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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
COMMISSION FILE NUMBER 000-23733
---------
CAPITAL AUTOMOTIVE REIT
(Exact name of registrant as specified in its charter)
Maryland 54-1870224
(State of organization) (I.R.S. Employer Identification Number)
1420 Spring Hill Road, Suite 525, McLean, Virginia 22102
(Address of principal executive offices and zip code)
(703) 288-3075
(Registrant's telephone Number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Number of common shares of beneficial interest outstanding as of April 30, 2000
was 20,711,863.
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CAPITAL AUTOMOTIVE REIT
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets - March 31, 2000 (unaudited) and
December 31, 1999. 3
Consolidated Statements of Operations (unaudited) - three months
ended March 31, 2000 and March 31, 1999. 4
Consolidated Statements of Cash Flows (unaudited) - three months
ended March 31, 2000 and March 31, 1999. 5
Notes to Consolidated Financial Statements (unaudited) 6 - 11
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 12 - 18
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 18
Part II - Other Information
Item 1 - Legal Proceedings 19
Item 2 - Changes in Securities 19
Item 3 - Defaults Upon Senior Securities 19
Item 4 - Submission of Matters to Vote to Security Holders 19
Item 5 - Other Information 19
Item 6 - Exhibits and Reports on Form 8-K 19 - 20
Signatures 21
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
CAPITAL AUTOMOTIVE REIT
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land $ 425,018 $ 423,757
Buildings and improvements 519,227 511,768
Accumulated depreciation (25,390) (21,202)
--------------- ---------------
918,855 914,323
Cash and cash equivalents 4,619 11,886
Other assets, net 15,656 16,350
--------------- ---------------
TOTAL ASSETS $ 939,130 $ 942,559
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage loans $ 515,818 $ 501,510
Accounts payable and accrued expenses 4,834 21,298
Security deposits payable 4,346 4,768
--------------- ---------------
TOTAL LIABILITIES 524,998 527,576
--------------- ---------------
Minority Interest 118,718 115,384
SHAREHOLDERS' EQUITY
Preferred shares, $.01 par value; 20,000,000
shares authorized; none outstanding - -
Common shares, $.01 par value; authorized shares, 100,000,000;
issued shares, 24,792,115; and outstanding shares, 20,707,415 at
March 31, 2000 and 21,607,415 at December 31, 1999 248 248
Additional paid-in-capital 344,266 344,981
Accumulated deficit (5,766) (12,159)
Less treasury shares at cost, 4,084,700 at March 31, 2000 and
3,184,700 at December 31, 1999 (43,334) (33,471)
--------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 295,414 299,599
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 939,130 $ 942,559
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
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CAPITAL AUTOMOTIVE REIT
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Revenue:
Rental $ 24,718 $ 14,572
Interest and other 457 216
--------------- ---------------
Total revenue 25,175 14,788
--------------- ---------------
Expenses:
Depreciation and amortization 4,311 3,845
General and administrative 1,665 1,894
Interest 10,247 3,275
--------------- ---------------
Total expenses 16,223 9,014
--------------- ---------------
Net income before minority interest 8,952 5,774
Minority interest (2,559) (1,385)
--------------- ---------------
Net income $ 6,393 $ 4,389
=============== ===============
Shares of common stock outstanding used to
compute basic earnings per share 21,070 21,607
=============== ===============
Basic earnings per share $ 0.30 $ 0.20
=============== ===============
Shares of common stock outstanding used to
compute diluted earnings per share 21,148 21,607
=============== ===============
Diluted earnings per share $ 0.30 $ 0.20
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
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CAPITAL AUTOMOTIVE REIT
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,393 $ 4,389
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,597 3,845
Income applicable to minority interest 2,559 1,385
Increase in other assets (90) (506)
Decrease in accounts payable and accrued expenses (5,630) (2,932)
(Decrease) increase in security deposits payable (422) 439
--------------- ---------------
Net cash provided by operating activities 7,407 6,620
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment, net of disposals (3) (21)
Real estate acquisitions, net of sales (8,342) (83,655)
--------------- ---------------
Net cash used in investing activities (8,345) (83,676)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings 8,600 20,000
Proceeds from mortgage loans 8,400 -
Mortgage principal payments (2,691) (68)
Payment of cash dividend (7,779) (6,914)
Payment of partner distribution (2,996) (2,059)
Purchase of treasury shares (9,863) -
Other fees - (70)
--------------- ---------------
Net cash (used in) provided by financing activities (6,329) 10,889
--------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,267) (66,167)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,886 72,106
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,619 $ 5,939
=============== ===============
SUPPLEMENTAL DATA:
Real estate acquisitions in exchange for equity issuance $ - $ 4,360
=============== ===============
Interest paid during the period $ 14,920 $ 2,110
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
5
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CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Capital Automotive REIT (the "Company") is a Maryland real estate investment
trust formed in October 1997. The Company owns its property interests through
Capital Automotive L.P. (the "Operating Partnership") and its subsidiaries. The
Company is the sole general partner of the Operating Partnership. As of March
31, 2000, the Company held a 71.3% general partnership interest in the Operating
Partnership. The Company completed its initial public offering of common shares
and began generating rental income in February 1998. References to "we," "us,"
"our," refer to the Company or, if the context otherwise requires, the Operating
Partnership and our business and operations conducted through the Operating
Partnership and/or its directly and indirectly owned subsidiaries.
Our primary business purpose is to own and lease real estate properties (land,
buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. We use (i) the term dealerships to refer to these types of
businesses that are operated on our properties, (ii) the term dealer group to
refer to a group of related persons and companies who sell us properties, and
(iii) the term dealer, tenant or lessee to refer to the related persons and
companies that lease our properties. Our strategy focuses on acquiring real
estate used by multi-site, multi-franchised dealerships located primarily in
major metropolitan areas throughout the United States.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
by our management in accordance with generally accepted accounting principles
("GAAP") for interim financial information and in conformity with the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. The results of operations for the three months ended March
31, 2000, are not necessarily indicative of the results that may be expected for
the full year. These financial statements should be read in conjunction with our
audited consolidated financial statements and footnotes thereto, included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in
accordance with GAAP and include our accounts, net of minority interest as
defined in Note 8 herein. All intercompany balances and
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transactions have been eliminated in consolidation.
Real Estate and Depreciation
Real estate assets are recorded at cost. External acquisition costs directly
related to each property are capitalized as a cost of the respective property.
The cost of real estate properties acquired is allocated between land and
buildings based upon estimated market values at the time of acquisition.
Depreciation is computed using the straight-line method over an estimated useful
life of 20 to 30 years for the buildings and improvements.
Cash and Cash Equivalents
Cash and cash equivalents are comprised of highly liquid instruments purchased
with original maturities of three months or less.
Deferred Loan Costs
Included in other assets are costs incurred in connection with obtaining our
revolving secured credit facilities and issuance of mortgage notes through March
31, 2000, which are amortized over the terms of the respective credit facilities
or notes on a straight-line basis (which approximates the effective interest
method).
Capitalized Leasing Costs
Certain initial direct costs incurred by us in negotiating and consummating a
successful lease are capitalized and generally amortized over the initial term
of the lease. These costs, net of accumulated amortization, are included in
other assets. Capitalized leasing costs include employee compensation and
payroll related fringe benefits directly related to time spent performing
leasing related activities. Such activities include evaluating the prospective
tenant's financial condition, evaluating and recording guarantees, collateral
and other security arrangements, negotiating contract terms, preparing lease
documents and closing the transaction.
Income Taxes
We are qualified as a real estate investment trust under the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). As a real estate
investment trust, we are generally not subject to federal income tax to the
extent that we distribute annually at least 95% of our taxable income to our
shareholders and comply with certain other requirements.
Rental Revenue Recognition
We lease our real estate pursuant to long-term triple-net leases which typically
require the tenants to pay substantially all expenses associated with the
operations of the real estate, including, but not limited to, taxes, assessments
and other government charges, insurance, utilities, service, repairs,
maintenance and other expenses. All leases are accounted for as operating
leases.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of
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contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. ACQUISITIONS AND DISPOSITIONS
During the three months ended March 31, 2000, we closed on approximately $12.8
million in real estate, which included the acquisition of two dealership
properties. Consideration for the real estate consisted of $8.4 million in
mortgage debt issued during the first quarter of 2000 and the remainder from a
combination of funds drawn down on our revolving credit facility and cash on
hand. Both dealership properties acquired are leased to an affiliate of an
existing tenant utilizing a floating cap rate. Under the floating cap rate lease
program, rental payments are adjusted monthly based upon a spread over the
30-day LIBOR. The tenant has the ability to fix the lease rate during the
initial lease term. The lease is substantially match funded with long-term,
floating rate debt. The properties acquired total approximately 124,000 square
feet of buildings and improvements on approximately 22 acres of land and are
located in the state of Alabama. The properties have an initial lease term of 15
years and have two renewal options of five years each. In addition, during the
three months ended March 31, 2000, we sold two properties for approximately $5.0
million, which resulted in a gain on sale of the assets of approximately
$294,000.
As of March 31, 2000, we owned 230 dealership properties, in which 351
automotive franchises reside, with a total investment of approximately $944.2
million. These properties total approximately 8.1 million square feet of
buildings and improvements on 1,302 acres of land and are located in 27 states.
These properties have initial lease terms generally ranging from ten to 20 years
with an average initial lease term of approximately 13.3 years, and have renewal
options (ranging from a total of ten to 40 years). The renewal options are
exercisable at the option of the tenant.
4. EARNINGS PER SHARE
Basic earnings per share is computed as net income divided by the weighted
average common shares outstanding for the period. Diluted earnings per share is
computed as net income divided by the weighted average common shares outstanding
for the period plus the effect of dilutive common equivalent shares outstanding
for the period, based on the treasury stock method. Dilutive common equivalent
shares include restricted shares, options and warrants. For the three-months
ended March 31, 2000, there were 78,000 dilutive common equivalent shares
outstanding. For the three-months ended March 31, 1999, there were no dilutive
common equivalent shares outstanding.
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5. MORTGAGE LOANS
As of March 31, 2000, we had mortgage indebtedness totaling approximately $507.2
million secured by approximately 200 dealership properties we owned. The
following is a summary of our mortgage debt as of March 31, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
Balances Balances
Original Debt Outstanding as of Outstanding as of
Description of Debt Issued March 31, 2000 December 31, 1999
- -------------------------------------------------- ----------------- -------------------- --------------------
<S> <C> <C> <C>
7.50% Fixed rate debt due 1/20/03 $ 12,000 $ 11,637 $ 11,730
7.59% Fixed rate debt due 12/1/08 38,050 37,947 38,050
7.635% Fixed rate debt due 10/1/14 111,950 106,711 107,675
8.05% Fixed rate debt due 10/1/14 85,000 83,799 84,528
7.54% Fixed rate debt due 7/6/11 100,000 98,824 99,527
8.03% Fixed rate debt due 9/29/11 150,000 150,000 150,000
(1) Floating rate debt due 12/22/09 10,000 9,900 10,000
(2) Floating rate debt due 03/02/10 8,400 8,400 --
----------------- -------------------- --------------------
Total ....................................... $ 515,400 $ 507,218 $ 501,510
================= ==================== ====================
</TABLE>
<TABLE>
<CAPTION>
Effective
Interest Amortization
Description of Debt Rate* Schedule
- -------------------------------------------------- -------------- ---------------------
<S> <C> <C>
7.50% Fixed rate debt due 1/20/03 7.75% 20 year
7.59% Fixed rate debt due 12/1/08 7.98% 17 year
7.635% Fixed rate debt due 10/1/14 7.92% 15 year
8.05% Fixed rate debt due 10/1/14 8.32% 15 year
7.54% Fixed rate debt due 7/6/11 7.70% 25 year
8.03% Fixed rate debt due 9/29/11 8.08% 25 year
(1) Floating rate debt due 12/22/09 8.57% (1)
(2) Floating rate debt due 03/02/10 7.89% (2)
</TABLE>
* Includes deferred loan fees amortized over the life of the loans.
(1) The loan bears interest at a variable rate equal to 200 basis points per
annum above the A1-P1 Commercial Paper Rate. The weighted average interest
rate for the quarter ended March 31, 2000 was 8.40%. The terms of the loan
require quarterly principal payments of $100,000 and quarterly interest
payments.
(2) The loan bears interest at a variable rate equal to 200 basis points per
annum above the A1-P1 Commercial Paper Rate. The weighted average interest
rate for the quarter ended March 31, 2000 was 7.77%. The terms of the loan
require quarterly principal payments of $84,000 and quarterly interest
payments. The loan is secured by mortgages on the two properties acquired
during the three months ended March 31, 2000, which as of March 31, 2000,
have an aggregate net book value of approximately $11.5 million. There is
one financial covenant limiting our total debt to 65% of our assets, as
defined in the loan agreement. There are negative covenants relating to
customary items such as operation and maintenance of properties securing
the loan and limitations on issuing additional indebtedness at the
subsidiary level.
As of March 31, 2000, we were in compliance with all of the loan covenants
related to our mortgage indebtedness.
6. SHORT-TERM FINANCING
As of March 31, 2000, we had a $50 million revolving secured credit facility
from a financial institution, under which $8.6 million was outstanding. The
facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
weighted average interest rate for the quarter ended March 31, 2000 was 7.71%.
The effective interest rate for the
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quarter ended March 31, 2000 was 8.10%. As of March 31, 2000, we were in
compliance with the loan covenants.
During the first quarter of 2000, we executed an agreement with a financial
institution for a $100 million secured revolving credit facility under which no
amounts were outstanding as of March 31, 2000. The proceeds are to be used to
fund future acquisitions on a short-term basis and will be repaid with the
issuance of long-term debt. Borrowings will require monthly interest payments at
a floating rate equal to 225 basis points above the 30-day LIBOR rate and
repayment of principal within 150 days. The term of the agreement is one year
and is renewable annually. The facility contains financial covenants that we
must comply with annually, such as the maintenance of a consolidated debt
service coverage ratio of 1.5 to 1.0 and a limitation on our debt to 75% of our
total assets, as defined in the loan agreement. As of March 31, 2000, we were in
compliance with the loan covenants.
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement was originally effective for
all fiscal quarters of fiscal years beginning after June 15, 1999; however,
during the second quarter of 1999 the FASB deferred the effective date until
June 15, 2000. SFAS No. 133 does not require restatement of financial statements
from prior periods. SFAS No. 133 requires an entity to recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. We believe that the adoption of SFAS
No. 133 will not have a significant impact on our consolidated financial
position, results of operations or cash flows.
8. MINORITY INTEREST
Minority interest is calculated at approximately 28.7% of the Operating
Partnership's partners' capital as of March 31, 2000 and 28.6% of the Operating
Partnership's partners' net income for the three months ended March 31, 2000.
The ownership of the Operating Partnership as of March 31, 2000 is as follows
(units of limited partnership interest in the Operating Partnership ("Units"),
in thousands):
<TABLE>
<CAPTION>
Units Percent
----------- -------
<S> <C> <C>
Partners' capital:
Limited Partners 8,321.6 28.7%
The Company 20,707.4 71.3%
--------- ------
Total 29,029.0 100.0%
========= ======
</TABLE>
9. 401(K) PLAN
During 1998, we adopted the Capital Automotive L.P. Employee 401 (k) Plan (the
"401(k) Plan"). Employees who are at least 21 years of age are eligible to
participate in the plan after three months of service. Participants may
contribute up to 20% of their earnings, on a pre-tax basis, subject to annual
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limitations imposed by the Code. We may make matching or discretionary
contributions to the plan at the discretion of management. During December 1999,
we approved a 20% match of the participant's elected deferral contribution
during 2000 (subject to maximum limits). Our matching contribution vests ratably
over five years from each employee's date of service.
