N. Tryon Street, Suite 3350, or at such other place as may be agreed upon by the parties hereto. 4.2 Seller's Closing Deliveries. At the Closing, Seller shall execute and deliver, or cause to be executed and delivered, to Purchaser, in form and substance reasonably acceptable to Purchaser, the following: (a) A special warranty deed (subject only to the "Permitted Exceptions", as hereinafter defined); (b) A bill of sale (the "Bill of Sale") conveying to Purchaser, without warranty, the Personal Property which may be located upon the Land and Improvements and which is used exclusively in the business operated thereon; (c) An assignment and assumption of the Leases (the "Assignment and Assumption") dated as of the Closing Date, assigning all of the Seller's right, title and interest in and to the Leases; and, to the extent necessary, also assigning all of Seller's right, title and interest in and to the service and maintenance contracts pertaining to the Property (collectively, the "Contracts"); (d) Tenant notification agreements (the "Tenant Notices"), dated as of the Closing Date, and complying with applicable statutes in order to relieve Seller of liability for tenant security deposits, if any, notifying the tenants that the Property has been sold to Purchaser and directing the tenants thereafter to pay rentals to Purchaser (or Purchaser's designated agent); (e) To the extent in Seller's possession or under Seller's reasonable control, the originals of the Contracts, the Leases, and all tenant correspondence and other correspondence pertaining to the ongoing operation of the Property, as-built plans and specifications, maintenance and service contracts, and all licenses, permits and certificates of occupancy for the Real Property or the Improvements; (f) An updated Rent Roll, in the form of the Rent Roll attached hereto, dated within five (5) days of the date of the Closing; (g) To the extent in the possession of Seller or Seller's Property manager, copies of all engineering and maintenance records for the Property; (h) Such title affidavits as are reasonably required by the title company insuring title to the Real Property on behalf of Purchaser (but not an owner's affidavit covering the "Purchaser Created Liens," as hereinafter defined, or indemnifying the title company for such Purchaser Created Liens); (i) Documentary evidence of authority of the Seller to consummate the transaction contemplated hereunder; (j) An executed original of a sale closing statement (the "Closing Statement") in form and substance mutually agreeable to Seller and Purchaser; and (k) Written confirmation from the Seller that all representations and warranties of the Seller set forth herein at Section 10.1 are and continue to be true, accurate and complete as of the Closing Date, or if not, the extent and nature of any material changes to such representations and warranties. If there is a material, adverse change in the representations and warranties of Seller, Purchaser shall have the right to terminate this Agreement, without a return of the Deposit, except as set forth in Exhibit "B". 4.3 No Default for Failure to Obtain Estoppels. During the Inspection Period, Seller agrees to reasonably cooperate in good faith, with Purchaser's attempt, at Purchaser's cost, to procure tenant estoppel certificates executed by Belk, Dillard's, and Montgomery Ward, in the form attached hereto as Exhibit "C-1", or otherwise in form and substance reasonably satisfactory to Purchaser, together with an acceptable operating estoppels from all parties to any reciprocal easement agreement or operating agreement pertaining to the Real Property, together with additional tenant estoppel certificates from fifty percent (50%), as measured by floor area, of the remaining permanent tenants leasing space in the Building, in the form attached hereto as Exhibit "C-2", or in a form reasonably acceptable to Purchaser. Purchaser's failure to obtain the estoppels provided for hereunder shall not constitute a breach of this Agreement by Seller so long as Seller has reasonably cooperated in good faith with Purchaser, and Purchaser shall have no rights hereunder to compel Seller to perform any action with respect to estoppels. Nonetheless, if Purchaser is not satisfied with the estoppels obtained, Purchaser shall have the right to terminate this Agreement on or prior to the last day of the Inspection Period as such right is more fully described in Section 6.1, hereof, without a return of the Deposit, except as provided on Exhibit "B". 4.4 Purchaser's Closing Deliveries. At the Closing, Purchaser will cause the Purchase Price to be delivered to Seller by the method herein described, and will execute and deliver to Seller counterparts of the Tenant Notices, the Assignment and Assumption, the Bill of Sale and the Closing Statement. 4.5 Evidence of Authority; Miscellaneous. Both parties agree to deliver to the Escrow Agent and each other such evidence or documents as may be reasonably required by the Escrow Agent or either party hereto evidencing the power and authority of Seller and Purchaser and the due authority of, and execution and delivery by, any person or persons who are executing any of the documents required hereunder in connection with the sale of the Property. Article 5. Prorations of Rents, Taxes, Etc. 5.1 General Prorations. Real estate taxes for the year of Closing and any tax bond or assessment which is a lien against the Real Property shall be prorated as of 12:01 a.m. on January 1, 1998 (notwithstanding the fact that the Closing Date is January 6, 1998) either using actual tax or assessment figures or, if actual figures are not available, then using as a basis for said proration the most recent assessed value of the Real Property multiplied by the current tax or assessment rate, with a subsequent cash adjustment to be made between Purchaser and Seller when actual tax or assessment figures are available. Personal property taxes, annual permit or inspection fees, sewer charges, other utility charges, and other expenses and charges normal to the operation and maintenance of the Property shall also be prorated as of 12:01 a.m. on January 1, 1998. Final readings on all gas, water and electric meters shall be made as of the proration date, if possible, for purposes of accurate proration. If final readings are not possible, gas, water, electricity, and other utility charges will be prorated based on the most recent period for which costs are available. Any deposits made by Seller with utility companies shall be returned to Seller, and Purchaser shall be responsible for all arrangements for the continuation of utility services to the Property. 5.2 Rental Prorations. All "base" rental and percentage rental payments pertaining to the Property (including base rents and percentage rents pursuant to the Leases) shall be prorated on an accrual basis, effective as of 12:01 a.m. on January 1, 1998 (notwithstanding the fact that the Closing Date is January 6, 1998). With regard to those base rents or percentage rents that Seller shall set forth on a list of delinquent accounts provided to Purchaser just prior to Closing (the "Delinquent Accounts Receivable), no proration will be made at the Closing. With regard to such Delinquent Accounts Receivable, Purchaser and Seller acknowledge and agree that Seller shall be transferring and assigning to Purchaser, at the Closing, up to $25,000.00 of the most current of such Delinquent Accounts Receivable (the "Transferred DAR"). Seller shall receive a credit at the Closing for the total sum due pursuant to the Transferred DAR. Thereafter, Purchaser shall make a good faith effort to collect all Delinquent Accounts Receivable in the usual course of Purchaser's operation of the Property, using commercially reasonable methods, with all sums collected pursuant to the Transferred DAR being the sole property of Purchaser and all sums collected pursuant to the other Delinquent Accounts Receivable being promptly paid over to Seller subject to deduction by Purchaser for the actual, out-of-pocket expenses incurred by Purchaser in making such collections. All other sums collected by Purchaser in respect of the Property which are the property of Seller shall be promptly paid over to Seller subject to deduction by Purchaser for the actual, out-of-pocket expenses incurred by Purchaser in making such collections (provided, however, that funds received by Purchaser which are not specifically designated by the payor as property of Seller shall be first applied to sums due Purchaser accruing after the Closing Date). The obligations of Purchaser under this Section shall survive the Closing. 