EXHIBIT 10.9
(FORM OF CREDIT AGREEMENT)
THIS CREDIT AGREEMENT is dated as of February __, 1998, between CAPITAL
AUTOMOTIVE, L.P., a Maryland limited partnership (the "Company"), and
NATIONSBANK, N.A. (the "Bank").
The parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
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Section 1.1 Defined Terms. As used in this Agreement, the following terms
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have the following meanings:
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
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modified from time to time.
"Business Day": any day except a Saturday, Sunday or other day on which
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commercial banks in Norfolk, Virginia or New York, New York are authorized by
law to close.
"CAR": Capital Automotive REIT, a Maryland real estate investment trust.
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"CD": the certificate of deposit issued by the Bank and owned by the
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Company in the amount of $10,000,000.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
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"Commonly Controlled Entity": an entity, whether or not incorporated, which
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is under common control with the Company within the meaning of Section 414(b),
(c), (m) or (n) of the Code.
"Contingent Obligation": as to any Person, any obligation of such Person
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guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
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obligation or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof; provided, however, that the term
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Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business.
"Contractual Obligation": as to any Person, any provision of any security
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issued by such Person or of any agreement, instrument or undertaking to which
such Person is a party or by which it or any of its property is bound.
"Debt Service Coverage Ratio": the consolidated ratio for the Company and
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CAR, calculated at the end of any fiscal quarter as an average of that quarter
and the immediately preceding three quarters, by dividing (A) the sum of (i) net
profit, (ii) depreciation, (iii) amortization and (iv) interest expense, minus
the sum of (i) distributions, (ii) non-recurring gains and (iii) charges to
equity, by (B) the sum of (i) interest expense, (ii) prior year current
maturities of long term debt and (iii) prior year current maturities of capital
leases.
"Default": any of the events specified in Article VII, whether or not any
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requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
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from time to time.
"Event of Default": any of the events specified in Article VII, provided
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that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Funds from Operations": net income (determined in accordance with GAAP)
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excluding gains (or losses) from debt restructuring and sales of depreciated
property, plus depreciation and amortization related to real estate investment,
and after adjustments for minority interest and unconsolidated partnerships and
joint ventures.
"GAAP": Generally Accepted Accounting Principles in the United States of
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America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
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political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing.
"Guarantee": the collective reference to the guarantees dated as of the
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date hereof from the Guarantors to the Bank, as the Guarantee may be amended,
supplemented or otherwise modified from time to time.
"Guarantors": CAR, Xxxxx Xxxxxx and Xxxxxx Xxxxxxxxx, jointly and
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severally.
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"Indebtedness": as to any Person, at a particular time, (a) all
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indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which such
Person otherwise assures a creditor against loss, including, without limitation,
accounts payable, accrued expenses and other current liabilities, and inter-
company accounts, (b) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, and (c) capitalized lease obligations of such
Person.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
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arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction).
"Loan": the loan to be made to the Company by the Bank pursuant to Section
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2.1, evidenced by the Note.
"Loan Documents": the collective reference to this Agreement, the Note, the
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Guarantee, the Security Documents and all other documents which have been
executed and delivered by the Company in connection with the Loans;
individually, a "Loan Document".
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
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Section 4001(a)(3) of ERISA.
"Note": as defined in Section 2.1.
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
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Subtitle A of Title IV of ERISA or any entity succeeding to any or all of its
functions under ERISA.
"Person": an individual, a partnership, a corporation, a real estate
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investment trust, a limited liability company, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature.
"Plan": at any time an employee pension benefit plan which is covered by
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Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by a member of the Commonly Controlled
Entity for employees of a member or members of the Commonly Controlled Entity,
or (ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Commonly Controlled Entity is then making or accruing an
obligation to make contributions or has within the preceding five years made
contributions.
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"Pledge Agreement": the Pledge Agreement dated as of the date hereof
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between the Company and the Bank, pledging the CD to the Bank as collateral for
the Loans.
"Reportable Event": any of the events set forth in Section 4043(b) of ERISA
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or the regulations thereunder.
"Requirement of Law": as to any Person, the partnership agreement, the
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Certificate or Articles of Incorporation and Bylaws, or Articles of
Organization, or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation, or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its properties or to which such Person or any of its
property is subject.
"Responsible Officer": the ________of the Company, or the ________ of CAR
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or, with respect to financial matters, the chief financial officer of a Person
or the chief accounting officer of a Person.