10. SHARE REPURCHASE PROGRAM
During 1998, we announced that our Board of Trustees had authorized the
repurchase of up to 6.0 million common shares. Purchases have been and will be
made from time to time in open market transactions at prevailing prices or in
negotiated private transactions at the discretion of our management. During the
three months ended March 31, 2000, we repurchased 900,000 common shares at an
average price of $10.96 per common share. In conjunction with the common share
repurchases, the Operating Partnership redeemed an equivalent number of Units
from the Company for equivalent purchase prices.
11. RELATED PARTY TRANSACTIONS
During March 2000, we sold a property to the brother-in-law of a current Trustee
of the Company, for a total sales price of $2.8 million, resulting in a gain on
sale of assets. The property was originally acquired in February 1998 from an
entity related to the Trustee and members of his family.
12. SUBSEQUENT EVENTS
Declaration of Dividend
On April 26, 2000, we declared a dividend of $0.365 per share, which will be
paid on May 19, 2000 to shareholders of record as of May 10, 2000.
Dividend Reinvestment and Share Purchase Plan
During April 2000, we implemented a Dividend Reinvestment and Share Purchase
Plan (the "Plan"). Under the Plan, current shareholders and holders of Units
("unitholders") are permitted to designate all, a portion or none of their
existing shares for reinvestment in more shares of common stock through the
Dividend Reinvestment Program of the Plan. The Plan also provides both new
investors and existing shareholders and unitholders with a method to purchase
shares of common stock under the Share Purchase Program of the Plan. The Plan
permits current shareholders, unitholders and new investors to invest a minimum
of $500 up to a maximum of $10,000 in common shares per month. With respect to
reinvested dividends and direct purchases of common shares up to $10,000, shares
of common stock will be purchased at a discount ranging from 0% to 5% (currently
3%) from market price, as more fully described in the Prospectus relating to the
Plan. The Plan also allows us to raise additional capital by waiving the
limitations on the $10,000 maximum per month, as more fully described in the
Prospectus relating to the Plan.
Common shares may be purchased directly from the Company or in open market or
privately negotiated transactions, as determined from time to time by the
Company, to fulfill the requirements for the Plan. At present, the Company
anticipates that all common shares purchased will be purchased directly from the
Company.
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CAPITAL AUTOMOTIVE REIT
ITEM II - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31,
2000 AND MARCH 31, 1999
The following discussion should be read in conjunction with the accompanying
unaudited consolidated financial statements and notes thereto.
Certain statements in this Form 10-Q are "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchanged Act"). Also, documents that we subsequently file with the Securities
and Exchange Commission and that are incorporated by reference herein will
contain forward-looking statements. When we refer to forward-looking statements
or information, sometimes we use words such as "may," "will," "could," "should,"
"plans," "intends," "expects," "believes," "estimates," "anticipates" and
"continues." In particular, the following summary of "Business Risks" describe
forward-looking information. The Business Risks that are described are not all
inclusive, particularly with respect to possible future events, and should be
read together with other filings made by the Company under the Securities Act
and the Exchange Act, including the risks and other risk factors contained in
the Company's Form 8-K/A filed on January 19, 2000. Other parts of this Form
10-Q may also describe forward-looking information. Many things can happen that
can cause our actual results to be very different than those described. These
factors include:
- - risks that our tenants will not pay rent or that our operating costs
will be higher than expected;
- - risks of interest rate fluctuations impacting future acquisitions;
- - risks that additional acquisitions may not be consummated; and
- - environmental and other risks associated with the acquisition and
leasing of automotive properties.
Given these uncertainties, readers are cautioned not to place value reliance on
these forward-looking statements. We also make no promise to update any of the
forward-looking statements, or to publicly release the results if we revise any
of them.
OVERVIEW
Our primary business purpose is to own and lease real estate properties (land,
buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. As of March 31, 2000, we owned 230 dealership properties, in which
351 automotive franchises reside, with a total investment of approximately
$944.2 million. These properties total approximately 8.1 million square feet of
buildings and improvements on 1,302 acres of land and are located in 27 states.
Substantially all of our properties are leased pursuant to long-term triple-net
leases, under which the tenants typically pay substantially all operating
expenses of a property, including, but not limited to, taxes, assessments and
other government charges, insurance, utilities, service, repairs, maintenance
and other expenses. The initial lease terms generally range from ten to 20
years, with an average initial lease term of approximately 13.3 years, and have
options to renew upon the same terms and conditions for one or more additional
periods of five to ten years (ranging from a total of ten to 40 years). The
renewal
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options are exercisable at the option of the tenant. Our portfolio weighted
average initial cap rate at March 31, 2000 was approximately 10.5%, which is
calculated as the percentage of the initial annual base rent over the purchase
price paid to the sellers for the related properties.
Substantially all of our revenues are derived from (1) rents received or accrued
under long-term, triple-net leases; and (2) interest earned from the temporary
investment of funds in short-term investments.
We incur general and administrative expenses including, principally,
compensation expense for our executive officers and other employees,
professional fees and various expenses incurred in the process of identifying
and acquiring additional properties. We are self-administered and managed by our
trustees, executive officers and staff. Our primary non-cash expense is the
depreciation of our properties. We depreciate buildings and improvements on our
properties over a 40-year period for tax purposes and a 20-year to 30-year
period for financial reporting purposes. We do not own or lease any significant
personal property, furniture or equipment at any property we currently own.
FIRST QUARTER ACQUISITIONS AND DISPOSITIONS
During the three months ended March 31, 2000, we closed on approximately $12.8
million in real estate, which included the acquisition of two dealership
properties. Consideration for the real estate consisted of $8.4 million in
mortgage debt issued during the first quarter of 2000 and the remainder from a
combination of funds drawn down on our revolving credit facility and cash on
hand. Both dealership properties acquired are leased to an affiliate of an
existing tenant utilizing a floating cap rate. Under the floating cap rate lease
program, rental payments are adjusted monthly based upon a spread over the
30-day LIBOR. The tenant has the ability to fix the lease rate during the
initial lease term. The lease is substantially match funded with long-term,
floating rate debt. The properties acquired total approximately 124,000 square
feet of buildings and improvements on approximately 22 acres of land and are
located in the state of Alabama. The properties have an initial lease term of 15
years and have two renewal options of five years each. In addition, during the
three months ended March 31, 2000, we sold two properties for approximately $5.0
million, which resulted in a gain on sale of the assets of approximately
$294,000.
RESULTS OF OPERATIONS
Rental revenue for the three months ended March 31, 2000, increased 70% to $24.7
million, as compared to $14.6 million for the same quarter in 1999. The increase
was primarily attributable to the growth of our real estate portfolio and the
timing of our property acquisitions (230 properties as of March 31, 2000 versus
142 properties as of March 31, 1999), from which we generate our rental income.
In addition, included in rental revenue for the three months ended March 31,
2000 was straight-lined rents totaling $510,000, or $0.02 per share. During the
third quarter of 1999, we began, on a prospective basis, straight-lining our
rents for leases with fixed minimum escalators. The effect on prior years was
not material.
Interest and other income for the three months ended March 31, 2000, increased
112% to $457,000 from $216,000 for the same quarter in 1999. The increase was
primarily attributable to a $294,000 gain on the sale of properties during the
first quarter of 2000, partially offset by a decrease in interest earned on
temporary investments.
Depreciation and amortization for the three months ended March 31, 2000
increased 12% to $4.3 million
13
<PAGE> 14
from $3.8 million for the same quarter in 1999 and consisted primarily of
depreciation on buildings and improvements owned during those periods. The
increase is attributable to the growth of our real estate portfolio, resulting
in an increase in our depreciable assets. Partially offsetting the increase was
a change in the depreciable life on the majority of our buildings and
improvements that were acquired prior to 1999 that were being depreciated over
20 years. During the third quarter of 1999, we reviewed the age and estimated
remaining useful life of each of our properties in our real estate portfolio
that we acquired prior to 1999. Based on the average age of these assets, we
changed the depreciable life on the majority of our buildings and improvements
that were currently being depreciated over a 20-year life to a 30-year life in
order to properly reflect the estimated remaining useful lives. The change in
depreciable life is considered a change in an accounting estimate and has been
recorded on a prospective basis beginning in the third quarter of 1999. The
impact of this change decreased depreciation expense on the assets acquired
prior to 1999 by approximately $1.1 million for the three months ended March 31,
2000 as compared to the same quarter in 1999.
General and administrative expenses for the three months ended March 31, 2000
decreased 12% to $1.7 million, as compared to $1.9 million for the same quarter
in 1999. The decrease is primarily due to decreased payroll and related benefits
attributable to staffing reductions throughout 1999, the closing of the Chicago
office during the second quarter of 1999 and the reduction in advertising
expenses.
Interest expense for the three months ended March 31, 2000 increased to $10.2
million from $3.3 million for the same quarter in 1999. The increase was due to
an increase in debt outstanding during that time period (including mortgage debt
and borrowings under our credit facilities). Debt outstanding as of March 31,
2000 was approximately $515.8 million (consisting of approximately $488.9
million of fixed rate indebtedness and approximately $26.9 million of variable
rate indebtedness) compared to $181.9 million (consisting of approximately
$161.9 million of fixed rate indebtedness and approximately $20.0 million of
variable rate indebtedness) as of March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $4.6 million and $11.9 million at March 31, 2000
and December 31, 1999, respectively. The changes in cash and cash equivalents
during the three months ended March 31, 2000 and 1999 were attributable to
operating, investing and financing activities, as described below.
Cash flow provided by operating activities for the three months ended March 31,
2000 and 1999 was $7.4 million and $6.6 million, respectively, and represents,
in both years, cash received from rents under long-term triple-net leases, plus
interest and other income, less normal recurring general and administrative
expenses and interest payments on debt outstanding. Cash used in investing
activities for the three months ended March 31, 2000 and 1999 was $8.3 million
and $83.7 million, respectively, and primarily reflects the acquisition of
dealership properties, net of sales during those periods. Cash used in financing
activities for the three months ended March 31, 2000 was $6.3 million and
primarily reflects the repurchase of common shares totaling $9.9 million, the
payment of mortgage principal payments totaling $2.7 million and the
distributions made to shareholders and limited partners during the period
totaling $10.8 million. This was partially offset by the proceeds from a
mortgage loan that closed during the period totaling $8.4 million and $8.6
million of proceeds from bank borrowings. Cash flow from financing activities
for the three months ended March 31, 1999 was $10.9 million and primarily
reflects the $20 million of proceeds from bank borrowings during that period
partially offset by distributions made to shareholders and limited partners
during
14
<PAGE> 15
the period totaling $9.0 million.
Mortgage Indebtedness
As of March 31, 2000, we had mortgage indebtedness totaling approximately $507.2
million secured by approximately 200 dealership properties we owned. The
following is a summary of our mortgage debt as of March 31, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
Balances Balances
Original Debt Outstanding as of Outstanding as of
Description of Debt Issued March 31, 2000 December 31, 1999
- -------------------------------------------------- ----------------- -------------------- --------------------
<S> <C> <C> <C>
7.50% Fixed rate debt due 1/20/03 $ 12,000 $ 11,637 $ 11,730
7.59% Fixed rate debt due 12/1/08 38,050 37,947 38,050
7.635% Fixed rate debt due 10/1/14 111,950 106,711 107,675
8.05% Fixed rate debt due 10/1/14 85,000 83,799 84,528
7.54% Fixed rate debt due 7/6/11 100,000 98,824 99,527
8.03% Fixed rate debt due 9/29/11 150,000 150,000 150,000
(1) Floating rate debt due 12/22/09 10,000 9,900 10,000
(2) Floating rate debt due 03/02/10 8,400 8,400 --
----------------- -------------------- --------------------
Total ....................................... $ 515,400 $ 507,218 $ 501,510
================= ==================== ====================
</TABLE>
<TABLE>
<CAPTION>
Effective
Interest Amortization
Description of Debt Rate* Schedule
- -------------------------------------------------- -------------- ---------------------
<S> <C> <C>
7.50% Fixed rate debt due 1/20/03 7.75% 20 year
7.59% Fixed rate debt due 12/1/08 7.98% 17 year
7.635% Fixed rate debt due 10/1/14 7.92% 15 year
8.05% Fixed rate debt due 10/1/14 8.32% 15 year
7.54% Fixed rate debt due 7/6/11 7.70% 25 year
8.03% Fixed rate debt due 9/29/11 8.08% 25 year
(1) Floating rate debt due 12/22/09 8.57% (1)
(2) Floating rate debt due 03/02/10 7.89% (2)
</TABLE>
* Includes deferred loan fees amortized over the life of the loans.
(1) The loan bears interest at a variable rate equal to 200 basis points per
annum above the A1-P1 Commercial Paper Rate. The weighted average interest
rate for the quarter ended March 31, 2000 was 8.40%. The terms of the loan
require quarterly principal payments of $100,000 and quarterly interest
payments.
(2) The loan bears interest at a variable rate equal to 200 basis points per
annum above the A1-P1 Commercial Paper Rate. The weighted average interest
rate for the quarter ended March 31, 2000 was 7.77%. The terms of the loan
require quarterly principal payments of $84,000 and quarterly interest
payments. The loan is secured by mortgages on the two properties acquired
during the three months ended March 31, 2000, which as of March 31, 2000,
have an aggregate net book value of approximately $11.5 million. There is
one financial covenant limiting our total debt to 65% of our assets, as
defined in the loan agreement. There are negative covenants relating to
customary items such as operation and maintenance of properties securing
the loan and limitations on issuing additional indebtedness at the
subsidiary level.
As of March 31, 2000, we were in compliance with all of the loan covenants
related to our mortgage indebtedness.
Short-Term Financing
As of March 31, 2000, we had a $50 million revolving secured credit facility
from a financial institution, under which $8.6 million was outstanding. The
facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
weighted average interest rate for the quarter ended March 31, 2000 was 7.71%.
The effective interest rate for the
15
<PAGE> 16
quarter ended March 31, 2000 was 8.10%. As of March 31, 2000, we were in
compliance with the loan covenants.
During the first quarter of 2000, we executed an agreement with a financial
institution for a $100 million secured revolving credit facility under which no
amounts were outstanding as of March 31, 2000. The proceeds are to be used to
fund future acquisitions on a short-term basis and will be repaid with the
issuance of long-term debt. Borrowings will require monthly interest payments at
a floating rate equal to 225 basis points above the 30-day LIBOR rate and
repayment of principal within 150 days. The term of the agreement is one year
and is renewable annually. The facility contains financial covenants that we
must comply with annually, such as the maintenance of a consolidated debt
service coverage ratio of 1.5 to 1.0 and a limitation on our debt to 75% of our
total assets, as defined in the loan agreement. As of March 31, 2000, we were in
compliance with the loan covenants.