5.3 Prorations for Tenant Deposits. The following shall apply to proration of deposits made by tenants for common area maintenance charges, taxes, insurance and other similar tenant assessments (collectively, the "Tenant Expense Deposits"): Seller and Purchaser agree that the Tenant Expense Deposits shall be part of the Personal Property transferred to Purchaser at the Closing. Therefore, from and after the Closing Date, Purchaser shall have the sole responsibility for proper application of the Tenant Expense Deposits, the refund of any overpayment of Tenant Expense Deposits and the collection of any deficiencies from tenants of the Real Property. In addition, all tenant security deposits, if any, pertaining to the Leases shall be assigned by Seller to Purchaser at the Closing and Purchaser shall thereafter have sole responsibility for management and accounting of such security deposits. 5.4 Final Adjustment. Purchaser and Seller acknowledge and agree that all prorated items that are not subject to an exact determination shall be estimated by the parties with prorations adjusted to actual sums within twelve (12) months after the Closing Date. This obligation shall survive the Closing. 5.5 Property Management Agreement. Purchaser and Seller acknowledge and agree that any contract for the management of the Property currently in force shall be terminated by Seller as of the Closing Date, with any fees for such termination to be paid by Seller. After such termination, Seller shall have no further responsibility with regard to supplying management services for the Property and Purchaser shall be solely responsible for procuring its own contract for management services for the Property. Article 6. Inspection Period, Survey and Title Matters 6.1 Inspection Period. Purchaser shall have from the Effective Date of this Agreement until 5:00 p.m. Eastern Standard Time on December 19, 1997 (hereinafter referred to as the "Inspection Period") to complete such environmental, title, economic and other due diligence investigations as Purchaser shall deem necessary or appropriate with regard to the Property. During the Inspection Period, Purchaser's agents and employees shall have the reasonable right to enter upon the Real Property to conduct due diligence in a manner reasonably acceptable to Seller, and to make commercially reasonable inquiries of tenants, governmental authorities and others with potentially relevant information about the Property; but in any event, without disruption to the normal business of Seller. During the Inspection Period, Purchaser shall be permitted to inspect and copy, in Asheville, North Carolina, the Leases and the Contracts and other pertinent information relating to the Property. On or before 5:00 p.m. Eastern Standard Time on the last day of the Inspection Period, Purchaser shall have the right to terminate this Agreement if Purchaser determines that it is not satisfied with any of the results of any of its due diligence investigation. The parties agree that for ease of administration of this Agreement, if Purchaser elects such termination, Purchaser shall not be obligated to provide any written notice of same to Seller. This Agreement shall automatically terminate at 5:00 p.m. on the last day of the Inspection Period, if Purchaser has not notified Seller otherwise. If Purchaser does not elect to have this Agreement automatically terminate but desires to proceed to Closing, Purchaser shall provide written notice of same to Seller and Escrow Agent on or before 5:00 p.m. of the last day of the Inspection Period (which notice shall also serve as a notice by Purchaser of Purchaser's acknowledgment that it has waived its right to a return of the Deposit if any of the representations made by Seller as set forth in Section 10.1(d), (e), (f), and (k) of this Agreement prove to be materially false). 6.2 Survey. Purchaser acknowledges that Seller has provided it with a copy of the most recent survey of the Real Property in the possession of Seller, which survey was performed in 1997 (the "Prior Survey"). In the event Purchaser elects to have a new or updated as-built survey (the "Survey") of the Real Property prepared, which shall be at Purchaser's own expense, on or prior to the end of the Inspection Period, Purchaser shall provide a copy of such Survey to Seller. In the event the legal description conforming to the Survey does not match the legal description originally attached to this Agreement as Exhibit "A", Seller agrees to execute and deliver to Purchaser on the Closing Date, a quitclaim deed with a legal description conforming to the Survey (if so requested by Purchaser), in addition to the special warranty deed with the legal description set forth on Exhibit "A". Seller makes no representation or warranty whatsoever with regard to the accuracy or completeness of the Prior Survey and Purchaser acknowledges and agrees that it shall be solely responsible for procuring the Survey and ensuring that this Survey is satisfactory to Purchaser. 6.3 Title Matters. (a) Purchaser shall have until the end of the Inspection Period to examine title to and the Survey of the Real Property and to furnish Seller with a written statement of objections to the title or Survey, if any, other than the Permitted Exceptions, accompanied by copies of Purchaser's title commitment or Survey disclosing such objections to title and all documents listed therein as exceptions to title. Thereafter, Purchaser shall have until the Closing Date in which to reexamine title to the Property and in which to give Seller written notice of any additional encumbrances, other than the Permitted Exceptions and those disclosed by the earlier title examination, disclosed by such reexamination. Should Purchaser fail to notify Seller of any such objections within the aforesaid time periods, Purchaser shall be deemed to have waived all objections to the title to the Property. Seller shall have the right, until the Closing Date, to satisfy or cure all valid objections to title of which it was timely notified by Purchaser, but not the obligation to satisfy or cure such title objections; provided, however, that Seller, upon written notice to Purchaser, may postpone the Closing by thirty (30) days in order that such objections might be cured. Should Seller fail to satisfy or cure all such valid objections by the Closing Date, as postponed, if appropriate, then Purchaser shall have the right, at Purchaser's election, either to terminate this Agreement (without return of the Deposit, except as provided on Exhibit "B"), or to waive those title objections which Seller failed to satisfy or cure and proceed to close the sale of the Property contemplated herein and accept the Property subject to such objections with no reduction in the Purchase Price. For purposes of this Agreement, the term "Permitted Exceptions" shall mean taxes and assessments for the Property not yet due and payable, the exceptions to title shown on Exhibit "T-1", attached hereto, and such additional title exceptions as Purchaser shall approve or waive hereunder. (b) In the event that Purchaser should furnish to Seller such written statement of objections and should Seller fail to convey title to the Real Property subject only to the Permitted Exceptions and should Purchaser not waive all title objections other than the Permitted Exceptions, Purchaser's sole remedy shall be to terminate this Agreement (without return of the Deposit, except as provided on Exhibit "B") in which event this Agreement shall wholly cease and terminate, the parties hereto shall have no further rights or obligations hereunder, except for the Surviving Covenants, and the lien or right, if any, of the Purchaser against or to the Property shall wholly cease. Except as specifically provided herein, Seller shall not be required and is not obligated hereby to bring any action or proceeding or otherwise to incur an expense to render the title to the Property free of any liens and encumbrances, subject to the Permitted Exceptions. The acceptance of a deed to the Real Property by Purchaser shall be deemed to be a full performance of and discharge of every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Agreement, except those pursuant to any articles hereof which are herein specifically stated to survive the Closing. (c) Seller hereby covenants