"Security Documents": the Pledge Agreement and any other instruments or
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documents executed by the Company or others as security for the Note, as they
may be amended, supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation of which shares of stock
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having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Tangible Net Worth": at a particular date, all amounts which would, in
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conformity with GAAP, be included under shareholders' equity on a balance sheet
of a Person at such date; provided, however, such amounts are to be net of
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amounts carried on the books of such Person for (a) any write-up in the book
value of any assets of such Person resulting from a revaluation thereof, (b)
treasury stock, (c) unamortized debt discount and expense, (d) any cost of
investments in excess of net assets acquired at any time of acquisition by such
Person, (e) patents, patent applications, copyrights, trademarks, trade names,
and other like intangibles and (f) goodwill, experimental or organizational
expenses and other like intangibles.
"Termination Date": August __, 1998.
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"Total Liabilities": at a particular date, the total liabilities of a
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Person, determined in accordance with GAAP.
"Unfunded Vested Liabilities": with respect to any Plan at any time, the
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amount (if any) by which (i) the present value of all vested nonforfeitable
benefits under the Plan exceeds (ii) the
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fair market value of all Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the Commonly
Controlled Entity to the PBGC or the Plan under Title IV of ERISA.
"Withdrawal Liability": at a particular date, the aggregate liability of
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the Company or any Commonly Controlled Entity (regardless of the date of
payment) to any Multiemployer Plans pursuant to (S) 4201 of ERISA if, on such
date, the Company or any Commonly Controlled Entity were to withdraw (partially
or completely) from such Plans.
Section 1.2 Other Definitional Provisions.
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(a) All terms defined in this Agreement shall have the defined
meanings when used in the Note, the other Loan Documents, and in any certificate
or other document made or delivered pursuant hereto or thereto, unless otherwise
defined therein.
(b) As used herein and in the Note, and any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
Section 1.1, and accounting terms partly defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under GAAP.
ARTICLE II.
AMOUNT AND TERMS OF LOAN
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Section 2.1 The Loan. Subject to the terms and conditions hereof, and
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until the Termination Date, the Bank agrees to make a revolving loan to the
Company in an amount up to $10,000,000 (the "Loan"). The Loan shall be evidenced
by the revolving note of the Company (the "Note"), dated the date hereof, and
payable to the order of the Bank in the maximum original principal amount of
$10,000,000. The Note shall bear interest from the date thereof on the unpaid
principal amount thereof at a rate per annum equal to the rate of interest paid
by the Bank to the Company on the CD plus 1%. Interest only on the Note shall
be payable monthly in arrears, on the first day of each month, beginning on the
first such date to occur after the date hereof. The Note shall mature on the
Termination Date. The Bank is authorized to endorse the date and amount of each
Loan of the Bank and each payment of principal with respect thereto on the
schedule annexed to and constituting a part of the Note, which endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
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Subject to the terms and conditions hereof, the Company may borrow, repay and
reborrow the Loan. The Note shall be secured by the Security Documents.
Section 2.2 Default Interest; Late Charges. After any amount on the
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Note becomes due and payable, (whether at the stated maturity, by acceleration
or otherwise) the Note shall bear interest at a rate per annum equal to three
percent (3%) above the rate otherwise applicable until paid in full (both before
and after judgment). In the event the Company fails to pay any
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installment of principal and/or interest or otherwise fails to repay the Note
within fifteen (15) days of its due date, the Company will pay the Bank on
demand a late charge of 5% of the overdue payment.
Section 2.3 Prepayments. The Company may, at its option, from time to
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time, prepay the Loans in whole or in part without premium or penalty at any
time or times.
Section 2.4 Computation of Interest and Fees. Interest and fees shall be
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calculated on the basis of a 360-day year for the actual days elapsed.
Section 2.5 Notice of Borrowing; Disbursements and Payments. The Company
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shall give the Bank notice of a requested advance under the Loan before ______,
specifying a Business Day on which the Loan is to be made and the amount of such
Loan, which shall be in a minimum amount of ______. All proceeds of the Loans
shall be disbursed by the Bank to the Company. Each payment by the Company on
account of principal, interest and fees with respect to the Loans shall be made
to the Bank. All payments (including prepayments) by the Company on account of
principal, interest and fees shall be made without set-off or counterclaim to
the Bank at the office of the Bank in lawful money of the United States of
America and in immediately available funds. If any payment hereunder or on the
Note becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day, and, with respect
to payments of principal or interest thereon shall be payable at the then
applicable rate during such extension.