Liquidity Requirements
Short-term liquidity requirements consist primarily of normal recurring
operating expenses, regular debt service requirements (including debt service
relating to additional and replacement debt), recurring capital expenditures,
distributions to shareholders and unitholders, and amounts required for
additional property acquisitions. We expect to meet these requirements (other
than amounts required for additional property acquisitions) through cash flow
provided by operating activities. We anticipate that any additional acquisition
of properties during the next 12 months will be funded with amounts available
under our existing secured credit facilities and with future long-term secured
and unsecured debt. Acquisitions will be made subject to our investment
objectives and policies to maximize both current income and long-term growth in
income.
As of March 31, 2000, long-term liquidity requirements consisted primarily of
maturities under our long-term debt. We anticipate that long-term liquidity
requirements will also include amounts required for acquisition of properties.
We expect to meet long-term liquidity requirements through long-term secured and
unsecured borrowings and other debt and equity financing alternatives. The
availability and terms of any such financing will depend upon market and other
conditions.
Our liquidity requirements with respect to future acquisitions may be reduced to
the extent that we use Units as consideration for such purchases.
We have adopted a policy to limit debt to approximately 65% of our assets (total
assets plus accumulated depreciation). As of March 31, 2000, our debt was
approximately 53% of our assets. This policy may be changed by our Board of
Trustees at any time without shareholder approval.
In light of our current debt to asset ratio, we are able to obtain additional
financing for our short-term and long-term capital needs without exceeding our
debt to asset ratio policy. However, there can be no assurance that additional
financing or capital will be available, or that the terms will be acceptable or
advantageous to us.
YEAR 2000 UPDATE
In 1999, we discussed the nature and progress of our plans to confront year 2000
issues. In late 1999, we completed our remediation and testing of our software
applications and hardware systems. As a result of those planning and
implementation efforts, we experienced no material information
16
<PAGE> 17
technology or non-information technology systems problems, and we believe those
systems successfully responded to the year 2000 date change. We did not incur
significant costs in designing and implementing our year 2000 plan, nor did we
incur significant costs in modifying our existing software applications,
replacing hardware or hiring consultants in resolving year 2000 issues. In
addition, we are not aware that any of our tenants or third parties with whom we
conduct business experienced any material systems problems related to year 2000
issues. We will continue to monitor our information technology and
non-information technology systems and those of our tenants and third parties
with whom we conduct business throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly. Although management
does not anticipate any additional expenditures relating to year 2000 issues,
there can be no assurance as to the magnitude of any future costs until
significant time has past.
FUNDS FROM OPERATIONS
Funds From Operations ("FFO") is defined under the revised definition adopted in
October 1999 by the National Association of Real Estate Investment Trusts
(NAREIT) as net income (loss) before minority interest (computed in accordance
with generally accepted accounting principles) excluding gains (or losses) from
sales of property plus depreciation and amortization of assets unique to the
real estate industry, and after adjustments for unconsolidated partnerships and
joint ventures. To conform to NAREIT's revised FFO definition adopted in 1999,
we began in the first quarter of 2000 including straight-lined rents in the
calculation of FFO. Prior to the first quarter of 2000, we excluded
straight-lined rents from the FFO calculation. We began straight-lining rents on
a prospective basis in the third quarter of 1999, therefore the revised
definition has no impact on FFO for the three months ended March 31, 1999. The
effect of straight-lined rents on prior years was not material.
NAREIT developed FFO as a relative measure of performance and liquidity of an
equity REIT in order to recognize that income-producing real estate historically
has not depreciated on the basis determined under GAAP. FFO does not represent
cash flows from operating activities in accordance with generally accepted
accounting principles (which, unlike FFO, generally reflects all cash effects of
transactions and other events in the determination of net income) and should not
be considered an alternative to net income as an indication of our performance
or to cash flow as a measure of liquidity or ability to make distributions. We
consider FFO a meaningful, additional measure of operating performance because
it primarily excludes the assumption that the value of the real estate assets
diminishes predictably over time, and because industry analysts have accepted it
as a performance measure. Comparison of our presentation of FFO, using the
NAREIT definition, to similarly titled measures for other REITs may not
necessarily be meaningful due to possible differences in the application of the
NAREIT definition used by such REITs.
FFO for the three months ended March 31, 2000 and 1999 is computed as follows
(in thousands):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net Income before Minority Interest $ 8,952 $ 5,774
Real Estate Depreciation and Amortization 4,287 3,820
Gain on Sale of Assets (294) -
Funds From Operations $12,945 $ 9,594
======= =======
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C> <C>
Weighted Average Number of Common
Shares and Units Used to Compute
Basic FFO per Share 29,392 28,274
====== ======
Weighted Average Number of Common
Shares and Units Used to Compute
Fully Diluted FFO per Share 29,469 28,274
====== ======
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates. Interest rate fluctuations are monitored by our
management as an integral part of our overall risk management program, which
recognizes the unpredictability of financial markets and seeks to reduce the
potentially adverse effect on our results of operations.
Since December 31, 1999, there have been no material changes in the information
regarding market risk that was provided in the Company's Form 10-K for the year
ended December 31, 1999 except as described below.
During the three months ended March 31, 2000, our fixed-rate debt decreased from
$491.5 million at December 31, 1999 to $488.9 million as of March 31, 2000.
Interest rate fluctuations will affect the fair value of our fixed rate debt
instruments. If interest rates on our fixed rate debt instruments at March 31,
2000 had been one percent higher, the fair value of those debt instruments on
that date would have decreased by approximately $30.0 million. During the three
months ended March 31, 2000, our variable-rate debt increased from $10.0 million
as of December 31, 1999 to $26.9 million as of March 31, 2000. Interest rate
fluctuations will effect our annual interest expense on our variable rate debt.
If interest rates on our variable rate debt instruments outstanding at March 31,
2000, had been one percent higher, our annual interest expense relating to that
debt instrument would have increased by $269,000 based on balances at March 31,
2000.
18
<PAGE> 19
CAPITAL AUTOMOTIVE REIT
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
The Company has not sold any common shares of beneficial interest, par value
$.01 per share ("Common Shares"), during the three-month period ended March 31,
2000.
Share Repurchase Program. During 1998, we announced that our Board of Trustees
had authorized the repurchase of up to 6.0 million common shares. Purchases have
been and will be made from time to time in open market transactions at
prevailing prices or in negotiated private transactions at the discretion of our
management. During the three months ended March 31, 2000, we repurchased 900,000
common shares at an average price of $10.96 per common share. In conjunction
with the common share repurchases, the Operating Partnership redeemed an
equivalent number of Units from the Company for equivalent purchase prices.
Dividend Reinvestment and Share Purchase Plan. During April 2000, we implemented
a Dividend Reinvestment and Share Purchase Plan (the "Plan"). Under the Plan,
current shareholders and unitholders are permitted to designate all, a portion
or none of their existing shares for reinvestment in more shares of common stock
through the Dividend Reinvestment Program of the Plan. The Plan also provides
both new investors and existing shareholders and unitholders with a method to
purchase shares of common stock under the Share Purchase Program of the Plan.
The Plan permits current shareholders, unitholders and new investors to invest a
minimum of $500 up to a maximum of $10,000 in common shares per month. With
respect to reinvested dividends and direct purchases of common shares up to
$10,000, shares of common stock will be purchased at a discount ranging from 0%
to 5% (currently 3%) from market price, as more fully described in the
Prospectus relating to the Plan. The Plan also allows us to raise additional
capital by waiving the limitations on the $10,000 maximum per month, as more
fully described in the Prospectus relating to the Plan.
Common shares may be purchased directly from the Company or in open market or
privately negotiated transactions, as determined from time to time by the
Company, to fulfill the requirements for the Plan. At present, the Company
anticipates that all common shares purchased will be purchased directly from the
Company.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
19
<PAGE> 20
(a) Exhibits:
10.43 Credit Agreement dated as of March 22, 2000 by and among General
Motors Acceptance Corporation, as Lender and Capital Automotive, L.P. and
certain of its subsidiaries, as Borrowers.
27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
20
<PAGE> 21
SIGNATURES
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.
CAPITAL AUTOMOTIVE REIT
(Registrant)
BY: /s/ Thomas D. Eckert
-------------------------------------
Thomas D. Eckert
President and Chief Executive Officer
(principal executive officer)
BY: /s/ David S. Kay
------------------------------------------
David S. Kay
Vice President and Chief Financial Officer
(principal financial and accounting officer)
Dated: May 10, 2000
-------------
21
<PAGE> 1
EXHIBIT 10.43
CREDIT AGREEMENT
Dated as of March 22, 2000
among
GENERAL MOTORS ACCEPTANCE CORPORATION, as Lender,
and
CAPITAL AUTOMOTIVE, LP,
and
CERTAIN REAL ESTATE SUBSIDIARIES, as Borrowers
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - Definitions 1
Section 1.01 Definitions 1
Section 1.02 Certain UCC and Accounting Terms 6
ARTICLE II - Amount and Terms of the Mortgage Loans 7
Section 2.01 Mortgage Loans 7
Section 2.02 Notes 7
Section 2.03 Making the Mortgage Loans 8
Section 2.04 Extension, Termination and Reduction of the Credit Commitment 8
Section 2.05 Payment, Interest Rate; Default Rate 8
Section 2.06 Payment on Non-Business Days 9
Section 2.07 Inability to Ascertain the LIBOR Rate 9
Section 2.08 Use of Proceeds 9
Section 2.09 Effect of Full Payment 9
ARTICLE III - Conditions of Lending 9
Section 3.01 Conditions Precedent to the Advance of each Loan 9
Section 3.02 Conditions Precedent to All Loans 12
ARTICLE IV - Representations and Warranties 12
Section 4.01 Capacity and Power 12
Section 4.02 Authorization of Borrowing: No Conflict as to Law or
Agreements 12
Section 4.03 Legal Agreements 13
Section 4.04 Subsidiaries 13
Section 4.05 Financial Condition 13
Section 4.06 Adverse Change 13
Section 4.07 Litigation 13
Section 4.08 Taxes 13
Section 4.09 Titles and Liens 13
Section 4.10 Real Property Collateral Documents 13
Section 4.11 Other Security Interests 14
Section 4.12 Compliance with Laws 14
Section 4.13 Other Agreements 14
Section 4.14 Year 2000 Compliance 14
Section 4.15 Solvency 14
Section 4.16 Accuracy of Information 14
Section 4.17 Wetlands 14
Section 4.18 Environmental Matters 15
ARTICLE V - Affirmative Covenants 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.01 Financial Statements 16
Section 5.02 Books and Records; Inspection and Examination 18
Section 5.03 Compliance with Laws 18
Section 5.04 Payment of Taxes and Other Claims 18
Section 5.05 Maintenance of Properties 18
Section 5.06 Insurance 18
Section 5.07 Restoration Following Casualty 21
Section 5.08 Application of Proceeds 22
Section 5.09 Financial Covenants. 23
Section 5.10 Use of Mortgaged Property 23
Section 5.11 Condemnation--General 23
Section 5.12 Rebuilding, Restoration and Repair 23
ARTICLE VI - Negative Covenants 25
Section 6.01 Consolidation and Merger 25
Section 6.02 Restrictions on Further Encumbrances or
Indebtedness on Real Estate 26
Section 6.03 Management Fees 26
ARTICLE VII - Events of Default, Rights and Remedies 26
Section 7.01 Events of Default 26
Section 7.02 Rights and Remedies 27
ARTICLE VIII - Miscellaneous 28
Section 8.01 No Waiver; Cumulative Remedies 28
Section 8.02 Amendments, Etc. 28
Section 8.03 Addresses for Notices, Etc. 28
Section 8.04 Costs and Expenses 30
Section 8.05 Execution in Counterparts 30
Section 8.06 Binding Effect; Assignment 30
Section 8.07 Governing Law 30
Section 8.08 Severability of Provisions 30
Section 8.09 Headings 30
Section 8.10 Venue and Waiver of Jury Trial 30
Section 8.11 Indemnification by Borrowers 31
Section 8.12 Joint and Several Liability 31
Section 8.13 Reimbursement Among Borrowers 31
Section 8.14 Appointment of Capital as Representative 32
EXHIBITS:
- ---------
Exhibit A Form of Mortgage Note
Exhibit B Form of Joinder Agreement
Exhibit C Form of Subordination Agreement
</TABLE>
ii
<PAGE> 4
Exhibit D Form of Opinion of Borrower's Counsel
SCHEDULES:
- ----------
Schedule 4.04 Subsidiaries
Schedule 4.18 Environmental Matters
iii
<PAGE> 5
CREDIT AGREEMENT
This Credit Agreement (this "Credit Agreement") is made and entered
into as of March 22, 2000 by and among Capital Automotive, LP, a Delaware
limited partnership ("Capital"), and certain subsidiaries of Capital from time
to time party hereto (collectively, the "Real Estate Subsidiaries") (Capital
and its Real Estate Subsidiaries are collectively referred to as the
"Borrowers"), jointly and severally; and General Motors Acceptance Corporation,
a Delaware corporation ("GMAC").
W I T N E S S E T H:
WHEREAS, Borrowers desire GMAC to provide certain extensions of
credit, loans or other financial accommodations to Borrowers for the purchase
of certain real property from time to time in a maximum aggregate principal
amount not to exceed One Hundred Million and no/100 Dollars ($100,000,000) (the
"Financial Accommodations"); and
WHEREAS, GMAC is willing to provide the Financial Accommodations to
Borrowers, but solely on the terms and subject to the conditions set forth in
this Credit Agreement and the other documents, instruments and agreements
executed and delivered pursuant to this Credit Agreement or referenced herein.
NOW, THEREFORE, in consideration of the Financial Accommodations, the
mutual promises and understandings of GMAC and the Borrowers set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, GMAC and the Borrowers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS . The following words, terms and/or
phrases shall have the meanings set forth thereafter and such meanings shall be
applicable to the singular and plural form thereof, giving effect to the
numerical difference.
"Affiliate" means any Person (a) that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with any other Person or one or more Affiliates, (b) that directly or
beneficially owns or holds 20% or more of any equity interest in any other
Person or one or more Affiliates or (c) 20% or more of whose voting stock (or
in the case of a person that is not a corporation, 20% or more of any equity
interest) is owned directly or beneficially or held by any other Person or one
or more Affiliates. For purposes of this definition and this Agreement, the
term "control" shall mean, directly or indirectly, the power to direct or cause
the direction of the management or policies of a Person, whether through
ownership interest or otherwise, including without limitation the power to
elect or appoint, directly or indirectly, a majority of the members of its
governing board or body.
1
<PAGE> 6
"Borrowers' Liabilities" means all obligations and liabilities of
Borrowers in the aggregate to GMAC (including, without limitation, all debts,
claims, reimbursement obligations and indebtedness) whether primary, secondary,
direct, contingent, fixed or otherwise, theretofore, now and/or from time to
time hereafter owing, due or payable, however evidenced, created, incurred,
acquired or owing and however arising, whether under this Agreement or the
Other Agreements, or by oral agreement or operation of law or otherwise.
"Business Day" means any day on which GMAC is open for the transaction
of business in Detroit, Michigan other than a Saturday or Sunday.
"CARS" means Capital Automotive REIT, a Maryland real estate
investment trust.
"Credit Commitment" means One Hundred Million Dollars ($100,000,000)
unless said amount is reduced in accordance with Section 2.04, in which event
it means the amount to which said amount is reduced.