that it shall not voluntarily transfer, sell, assign, encumber, hypothecate or otherwise dispose of any or all of its right, title and interest in and to the Property or any portion thereof granting to any person or entity any rights with respect to the Property or any interest whatsoever therein without the consent of Purchaser, which will not be unreasonably withheld, conditioned or delayed, during the existence of this Agreement. (d) Notwithstanding any other provision of this Section 6 to the contrary, Seller shall satisfy, cure or cause to be released or bonded off of the Property, at Seller's election, (i) all materialmen's and mechanic's liens affecting the Property shown as mechanics or materialmen's liens on Exhibit "T-2", attached hereto (but not liens attaching to the Property which are caused or created by Purchaser either from work ordered by Purchaser or due to Purchaser's disclosure of information to tenants or others during the existence of this Agreement (collectively, the "Purchaser Created Liens"); (ii) the additional items listed on Exhibit "T-2", and (iii) the lien and interest of any other person or any other entity securing a loan to Seller in respect of the Property. Article 7. Loss Due to Casualty or Condemnation 7.1 Loss due to Condemnation. In the event of a condemnation of all or a "Substantial Portion" (as hereinafter defined) of the Real Property which condemnation shall or would render a Substantial Portion of the Real Property untenantable or would result in the Real Property not having sufficient parking to materially comply with applicable law or the specific requirement of any Lease, either party may, upon written notice to the other given within ten (10) days of receipt of notice of such event, cancel this Agreement, in which event this Agreement shall terminate, and neither party shall have any rights or obligations hereunder except for the Surviving Covenants. In the event that Purchaser or Seller does not elect to terminate, or if the condemnation affects less than a Substantial Portion of the Real Property or does not materially affect the parking area, then this Agreement shall remain in full force and effect, and Seller shall assign to Purchaser at Closing all monies received or collected by reason of such condemnation prior to Closing. In such event, the transaction hereby contemplated shall close in accordance with the terms and conditions of this Agreement. For purposes of this Section, the term "Substantial Portion" shall mean five percent (5%) or greater of the Real Property. 7.2 Loss due to Casualty. In the event of "Substantial Loss or Damage" (as hereinafter defined) to the Real Property by fire or other casualty (not resulting from acts or omissions of Purchaser), Purchaser or Seller, upon written notice to the other given within ten (10) days of receipt of notice of such event, may cancel this Agreement in which event this Agreement shall terminate and neither party shall have any rights or obligations hereunder except for the Surviving Covenants. In the event that neither party elects to terminate, or if the casualty results in less than Substantial Loss or Damage, then this Agreement shall remain in full force and effect and Seller shall be entitled to all insurance proceeds received or collected by reason of such damage or loss, whereupon the transaction hereby contemplated shall close in accordance with the terms and conditions of this Agreement except that there will be abatement of the Purchase Price equal to the amount of the gross proceeds of insurance, plus Seller's deductible, provided that such abatement will be reduced by the amount expended by Seller (if any) for restoration of the Property following the casualty, and provided, further, that such abatement will be further reduced by the amount that the gross proceeds include any separate award for costs (including preservation costs) and attorneys' fees, to the extent actually incurred by Seller. For purposes of this Section 7.2, "Substantial Loss or Damage" shall mean loss or damage to the parking and/or any portion of the Building the cost for repair of which exceeds Two Million Dollars ($2,000,000.00) of the value of the Real Property. Article 8. Maintenance of the Property Between the Effective Date of this Agreement and the Closing, Seller shall maintain the Property in good condition and repair, reasonable wear and tear excepted, and shall perform all work required to be done under the terms of any Lease or agreement relating to the Property, in accordance with its customary practices in operation of the Property; except that in the event of a fire or other casualty, damage or loss, Seller shall have no duty or obligation to repair said damage except as otherwise provided in Section 7.2 of this Agreement. Until the Closing Date, Seller shall not intentionally cause or intentionally permit any new liens to attach to the Property except (i) the Purchaser Created Liens, or (ii) the lien for taxes not yet due and payable, or (iii) other liens in the ordinary course of business. In the event of liens attaching to the Property pursuant to clause (iii) immediately above, Seller agrees to satisfy such liens at or prior to Closing, provided they do not constitute Purchaser Created Liens. Seller shall not lease any portion of the Real Property or amend or terminate any existing Lease without first obtaining Purchaser's written approval, which approval shall not be unreasonably denied or delayed. Purchaser shall have three (3) days from the date Seller provides Purchaser with the business terms of a new lease, or modification or termination of any existing Lease, together with any information reasonably requested by Purchaser regarding such matter, to approve such lease, modification or termination. If Purchaser fails to respond within said time period, Purchaser shall be deemed to have approved such lease, modification or termination, as applicable. Article 9. No Brokers Seller and Purchaser each represent and warrant to the other that neither has employed, retained or consulted any broker, agent, or finder in carrying on the negotiations in connection with this Agreement or the purchase and sale referred to herein, and Seller and Purchaser shall each indemnify and hold the other harmless from and against any and all claims, demands, causes of action, debts, liabilities, judgments and damages (including costs and reasonable attorneys' fees incurred in connection with the enforcement of this indemnity) which may be asserted or recovered against the indemnified party on account of any brokerage fee, commission or other compensation arising by reason of the indemnitor's breach of this representation and warranty. This Section 9 shall survive the Closing or any termination of this Agreement. Article 10. Representations and Warranties 10.1 Representations and Warranties of Seller. Seller represents and warrants to Purchaser that the following matters are true and correct as of the Effective Date hereof. None of the representations and warranties shall survive the Closing. (a) The Seller is not a party to, subject to or bound by any agreement, contract, permit or other restriction of any nature, or any judgment, order, statute, rule or regulation of any court, governmental body, administrative agency or arbitrator, or any legal proceeding which would prevent or be violated by, or under which there would be a default, or which would result in creation of or claim of any lien, charge or encumbrance upon any of the Property as a result of any of the items set forth below (excepting therefrom any claims covered by Seller's general liability insurance): (i) the execution, delivery and performance of this Agreement; or (ii) the transfer and assignment to Purchaser, in accordance with this Agreement, of the Property. (b) Seller is a North Carolina limited partnership, organized, existing, and in good standing under the laws of the State of North Carolina, and has all power and authority to conduct the business of the Property and to enter into and perform its obligations hereunder under the laws of the State of North Carolina. (c) The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby have been duly authorized by all necessary parties and no other proceedings on the part of Seller are necessary in order to permit them to consummate the transaction contemplated hereby. This Agreement has been duly executed and delivered by Seller. (d) The rent roll attached hereto as Exhibit "D" (the "Rent Roll") is