Section 2.6 Use of Proceeds. The proceeds of the Loan shall be used by
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the Company for working capital.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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In order to induce the Bank to enter into this Agreement and to make the
loans herein provided for, the Company hereby represents and warrants to the
Bank that:
Section 3.1 Financial Condition. The consolidated financial statements of
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the Company and CAR provided to the Bank by the Company, accurately reflect the
financial condition of the Company and CAR on the dates stated therein.
Section 3.2 No Change. Since the date of the most recent consolidated
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financial statements of the Company and CAR provided to the Bank, there has been
no material adverse change in the business, operations, assets or financial or
other condition of the Company and/or CAR.
Section 3.3 Partnership Existence; Compliance with Law. The Company (a) is
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duly organized, validly existing and in good standing as a limited partnership
under the laws of
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Maryland, (b) has the partnership power and authority to own and operate its
property, to lease the property it operates and to conduct the business in which
it is currently engaged, (c) is duly qualified as a limited partnership and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business required such
qualification, and (d) is in compliance with all Requirements of Law, except to
the extent that the failure to comply therewith could not, in the aggregate,
have a material adverse effect on the business, operations, property or
financial or other condition of the Company and could not materially adversely
affect the ability of the Company to perform its obligations under this
Agreement, the Note, and the Security Documents and to effectuate the
transactions contemplated hereby and thereby.
Section 3.4 Partnership Power; Authorization; Enforceable Obligations. The
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Company has the partnership power and authority to make, deliver and perform the
Loan Documents to which it is a party, to borrow hereunder and to effectuate the
transactions contemplated hereby and has taken all necessary action to authorize
the borrowings on the terms and conditions of this Agreement and the Note, to
grant the mortgage liens and security interests pursuant to the Security
Documents and to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization of, filing with,
or other act by or in respect of any Person or any Governmental Authority, is
required or advisable in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which it is a party. The Loan Documents to which the Company is a
party have been duly executed and delivered on behalf of the Company and
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally.
Section 3.5 No Legal Bar. The execution, delivery and performance of the
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Loan Documents and the borrowings hereunder, the use of the proceeds thereof and
the granting of the security interests pursuant to the Security Documents will
not violate any Requirement of Law or any Contractual Obligation of the Company,
and will not result in, or require, the creation or imposition of any Lien on
any of its properties or revenues pursuant to any Requirement of Law or
Contractual Obligation except as permitted in Section 5.2 hereof.
Section 3.6 No Material Litigation. No litigation, investigation or
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proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Company, threatened by or against the Company, any of
its employee benefit programs, policies or Plans or against any of its
properties or revenues (a) with respect to the Loan Documents or any of the
transactions contemplated thereby, or (b) which could have a material adverse
effect on the business, operations, property or financial or other condition of
the Company.
Section 3.7 No Default. The Company is not in default under or with
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respect to any Contractual Obligation in any respect which could be materially
adverse to the business, opera-
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tions, property or financial or other condition of the Company, or which could
materially adversely affect the ability of the Company to perform its
obligations under the Loan Documents. No Default or Event of Default has
occurred and is continuing.
Section 3.8 Ownership of Property; Liens. The Company has good record and
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marketable title in fee simple to all its real property, and good title to all
its other property, and none of such property is subject to any Lien, except as
permitted in Section 5.2 hereof.
Section 3.9 No Burdensome Restrictions. No Contractual Obligation of the
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Company and no Requirement of Law materially adversely affects, or insofar as
the Company may reasonably foresee may so affect, the business, operations,
property or financial or other condition of the Company.
Section 3.10 Taxes. The Company has filed or caused to be filed all tax
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returns which to the knowledge of the Company are required to be filed, and has
paid all taxes shown to be due and payable on said returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority; and
no tax liens have been filed and, to the knowledge of the Company, no claims are
being asserted with respect to any such taxes, fees or other charges.
Section 3.11 Federal Regulations. The Company is not engaged and will not
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engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any loans
hereunder will be used for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of such Board of Governors.
Section 3.12 Compliance with ERISA; Prohibited Transactions. Each member
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of the Commonly Controlled Entity has fulfilled its obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with provisions of ERISA and the Code and
published regulations presently applicable to each Plan. No member of the
Commonly Controlled Entity has incurred any liability, or has entered into any
transaction that is likely to cause any liability to be incurred to the PBGC or
any Plan under Title IV of ERISA. No Lien has been attached and no Person has
threatened to attach a Lien on any property of the Company as a result of the
Company's failure to comply with ERISA. None of the Plans is a Multiemployer
Plan. With respect to each Plan, the Plan has not at any time:
(a) engaged in any "prohibited transaction," as such term is defined
in Section 4975 of the Code or in Section 406 of ERISA;
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(b) incurred any "accumulated funding deficiency," as such term is
defined in Sections 302(a)(2) and 4243 of ERISA, whether or not waived; or
(c) been terminated in a manner which could result in the imposition
of a Lien on the property of the Company pursuant to Section 4068 of ERISA.