"Debt Service Coverage Ratio" means, at each year end, the ratio
expressed as a fraction, the numerator of which is consolidated EBITDA before
minority interest of CARS and the denominator of which is the scheduled
principal paid during such year plus interest expense during the year.
"Debt to Total Assets Ratio" means, at each year end, the ratio
expressed as a fraction, the numerator of which is the consolidated long-term
Indebtedness (less payments due within one year) of CARS and the denominator of
which is Total Assets plus accumulated depreciation and amortization (less
goodwill) reflected on CARS' audited financial statements.
"EBITDA" means, for any period, operating income for CARS (determined
on a consolidated basis without duplication in accordance with GAAP) for such
period (calculated before taxes, interest expense, depreciation and
amortization) excluding any extraordinary or unusual gains or losses during
such period.
"Environmental Assessment" has the meaning set forth in Section
3.01(i).
"Environmental Laws" means any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license regulating,
relating to, or imposing liability or standards of conduct concerning,
environmental matters or conditions, environmental protection or conservation,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the Superfund Amendments
and Reauthorization Act of 1986, as amended; the Resource Conservation and
Recovery Act, as amended; the Toxic Substances Control Act, as amended; the
Clean Air Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, and any other "Superfund" or "Superlien"
law.
"Event of Default" has the meaning specified in Section 7.01.
2
<PAGE> 7
"GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
"Hazardous Material" means any pollutant, contaminant, or hazardous,
toxic or dangerous waste, substance or material (including, without limitation,
petroleum products, asbestos-containing materials and lead), the generation,
handling, storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
"Indebtedness" means all of a Person's liabilities, obligations and
indebtedness to any Person of any and every kind and nature, whether primary,
secondary, direct, indirect, absolute, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable,
however evidenced, created, incurred, acquired or owing and however arising,
whether under written or oral agreement, by operation of law or otherwise.
Without in any way limiting the generality of the foregoing, Indebtedness
specifically includes (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, (v) obligations under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iv) above, and (vi) liabilities in respect of
unfunded vested benefits under plans and multiemployer plans covered by Title
IV of ERISA.
"Interest Rate" shall have the meaning specified in Section 2.05.
"Leases" means any and all leases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) through which
Borrowers directly or indirectly grant a possessory interest in and to, or the
right to occupy and use, all or any portion of the Mortgaged Property that
constitutes real property, together with any renewals or extensions thereof and
all leases, subleases, licenses, concessions or other agreements in
substitution therefor.
"LIBOR Rate" means, with respect to any Loan, a rate per annum equal
to the offered rate for 30-day deposits in Dollars for each day of a monthly
billing period that appears on Telerate Page 3750 as of approximately 11:00
A.M. (London time). "Telerate Page 3750" means the display designated as "Page
3750" on the Telerate Service (or such other page as may replace page 3750 on
that service or such other service as may be nominated by the British Lenders'
Association as the information vendor for the purpose of displaying British
Lenders' Association Interest Settlement Rates for Dollar deposits). The LIBOR
Rate applicable to any day on which no rate so appears or is published will be
the rate last quoted prior to such day.
"Lien" means, with respect to any asset of any Borrower, any mortgage,
pledge, security interest, encumbrance, lien or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code in
effect in any jurisdiction).
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"Loan" or "Loans" means and includes all Mortgage Loans issued under
the Credit Commitment.
"Maturity Date" means March 21, 2001, unless otherwise extended in
accordance with Section 2.04.
"Maximum Advance Rate" has the meaning specified in Section 2.01.
"Mortgage" means each Deed of Trust, Mortgage, Leasehold Mortgage,
Leasehold Deed of Trust, Security Agreement, Fixture Filing, Assignment of
Leases and Rents and Financing Statement executed by any Borrower from time to
time in favor of GMAC, as each may be amended, modified or supplemented from
time to time.
"Mortgage Loans" means and includes all Loans made under the Credit
Commitment, unless the context in which such term is used shall otherwise
require.
"Mortgage Notes" has the meaning specified in Section 2.02.
"Mortgaged Property" means each parcel of real property which is
financed by GMAC using proceeds of the Credit Commitment.
"Note" or "Notes" means each Mortgage Note executed in connection with
the Credit Commitment.
"Operating Documents" shall mean with respect to any corporation,
limited liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the bylaws, operating agreement, partnership agreement, limited partnership
agreement or other applicable documents relating to the operation, governance
or management of such entity.
"Organizational Documents" shall mean with respect to any corporation,
limited liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the articles of incorporation, certificate of incorporation, articles of
organization, certificate of limited partnership or other applicable
organizational or charter documents relating to the creation of such entity.
"Other Agreements" means all agreements, instruments and documents,
including, without limitation, letters of credit, guaranties, mortgages, deeds
of trust, pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, subordination agreements, financing statements
and all other written matter heretofore, now and/or from time to time hereafter
executed by any Borrower relating to any Mortgage Loan and delivered to GMAC
including, without limitation, each Mortgage and each Mortgage Note delivered
in connection with this Agreement.
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"Person" means and includes an individual, a partnership, a joint
venture, a corporation (whether or not for profit), a limited liability
company, a trust, an unincorporated organization, a government or any
department or agency thereof or any other entity or organization.
"Plan" means, at any time, any single-employer plan, as defined in
Section 4001(a) and subject to Title IV of ERISA, which is maintained, or at
any time during the five calendar years preceding the time in question was
maintained, for employees of any Borrower or any Subsidiary.
"Prime Rate" shall mean a variable rate of interest per annum equal to
the higher of (a) the rate of interest from time to time published by the Board
of Governors of the Federal Reserve System as the "Bank Prime Loan" rate in
Federal Reserve Statistical Release H.15(519) entitled "Selected Interest
Rates" or any successor publication of the Federal Reserve System reporting the
Bank Prime Loan rate or its equivalent, or (b) the Federal Funds Rate. The
statistical release generally sets forth a Bank Prime Loan rate for each
Business Day. In the event the Board of Governors of the Federal Reserve System
ceases to publish a Bank Prime Loan rate or its equivalent, the term "Base
Rate" shall mean a variable rate of interest per annum equal to the highest of
the "prime rate," "reference rate," "base rate," or other similar rate
published from time to time by The Wall Street Journal, Central Edition, or its
successors, with the understanding that any such rate may merely be a reference
rate and may not necessarily represent the lowest or best rate actually charged
to any customer by any financial institution.
"Reportable Event" means a "Reportable Event" described in Section
4.03 of the Employee Income Retirement Security Act of 1974, as the same may be
amended from time to time, and any successor statute.
"Representative" has the meaning specified in Section 8.14.
"Subsidiary" shall mean, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have more than fifty percent
(50%) of the ordinary voting power for the election of directors or other
managers of such corporation, partnership, limited liability company or other
entity. Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Borrowers.
"Total Assets" means the aggregate book value of all assets of CARS
reflected on its audited financial statements for the relevant period.
"Trustee" means First American Title Insurance Company, its successors
and assigns, or the Individual Trustees (as defined in the applicable Mortgage
for any Mortgaged Property), as applicable and any successor Trustee hereunder,
with an address at The Phoenix Tower, 3200 Southwest Freeway, Suite 3050,
Houston, Texas 77027.
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"Year 2000 Compliant" shall mean that all computer applications
(including those affected by information received from its suppliers and
vendors) that are material to the business and operations of each Borrower are
able to perform properly date-sensitive functions involving all dates after
January 1, 2000.
SECTION 1.02 CERTAIN UCC AND ACCOUNTING TERMS. Except as
otherwise defined in this Agreement or the Other Agreements, all words, terms
and/or phrases used herein and therein shall be defined by the applicable
definition therefor (if any) in the Uniform Commercial Code as then in effect
in the State of Michigan. Notwithstanding the foregoing, any accounting terms
used in this Agreement which are not specifically defined herein shall have the
meanings customarily given to them in accordance with GAAP. All financing
computations hereunder shall be computed, unless otherwise specifically
provided herein, in accordance with GAAP as consistently applied. It is the
intention of the parties hereto that the priorities and agreements herein
contained continue to apply after the enactment by the various States of
Revised Article 9 - Secured Transactions (with conforming amendments to
Articles 1, 2, 2a, 4, 5, 6, 7 and 8) to the UCC as approved by The American Law
Institute in 1998 and approved and recommended for enactment in all the States
by the National Conference of Commissioners for Uniform State Laws in 1998
("Revised Article 9") and the effectiveness of Revised Article 9 in any State.
After the effectiveness of Revised Article 9 in any State governing perfection
and the effect of perfection or non-perfection of a security interest in any
collateral, as to such State and such collateral, (i) all section references
herein to, and all defined terms used herein defined in, Article 9 of the UCC
as currently in effect shall be deemed to be to any corresponding Section or
definition of Revised Article 9, and (ii) if any definition used herein by
reference to Revised Article 9 is broader than the corresponding definition
used in current Article 9 of the UCC, such broader definition will apply
herein.
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ARTICLE II
AMOUNT AND TERMS OF THE MORTGAGE LOANS
SECTION 2.01 MORTGAGE LOANS . GMAC agrees, on the terms and
subject to the conditions hereinafter set forth, to make Mortgage Loans to the
Borrowers from time to time until the Maturity Date for the purpose of
financing the purchase of certain parcels of Mortgaged Property or the earlier
date of termination in whole of the Credit Commitment pursuant to Section 7.02,
in such aggregate amounts as Borrowers may from time to time request but in no
event exceeding One Hundred Million Dollars ($100,000,000) at any time
outstanding; provided, however, the aggregate amount of any Loan for any
Mortgaged Property shall not exceed one hundred percent (100%) of the cash
purchase price (excluding commissions, transaction fees and other expenses
associated with such purchase) for such Mortgaged Property at any time (the
"Maximum Advance Rate"). Notwithstanding the foregoing, in the event Borrowers
elect not to provide GMAC with (i) a properly recorded first priority Mortgage
or (ii) a Lender's Title Policy prior to GMAC's financing of any parcel of
Mortgaged Property for any Loan for any Mortgaged Property, in each case as and
to the extent permitted by the last paragraph of Section 3.01 below, then the
Maximum Advance Rate for such parcel shall be seventy percent (70%). In either
such case described in clauses (i) and (ii) of the preceding sentence, GMAC
may, at its own expense, record a first priority Mortgage and/or purchase a
Lender's Title Policy, as applicable, and Borrowers shall fully cooperate as
deemed necessary by GMAC. Notwithstanding anything contained herein to the
contrary, for each Mortgage Loan, no later than thirty (30) days after the date
GMAC advances such Loan, Borrowers shall prepay the principal balance of the
applicable Loan by an amount equal to the difference between (A) the applicable
dollar amount of the Maximum Advance Rate for the applicable parcel of
Mortgaged Property and (B) the average of the fee simple appraisal value and
the leased fee appraisal value of the applicable parcel of Mortgaged Property.
The Credit Commitment shall be available to Borrowers by means of individual
term Loans, it being understood that Loans advanced for a particular Mortgaged
Property which are repaid may not be reborrowed under each applicable Note.
Each Loan made by GMAC to finance a particular parcel of Mortgaged Property
hereunder shall have a maturity date which is five (5) months from the date of
the original advance of the Loan for such Mortgaged Property as set forth in
the applicable Note.
SECTION 2.02 NOTES . Each Loan made by GMAC pursuant to Section
2.01 shall be evidenced by and repayable with interest in accordance with a
promissory note executed, jointly and severally, by Capital and any applicable
Borrower (a "Mortgage Note") payable to the order of GMAC, substantially in the
form of Exhibit A attached hereto, dated the date of the Loan hereunder. Any
Person that owns the Mortgaged Property shall be an "applicable" Borrower for
purposes of the preceding sentence and this Agreement. The unpaid principal
amount of each Loan shall bear interest and be due and payable as provided in
this Agreement and each Note. The Note shall bear interest on the unpaid
principal amount thereof from the date thereof until paid at the Interest Rate.
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SECTION 2.03 MAKING THE MORTGAGE LOANS . Once the conditions
described in Section 3.01 below for a particular Loan have been met, such Loan
shall be made on at least two (2) Business Days' prior notice from the
Representative to GMAC in writing, which request shall specify and/or include,
as the case may be, (i) the date of the requested Loan, (ii) the amount of such
advance, (iii) the address and owner of the Mortgaged Property, (iv) the
purchase price of the Mortgaged Property, (v) a copy of the contract evidencing
the purchase of the Mortgaged Property and a copy of the applicable settlement
statement, (vi) each of the documents specified in Section 3.01, and (vii) such
other documents, certificates and opinions as GMAC may request, in each case in
form and substance acceptable to GMAC. Upon fulfillment of the applicable
conditions set forth in Article III, GMAC may disburse the amount of the
requested Loan in such manner as GMAC and the Representative may from time to
time agree.
SECTION 2.04 EXTENSION, TERMINATION AND REDUCTION OF THE CREDIT
COMMITMENT. The Credit Commitment shall automatically renew on an annual basis
for periods of one (1) year unless either of GMAC or the Representative
provides such other party written notice of such party's intent to not renew
the Credit Commitment on or prior to ninety (90) days before the applicable
Maturity Date. The Borrowers shall have the right at any time and from time to
time upon three (3) business days' prior notice to GMAC to permanently
terminate in whole or permanently reduce in part the Credit Commitment, without
penalty or premium; provided, however, that no reduction shall reduce the
Credit Commitment to an amount less than the aggregate amount of all Loans
outstanding at the time with respect thereto. GMAC may also terminate the
Credit Commitment as provided in Section 7.02.
SECTION 2.05 PAYMENT, INTEREST RATE; DEFAULT RATE.
(a) Unless otherwise increased pursuant to Section 2.01,
the unpaid principal amount of each Loan shall bear interest from the date of
such Loan until maturity (whether by acceleration or otherwise) at a rate per
annum which shall at all times be the LIBOR Rate in effect from time to time
plus two and one quarter percent (2.25%) (the "Interest Rate"), with such
interest payable in accordance with Section 2.05(c) below.
(b) If an Event of Default shall have occurred and be
continuing hereunder, all Loans shall bear interest from the date of such Event
of Default, payable on demand, at a rate per annum (the "Default Rate") equal
to the sum of three percent (3%) plus the then applicable Interest Rate.
(c) Interest on Loans shall accrue from and including
the date of any such Loan to but excluding the date of any repayment thereof
and shall be payable (i) monthly in arrears for each month on the first
Business Day of the next following calendar month and (ii) at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(d) All payments of principal and interest under each
Note hereunder shall be made to GMAC in immediately available funds. Borrowers
agree that the amount shown on the books and records of GMAC as being the
aggregate amount of the Loan outstanding under each Note shall be prima facie
evidence of the principal amount of such Note then outstanding.
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SECTION 2.06 PAYMENT ON NON-BUSINESS DAYS . Whenever any payment
to be made hereunder or under any Note shall be stated to be due on a day which
is not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest on the applicable Note or the fees
hereunder, as the case may be.
SECTION 2.07 INABILITY TO ASCERTAIN THE LIBOR RATE .
Notwithstanding any other provision of this Agreement or the Notes to the
contrary, if GMAC shall determine in good faith by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate, then GMAC shall promptly give notice thereof to
Representative, and all outstanding Loans commencing as of the next monthly
billing period shall bear interest at the Prime Rate.