true, correct and complete in all material respects. At the Closing, Seller shall deliver to Purchaser an updated Rent Roll which will be true, correct and complete as of the Closing. (e) The Land is currently zoned under the classification "Regional Business" pursuant to the applicable zoning ordinance for the City of Asheville. The zoning for the Land permits the current use of the Land as a shopping center. (f) To the best of Seller's knowledge, and except as may be set forth in that certain Phase I Environmental Site Assessment - Asheville Mall Property - S&ME Project Number 14-14-97-100 prepared for R.L. Coleman & Company, dated August 13, 1997, a copy of which will be provided to Purchaser, the Property has not been used by Seller as a land fill or as a dump for the disposal of garbage, refuse, hazardous substances or toxic wastes, nor are any storage tanks located on the Property, and Seller has not received any notice of, and has no knowledge, information or belief of, the use of the Land for the disposal of garbage, refuse, hazardous substances or toxic wastes. (g) To the best of Seller's knowledge, there is no permanent condemnation proceeding pending with regard to all or any part of the Property and Seller has received no notice of such proceeding commenced or threatened by any governmental authority. (h) Seller has not received notice of, nor does Seller have knowledge of any litigation or any administrative, regulatory, or judicial proceeding, pending against Seller or the Property, except as set forth on Exhibit "E", which will be provided by Seller to Purchaser promptly following the Effective Date hereof. (i) Seller is not a "foreign person" as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act, as amended. (j) Seller is not currently subject to any bankruptcy, reorganization, insolvency or similar proceedings. (k) In addition, Seller represents and warrants to Purchaser that as of the Effective Date of this Agreement, Seller has fee simple title to the Land subject only to those matters shown on Exhibits "T-1" and "T-2", attached hereto. Purchaser acknowledges that it has the skills, knowledge and expertise to perform its own investigation of all aspects of the Property, that it has been provided with the time to do so, that it has conducted its own independent investigation to the fullest extent desired and that, other than Seller's representation and warranties set forth herein or made pursuant hereto, it is relying solely on its own investigation and analysis of the Property in entering into this Agreement and closing the transaction contemplated hereby. Purchaser acknowledges that its due diligence shall include, without limitation, "Phase I" environmental assessments of the Property performed by independent environmental consultants, electrical, mechanical, roof and parking lot inspections, and all such other inspection as Purchaser shall deem appropriate (all of which shall be conducted in a manner so as not to interfere with the business conducted upon the Land and the Improvements). 10.2 Representations and Warranties of Purchaser. (a) The Purchaser is not a party to, subject to or bound by any agreement, contract, permit or other restriction of any nature, or any judgment, order, statute, rule or regulation of any court, governmental body, administrative agency or arbitrator, or any legal proceeding which would prevent or be violated by, or under which there would be a default as a result of any of the items set forth below: (i) the execution, delivery and performance of this Agreement; or (ii) the transfer and assignment to Purchaser, in accordance with this Agreement, of the Property. (b) Purchaser is a corporation, duly organized and validly existing, and in good standing under the laws of the State of Wyoming, and has all power and authority to enter into and perform its obligations hereunder under the laws of the State of Wyoming and North Carolina, and has been qualified to do business in the State of North Carolina. (c) the execution and delivery of this Agreement and the consummation of the transaction contemplated hereby have been duly authorized by all necessary parties and no other proceedings on the part of Purchaser are necessary in order to permit it to consummate the transaction contemplated hereby. This Agreement has been duly executed and delivered by Purchaser. Article 11. Indemnification 11.1 Purchaser's Indemnification. Purchaser on behalf of itself, its successors and assigns does hereby agree to indemnify and hold Seller, its successors and assigns, and any independent property manager which Seller has hired to manage the Property, harmless from and against all costs, charges and expenses arising from Purchaser's entry on the Property prior to Closing in conducting due diligence or relating to the ownership, management and operation of the Property from and after the Closing Date, including costs (i) for any labor performed on, or materials furnished to the Real Property subsequent to the Closing Date, (ii) for any leasing commissions disclosed to Purchaser on the Rent Roll and due for renewals of extensions of existing Leases subsequent to the Closing Date, (iii) for compliance with any laws, requirements or regulations of, or taxes, assessments, or other charges due to any governmental authority, but only to the extent that any such liability is attributable exclusively to Purchaser's period of ownership of the Property, or (iv) for any other charges or expenses whatsoever pertaining to the Property or to the ownership, title, possession, use or occupancy of the Property, but only to the extent any such liability is attributable to Purchaser's period of ownership of the Property. 11.2 Third Parties. Except as specifically limited herein, nothing contained in this Section is in any way intended to limit the rights of Seller or Purchaser to pursue any remedies as may exist at law or in equity against any unrelated third parties with respect to any liabilities covered by this Section 11. The provisions of this Section 11 shall survive the Closing or earlier termination of this Agreement. Article 12. Assignment Purchaser shall not assign this Agreement without the prior written consent of Seller, in Seller's sole discretion. Article 13. Notices All notices hereunder or required by law shall be sent via United States Mail, postage prepaid, certified mail, return receipt requested, or via any nationally recognized commercial overnight carrier with provisions for receipt, addressed to the parties hereto at their respective addresses set forth below or as they have theretofore specified by written notice delivered in accordance herewith: PURCHASER: Development Options, Inc. c/o CBL & Associates Properties, Inc. One Park Place 6148 Lee Highway Chattanooga, Tennessee 37421-2931 Attn: Mr. John Foy with a copy to: Mary Ann Okrasinski, Esq. CBL & Associates Properties, Inc. One Park Place 6148 Lee Highway Chattanooga, Tennessee 37421-2931 SELLER: R.B.R.&S.T. Limited Partnership c/o Richard L. Coleman, Jr. 39 Hilltop Road Asheville, North Carolina 28803 with a copy to: Nelson Mullins Riley & Scarborough, L.L.P. First Union Plaza, Suite 1400 999 Peachtree Street, N.E. Atlanta, Georgia 30309 Attn: Wade H. Stribling, Esq. ESCROW AGENT: Nelson Mullins Riley & Scarborough, L.L.P. First Union Plaza, Suite 1400 999 Peachtree Street, N.E. Atlanta, Georgia 30309 Attn: Wade H. Stribling, Esq. Delivery will be deemed complete upon confirmed receipt or refusal to accept delivery. Article 14. Expenses of Closing Seller shall pay its own attorney's fees, brokerage commissions payable in respect of the Leases, if any, which are due and payable prior to the Closing Date and were not disclosed on the Rent Roll, and the other items and costs specifically provided for hereunder to be the responsibility of Seller. Purchaser shall pay its due diligence expenses, including, but not limited to, the cost of any environmental or engineering studies, surveys, and title reports, it's own attorney's fees, and the title insurance premium for the policy of title insurance for Purchaser and any lender of Purchaser. The parties shall split equally the real estate transfer tax, any recording fees, and other similar documentary fees and charges incurred in connection with the transfer of the Property, except for any fees charged in connection with Purchaser's financing for the Property including intangibles tax or loan fees which shall be paid solely by Purchaser. Article 15. Miscellaneous 15.1 Successors and Assigns. All the terms and conditions of this Agreement are hereby made binding upon the executors, heirs, administrators, successors and permitted assigns of the parties hereto. 