Section 3.13 Investment Company Act. The Company is not an "investment
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company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
Section 3.14 Subsidiaries. There are no Subsidiaries of the Company.
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Section 3.15 Operations and Business. The Company has engaged in no
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business other than the business currently being conducted by the Company.
Section 3.16 Patents, Copyrights, Permits, Licenses, Trademarks and Leases.
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The Company owns all of the patents, trademarks, permits, service marks, trade
names, copyrights and licenses, or rights with respect to the foregoing, and has
obtained, or shall have obtained, all assignments of all leases and other rights
of whatever nature, necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others which might
result in a material adverse effect on the business, operations, property or
financial or other condition of the Company.
Section 3.17 The Security Documents. Upon the due execution and delivery
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thereof pursuant to this Agreement, the provisions of the Security Documents
will be effective to create in favor of the Bank, a legal, valid and enforceable
security interest in all right, title and interest of the Company in the
collateral described therein. When the CD has been delivered to the Bank, the
Security Documents shall constitute fully perfected security interests in all
right, title and interest of the Company in such collateral superior in right to
any Liens, existing or future, which the Company or any third Person may have
against such collateral or interests therein, except as permitted by Section 5.2
below or specifically consented to by the Bank.
ARTICLE IV
CONDITIONS PRECEDENT
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Section 4.1 Conditions to First Loan. The obligation of the Bank to make
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its first Loan hereunder is subject to the satisfaction of the following
conditions precedent:
(a) Note. The Bank shall have received the Note conforming to the
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requirements hereof, duly executed and delivered by a duly authorized officer of
the Company.
(b) Legal Opinion of Counsel. The Bank shall have received the
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executed legal
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opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx dated the date of the making of the
initial Loan hereunder and addressed to the Bank, covering such matters
incidental to the transactions contemplated hereby as the Bank may reasonably
require and satisfactory in form and substance to the Bank.
(c) Partnership Proceedings. The Bank shall have received a copy of
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the resolutions (in form and substance satisfactory to the Bank) of the Company
authorizing (i) the execution, delivery and performance of the Loan Documents to
which it is a party, (ii) the consummation of the transactions contemplated
thereby and (iii) the borrowings herein provided for and the granting of the
mortgage liens and security interests pursuant to the Security Documents,
certified by the general partner of the Company on the date of the making of the
initial Loan hereunder. Such certificate shall state that the resolutions set
forth therein have not been amended, modified, revoked or rescinded as of the
date of such certificate.
(d) Incumbency Certificate of Company. The Bank shall have received a
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certificate of the Company, dated the date of the making of the initial Loan
hereunder, as to the incumbency and signature of the representatives of the
general partner of the Company executing the Loan Documents and any certificate
or other document to be delivered pursuant hereto or thereto.
(e) Proceedings of CAR. The Bank shall have received a copy (in form
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and substance satisfactory to the Bank) of the resolutions of CAR, certified by
a Responsible Officer of CAR on the date of the making of the initial advance
hereunder, authorizing CAR's execution, delivery and performance of the Loan
Documents to which it is a party. Such certificate shall state that the
resolutions set forth therein have not been amended, modified, revoked or
rescinded as of the date of such certificate.
(f) Incumbency Certificate of CAR. The Bank shall have received a
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certificate of CAR, dated the date of the making of the initial advance
hereunder, as to the incumbency and signature of the Responsible Officer
authorized to sign the Loan Documents to which it is a party and any other
certificate or other document to be delivered pursuant thereto.
(g) Guarantee. The Bank shall have received the Guarantee, duly
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executed and delivered by the Guarantors and dated the date hereof.
(h) Security Documents. The Bank shall have received the Security
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Documents, each duly executed and delivered by a duly authorized Responsible
Officer of the Company.
(i) Filings, Registrations and Recordings. Any documents required to
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be filed, registered or recorded in order to create, in favor of the Bank, a
perfected Lien on the collateral described in the Security Documents shall have
been properly filed, registered or recorded in each office in each jurisdiction
in which such filings, registrations and recordations are required; the Bank
shall have received acknowledgment copies of all such filings, registrations and
recordations stamped by the appropriate filing, registration or recording
officer (or, in lieu
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thereof, other evidence satisfactory to the Bank that all such filings,
registrations and recordations have been made); and the Bank shall have received
evidence that all necessary filing, subscription and inscription fees and all
recording and other similar fees, and all taxes and other expenses related to
such filings, registrations and recordings have been paid in full by or on
behalf of the Company.