SECTION 2.08 USE OF PROCEEDS . The proceeds of each Loan shall be
used solely for financing the purchase of new Mortgaged Property or refinancing
of existing parcels of real property owned by the Borrowers with the applicable
Note hereunder in accordance with the terms and conditions set forth in Section
2.03.
SECTION 2.09 EFFECT OF FULL PAYMENT . Upon the full payment and
satisfaction of principal and interest of any particular Mortgage Note, the
applicable Borrower (other than Capital) obligated on such Mortgage Note shall
be released from all liability under this Agreement, the Mortgage Note and the
Other Agreements and each corresponding Mortgage securing such Mortgage Note
shall be released, it being understood that Capital shall assume all
responsibility and obligation of such Borrower to indemnify Lender pursuant to
Section 8.11 herein after full payment of the applicable Borrower's Mortgage
Note.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01 CONDITIONS PRECEDENT TO THE ADVANCE OF EACH LOAN .
The obligation of GMAC to make any Loan is subject to the condition precedent
that GMAC shall have received on or before the day of such Loan all of the
following, each dated (unless otherwise indicated) as of the date of such Loan,
in each case in form and substance satisfactory to GMAC unless otherwise agreed
to by GMAC and Borrowers in writing (collectively, the "Mortgage Loan
Documents"):
(a) Joinder Agreement. Executed original of the Joinder
Agreement in the form attached hereto as Exhibit B pursuant to which the owner
of each parcel of Mortgaged Property agrees to become a Borrower under this
Agreement.
(b) Mortgage. The Borrower which is the mortgagor will
own the respective Mortgaged Property in fee simple and shall execute a
Mortgage which when recorded will grant to GMAC a first priority security
interest in each parcel of Mortgaged Property to GMAC.
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(c) Mortgage Note. Mortgage Note properly executed on
behalf of the applicable Borrower.
(d) Use of Proceeds. Evidence that the proceeds of the
Loan shall be used for the acquisition of a parcel of Mortgaged Property.
(e) Title Policy. For each parcel of Mortgaged Property,
an ALTA mortgagee policy of title insurance, with all premiums having been paid
in full, with aggregate liability limits of not less than the Mortgage Loan
amount applicable to such Mortgaged Property, insuring GMAC's interest under
the mortgage, subject only to such defects and exceptions as will have been
approved by GMAC in its sole, absolute discretion and containing such
endorsements as GMAC will require. Such title insurance policies will insure
that marketable legal title is vested in fee simple absolute or leasehold in
the applicable Borrower, that the mortgage or deed of trust constitutes a first
lien on the real property acquired or refinanced with the proceeds of such
Loan, and that there are no recorded or unrecorded Liens encumbering such
property, except such Liens as are approved by GMAC. Notwithstanding the
foregoing, to the extent Borrowers elect not to purchase a title insurance
policy on behalf of GMAC in accordance with Section 2.01 and the last paragraph
of this Section 3.01, the applicable Borrower and Capital shall (i) deliver a
collateral assignment of the proceeds of the owner's title policy issued in the
name of the applicable Borrower in favor of GMAC pursuant to a collateral
assignment, in form and substance acceptable to GMAC and its counsel, and (ii)
deliver a title commitment to GMAC, in form and substance acceptable to GMAC
and its counsel.
(f) Survey. Borrowers will have provided to GMAC an ALTA survey
with respect to each parcel of Mortgaged Property, with each such survey to be
certified to GMAC in form satisfactory to GMAC in its sole, absolute
discretion; provided, however, Borrowers may elect to deliver such survey to
GMAC within thirty (30) days after the making of any applicable Loan, but only
if the applicable title policy will not have a "survey exception" (in which
case Borrowers hereby covenant and agree to make such delivery within the
aforesaid thirty (30) day time period).
(g) Appraisal. Borrowers will have provided to GMAC an MAI
appraisal with respect to each parcel of Mortgaged Property (including, without
limitation, a fee simple appraisal value and a leased fee appraisal value) by
an appraiser acceptable to GMAC and, in form and substance acceptable to GMAC;
provided, however, Borrowers may elect to deliver such appraisal to GMAC within
thirty (30) days after the making of any applicable Loan (in which case
Borrowers hereby covenant and agree to make such delivery within the aforesaid
thirty (30) day time period).
(h) Opinion. GMAC will have received an opinion of Borrowers'
counsel as to a particular Real Estate Subsidiary in the form attached hereto
as Exhibit D prior to making any Loan where such Real Estate Subsidiary is a
maker of the applicable Mortgage Note and/or an owner of the applicable
Mortgaged Property.
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(i) Environmental Assessment. An environmental assessment report
(at the expense of Borrowers), including Phase I and Phase II assessments (when
recommended by the Phase I assessment), from a qualified engineering firm or
other qualified consultant acceptable to GMAC with respect to an environmental
assessment of the Mortgaged Property to be acquired (each an "Environmental
Assessment"), in form and substance acceptable to GMAC including, without
limitation, environmental condition of such Mortgaged Property acceptable to
GMAC.
(j) Pay-off. Executed Pay-off Letter and evidence of the release
of all Liens on each parcel of Mortgaged Property.
(k) Officers' Certificate. A certificate of the applicable (or
respective) Borrower certifying that (i) the representations and warranties
contained in Article IV are correct on and as of the date of such Loan as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date, and (ii) no
event has occurred and is continuing, or would result from such Loan, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or the lapse of time or both.
(l) Resolutions. A certified copy of the resolutions of the Board
of Directors/Managers of the respective Borrower evidencing approval of this
Agreement, the Mortgage, the Note and the other matters contemplated hereby.
(m) Secretary's Certificate. A signed copy of a certificate of
the Secretary or an Assistant Secretary of each Borrower which shall certify to
(i) the Organizational Documents of such Borrower, (ii) Operating Documents of
such Borrower, and (iii) the names of the officers of the Borrower authorized
to sign this Agreement and the Other Agreements and the certificates to be
delivered pursuant to this Agreement, together with the true signatures of such
officers. GMAC may conclusively rely on such certificate until it shall receive
a further certificate of the Secretary or Assistant Secretary of the applicable
Borrower canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(n) Financing Statements. UCC fixture filings for each parcel of
Mortgaged Property.
(o) Other Agreements. Such other documents, agreements and
certificates as GMAC may reasonably request.
Notwithstanding the requirement to deliver each of the foregoing
Mortgage Loan Documents to GMAC prior to the advance of any Mortgage Loan, in
the event (i) the taxes and/or fees associated with the recording of any
Mortgage exceed $2.00 per $1,000, or (ii) the cost of a lender's title policy
for any parcel of Mortgaged Property exceeds $1.20 per $1,000, Borrowers may
elect not to record such Mortgage and/or purchase a lender's title policy in
favor of GMAC; provided, however, that for such Mortgage Loan, (A) the
Borrowers will be subject to the reduction in the Maximum Advance Rate in
accordance with Section 2.01 above, and (B) if the taxes or fees associated
with recording the Mortgage are not in excess of the amount
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described in clause (i) above, but the cost of the lender's title policy
exceeds the amount described in clause (ii) above, GMAC still may record the
Mortgage in the applicable jurisdiction (at Borrower's expense).
SECTION 3.02 CONDITIONS PRECEDENT TO ALL LOANS . The obligation
of GMAC to make each Loan shall be subject to the further conditions precedent
that on the date of such Loan:
(i) The representations and warranties
contained in Article IV are correct on and as of the date of such Loan as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date;
(ii) No event has occurred and is continuing, or
would result from such Loan, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both;
(iii) Evidence of a valid first priority lien
and/or security interest in the Mortgaged Property purchased with the proceeds
of the Loan except as otherwise specifically provided herein; and
(iv) During the term of this Agreement, no
Borrower shall have further encumbered through non-GMAC financing any parcel of
Mortgaged Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants to GMAC
as follows:
SECTION 4.01 CAPACITY AND POWER . Each Borrower is of due
capacity and is a limited partnership, general partnership, limited liability
company or corporation duly incorporated or formed, as applicable, validly
existing and in good standing under the laws of its respective state of
formation and is duly licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification
necessary. Each Borrower has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under this Agreement and the
Other Agreements.
SECTION 4.02 AUTHORIZATION OF BORROWING: NO CONFLICT AS TO LAW OR
AGREEMENTS . The execution, delivery and performance by each Borrower of this
Agreement and the Other Agreements and the borrowings from time to time
hereunder have been duly authorized by all necessary action and do and will not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect having applicability to
any Borrower or to the Organizational Documents or Operating Documents of any
Borrower, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
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instrument to which any Borrower is a party or by which it or its properties
may be bound or affected, or (iv) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than the respective Mortgage,
as applicable) upon or with respect to any of the properties now owned or
hereafter acquired by any Borrower.
SECTION 4.03 LEGAL AGREEMENTS . This Agreement and the Other
Agreements, when executed and delivered by each respective Borrower hereunder,
will constitute the legal, valid and binding obligation of each Borrower
enforceable against such Borrower in accordance with their respective terms,
subject to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or similar laws affecting the enforceability of creditors'
rights generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity).
SECTION 4.04 SUBSIDIARIES . No Borrower other than Capital has
any subsidiaries other than a Borrower or as set forth in Schedule 4.04.
SECTION 4.05 FINANCIAL CONDITION . Capital has heretofore
furnished or will furnish prior to any Loan, certain financial statements of
CARS on a consolidated basis to GMAC. Said financial statements fairly present
the financial condition of CARS on a consolidated basis as of the dates thereof
and the results of their operations for the periods then ended, and were
prepared in accordance with generally accepted accounting principles. No
Borrower (other than CARS) has (a) any material amount of assets other than the
applicable Mortgaged Property owned by such Borrower or (b) any Indebtedness
except in favor of GMAC.
SECTION 4.06 ADVERSE CHANGE . There has been no material adverse
change in the business, properties or condition (financial or otherwise) of
CARS or any Borrower since the date of the latest financial statement.
SECTION 4.07 LITIGATION . There are no actions, suits or
proceedings pending or, to the knowledge of any Borrower, threatened against or
affecting any Borrower or the properties of any Borrower before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to such Borrower, would
have a material adverse effect on the financial condition, properties, or
operations of such Borrower.
SECTION 4.08 TAXES . Each Borrower has filed all federal, state
and local tax returns which are required to be filed, and each Borrower has
paid or caused to be paid to the respective taxing authorities all taxes as
shown on said returns or on any assessment received by it to the extent such
taxes are due.
SECTION 4.09 TITLES AND LIENS . Each Borrower has good and clean
title to each parcel of Mortgaged Property.
SECTION 4.10 REAL PROPERTY COLLATERAL DOCUMENTS . Each Mortgage
constitutes a valid and perfected (to the extent recorded in the applicable
jurisdiction in which such Mortgaged
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Property is located) first priority security interest in favor of GMAC in the
respective Mortgaged Property to which such Mortgage relates (except as
otherwise permitted by this Agreement).
SECTION 4.11 OTHER SECURITY INTERESTS . Except for Permitted
Encumbrances (as defined in the applicable Mortgage for any Mortgaged
Property), there are no security interests or liens encumbering any portion of
any Mortgaged Property covered by any Mortgage.
SECTION 4.12 COMPLIANCE WITH LAWS . Each Borrower is in
compliance with all laws, orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities binding upon or affecting the
business, operation or assets of each Borrower including, without limitation,
zoning or other ordinances relating to permissive non-conforming uses of
property, except to the extent the failure to so comply will not have a
material adverse effect on any applicable Borrower or Mortgaged Property owned
by such Borrower.
SECTION 4.13 OTHER AGREEMENTS . Each Borrower makes each of the
representations and warranties of each Borrower contained in the Other
Agreements to which such Borrower is a party operative and applicable for the
benefit of GMAC as if the same were set forth at length herein.
SECTION 4.14 YEAR 2000 COMPLIANCE . Each Borrower reasonably
believes that all computer applications (including those affected by
information received from its suppliers and vendors) that are material to the
business and operations of any Borrower are Year 2000 Compliant, except to the
extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
SECTION 4.15 SOLVENCY . Each Borrower has capital sufficient to
carry on its business and transactions and all businesses and transactions in
which it is about to engage and is solvent and able to pay its debts as they
mature and each Borrower owns property the fair saleable value of which is
greater than the amount required to pay each Borrower's Indebtedness. No
transfer of property is being made and no Indebtedness is being incurred in
connection with the transactions contemplated by this Agreement with the intent
to hinder, delay or defraud either present or future creditors of Borrower.
SECTION 4.16 ACCURACY OF INFORMATION . All factual information
heretofore or contemporaneously furnished by each Borrower to GMAC for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all other factual information (taken as a whole) hereafter furnished by
or on behalf of each Borrower to GMAC will be, true and accurate in every
material respect on the date as of which such information is dated or
certified, and no Borrower has not omitted and will not omit any material fact
necessary to prevent such information from being false or misleading.
SECTION 4.17 WETLANDS . To the best knowledge of the Borrowers,
there are no wetlands or similarly protected marsh areas as defined under any
federal, state or local law on the Mortgaged Property except as disclosed in
the applicable Mortgage for such Mortgaged Property. THE BORROWERS SHALL BE
SOLELY RESPONSIBLE FOR AND AGREE TO
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INDEMNIFY TRUSTEE AND GMAC AND PROTECT AND DEFEND WITH COUNSEL REASONABLY
ACCEPTABLE TO GMAC AND HOLD TRUSTEE AND GMAC HARMLESS FROM AND AGAINST ANY
CLAIMS (INCLUDING WITHOUT LIMITATION THIRD PARTY CLAIMS FOR PERSONAL INJURY OR
REAL OR PERSONAL PROPERTY DAMAGE), ACTIONS, ADMINISTRATIVE PROCEEDINGS
(INCLUDING INFORMAL PROCEEDINGS), JUDGMENTS, DAMAGES, PUNITIVE DAMAGES,
PENALTIES, FINES, COSTS, LIABILITIES (INCLUDING SUMS PAID IN SETTLEMENTS OF
CLAIMS), INTEREST OR LOSSES, REASONABLE ATTORNEYS' FEES (INCLUDING ANY FEES AND
EXPENSES INCURRED IN ENFORCING THIS INDEMNITY), REASONABLE CONSULTANT FEES, AND
EXPERT FEES THAT ARISE DIRECTLY OR INDIRECTLY FROM OR IN CONNECTION WITH THE
PRESENCE ON THE MORTGAGED PROPERTY OF WETLANDS, TIDELANDS OR SWAMP AND OVERFLOW
LANDS, OR ANY BREACH OF THE FOREGOING REPRESENTATION AND WARRANTY. THE
PROVISIONS OF THIS SECTION 4.17 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
AND RECONVEYANCE OF THE MORTGAGED PROPERTY.