15.2 Gender. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. 15.3 Captions. The captions in this Agreement are inserted only for the purpose of convenient reference and in no way define, limit or prescribe the scope or intent of this Agreement or any part hereof. 15.4 Construction. No provision of this Agreement shall be construed by any Court or other judicial authority against any party hereto by reason of such party's being deemed to have drafted or structured such provisions. 15.5 Entire Agreement. This Agreement constitutes the entire contract between the parties hereto and there are no other oral or written promises, conditions, representations, understandings or terms of any kind as conditions or inducements to the execution hereof and none have been relied upon by either party. 15.6 Recording. The parties agree that this Agreement shall not be recorded. If Purchaser causes this Agreement or any notice or memorandum thereof to be recorded, this Agreement shall be null and void at the option of the Seller. 15.7 No Continuance. Purchaser acknowledges that there shall be no assignment, transfer or continuance of any of Seller's insurance coverage. 15.8 Time of Essence. Time is of the essence of this Agreement. If the date for performance of any action under this Agreement shall fall on a Saturday, Sunday or legal holiday, such action shall, and may, be performed on the next succeeding business day which is not a Saturday, Sunday or legal holiday. 15.9 Counterparts. This Agreement may be executed by both parties in counterparts in which event each shall be deemed an original and all of which together shall be deemed one and the same agreement. 15.10 Governing Law. This Agreement shall be construed, and the rights and obligations of Seller and Purchaser hereunder, shall be determined in accordance with the laws of the State of North Carolina. 15.11 Confidentiality. Purchaser and Seller agree that neither shall make any public announcement or issue any press release or similar statement with regard to the existence of this Agreement or any of the terms hereof, without the written consent of the other party, in its sole discretion (except as may be required by law, court order or stock exchange rules). 15.12 Surviving Covenants. Only the provisions specifically stated herein to survive the Closing or earlier termination of this Agreement, as the case may be (collectively, the "Surviving Covenants") shall survive the Closing or any termination of this Agreement. All others shall merge with the execution and delivery of the deed at Closing. 15.13 Further Assurances. The parties hereto hereby expressly agree to perform such additional acts and deliver such additional documents as shall be reasonably required by the other party, or its counsel, to consummate the transaction herein contemplated. 15.14 Severability. If any term, covenant, or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term, covenant, or condition to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforced to the fullest extent permitted by law. 15.15 Attorneys' Fees. In the event a party hereto shall be required to file suit to enforce its rights hereunder, the prevailing party in such action shall be entitled to recovery of its reasonable attorneys' fees and costs, as may be awarded by the court. 15.16 Effective Date. The Effective Date of this Agreement shall be the later of the dates on which this Agreement is executed by Purchaser and Seller. [Remainder of this page intentionally left blank] IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement under seal as of the dates set forth below. EXECUTED BY PURCHASER this 12th day of November, 1997. PURCHASER: DEVELOPMENT OPTIONS, INC., a Wyoming corporation John N. Foy ------------------------------ By: John N. Foy ------------------------------ Title: Executive Vice President [SEAL] EXECUTED BY SELLER this 12th day of November, 1997. SELLER: R.B.R.&S.T. LIMITED PARTNERSHIP, a North Carolina limited Partnership By: Asheville Mall, Inc., a North Carolina corporation, its general partner Richard L. Coleman Jr. ---------------------------------- By: Richard L. Coleman Jr. ---------------------------------- Title: President [SEAL] Receipt of an original counterpart of this Agreement executed by Seller and Purchaser is acknowledged this 12th day of November, 1997. Escrow Agent: Nelson Mullins Riley & Scarborough, LLP Wade Stribling ------------------------------ By: Wade Stribling ------------------------------ Title: Partner EXHIBIT "B" DEPOSIT PROVISIONS Purchaser and Seller acknowledge that Purchaser is requiring a substantial quantity of documentation, the production of which, is claimed to be necessary to facilitate the Closing. In consideration thereof, and in consideration of Seller holding the Property off the market during the term of this Agreement, Purchaser shall pay to Escrow Agent simultaneously with the execution of this Agreement the lump sum of $300,000.00, the Deposit, to offset the cost to Seller in connection with the production and reproduction of the documented items listed but not limited to those set forth herein and including the cost of counsel. Escrow Agent shall place the Deposit in an interest bearing account with a financial institution having an office in Atlanta, Georgia. The interest earned on the Deposit shall become a part of the Deposit and disbursed in the same manner as the Deposit. Notwithstanding anything to the contrary contained in this Agreement, the Deposit shall only be refundable to Purchaser if: (i) any of the representations made by Seller as set forth in Section 10.1(d), (e), (f), and (k) of this Agreement prove to be materially false (subject to Purchaser's waiver of this right as set forth in Section 6.1), or (ii) Seller shall breach this Agreement by (1) failing to consummate the sale of the Property to Purchaser, (2) failing to materially comply with the provisions of Section 8 of this Agreement, (3) failing to cure those title matters which Seller has agreed, in writing, on and after the Effective Date hereof, to cure, or (4) failing to materially comply with the provisions of Section 6.3(d) of this Agreement. In any event, if Purchaser purchases the Property, Purchaser shall receive a credit against the Purchase Price in the amount of the Deposit. In performing its duties hereunder, Escrow Agent shall not incur any liability for any damages, losses or expenses, except for its gross negligence or willful misconduct, and it shall accordingly not incur any such liability with respect (a) to any action taken or omitted in good faith upon advice of its counsel or (b) to any action taken or omitted in reliance upon any instrument, including any written notice or instruction provided for in this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, that Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by a proper person, and to conform to the provisions of this Agreement. The parties hereto (other than Escrow Agent) agree to indemnify and hold harmless Escrow Agent against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation, legal fees and disbursements, that may be imposed upon Escrow Agent or incurred by Escrow Agent in connection with its acceptance or performance of its duties hereunder, including, without limitation, any litigation arising out of this Agreement or involving the subject matter hereof. If any dispute shall arise among the parties sufficient in the sole discretion of Escrow Agent to justify its doing so, Escrow Agent shall be entitled to tender into the registry or custody of the Clerk of the Superior Court of Buncombe County, North Carolina, or the Clerk for the United States District Court for the corresponding district, any or all money, property or documents in its hands relating to this Agreement, together with such legal pleadings and documents as it shall deem appropriate, and thereupon be discharged from all further duties and liabilities under this Agreement. The parties hereto (other than Escrow Agent) shall bear all costs and expenses of any such legal proceedings. Liability for the indemnities made in this Exhibit shall survive the execution and delivery of this Agreement, the termination of this Agreement prior to Closing (if applicable), and the Closing. EXHIBIT "E" LIST OF