(j) No Proceedings or Litigation. No action, suit or proceeding
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before any arbitrator or any Governmental Authority shall have been commenced,
no investigation by any Governmental Authority shall have been threatened,
against the Company or any Guarantor or any of the officers or representatives
of the Company or any Guarantor, seeking to restrain, prevent or change the
transactions contemplated by the Loan Documents, in whole or in part, or
questioning the validity or legality of the transactions contemplated by the
Loan Documents or seeking damages in connection with such transactions.
(k) Insurance. The Bank shall have received evidence satisfactory to
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it that the Company or other appropriate party has obtained the policies of
insurance required by the Security Documents and Section 5.5 of this Agreement.
(l) Consents, Licenses, Approvals, etc. The Bank shall have received
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certified true copies of all consents, licenses and approvals required or
advisable in connection with the execution, delivery, performance, validity and
enforceability of the Loan Documents, and such consents, licenses and approvals
shall be in full force and effect and be satisfactory in form and substance to
the Bank.
(m) No Default or Event of Default. No Default or Event of Default
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shall have occurred and be continuing hereunder or after giving effect to the
making of the Loans hereunder.
(n) Initial Public Offering. CAR shall have completed an initial
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public offering in which at least $225,000,000 of equity capitalization was
raised from the public and contributed to the equity of the Company.
(o) Additional Information. The Bank shall have received such
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additional information as it shall have reasonably requested, including, without
limitation, copies of any debt agreements, security agreements and other
material contracts.
(p) Additional Matters. All corporate and other proceedings and all
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other documents and legal matters in connection with the transactions
contemplated by the Loan Documents shall be satisfactory in form and substance
to the Bank and its counsel.
Section 4.2 Conditions to All Loans. The obligation of the Bank to make
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any Loan hereunder on any date is subject to the satisfaction of the following
conditions precedent:
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(a) Representations and Warranties. The representations and
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warranties made by the Company or any Guarantor in the Loan Documents to which
any of them is a party, or which are contained in any certificate, document or
financial or other statement furnished at any time under or in connection
herewith or therewith, shall be correct on and as of the date of such Loan as if
made on and as of such date.
(b) No Default or Event of Default. No Default or Event of Default
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shall have occurred on or before such date and/or after giving effect to the
Loan to be made on such date.
(c) Satisfaction of Conditions. Each borrowing by the Company under
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this Agreement shall constitute a representation and warranty by the Company as
of the date of each such borrowing that the conditions contained in the
foregoing paragraphs (a) and (b) of this Section 4.2 have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
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The Company hereby agrees that, so long as the Note remains outstanding and
unpaid or any other amount is owing to the Bank hereunder, the Company shall:
Section 5.1 Financial Statements. Furnish to the Bank:
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(a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited
financial statements of the Company prepared on a consolidated and consolidating
basis with CAR in accordance with GAAP as at the end of such year, including a
balance sheet and statements of income and retained earnings and paid-in capital
and changes in financial position, setting forth in each case in comparative
form the figures for the previous year, certified without a "going concern" or
like qualification or exception, or qualification arising out of the scope of
the audit, by independent certified public accountants of nationally recognized
standing acceptable to the Bank, and certified by a Responsible Officer of the
Company as being true and correct in all material respects;
(b) as soon as available, but in any event not later than twenty-
five (25) days after the end of each accounting quarter of the Company
internally prepared financial statements of the Company prepared on a
consolidated and consolidating basis with CAR in accordance with GAAP as at the
end of such quarter, including a balance sheet and statements of income and
retained earnings and paid-in capital and changes in financial position,
certified by a Responsible Officer;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods.
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Section 5.2 Certificates; Other Information. Furnish to the Bank:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b) above, a certificate of a Responsible
Officer of the Company (i) stating that, to the best of such officer's
knowledge, the Company during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in the
Loan Documents to be observed, performed or satisfied by them, and that such
officers have obtained no knowledge of any Default or Event of Default except as
specified in such certificate, and (ii) showing in detail in form and substance
satisfactory to the Bank, the calculations supporting such statement in respect
of Section 5.9 hereof;
(b) within five days after the same are sent, copies of all
financial statements and reports which the Company sends to partners, and within
five days after the same are filed, copies of all financial statements and
reports, which the Company or CAR may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority;
(c) furnish to the Bank by January 31 of each year an estimate of
the Withdrawal Liability as of the end of the Plan year occurring in the
preceding year for each Plan that is a Multiemployer Plan; and
(d) promptly, such additional financial and other information as
the Bank may from time to time reasonably request.