SECTION 4.18 ENVIRONMENTAL MATTERS . The Borrowers, each
Subsidiary and, to the best knowledge of Borrowers, any tenant or other
occupant of the Mortgaged Property, are in compliance in all material respects
with all applicable Environmental Laws and have been issued and will maintain
and keep current all required federal, state and local permits, licenses,
certificates and approvals. Except as set forth in any Environmental Assessment
or on Schedule 4.18 hereto, neither the Borrowers nor, to the best of
Borrowers' knowledge after reasonable investigation, any previous owner or
operator of the Mortgaged Property or any other Person, (a) has used or is
using the Mortgaged Property in violation of any Environmental Law; (b) has
managed, generated, stored, released, discharged, treated, or disposed of any
Hazardous Material on any portion of the Mortgaged Property in violation of any
Environmental Law; or (c) has transferred or released or caused to be
transferred or released any Hazardous Material from the Mortgaged Property to
any other location in violation of any Environmental Law. Except for Hazardous
Materials approved in writing by GMAC for use on the Mortgaged Property or
necessary for the routine maintenance of the Mortgaged Property and as used in
the ordinary course of the Borrowers' business (or the business of any tenant
occupying the Mortgaged Property pursuant to a written lease approved by GMAC),
which Hazardous Material shall be used in accordance with all applicable
Environmental Laws, the Borrowers covenant that they shall not permit any
Hazardous Materials to be brought on to the Mortgaged Property, or if so
brought or found located thereon, shall be immediately removed, with proper
disposal, and all environmental cleanup requirements shall be diligently
undertaken pursuant to all Environmental Laws. Except as set forth in the
Environmental Assessment or on Schedule 4.18 hereto, no Borrower nor any
Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and no Borrower nor any Subsidiary is aware of any
facts, which (i) calls into question, or could reasonably be expected to call
into question, compliance by the Borrowers or any Subsidiary or any tenant or
other occupant with any Environmental Laws, (ii) seeks, or could reasonably be
expected to form the basis of a meritorious proceeding to seek, to suspend,
revoke or terminate any license, permit or approval necessary for the
operations of the Borrowers' or Subsidiary's or any tenant's or other
occupant's business or facilities or for the
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generation, handling, storage, treatment or disposal of any Hazardous
Materials, or (iii) seeks to cause, or could reasonably be expected to form the
basis of a meritorious proceeding to cause, any property of the Borrowers or
any Subsidiary to be subject to any restrictions on ownership, use, occupancy
or transferability under any Environmental Laws. Borrowers, jointly and
severally, agree that GMAC shall not assume any liability or obligation for
loss, damage, fines, penalties, claims or duty to clean-up or dispose of wastes
or materials on or relating to the property of Borrowers regardless of any
inspections made by GMAC prior to the consummation of this Agreement or as a
result of any conveyance of title to GMAC by foreclosure, deed in lieu of
foreclosure, or otherwise. Borrowers, jointly and severally, agree to remain
fully liable and to indemnify and hold harmless GMAC from any costs, expenses,
clean-up costs, waste disposal costs, litigation costs, fines and penalties,
including without limitation those costs, expenses, penalties, fines and other
related liabilities under applicable Environmental Laws, except to the extent
such costs, expenses, penalties, fines and other related liabilities are
directly caused by the gross negligence or wilful misconduct of GMAC.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid, the Credit Commitment shall
be outstanding or any Borrowers' Liabilities shall be due under this Agreement,
the Borrowers and CARS, as applicable, will comply with the following
requirements, unless GMAC shall otherwise consent in writing:
SECTION 5.01 FINANCIAL STATEMENTS . The Borrowers shall deliver
to GMAC the following:
(a) As soon as available, copies of the periodic Form
10-Q quarterly report or comparable successor report filed by CARS with the
Securities and Exchange Commission or any successor agency; provided, that if
such report is not made available within forty-five (45) days after the end of
each of the first three quarterly accounting periods in each fiscal year of
CARS beginning with the quarter ending March 31, 2000, CARS shall immediately
deliver to GMAC an internally-prepared balance sheet of CARS and its
Subsidiaries on a consolidated and consolidating basis as at the end of such
quarter and the related statements of operations and statements of cash flows
of CARS and its Subsidiaries on a consolidated and consolidating basis for such
quarter and for the portion of the fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous fiscal
year, all in reasonable detail and certified (subject to normal year-end
adjustments) as to fairness of presentation, in accordance with GAAP (other
than footnotes thereto), by the chief financial officer of CARS;
(b) As soon as available, copies of the Form 10-K Annual
Report or comparable successor report filed by CARS with the Securities and
Exchange Commission or any successor agency; provided, that if such report is
not made available within ninety (90) days after the close of each fiscal year
of CARS, CARS shall immediately deliver to GMAC a balance sheet and the related
consolidated and consolidating statements of operations and stockholders'
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equity and consolidated and consolidating statements of cash flows of CARS and
its Subsidiaries on a consolidated and consolidating basis as of the end of
such fiscal year, fairly and accurately presenting the financial condition of
CARS and its Subsidiaries on a consolidated basis as at such date and the
results of operations of CARS and its Subsidiaries for such fiscal year and
setting forth in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, all in reasonable
detail, prepared in accordance with GAAP consistently applied, and audited by a
big-five accounting firm or an accounting firm acceptable to GMAC in its
reasonable discretion;
(c) Concurrently with the financial statements delivered
to GMAC in connection with Section 5.01(b) above, copies of the balance sheet
of each lessee (the "Lessee") of each parcel of Mortgaged Property as at the
end of each calendar quarter, and the related statements of income, changes in
equity and cash flows for such quarter and for the period from the beginning of
the then current Fiscal Year through the end of such quarter, certified as true
and correct by such Lessee, to the extent received by any Borrower;
(d) Immediately after the commencement thereof, notice
in writing of all litigation and of all proceedings before any governmental or
regulatory agency affecting CARS or any Borrower, which seek a monetary
recovery against CARS or any Borrower in excess of $5,000,000, or otherwise
having a material adverse effect on the financial condition, business or
operations of CARS or the Borrowers taken as a whole;
(e) As promptly as practicable (but in any event not
later than five (5) business days) after any Borrower obtains knowledge of the
occurrence of any event which constitutes an Event of Default or would
constitute an Event of Default with the passage of time or the giving of
notice, or both, notice of such occurrence, together with a detailed statement
by such Borrower of the steps being taken by such Borrower to cure the effect
of such event;
(f) As soon as practicable and in any event within
thirty (30) days after any Borrower knows or has reason to know that any
Reportable Event with respect to any plan has occurred, the statement of such
Borrower setting forth details as to such Reportable Event and the action which
such Borrower proposes to take with respect thereto, together with a copy of
the notice of such Reportable Event to the Pension Benefit Guaranty
Corporation; and
(g) Such other information respecting the financial
condition and results of operations of CARS and each Borrower as GMAC may from
time to time reasonably request.
GMAC is hereby authorized to deliver a copy of any such financial or
other information delivered hereunder to GMAC (or any affiliate of GMAC), to
any governmental authority having jurisdiction over GMAC pursuant to any
written request therefor or in the ordinary course of examination of loan
files, or to any other Person who shall acquire or consider the assignment of,
or acquisition of any participation interest in, any obligation of Borrower
permitted by this Agreement.
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SECTION 5.02 BOOKS AND RECORDS; INSPECTION AND EXAMINATION . CARS
and each Borrower will keep accurate books of record and account for itself in
which true and complete entries will be made in accordance with generally
accepted accounting principles consistently applied and, upon prior written
request of GMAC, will give any representative of GMAC access to, and permit
such representative to examine, copy or make extracts from, any and all books,
records and documents in its possession, to inspect any of its properties
(including, but not limited to, performing environmental testing on any parcel
of Mortgaged Property at Borrowers' expense (but only if GMAC has reasonable
cause to believe such environmental testing is necessary), subject to any
reasonable restrictions under the lease governing such Mortgaged Property) and
to discuss its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as often as GMAC
may reasonably request.
SECTION 5.03 COMPLIANCE WITH LAWS . Each Borrower will comply
with, and cause any tenant of Mortgaged Property to comply with, the
requirements of applicable laws and regulations, the noncompliance with which
would materially and adversely affect its business or its financial condition.
SECTION 5.04 PAYMENT OF TAXES AND OTHER CLAIMS . Each Borrower
will pay or discharge, or cause any tenant of Mortgaged Property to pay or
discharge, all taxes, assessments and governmental charges levied or imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto and all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien or
charge upon any properties of any Borrower; provided, that no Borrower shall be
required to pay, or cause any third party to pay, any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate legal proceedings.
SECTION 5.05 MAINTENANCE OF PROPERTIES . Each Borrower will keep
and maintain, or cause any tenant of Mortgaged Property to keep and maintain,
all of its properties necessary or useful in its business in good condition,
repair and working order.
SECTION 5.06 INSURANCE. Each Borrower will keep all of its
insurable properties adequately insured at its full insurable value at all
times with responsible insurance carriers against loss or damage by fire and
other hazards to the extent and in the manner as are customarily insured
against by similar businesses owning such properties similarly situated. At a
minimum, each Borrower will maintain, or cause any tenant of Mortgaged Property
to maintain, upon and relating to the Mortgaged Property the following policies
of property, liability and casualty insurance, such insurance policies to be in
a form reasonably satisfactory to GMAC:
a) General public liability insurance at all
times with responsible insurance carriers against liability on account of
damage to persons and property.
b) Insurance under all applicable workers'
compensation laws (or in the alternative, maintain required reserves if
self-insured for workers' compensation purposes) and against loss by
reason of business interruption, such policies of insurance to
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have such limits, deductibles, exclusions, co-insurance and other
provisions providing no less coverages than are maintained by similar
businesses that are similarly situated.
c) Prior to construction of any improvements
being conducted on the Mortgaged Property, an "all-risk", completed value,
non-reporting builder's risk insurance policy or policies that provide
coverage similar to the foregoing must be submitted to GMAC. This policy
must be from a company and in an amount satisfactory to GMAC, must have a
vandalism and malicious mischief endorsement and must be sufficient to
avoid the application of any co-insurance provisions, must include
provisions for a minimum 30-day advance written notice of any intended
policy cancellation or non-renewal, and must designate GMAC as mortgagee
and loss payee in a standard mortgagee endorsement.
d) Each Borrower covenants to maintain or
cause to be maintained, by the Borrowers and, during the construction of
any improvements on the Mortgaged Property, the general contractor,
general accident and commercial general liability insurance against all
claims for bodily injury, death or property damage occurring upon, in or
about any part of the Mortgaged Property. The policies must be in amounts
satisfactory to GMAC. The contractor's policy must include worker's
compensation coverage in an amount sufficient to satisfy statutory
requirements.
e) For any improvement on the Mortgaged
Property, and after completion of any construction and in replacement of
the builder's risk coverage under Subparagraph 5.06(c) above, an
"all-risk" permanent property insurance policy must be in effect, and an
original certificate from the issuing insurance company evidencing that
the policy is in full force and effect must be submitted to GMAC. The
policy must be in an amount satisfactory to GMAC, must eliminate all
co-insurance provisions, must include a Replacement Cost and Agreed
Amount/Stipulated Value Endorsement, must include a Sinkhole Endorsement,
if appropriate, must include provisions for a minimum 30-day advance
written notice to GMAC of any intended policy cancellation or non-renewal,
and must designate GMAC as mortgagee and loss payee in a standard
mortgagee endorsement, as its interest may appear.
f) Rent loss/business interruption insurance
as to any buildings or structures now or hereafter comprising a part of
the Mortgaged Property. The policy must be from a company and in an amount
satisfactory to GMAC and must include provisions for a minimum 30-day
advance written notice to GMAC of any intended policy cancellation or
non-renewal.
g) If, and to the extent that, the Mortgaged
Property is located within an area that has been or is hereafter
designated or identified as an area having special flood hazards as
defined in the Federal Flood Disaster Protection Act of 1973, as such act
may from time to time be amended and in effect, or pursuant to any other
national or state program of flood insurance, Borrowers shall carry flood
insurance with respect to the improvements located on such Mortgaged
Property in an amount not less than the maximum amount available under the
Flood Disaster Protection Act of 1973 and the regulations issued
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pursuant thereto, as amended from time to time, in form complying with the
"insurance purchase" requirement of that Act.
h) If, and to the extent that, the Mortgaged
Property is located within an area that has been or is hereafter
designated or identified as an area having special earthquake hazards,
Borrowers shall carry, if required by GMAC, earthquake insurance in such
amounts as GMAC shall require.
i) Each such liability insurance policy shall
name GMAC as an additional insured party with respect to the Mortgaged
Property, and each such property insurance policy shall name GMAC as a
loss payee subject to the rights of any tenant under leases approved by
GMAC, and shall provide by way of endorsements, riders or otherwise that
(i) proceeds will be payable to GMAC as its interest may appear; (ii) GMAC
will be loss payee for all proceeds payable if the proceeds payable are
equal to or greater than Five Hundred Thousand Dollars ($500,000) in
amount on a per occurrence or claim basis, and such proceeds shall be made
available to Borrowers if such proceeds are less than Five Hundred
Thousand Dollars ($500,000) so long as no Event of Default shall have
occurred; (iii) such insurance policy shall be renewed, if renewal is
available, and shall not be canceled and further, shall not be endorsed,
altered or reissued to effect a change in coverage in any manner
materially adverse to GMAC, for any reason and to any extent whatsoever
unless such insurer shall have first given GMAC thirty (30) days' prior
written notice thereof; (iv) such insurance policy shall not be impaired
by any act or neglect of Borrowers or any use of the Mortgaged Property
for purposes more hazardous than are permitted by such policy; and (v)
GMAC may, but shall not be obliged to, without waiving or releasing any
obligation or default by Borrowers hereunder following notice, make
premium payments and take any other action with respect thereto which GMAC
deems advisable to prevent any nonrenewal, cancellation, endorsement,
alteration or reissuance and such payments shall be accepted by the
insurer to prevent same. All sums so disbursed by GMAC, including
reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, on demand, by Borrowers to GMAC, shall
bear interest until paid in full at the interest rate per annum equal to
then applicable Interest Rate and shall be additional obligations
hereunder secured by the Collateral.
j) Borrowers may maintain the insurance
coverages required hereunder under a blanket policy or policies. GMAC
shall be furnished with the original certificate of insurance and a copy
of the policy, if requested by GMAC (or an original certificate and a copy
of the blanket policy or such other form as may be acceptable to GMAC with
respect to such insurance) coincident with the execution of this Agreement
or any Mortgage and satisfactory evidence of renewal thereof not less than
thirty (30) days prior to the expiration of the initial or each preceding
renewal policy together with receipts or other evidence that the premiums
thereon have been paid, with the original of each renewal policy or a
certificate with a duplicate of such renewal policy to follow as soon as
available or, in any such case, an appropriate broker's certificate in
respect thereto. Upon request by GMAC, Borrowers shall furnish to GMAC a
statement certified by Borrowers of the amounts of insurance maintained in
compliance with this Section 5.06, a general description of the risks
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covered by such insurance and of the insurance company or companies which
carry such insurance. In addition, Borrowers will promptly comply or cause
Tenants to promptly comply in all material respects with any requirements
of any insurer of any portion of the Mortgaged Property and any and all
rules and regulations of any insurance commission or board of fire
underwriters having jurisdiction over the Mortgaged Property.