PENDING LITIGATION EXHIBT "T-1" PERMITTED ENCUMBRANCES EXHIBIT "T-2" Mechanic's and Materialmen's Liens: Additional Matters: EX-2.2 3 PROMISSORY NOTE PROMISSORY NOTE $48,900,000.00 December 31, 1997 FOR VALUE RECEIVED, the undersigned, ASHEVILLE, LLC, a North Carolina limited liability company (hereinafter called "Maker"), promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, (hereinafter, together with all subsequent holders of this Note, called "Payee") on or before the 28th day of February, 1998 (the "Maturity Date"), as hereinafter provided, the principal sum of FORTY-EIGHT MILLION NINE HUNDRED THOUSAND AND No/100 DOLLARS ($48,900,000.00), or so much thereof as may actually be advanced from time to time, together with interest on the unpaid principal balance from time to time outstanding at the rate per annum equal to the "Base Rate" of interest as it fluctuates; provided, however, subject to the limitations stated herein, the Maker may elect in accordance with the procedures set forth below to have interest accrue and be paid on all or a portion of the outstanding principal balance hereof at a rate per annum equal to the "Fixed Increment Rate" (as defined below). Defined Terms: "Base Rate:" An interest rate per annum, fluctuating daily, equal to the rate announced by Payee from time to time at its principal office in San Francisco, California as its prime rate in effect on such day. Neither the Base Rate nor the prime rate of Payee is necessarily intended to be the lowest. rate of interest charged by Payee in connection with extensions of credit. Each change in the prime rate shall result in a corresponding change in the Base Rate and such change shall be effective on the effective date of such change in the prime rate. "Fixed Increment Rate:" The "Fixed LIBO Rate" (as defined below), plus nine-tenths of one percent (.90%) (i.e. 90 basis points) per annum. "Fixed LIBO Rate:" With respect to any "Fixed Period" (as defined below), the rate per annum which is equal to the quotient of the average rate per annum (determined solely by Payee and rounded upwards, if necessary, to the next higher 1/16 of 1%) at which deposits in United States Dollars are offered to Payee by brokers in the London interbank market as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Fixed Period, in an amount equal to the "Fixed Increment" (as defined below) so requested and for a period equal to -such Fixed Period. Each determination of the Fixed LIBO Rate by Payee shall, in absence of manifest error, be conclusive and binding. 1 "Reserve Requirement The daily average during the Fixed Period of the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other schedule changes in reserve requirements during the Fixed Period) which is imposed under "Regulation D" (as defined below) against "Eurocurrency liabilities" as defined in Regulation D. Each determination by Payee of the Reserve Requirement shall, in the absence of manifest error, be conclusive and binding. "Regulation D:" Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect arid shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System. "Loan" The loan advanced under this Note and evidenced hereby and by the other Security Documents. "Event of Default:" Any default hereunder or tender the other Security Documents. "Guaranty:" That certain Guaranty of or about even date herewith from CBL & Associates Limited Partnership in favor of payee. "Security Documents As that term is defined in the Guaranty. "Fixed Increment:" The portion of the outstanding principal balance hereof specified by Maker to Payee effective as of the applicable "Fixed Period Commencement Date" (as defined below); provided, however, in no event shall any such Fixed Increment be less than One Million and No/100 Dollars ($1,000,000.00). "Fixed Period A period as designated by Maker which is thirty (30) or sixty (60) days, commencing on the Fixed Period Commencement Date. Notwithstanding the foregoing, in no event shall any Fixed Period extend beyond the Maturity Date. "Fixed Period Commencement Date: The proposed commencement of the applicable Fixed Period. ,,Business Day:" (a) With respect to any advance, payment or rate determination for a Fixed Increment, a day, other than a Saturday or Sunday, on which Payee is open for business, in San Francisco and on which dealings in United States Dollars are carried on in the London interbank market; and (b) for all other purposes, any day of the week (but not a Saturday, Sunday or holiday) on which the offices of Payee are open to the public for carrying on substantially all of Payee's business functions. Unless specifically referenced in this Note as a Business Day, all references to "days" shall be to calendar days. 2 Selection of Fixed Increment Rate If the Maker elects to have the Fixed Increment Rate apply, it shall advise the Payee in writing of its election and the Fixed Period and Fixed Increment for which the Maker desires said rate to apply not later than 1 1:00 a.m., Pacific Standard Time or Pacific Daylight Time (as applicable), three (3) Business Days prior to the Fixed Period Commencement Date. Any such election may be made only (I) once during any thirty (30) day period and (ii) while no Event of Default is in existence and no event has occurred which with notice and/or lapse of time would constitute an Event of Default. After Maker has designated a Fixed Increment to which the Fixed Increment Rate shall apply, such rate shall apply to the Fixed Increment for the duration of the Fixed Period. At any one time during the term hereof, no more than three (3) Fixed Increments may be outstanding. If the Maker elects the Fixed Increment Rate, but the applicable Fixed Period will commence on a date which is not a Business Day, such Fixed Period shall be deemed to commence on the next Business Day after it would otherwise commence, and any interest which accrues hereunder in the interim shall accrue at the Base Rate. Notwithstanding anything contained herein to the contrary, if the Maker elects the Fixed Increment Rate to apply but the Payee is unable for any reason to obtain funds from Payee in the amount of the Fixed Increment elected for the Fixed Period elected, interest on such Fixed Increment shall accrue at the Base Rate unless and until a new election of the Fixed Increment Rate is made by Maker and the Payee is then able to obtain such funds. In the absence of an effective election by Maker of the Fixed Increment Rate in accordance with the above procedures prior to the expiration of the then current Fixed Period with respect to any Fixed Increment, Payee shall be deemed to have elected that such Fixed Increment thereafter bear interest at the Fixed Increment Rate for a fixed period of thirty (30) days. Special Provisions Applicable to LIBO Rate Provisions. Notwithstanding any other provisions hereof- A. Change in Law: If, after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Payee with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful o*@ impossible for Payee to make, maintain or fund advances at the Fixed Increment Rate, Payee shall forthwith give notice thereof to Maker. Before giving any noticed Payee shall designate a different LIBO lending office if such designation will avoid the need for giving such notice and will not be otherwise disadvantageous to Payee (as determined in good faith by Payee). Upon receipt of such notice, Maker shall either (I) repay in full the then outstanding principal amount of any Fixed Increment, together with accrued interest thereon, or (ii) convert such Fixed Increments to the Base Rate, either (a) on the last day of the then current Fixed Period applicable to such fixed increment if Payee may lawfully continue to maintain and fund advances at the fixed increment rate to such day or (b) immediately if payee may not lawfully continue to fund and maintain advances at the 3 Fixed Increment Rate to such day. B. Increased Costs. If, after the date hereof, any governmental authority, central bank or other comparable authority, shall at any time impose, modify or deem applicable any reserve (including, without limitation, the Reserve Requirement and any other reserve imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Payee, or shall impose on Payee (or its eurodollar lending office) or the interbank eurodollar market any other condition affecting Fixed Increments, this Note, or Payee's obligation to pen-nit Maker to elect to have the Fixed Increment Rate apply to a Fixed Increment; and