Section 5.3 Payment of Obligations. Pay, discharge or otherwise satisfy
----------------------
at or before maturity or before they become delinquent, as the case may be, all
its Indebtedness and other obligations of whatever nature, except, in the case
of such other obligations, when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Company.
Section 5.4 Conduct of Business and Maintenance of Existence. Engage in
------------------------------------------------
business of the same general type as now conducted by the Company, and preserve,
renew and keep in full force and effect its partnership existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business; comply with all Contractual
Obligations and Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, have a material adverse effect on
the business, operations, property or financial or other condition of the
Company.
Section 5.5 Maintenance of Property, Insurance. Keep all property useful
----------------------------------
and necessary in its business in good working order and condition, normal wear
and tear excepted; maintain with financially sound and reputable insurance
companies insurance on all its property, including the Real Property, in at
least such amounts and against at least such risks as are usually insured
13
against in the same general area by companies engaged in the same or a similar
business, designating the Bank as loss payee, provided that, in any event, the
-------- ---- -- --- -----
Company shall maintain insurance at all times on its tangible personal property
and real property in an amount equal to the replacement cost of such property at
such time and shall maintain extended coverage for vandalism and malicious
mischief; and furnish to the Bank, upon written request, full information as to
the insurance carried.
Section 5.6 Inspection of Property; Books and Records; Discussions. Keep
----------------------------------------- -----------
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Bank to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial and other condition of the Company with
officers and employees of the Company and with its independent certified public
accountants.
Section 5.7 Notices. Promptly give notice to the Bank:
-------
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any Contractual
Obligation of the Company or (ii) litigation, investigation or proceeding which
may exist at any time between the Company and any Governmental Authority, which
in either case could have a material adverse effect on the business, operations,
property or financial or other condition of the Company;
(c) of any litigation or proceeding affecting the Company, or any
of its employee benefit programs, policies or plans in which the amount sued for
is $__________ or more and not fully covered by insurance or in which injunctive
or similar relief is sought and of any material adverse development in such
litigation or proceeding;
(d) of the following events, as soon as possible, and in any event
no later than the date the Company gives or is required to give notice to the
PBGC of (i) the occurrence of any Reportable Event with respect to any Plan
which might constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows the Plan Administrator of any Plan has given or is required to
give notice of any such Reportable Event given or required to be given to the
PBGC, or (ii) the institution of proceedings or the taking or expected taking of
any other action by PBGC or the Company or any Plan, and in addition to such
notice, deliver to the Bank whichever of the following may be applicable (A) a
certificate of the chief financial officer of the Company setting forth details
as to such Reportable Event and the action that the Company or Commonly
Controlled Entity proposes to take with respect thereto, together with a copy of
any notice of such Reportable Event that may be required to be filed with PBGC,
or (B) any notice delivered by PBGC evidencing its intent to institute such
proceedings to terminate the Plan or to appoint a trustee to administer the Plan
or any notice to PBGC that such Plan is to be terminated, as the
14
case may be, or (iii) any member of the Commonly Controlled Entity receives
notice of complete or partial withdrawal liability under Title IV of ERISA; and
(e) of a material adverse change in the business, operations,
property or financial or other condition of the Company.
Each notice pursuant to this Section shall be accompanied by a statement of
the chief executive officer or chief financial officer of the Company setting
forth details of the occurrence referred to therein and stating what action the
Company proposes to take with respect thereto. For all purposes of clause (d) of
this Section 5.7, the Company shall be deemed to have all knowledge of all facts
attributable to the administrator of such Plan.
Section 5.8 Further Assurances. Execute and file all such further
------------------
instruments, and perform such other acts, as the Bank may determine are
necessary or advisable.
Section 5.9 Financial Covenants. Maintain, on a consolidated basis with
-------------------
CAR:
(a) a Debt Service Coverage Ratio of no less than 2.50 to 1.0;
(b) a ratio of Total Liabilities to Tangible Net Worth of not more
than .35 to 1.0, measured at the end of each fiscal quarter of the Company; and
(c) a minimum Tangible Net Worth of $200,000,000, plus 80% of the
net cash proceeds from any future equity offerings.