SECTION 5.07 RESTORATION FOLLOWING CASUALTY. If any acts or
occurrences of any kind or nature, ordinary or extraordinary, foreseen or
unforeseen, shall result in damage to or loss or destruction of the Mortgaged
Property in excess of Five Hundred Thousand Dollars ($500,000.00), Borrowers
will give prompt notice thereof to GMAC. If the cost to fully pay for the
restoration, repair or replacement (hereinafter called the "Work") of the
Mortgaged Property is less than Five Hundred Thousand Dollars ($500,000) in the
aggregate, the insurance proceeds shall be made available to Borrowers to
restore, repair, replace or rebuild the Mortgaged Property, so long as no
Default or Event of Default shall have occurred. If (a) the cost to fully pay
for the Work is equal to or greater than Five Hundred Thousand Dollars
($500,000), (b) there are sufficient insurance proceeds or sufficient other
amounts available to Borrowers to fully pay for the work and the projected
appraised value of the Mortgaged Property upon completion of the Work is equal
to or greater than the appraised value of the Mortgaged Property immediately
prior to the casualty, (c) no Event of Default shall have occurred and be
continuing, (d) neither Borrowers nor the tenant leasing the Mortgaged Property
has elected to terminate the Lease of the Mortgaged Property pursuant to the
Lease and confirmation of the same has been delivered to GMAC, (e) Borrowers
have received and are entitled to continue to receive full rental payments
under the Lease throughout the period of the Work, whether such payments are
made by the tenant or from rental or business interruption insurance proceeds,
(f) all parties having operating, management or franchise interests in, and
arrangements concerning, the Mortgaged Property agree that they will continue
their interests and arrangements for the contract terms then in effect
following the restoration or repair, (g) all parties having commitments to
provide financing with respect to the Mortgaged Property, to purchase
Borrowers' interest in full or in part in the Mortgaged Property or to purchase
the Borrowers' Liabilities agree in a manner satisfactory to GMAC that their
commitments will continue in full force and effect and, if necessary, the
expiration of such commitments will be extended by the time necessary to
complete the restoration or repair, (h) Borrowers present sufficient evidence
to GMAC that the damaged property will be restored prior to the applicable date
of maturity of the Mortgage Note relating to the applicable Mortgaged Property,
and (i) GMAC will not incur any liability to any other person as a result of
such use or release of insurance proceeds, then Borrowers will so certify to
GMAC, and will certify that it will, and shall, within 30 days following
reaching an agreement with the insurer under the casualty insurance policy
relating thereto with regard to the disbursement of insurance proceeds commence
and thereafter continue diligently to completion, to restore, repair, replace
and rebuild such Mortgaged Property as nearly as possible to its value,
condition and character immediately prior to such damage, loss or destruction
with such alterations, modifications and/or betterments reasonably deemed
necessary or desirable by Borrowers in their business judgment. If the
conditions set forth in such certificate of Borrowers are not satisfied with
respect to a casualty, or if Borrowers fail to deliver such a certificate to
GMAC within 90 days following the casualty, or if Borrowers shall otherwise
fail to restore, repair, replace or
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rebuild such Mortgaged Property as provided herein, the insurance proceeds
related thereto shall be promptly paid to GMAC and applied to the outstanding
balance of the Borrowers' Liabilities.
SECTION 5.08 APPLICATION OF PROCEEDS. Insurance proceeds to be
used for Work, which proceeds are equal to or greater than Five Hundred
Thousand Dollars ($500,000) (the "Insurance Proceeds Threshold Amount") on a
per occurrence or claim basis, initially shall be paid to GMAC, and shall be
paid out by GMAC to Borrowers from time to time as the Work progresses, subject
to the following conditions: (a) prior to the commencement thereof (other than
Work to be performed on an emergency basis to protect the Mortgaged Property or
prevent interference therewith), an architect or engineer, reasonably approved
by GMAC, shall be retained by Borrowers (at Borrowers' expense) and charged
with the supervision of the Work; (b) each request for payment by Borrower
shall be made on ten (10) days prior notice to GMAC and shall be accompanied by
a certificate by an executive officer of Borrowers, stating that: (i) all of
the Work completed has been completed in substantial compliance with the plans
and specifications therefor; (ii) the sum requested is justly required to
reimburse Borrowers for payments by Borrowers to, or is justly due to, the
contractor, subcontractors, materialmen, laborers, engineers, architects or
other persons rendering services or materials for the Work; and (iii) when
added to all sums previously paid out by Borrower, the sum requested does not
exceed the value of the Work completed to the date of such certificate; (c) the
amount of insurance proceeds remaining in the hands of GMAC or remaining to be
disbursed by the applicable insurance company, plus any further reserves agreed
to be maintained by Borrower in conformity with GAAP in connection with the
Work, will in GMAC's reasonable judgment be sufficient to complete the Work;
(d) each request shall be accompanied by certification by an executive officer
of Borrowers or copies of waivers of Lien reasonably satisfactory in form and
substance to GMAC covering that part of the Work for which payment or
reimbursement is being requested; provided, however, that in the event it is
customary practice not to grant such waivers prior to the making of such
payments, Borrower shall have obtained affidavits from the parties requesting
such payment (i) stating the amount then due and (ii) promising the delivery of
the waiver upon the making of the payment; (e) an Event of Default has not
occurred and is not continuing since the hazard, casualty or contingency giving
rise to payment of the insurance proceeds occurred; (f) in the case of the
request for the final disbursement, such request is accompanied by a copy of
any certificates of occupancy or other certificate required by any legal
requirement to render occupancy of the damaged portion of the Mortgaged
Property lawful; and (g) if, in GMAC's reasonable judgment, the amount of such
insurance proceeds will not be sufficient to complete the Work (which
determination may be made prior to or from time to time during the performance
of the Work), Borrowers shall maintain adequate reserves in conformity with
GAAP equal to an amount of money which when added to such insurance proceeds
will be sufficient, in GMAC's reasonable judgment, to complete the Work.
Insurance proceeds to be used for Work, which proceeds are less than the
Insurance Proceeds Threshold Amount on a per occurrence or claim basis,
initially shall be paid to Borrowers and shall be used by Borrowers to perform
such Work in accordance with its certificate delivered pursuant to Section
5.07, with any excess thereof used to repay the Borrowers' Liabilities in
accordance with Section 5.07. In the event Borrowers elect to restore, repair,
replace or rebuild the Mortgaged Property and subsequently fail to comply with
any of the conditions set forth herein to disbursement of insurance proceeds,
any proceeds remaining to be disbursed, whether held by Borrowers, GMAC
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or an insurance company, shall be paid to GMAC and, at its option, applied to
the outstanding balance of the Borrowers' Liabilities.
SECTION 5.09 FINANCIAL COVENANTS.
(a) Minimum Debt Service Coverage Ratio. CARS shall
maintain a consolidated Debt Service Coverage Ratio of at least 1.50:1.0
measured as of each year end.
(b) Maximum Debt to Total Assets Ratio. CARS shall not
permit its Debt to Total Assets Ratio to exceed more than seventy-five percent
(75%) at any time, measured as of each year end.
SECTION 5.10 USE OF MORTGAGED PROPERTY . Each parcel of Mortgaged
Property will be used, or intended for use, primarily as a facility for the
sale or repair of motor vehicles by the lessee of the Mortgaged Property,
except as otherwise permitted under the Leases.
SECTION 5.11 CONDEMNATION--GENERAL . Promptly following the date
on which an executive officer of any Borrower obtains knowledge of the
institution of any proceeding for the condemnation of all or any portion of the
Mortgaged Property owned by such Borrower, such Borrower shall notify Trustee
and GMAC of such fact. Such Borrower shall then, unless GMAC waives this
requirement, file or defend its claim in respect of such proceeding and
prosecute same with due diligence to its final disposition. Such Borrower may
be the nominal party in such proceeding but GMAC shall be entitled to
participate in same and to be represented therein by counsel of its own choice
in the event of a condemnation of all or part of the Mortgaged Property with a
value estimated to be in excess of One Hundred Thousand Dollars ($100,000), and
such Borrower will deliver or cause to be delivered to GMAC such instruments as
may be reasonably requested by it from time to time to permit such
participation. All proceeds received from any such condemnation proceeding
relating to Mortgaged Property with a value estimated to be in excess of
$100,000 shall be paid to GMAC and, except as provided in Section 7.2, applied
to reduce the outstanding balance of the Borrowers' Liabilities.
SECTION 5.12 REBUILDING, RESTORATION AND REPAIR . In the event
the cost to fully pay for the restoration, repair or replacement of any
Mortgaged Property is less than One Hundred Thousand Dollars ($100,000) in the
aggregate, the condemnation proceeds shall be forwarded to Borrowers, so long
as no Event of Default shall have occurred. In the event (a) no Event of
Default shall have occurred and be continuing, (b) only a portion of such
Mortgaged Property is taken, (c) Borrowers elect to rebuild, restore or repair
the remaining portion of such Mortgaged Property, (d) the cost of the
rebuilding, restoration or repair reasonably estimated by GMAC shall exceed One
Hundred Thousand Dollars ($100,00) but be less than One Million Dollars
($1,000,000) ($1,000,000 being the "Condemnation Threshold Amount"), (e) there
are sufficient proceeds or other amounts available to Borrowers to fully pay
for the rebuilding, restoration or repair of such Mortgaged Property and the
projected appraised value of such Mortgaged Property upon completion of the
same is equal to or greater than the appraised value of such Mortgaged Property
immediately prior to the condemnation, (f) neither the Borrowers nor the lessee
leasing such Mortgaged Property has elected to terminate the Lease pursuant to
the Lease and
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confirmation of the same has been delivered to GMAC, (g) Borrowers have
received and are entitled to continue to receive full rental payments under the
Lease through the period of rebuilding, restoration or repair, whether such
payments are made by the lessee or from rental or business interruption
insurance proceeds, (h) all parties having operating, management or franchise
interests in, and arrangements concerning, such Mortgaged Property agree that
they will continue their interests and arrangements for the contract terms then
in effect following the restoration, (i) all parties, having commitments to
provide financing with respect to such Mortgaged Property, to purchase
Borrowers' interest in full or in part in such Mortgaged Property or to
purchase the Borrowers' Liabilities agree in a manner satisfactory to GMAC that
their commitments will continue in full force and effect and, if necessary, the
expiration of such commitments will be extended by the time necessary to
complete the restoration, (j) Borrowers present sufficient evidence to GMAC
that the applicable Mortgaged Property will be restored to an architectural
whole prior to the Maturity Date and (k) GMAC will not incur any liability to
any other person as a result of such use or release of proceeds, then Borrowers
will so certify to GMAC, and will certify that Borrowers will and shall
continue diligently to completion to restore, repair, replace and rebuild such
Mortgaged Property as nearly as possible to its value, condition and character
immediately prior to such condemnation with such alterations, modifications
and/or betterments reasonably deemed necessary or desirable by Borrowers in
their business judgment. With the certification described in the preceding
sentence, then Borrowers shall deliver to GMAC plans and specifications for
such rebuilding, restoration or repair; and Borrowers shall thereafter commence
the rebuilding, restoration or repair in accordance with the plans and
specifications required pursuant to the preceding provisions within sixty (60)
days after the date of the disbursement of the award or settlement, and
complete same to the satisfaction of GMAC within a reasonable time thereafter.
In the event each of the conditions set forth above in the first sentence of
this Section are satisfied except that the cost of rebuilding, restoration or
repair is in excess of the Condemnation Threshold Amount, the above provisions
shall apply except that the proceeds shall be paid to GMAC and disbursed in
accordance with Section 5.06 (with all references to insurance proceeds being
revised to refer to condemnation proceeds). Upon completion of such rebuilding,
restoration and repair in accordance with the preceding provisions, Borrowers
may apply such amount or settlement to the costs of such rebuilding,
restoration or repair. If (i) there is a total condemnation of the applicable
Mortgaged Property, or (ii) if the cost of rebuilding, restoration or repair is
reasonably estimated to be in excess of One Million Dollars ($1,000,000), or
(iii) if Borrowers elect not to rebuild, restore or repair as specified above,
or (iv) the requirements set forth above for rebuilding, restoration or repair
after a partial condemnation are not met to GMAC's satisfaction, then Borrowers
shall pay to GMAC such award or settlement to be applied to reduce the
outstanding balance of the Borrowers' Liabilities.
SECTION 5.13 LEASES. (a) Each Borrower shall promptly and fully
keep, observe and perform, or cause to be kept, observed and performed, all of
the material terms, covenants, provisions and agreements imposed upon or
assumed by any Borrower under any Lease, now or hereafter in effect, including
any amendments or supplements to such Leases covering any part of any Mortgaged
Property that is affected by the terms, covenants, provisions and agreements
imposed upon or assumed by any Borrower in such Leases and no Borrower will do
or fail to do, or permit or fail to permit to be done, any act or thing, the
doing or omission of which will give
24
<PAGE> 29
any party a right to terminate any of such Leases or, in the case of any
tenant, to abate the rental or other material payment due thereunder;
(b) If any Borrower shall, in any manner, fail to comply with
subsection (a) above, Borrowers agree that GMAC may (but shall not be obligated
to) take, upon ten (10) days' written notice to Representative (or upon lesser
notice, or without notice, if GMAC reasonably deems that the same is required
to protect its interest in any parcel of Mortgaged Property), any action which
GMAC shall reasonably deem necessary or desirable to keep, observe and perform
or cause to be kept, observed or performed any such terms, covenants,
provisions or agreements and to enter upon any parcel of Mortgaged Property and
take all action thereon as may be necessary therefor, or to prevent or cure any
default by any Borrower in the performance of or compliance with any of any
Borrower's covenants or obligations under said Leases. GMAC may rely on any
notice of default received from any tenant unless, in connection with any such
default or alleged default Borrowers in good faith notify GMAC of Borrowers'
election to contest such default by appropriate procedures and diligently
pursues such contest. Borrowers shall promptly deliver to GMAC a copy of any
notice relating to defaults received from any tenant that is a party, or the
trustee, receiver or successor for or to a party, to any of said Leases. GMAC
may expend such sums of money as are reasonable and necessary for any such
purposes, and Grantor hereby agrees to pay to GMAC, immediately upon demand,
all sums so expended by GMAC, together with interest thereon from the date of
such payment at the Default Rate, and until so paid by Borrowers, all sums so
expended by GMAC and the interest thereon shall be added to Borrowers'
Liabilities secured by the Mortgages; and
(c) No Borrower will, without the prior written consent of GMAC, which
consent shall not be unreasonably withheld, conditioned or delayed, amend,
modify, terminate or cancel any of the Leases of any part of any parcel of
Mortgaged Property; provided, however, notwithstanding the foregoing, Borrowers
may modify or amend (i) a Lease without the prior written approval of GMAC so
long as such amendment or modification does not materially diminish any
Borrower's rights or benefits under such Lease; and (ii) a Lease with a
third-party tenant (not affiliated with any Borrower) without the prior written
approval of GMAC, so long as such modification or amendment is made in the
ordinary course of Borrowers' business.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note shall remain unpaid, GMAC shall have any Credit
Commitment hereunder, or any Borrowers' Liabilities shall be due under this
Agreement, each Borrower agrees that, without the prior written consent of
GMAC:
SECTION 6.01 CONSOLIDATION AND MERGER . No Borrower shall (i) dissolve
or liquidate or materially amend or modify its Organizational Documents; (ii)
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) any of its assets (whether now owned or hereafter
acquired) to any Person; provided, however, that (a) the foregoing restriction
of this clause (ii) shall not apply to Capital (except to the extent prohibited
by clause (iii) below) and (b) assets may be transferred from one Borrower to
another Borrower
25
<PAGE> 30
and any such transfers involving Mortgaged Property may only be made upon the
receipt by GMAC of agreements, instruments and documents deemed necessary by
GMAC to protect its interest hereunder; (iii) alone or together with one or
more Affiliates convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of the
assets of any Borrower (whether now owned or hereafter acquired) to any Person
except as otherwise permitted herein or by the Mortgage; (iv) sell, convey or
pledge or encumber any of its capital stock, equity interests, or the
securities to any Person; provided, however, that the foregoing restriction of
this clause (iv) shall not apply to Capital (except to the extent an Event of
Default arises under Section 7.01(g) below); (v) engage in any transaction out
of the ordinary course of business; or (vi) merge or consolidate with any
Person.