the result of any of the foregoing is to increase the cost to Payee of making or maintaining advances at the Fixed Increment Rate, or to reduce the amount of any sum received or receivable by Payee hereunder, by an amount deemed by Payee to be material, then, within five (5) days after demand by Payee, Maker shall pay to Payee, such additional amount or amounts as will compensate Payee for such increased cost or reduction. Payee will use good faith and reasonable efforts to designate a different LIBO lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of Payee, be disadvantageous to Payee. A certificate of Payee claiming compensation under this Paragraph B and setting forth in reasonable detail the calculation of the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. If Payee demands compensation under this Paragraph B, then Maker may at any time, upon at least five (5) Business Days' prior notice to Payee either (I) repay in full all then outstanding Fixed Increments, together with accrued interest thereon on the date of prepayment or (ii) convert such Fixed Increments to the Base Rate; provided, however, that Maker shall be liable for any."Consequential Loss" (as defined below) arising pursuant to such actions, unless the requirement or condition giving rise to the incurred costs is not generally applicable to lenders similar to Payee, but rather is applicable solely to Payee. C. Payments Not At End of Interest Period. If Maker makes any payment of principal with respect to any Fixed Increment on any day other than the last day of a Fixed Period applicable to such Fixed Increment (other than any such payment required by Paragraph A(ii)(b) above), then Maker shall reimburse Payee on demand the Consequential Loss incurred by Payee as a result of the timing of such payment. A certificate of Payee setting forth in reasonable detail the basis for the determination of the amount of Consequential Loss shall be delivered to Maker by Payee and shall, in the absence of manifest error, be conclusive and binding. Any conversion of a Fixed Increment to the Base Rate on any day other than the last day of the Fixed Period for such Fixed Increment shall be deemed a payment for purposes of this Paragraph C. D. Effect on Fixed Increments. If notice has been given pursuant to Paragraph A above requiring a Fixed Increment to be repaid or converted, then unless and until Payee notifies Maker that the circumstances giving rise to such repayment or conversion no longer apply, Maker shall not have the right to elect to have the Fixed Increment Rate apply. If Payee notifies Maker that the circumstances giving rise to such repayment or conversion no longer apply, Maker may thereafter elect to have the Fixed Increment Rate apply in accordance with the terms of this Note. 4 E. Notice. Payee shall notify Maker of any event occurring after the date hereof entitling Payee to compensation under Paragraph B above within 45 days after Payee obtains actual knowledge thereof, provided that if Payee fails to give such notice to Maker within 45 days after it obtains actual knowledge of such an event, Payee shall, with respect to compensation payable pursuant to such Paragraph B in respect of any costs resulting from such event, only be entitled to payment under Paragraph B for costs incurred from and after the date 45 days prior to the date that Payee gives such notice. F. Consequential Loss. The term "Consequential Loss" shall mean any loss, cost or expense incurred by Payee as a result of the payment or conversion of any Fixed Increment on a day other than the last day of the Fixed Period applicable thereto or in the redepositing, redeploying or reinvesting the principal amount so paid or affected by the timing of such conversion including the sum of (I) the interest which, but for the payment or conversion Payee would have earned in respect of such principal amount, reduced, if Payee is able to redeposits redeploy, or reinvest such principal amount by the interest earned by Payee as a result of so redepositing, redeploying or reinvesting such principal amount, plus (ii) any expense or penalty incurred by payee on redepositing, redeploying or reinvesting such principal amount. General Provisions: Interest based on a 360-day year will be accrued on the number of days funds are actually outstanding. Interest shall be calculated on a daily basis and shall be payable monthly on the first day of each and every month following the date hereof until the Maturity Date, at which time all accrued and unpaid interest and the unpaid principal balance hereof shall be due and payable in full. All payments on this Note shall, at the option of Payee, be applied first to the payment of accrued but unpaid interest, and any remainder shall be applied to reduction of the principal balance hereof. All payments hereunder shall be made to Payee at c/o Wells Fargo Bank, National Association, 212,0 East Park Place, Suite 100, El Segundo, California 90245, or at such other address as Payee may from time to time designate in writing to Maker. Except as otherwise specifically provided in the Security Documents, Maker and any endorsers or guarantors hereof jointly and severally waive presentment and demand for payment, notice of intent to accelerate maturity, notice of acceleration of maturity, protest or notice of protest and nonpayment, bringing of suit and diligence in taking any action to collect any sums owing hereunder or in proceeding against any of the rights and properties securing payment 5 hereof. Maker and any endorsers or guarantors hereof agree that the time for any payments hereunder may be extended from time to time without notice and consent to the acceptance of further security or the release of any existing security for this Note, all without in any manner affecting their liability under or with respect to this Note. No extension of time for the payment of this Note or any installment hereof shall affect the liability of Maker under. this Note even though Maker is not a party to such agreement. If a default is made in the payment, in whole or in part, of any sum provided for herein when due and such default is not cured within fifteen (15) days after written notice thereof from Payee to Maker, or if an Event of Default shall occur under the any of the Security Documents, then Payee may, at its option, without further notice or demand, except as otherwise specifically provided in the Security Documents, declare the unpaid principal balance and accrued interest on this Note at once due and payable, foreclose all deeds of trust, mortgages and liens securing payment hereof, pursue any and all other rights, remedies, and recourses available to Payee, or pursue any combination of the foregoing, all remedies hereunder and under the Security Documents being cumulative. Failure to exercise any of the foregoing options shall not constitute a waiver of the right to exercise the same or any other option at any subsequent time in respect to any other event. The acceptance by Payee of any payment hereunder that is less than payment in full of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing options at that time or at any subsequent time or nullify any prior exercise of any such option without the express written consent of Payee. If any payment required under this Note is not paid within fifteen (15) days after written notice has been given to Maker that the same has become due and payable, Payee may require a late charge for late payment to compensate for the Payee's loss of use of funds and for the expenses of handling the delinquent payment, in an amount not to exceed four percent (4%) of such delinquent payment. Said late charge shall be paid in any event not later than the due date of the next subsequent installment of principal and/or interest. In the event the maturity of the indebtedness hereunder is accelerated by Payee, this paragraph shall apply only to payments overdue prior to the time of such acceleration. This paragraph shall not be deemed to be a waiver of Payee's right to accelerate payment of this Note under the terms hereof. Maker shall have the right prior to. the Maturity Date, upon ten (10) days' prior written notice, to prepay all or any portion (except any portion constituting a Fixed Increment during its applicable Fixed Period) of the principal balance owing hereunder from time to time without the payment of any premium or penalty; provided, however, that (a) if such prepayment is only a partial payment of the