ARTICLE VI
NEGATIVE COVENANTS
------------------
The Company hereby agrees that, so long as the Note remains outstanding and
unpaid or any other amount is owing to the Bank hereunder, the Company shall
not, directly or indirectly, without the Bank's consent:
Section 6.1 Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness (other than current trade and other current accounts payable in the
ordinary course of business in accordance with customary trade terms), except:
(a) Indebtedness in respect of the Note;
(b) Indebtedness to the Bank; and
(c) Indebtedness expressly consented to by the Bank in writing.
15
Section 6.2 Limitation on Liens. Create, incur, assume or suffer to
-------------------
exist, any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except:
(a) Liens in favor of the Bank created pursuant to the Security
Documents or otherwise;
(b) Liens expressly consented to by the Bank in writing;
(c) Liens for taxes, assessments or governmental charges not yet
due or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings;
(e) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business; and
(g) easements, municipal zoning ordinances, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Company.
Section 6.3 Limitation on Contingent Obligations. Agree to, or assume,
------------------------------------
guarantee, endorse or otherwise in any way, be or become responsible or liable
for, directly or indirectly, any Contingent Obligation.
Section 6.4 Prohibition of Fundamental Changes. Enter into any
----------------------------------
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets, whether now owned or
hereafter acquired (including, without limitation, receivables and leasehold
interests but excluding obsolete or worn out property, or Inventory disposed of
in the ordinary course of business), or acquire by purchase or otherwise all or
substantially all the business or assets of, or stock or other evidence of
beneficial ownership of, any Person, or make any material change in its present
method of conducting business.
Section 6.5 Distributions. Make any distribution to its partners in
-------------
excess of an amount
16
equal to 95% of Funds from Operations.
Section 6.6 Investments. Except as otherwise specifically permitted
-----------
hereunder, make or commit to make, any advance, loan, extension of credit or
capital contribution to, or purchase of any stock, bonds, note, debentures or
other securities of, or make any other investment in, any Person (all such
transactions being herein called "investments") except:
(a) investments in accounts, contract rights and chattel paper (as
defined in the Uniform Commercial Code), arising or acquired in the ordinary
course of business; and
(b) investments in bank certificates of deposit, open market
commercial paper maturing within one year having the highest rating of either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., U.S. Treasury
Bills and other short term obligations issued or guaranteed by the U.S.
Government or any agency thereof.
Section 6.7 Transactions with Affiliates and Officers. (i) Enter into any
-----------------------------------------
transactions, including, without limitation, the purchase, sale or exchange of
property or the rendering of any services, with any Affiliate, or enter into,
assume or suffer to exist any employment or consulting contract with any
Affiliate or any officer thereof, except a transaction or contract which is in
the ordinary course of the Company's business and which is upon fair and
reasonable terms no less favorable to the Company than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate or (ii) make
any advance or loan in excess of $_______ in the aggregate in any fiscal year to
any Affiliate or any officer or employee thereof or of the Company or to any
trust of which any of the foregoing is a beneficiary, or to any Person on the
guarantee of any of the foregoing except for loans specifically permitted by
this Agreement, or (iii) pay any fees or expenses to, or reimburse or assume any
obligation for the reimbursement of any expenses incurred by any Affiliate
except for travel advances made by the Company in the ordinary course of
business.
Section 6.8 Sale and Leaseback. Enter into any arrangement with any Person
------------------
providing for the leasing by the Company of real or personal property which has
been or is to be sold or transferred by the Company to such Person or to any
other Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Company.
Section 6.9 Compliance with ERISA. (a) Terminate any Plan so as to result
---------------------
in any material liability to PBGC or any material Withdrawal Liability, (b)
engage in or permit any Person to engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan
which would subject the Company to any material tax, penalty or other liability,
(c) incur or suffer to exist any material "accumulated funding deficiency" (as
defined in Sections 302(a)(2) and 4243 of ERISA), whether or not waived,
involving any Plan, except for contingent Withdrawal Liability not in excess of
$_______, or (d) allow or permit to exist any event or condition which presents
a material risk of incurring a
17
material liability to PBGC.
Section 6.10 No Subsidiaries. Directly or indirectly form or hold any
---------------
Subsidiaries.