SECTION 6.02 RESTRICTIONS ON FURTHER ENCUMBRANCES OR INDEBTEDNESS
ON REAL ESTATE . No Borrower will create or suffer to exist, any Lien, other
charge or encumbrance or permit any other Indebtedness to be incurred through
non-GMAC financing with respect to any now owned or hereafter acquired
Mortgaged Property, other than (a) the liens of GMAC created under the Loan
Documents and (b) leasehold trusts or mortgages permitted under the terms of
applicable tenant Leases which do not adversely impact GMAC's interest in the
Mortgaged Property.
SECTION 6.03 MANAGEMENT FEES . No Borrower shall pay any
management, service, consulting or similar fee (i) upon the occurrence of an
Event of Default or (ii) in excess of one percent (1%) of total rental income
for any parcel of Mortgaged Property; provided, however, that GMAC reserves the
right to require any recipient of such fees and any applicable Borrower deemed
necessary by GMAC to enter into a subordination agreement in the form of
Exhibit C attached hereto and made a part hereof (and otherwise in form and
substance acceptable to GMAC).
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
SECTION 7.01 EVENTS OF DEFAULT . "Events of Default," wherever
used herein, means any one of the following events:
(a) Default in the payment of any interest on any Note
or this Agreement when it becomes due and payable or default in payment of the
principal of any Note or this Agreement when it becomes due and payable, in
each case if such default continues for five (5) days after written notice from
GMAC;
(b) Any representation or warranty made by any Borrower
in this Agreement or by any Borrower (or any of its officers) in any
certificate, instrument, or statement contemplated by or made or delivered
pursuant to or in connection with this Agreement or application related to this
Agreement, shall prove to have been incorrect in any material respect when
made;
26
<PAGE> 31
(c) (i) a default in the performance, or breach, of any
material covenant or agreement of any Borrower in this Agreement or in the
Other Agreements or (ii) a default in the performance, or breach, of any
non-material covenant or agreement of any Borrower in this Agreement or in the
Other Agreements and, in each of clause (i) and (ii) above, such default
continues after twenty (20) days written notice from GMAC, provided, however,
that if such default described in clause (ii) above is curable and Borrowers
are diligently proceeding toward a cure, such twenty (20) days will be extended
to sixty (60) days;
(d) CARS or any Borrower shall be adjudicated bankrupt
or insolvent, or admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors; or CARS or any
Borrower shall apply for or consent to the appointment of any receiver,
trustee, or similar officer for it or for all or any substantial part of its
property; or such receiver, trustee or similar officer shall be appointed
without the application or consent of CARS or such Borrower and such
appointment shall continue undischarged for a period of sixty (60) days; or a
petition shall be filed by CARS or any Borrower under the United States
Bankruptcy Code naming CARS or any Borrower as debtor thereunder or any such
petition shall be filed against CARS or any Borrower and shall remain
undismissed for a period of sixty (60) days; or any judgment, writ, warrant of
attachment or execution or similar process shall be issued or levied against a
substantial part of the property of CARS or any Borrower and such judgment,
writ, or similar process shall not be released, vacated or fully bonded within
sixty (60) days after its issue or levy;
(e) The rendering against CARS or any Borrower of a
final judgment, decree or order for the payment of money in excess of
$5,000,000 or such other amount having a material adverse effect on any
Borrower or any Mortgaged Property, and the continuance of such judgment,
decree or order unsatisfied and in effect for any period of sixty (60)
consecutive days without a stay of execution;
(f) Any Reportable Event, which GMAC determines in good
faith might constitute grounds for the termination of any Plan or for the
appointment by the appropriate United States District Court of a trustee to
administer any Plan, shall have occurred and be continuing sixty (60) days
after written notice to such effect shall have been given to the Representative
by GMAC; or any Plan shall have been terminated, or a trustee shall have been
appointed by an appropriate United States District Court to administer any
Plan, or the Pension Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan; or
(g) (i) any Person other than CARS shall hold more than
49% of the limited or general partnership interests in Capital, (ii) any Person
other than CARS shall be a general partner of Capital or (iii) any Person other
than Capital or CARS (or a Subsidiary of either of Capital or CARS) shall be a
manager or general partner of any other Borrower.
SECTION 7.02 RIGHTS AND REMEDIES . Upon the occurrence of an
Event of Default or at any time thereafter until such Event of Default is cured
to the written satisfaction of GMAC, GMAC may exercise any or all of the
following rights and remedies:
27
<PAGE> 32
(a) GMAC may, by notice to the Representative, declare
the Credit Commitment to be terminated, whereupon the same shall
forthwith terminate;
(b) GMAC may, by notice to the Representative, declare
the entire unpaid principal amount of each Note then outstanding, all
interest accrued and unpaid thereon, and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon each
Note, all such accrued interest and all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived
by each Borrower;
(c) GMAC may, without notice to any Borrower and without
further action, apply any and all money owing by GMAC to any Borrower
to the payment of the principal amounts of each Note then outstanding,
including interest accrued thereon, and of all other sums then owing
by the Borrowers hereunder, all in such order as GMAC shall determine;
and
(d) GMAC may exercise and enforce its rights and
remedies under this Agreement and the Other Agreements and any and all
other rights and remedies available under law or at equity.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 NO WAIVER; CUMULATIVE REMEDIES . No failure or delay
on the part of GMAC in exercising any right, power or remedy hereunder or under
the Other Agreements shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder or under any Mortgage. The remedies herein and in the Other
Agreements provided are cumulative and not exclusive of any remedies provided
by law.
SECTION 8.02 AMENDMENTS, ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, or the Other
Agreements or consent by any Borrower to any departure therefrom shall be
effective unless the same shall be in writing and signed by GMAC and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on any Borrower in any
case shall entitle any Borrower to any other or further notice or demand in
similar or other circumstances.
SECTION 8.03 ADDRESSES FOR NOTICES, ETC. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for hereunder and under the Other Agreements shall be
in writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
confirmed facsimile (with a copy sent via mail in the aforesaid manner) to the
applicable party at its address indicated below:
28
<PAGE> 33
If to any Borrower:
Capital Automotive, L.P.
1420 Spring Hill Road, Suite 525
McLean, Virginia 22102
Attn: Treasurer and General Counsel
Telecopy No. (703) 288-3375
With a copy to:
Winston & Strawn
1400 L Street NW
Washington DC 20005-3502
Attn: Richard F. Williamson, Esq.
Telecopy No. (202) 371-5950
If to GMAC:
General Motors Acceptance Corporation
General Motors Building
Mail Code 482-103-130
3044 West Grand Boulevard
Detroit, Michigan 48202
Attn: David E. Ehlers
Telecopy No. (313) 974-7683
With a copy to:
General Motors, Legal Staff
New Center One Building
3031 West Grand Blvd.
P.O. Box 33121
Detroit, Michigan 48202
Attn: John Bellaver, Esq.
Telecopy No. (313) 974-1496
With a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attn: Michael A. Nemeroff, Esq.
Telecopy No. (312) 609-5005
29
<PAGE> 34
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall, when received, be effective.
SECTION 8.04 COSTS AND EXPENSES . The Borrowers agree to pay on
demand all costs and expenses of GMAC in connection with the preparation of
this Agreement and the Other Agreements (and all subsequent transactions and
Loans contemplated hereby), including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for GMAC with respect thereto, provided,
however, that Borrowers shall not be required to pay more than $150,000 in
legal fees during any one year period commencing on the date of this Agreement
and on each anniversary thereof. The Borrowers further agree to pay on demand
all out-of-pocket expenses of legal counsel retained by GMAC in connection with
the enforcement of this Agreement and the Other Agreements and documents to be
delivered hereunder and thereunder.
SECTION 8.05 EXECUTION IN COUNTERPARTS . This Agreement and the
Other Agreements may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which counterparts of this Agreement or the Other Agreements, as the case may
be, taken together, shall constitute but one and the same instrument.
SECTION 8.06 BINDING EFFECT; ASSIGNMENT . This Agreement and the
Other Agreements shall be binding upon and inure to the benefit of each
Borrower and GMAC and their respective successors and assigns, except that no
Borrower shall have the right to assign its rights hereunder or thereunder or
any interest herein or therein without the prior written consent of GMAC.
SECTION 8.07 GOVERNING LAW . This Agreement and the Other
Agreements (except to the extent specifically set forth in any such Other
Agreement) shall be governed by, and construed in accordance with, the laws of
the State of Michigan without regard to conflict of laws principles.
SECTION 8.08 SEVERABILITY OF PROVISIONS . Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
SECTION 8.09 HEADINGS . Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 8.10 VENUE AND WAIVER OF JURY TRIAL . The parties agree
that all actions or proceedings arising in connection with this Agreement and
the Other Agreements shall be tried and litigated only in the state and federal
courts located in the State of Michigan or, at the sole option of GMAC, in any
other court in which GMAC shall initiate legal or equitable proceedings and
which has subject matter jurisdiction over the matter in controversy. All the
parties to this Agreement waive any right each may have to assert the doctrine
of forum non conveniens or to object to venue to the extent any proceeding is
brought in accordance with this Section 8.10. All the parties to this Agreement
hereby further jointly and severally waive any right to trial by jury
30
<PAGE> 35
with respect to any action, claim, suit or proceeding in respect of or relating
to this Agreement or any Other Agreement and/or any relationship between GMAC
and any Borrower.
SECTION 8.11 INDEMNIFICATION BY BORROWERS . Borrowers hereby
agree, jointly and severally, to indemnify, defend and hold GMAC, and its
directors, officers, agents, employees and counsel, harmless from and against
any and all losses, claims, damages, liabilities, deficiencies, judgments,
penalties or expenses imposed on, incurred by or asserted against any of them,
whether direct, indirect or consequential, arising out of or by reason of any
litigation, investigations, claims or proceedings (whether based on any
federal, state or local laws or other statutes or regulations, including,
without limitation, securities, environmental or commercial laws and
regulations, under common law or at equitable cause, or on contract or
otherwise) commenced or threatened, which arise out of or are in any way based
upon the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any Other Agreement, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission to act, event or transaction related or attendant
thereto, including, without limitation, amounts paid in settlement, court
costs, and the fees and expenses of counsel reasonably incurred in connection
with any such litigation, investigation, claim or proceeding, provided that
Borrowers shall have no obligation hereunder with respect to indemnified
liabilities arising from (i) any claim by GMAC which arises solely from the
actions or omissions to act of GMAC and was not caused by any breach of this
Agreement or any Other Agreement by any Borrower, or (ii) the gross negligence
or willful misconduct of GMAC or any of its agents, designees or attorneys in
fact. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it violates
any law or public policy, Borrowers shall contribute the maximum portion which
they are permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified matters incurred by GMAC. If, at the time of
the payment in full of Borrowers' Liabilities, any claim or claims are pending
or threatened against GMAC, or its directors, officers, agents, employees or
counsel, the foregoing indemnity shall survive the payment of Borrowers'
Liabilities and the termination of this Agreement, and Capital hereby agrees to
remain fully liable to GMAC for the indemnity obligation with respect to such
claim. All of the foregoing costs and expenses shall be part of Borrowers'
Liabilities, payable upon demand, and secured by the Mortgaged Property.
SECTION 8.12 JOINT AND SEVERAL LIABILITY . Each Borrower
acknowledges and agrees that this Agreement has been entered into as an
agreement among Borrowers and GMAC for the benefit of, and at the request of,
Borrowers jointly and severally. Except as specifically set forth herein, the
liability of each Borrower under this Agreement and the other agreements in
general shall be joint and several, and each reference herein to the Borrowers
shall be deemed to refer to each such Borrower. In furtherance and not in
limitation of GMAC's rights and remedies hereunder or at law, GMAC may proceed
under this Agreement and the other agreements against any one or more of the
Borrowers in its absolute and sole discretion for any of the obligations of the
Borrowers or any other liability or obligation of the Borrowers arising
hereunder.
SECTION 8.13 REIMBURSEMENT AMONG BORROWERS . To the extent that
any Borrower other than Capital shall be required to pay a portion of any
Borrower's Liabilities created under
31
<PAGE> 36
this Agreement of any other Borrower which shall exceed the amount of loans,
advances or other extensions of credit received by any such Borrower and all
interest, costs, fees and expenses attributable to such loans, advances or
other extensions of credit, then such Borrower shall be reimbursed by the other
Borrowers for the amount of such excess pro rata, based on their respective net
worth as of the date hereof. This Section 8.15 is intended only to define the
relative rights of the Borrowers among the Borrowers and nothing set forth in
this Section 8.15 is intended to or shall impair the obligations of Borrowers,
jointly and severally, to pay the obligations of the Borrowers to GMAC as and
when the same shall become due and payable in accordance with the terms hereof.
SECTION 8.14 APPOINTMENT OF CAPITAL AS REPRESENTATIVE . Each
Borrower hereby jointly and severally appoints Capital, with full power of
substitution, as agent and attorney-in-fact for all Borrowers (in such
capacity, the "Representative"), with full authority to receive or provide
notices on behalf of each Borrower and to execute and deliver on behalf of any
or all Borrowers (in the name of Capital as Representative hereunder and/or the
name of such Borrowers) any modifications, alterations, amendments or waivers
of this Agreement or any Other Agreement and to take any other action and
execute any other instrument or document on behalf of and in the name of any
Borrower as shall be deemed appropriate by Representative. The Borrowers hereby
jointly and severally ratify and approve all actions taken, and documents or
instruments executed and delivered, by Representative on behalf of any of them
hereunder.
[SIGNATURE PAGE FOLLOWS]
32
<PAGE> 37
(SIGNATURE PAGE TO CREDIT AGREEMENT)
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
GENERAL MOTORS ACCEPTANCE CORPORATION
By: /s/ Jeffrey G. McLeod
------------------------
Its: Vice President - National Accounts
------------------------------------
CAPITAL AUTOMOTIVE, LP, A DELAWARE LIMITED
PARTNERSHIP
By: Capital Automotive REIT, a Maryland
real estate investment trust
Its: General Partner
By: /s/ Peter C. Staaf
-------------------
Its: Vice President and Treasurer
-----------------------------
[Exhibits and Schedules intentionally omitted.]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,619
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,467
<PP&E> 944,625
<DEPRECIATION> 25,581
<TOTAL-ASSETS> 939,130
<CURRENT-LIABILITIES> 4,834
<BONDS> 515,818
0
0
<COMMON> 248
<OTHER-SE> 295,166
<TOTAL-LIABILITY-AND-EQUITY> 939,130
<SALES> 0
<TOTAL-REVENUES> 25,175
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,976
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,247
<INCOME-PRETAX> 6,393
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,393
<EPS-BASIC> 0.30
<EPS-DILUTED> 0.30
</TABLE>