then outstanding principal balance hereof, such prepayment shall be 6 accompanied by the payment of all accrued but unpaid interest on the portion of the outstanding principal balance of the Note being so paid through the date the prepayment is made, and (b) for same day credit all monies shall be received at Payee's office at c/o Wells Fargo Bank, National Association, 2120 East Park Place, Suite 100, El Segundo, California 90245 on or before 1 1:00 a.m., Pacific Standard Time or Pacific Daylight Time (as applicable). All monies received after this time shall be deemed received on the following Business Day and shall continue to accrue interest at the Base Rate to the date funds are deemed received. Maker shall have the right to prepay any Fixed Increment during its applicable Fixed Period only upon payment to Payee at the time of such prepayment, of an amount (the "Fixed Increment Liquidation Amount") equal to the excess of (I) the interest that would have been payable by Maker for such Fixed Increment for the remainder of the applicable Fixed Period at the applicable Fixed Increment Rate had such prepayment not been made by Maker, over (ii) the interest to be earned on sums equal to the amount of such Fixed Increment for the remainder of the applicable Fixed Period as invested by Payee in an interest bearing obligation of Payee's selection, in its sole and absolute discretion. In addition, in any such event, the provisions of the immediately, preceding paragraph hereto (relating to the obligation of Maker to pay to Payee certain amounts in the event of the prepayment of a Fixed Increment prior to the last day of the applicable Fixed Period) shall apply with respect to any Fixed Increment prepaid by Maker prior to the last day of the applicable Fixed Period as a result of the acceleration by Payee of the outstanding principal balance hereof. Upon the occurrence of an Event of Default, at the option of the Payee, all amounts payable hereunder or under the Security Documents shall bear interest for the period beginning with the date of occurrence -of such Event Of Default at a rate of interest per annum (the "Default Rate"), payable on the first day of each and every month, equal to three percent (3%) above the Base Rate, as it fluctuates, or three percent (3%) above the Fixed Increment Rate, whichever is applicable. Notwithstanding any other provision of this Note to the contrary, from and after the Maturity Date of this Note, or such earlier date as the unpaid principal owing on this Note becomes due and payable upon acceleration or otherwise pursuant to the terms hereof, the whole of the unpaid principal and, to the fullest extent permitted by law, interest owing on this Note, shall thereafter bear interest until paid in full at the Default Rate. All amounts payable hereunder are payable in lawful money of the United States of America. Maker agrees to pay all costs of collection hereof when incurred, including reasonable attorneys' fees, whether or not any legal action shall be instituted to enforce this Note. 7 This Note is given for business purposes and none of the proceeds of the Loan or this Note will be used for personal, family or household purposes. If this Note is executed by more than one party, each such party shall be jointly and severally liable for the obligations of Maker under this Note. If the Maker is a partnership, each general partner of Maker shall be jointly and severally liable hereunder, and each such general partner hereby waives any requirement of law that, upon an occurrence of an Event of Default hereunder or under the Security Documents, Payee exhaust any assets of Maker before proceeding against such general partner's assets. MAKER AGREES THAT TIME IS OF THE ESSENCE IN THE PERFORMANCE OF ALL OBLIGATIONS HEREUNDER. This Note shall be governed by and construed according to the laws of the State of Georgia. It is expressly stipulated and agreed to be the intent of Maker and Payee at all times to comply with the applicable law now or hereafter governing the interest payable on this Note or the Loan (or applicable United States federal law to the extent that it permits the Payee to contract for, charge, take, reserve, or receive a greater amount of interest than under Georgia law). If the applicable law is ever revised, repealed, or judicially interpreted so as to render usurious any amount called for under this Note, or under any of the Security Documents, or contracted for, charged, taken, reserved or received- with respect to the Loan, or if Payee's exercise of the option herein contained to accelerate the maturity of this Note, or if any prepayment by Maker results in Maker's having paid any interestt in excess of that permitted by applicable law, then it is Maker's and Payee's express intent that all excess amounts theretofore collected by Payee be credited on the principal balance of this Note (or, if the Note has been paid in full, refunded to Maker), and the provisions of this Note and the Security Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. All sums paid or agreed to be paid to Payee for the use, forbearance or detention of the indebtedness evidenced hereby and by the other Security Documents shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from time to time in effect and applicable to the Loan for so long as debt is outstanding under the Loan. The term "Maker" as used in this Note shall mean and have reference to, collectively, all parties and each of them directly or indirectly obligated for the indebtedness evidenced by this Note, whether as principal maker, endorser, guarantor, or otherwise, together with the respective heirs, administrators, executors, legal representatives, successors and assigns of each of the foregoing. 8 All notices hereunder shall be given at the following addresses: If to Maker, c/o CBL & Associates Limited Partnership, One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421, Attention: President. If to Payee, Suite 1805, 2859 Paces Ferry Road, Atlanta, Georgia 30339, with a copy of all notices to Chief Credit Officer - Real Estate Group, Wells Fargo Bank, National Association, 420 Montgomery Street, 6th Floor, San Francisco, California 94163. Either party may change their address for notice purposes upon giving thirty (30) days' prior notice thereof to the other party in accordance with this paragraph. All notices given hereunder shall be in writing and shall be considered properly given if mailed by first-class United States mail, postage prepaid, registered or certified with return receipt requested, if sent by national overnight courier providing documentation of receipt, if delivered in person, or if sent by prepaid telegram, telex or telecopy, with a copy of any communication so sent by telegram, telex or telecopy being sent by mail, overnight courier or personal delivery as aforesaid. Any notice mailed as above provided shall be effective three (3) business days after its deposit in the custody of the United States Postal Service; all other notices shall be effective upon receipt. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. IN WITNESS WHEREOF, this Note has been duly executed under seal in Chattanooga, Tennessee on the date first above written. "MAKER" ASHEVILLE, LLC, a North Carolina limited liability company (SEAL) By: CBL & Associates Limited Partnership, a Delaware limited partnership, its sole member By: CBL Holdings I, Inc., a Delaware corporation, its sole general partner By: /c/ John N. Foy -------------------------------------- By: John N. Foy --------------------------------------- Its: Executive Vice President 9 Attest /c/ Jeffery V. Curry -------------------------------------------- Attest Jeffery V. Curry ------------------------------------------- Its: Assistant Secretary (CORPORATE SEAL) This signature page is attached to and is a part of that certain Promissory Note in the original principal amount of Forty-Eight Million Nine Hundred Thousand and No/100 Dollars ($48,900,000.00), from Asheville, LLC, as "Maker," to Wells Fargo Bank, National Association, as "Payee." 10 EX-2.3 4 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report on the statement of the excess of revenues over specific operating expenses of Asheville Mall for the year ended December 31, 1996 included in this Form 8-k, into the Company's previously filed S-3 Registration Statement File No. 33-92218. Arthur Andersen, LLP Chattanooga, Tennessee February 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----