ARTICLE VII
EVENTS OF DEFAULT
-----------------
Upon the occurrence of any of the following events:
(a) The Company shall fail to pay any principal or interest on the
Note when due, or the Company shall fail to pay any other amount payable
hereunder in accordance with the terms hereof, or
(b) Any representation or warranty made or deemed made by the
Company herein or in any other Loan Document, or by any Guarantor in any Loan
Document to which it is a party or in any certificate, document or financial or
other statement furnished at any time under or in connection with any Loan
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) The Company shall default in the observance or performance of
any agreement contained in Section 5.5 or Article VI hereof; or
(d) Any of the Guarantors shall default under or breach the terms
of the Guarantee; or
(e) The Company or any Guarantor shall default in the observance or
performance of any other covenant or agreement contained in any Loan Document
and such default shall continue unremedied for a period of ten (10) days after
written notice shall have been given by the Bank to the Company; or
(f) Any Loan Document shall cease, for any reason, to be in full
force and effect in accordance with its terms or any party thereto shall so
assert in writing; or any Security Document shall cease, for any reason, to
grant to the Bank a legal, valid and enforceable Lien on any of the collateral
described therein or shall cease, for any reason, to have the priority purport
ed to be created thereby at the time of the execution thereof; or any party to
any Loan Document shall default in the observance or performance of any of the
covenants or agreements contained therein; or
(g) Any default or event of default shall occur and remain uncured
beyond any applicable grace period under any note, security documents,
guarantees, agreements, documents or other instruments (other than the Loan
Documents) between the Bank and (i) any Guarantor, (ii) the Company or (iii) any
Affiliate of any Guarantor or the Company; or
18
(h) The Company, shall (i) default in any payment of principal of or
interest on any Indebtedness or in the payment of any Contingent Obligation,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness or Contingent Obligation was created; or (ii)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or Contingent Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur, the effect of which default or other event is (A) to cause
such Indebtedness to become due prior to its stated maturity or such Contingent
Obligation to become payable, or (B) to allow the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Contingent Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries), to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Contingent
Obligation to become payable; or
(i) (i) the Company shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it, or for all or any substantial part of its
assets, or the Company shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company any case,
proceeding or other action of a nature referred to in clause (i) above which is
not dismissed within sixty (60) days or which results in the entry of an order
for relief or any such adjudication or appointment which shall not have been
vacated, discharged or stayed or bonded pending appeal within sixty (60) days
from the entry thereof; or (iii) there shall be commenced against the Company
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets, which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Company, shall
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above;
or (v) the Company shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(j) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Sections 302(a)(2) and
4243 of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Plan, which Reportable Event or institution of
proceedings is, in the reasonable opinion of the Bank, likely to result in the
termination of such Plan for purposes of Title IV of ERISA and, in the case of a
Reportable Event, the continuance of such Reportable Event unremedied for ten
days after the earlier of the date when the Company obtains actual
19
knowledge of the Reportable Event or the date when notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof, as the
case may be, (iv) any Plan shall terminate for purposes of Title IV of ERISA,
(v) if on any date, the Withdrawal Liability exceeds $100,000, or (vi) any other
event or condition shall occur or exist and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such events or
conditions, if any, could subject the Company to any tax, penalty or other
liabilities which in the aggregate are material in relation to the business,
operations, property or financial or other condition of the Company; or
(k) One or more judgments or decrees shall be entered against the
Company and such judgments or decrees shall not have been vacated, discharged,
or stayed within 60 days from the entry thereof; or
(l) If any material adverse change shall occur in the business
operations or financial condition of the Company, as determined in the Bank's
sole discretion;
Then, and in any such event, (a) if such event is an Event of Default
specified in paragraph (i) above, automatically the obligation of the Bank to
make Loans hereunder shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and
the Note shall immediately become due and payable, and (b) if such event is any
other Event of Default and has not been cured within any applicable grace
period, (i) the Bank may, by notice to the Company, terminate its obligation to
make Loans hereunder, whereupon it shall immediately terminate; and/or (ii) the
Bank may, by notice of default to the Company, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and
the Note to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1 Amendments and Waivers. No provision of any Loan Document may
----------------------
be amended or modified in any way, nor may non-compliance therewith be waived,
except pursuant to a written instrument executed by the Bank and the Company.
In the case of any waiver, the Company and the Bank shall be restored to their
former position and rights hereunder and under the outstanding Note, the
Guarantee and the Security Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
Section 8.2 Notices. All notices, requests and demands to or upon the
-------
respective parties
20
hereto to be effective shall be in writing or by telefax and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, postage prepaid, or, in the
case of telefaxed notice, when sent, or in the case of private courier, when
delivered to such courier, addressed as follows or to such address as may be
hereafter notified by the respective parties hereto and any future holders of
the Note:
The Company: Capital Automotive L.P.
Attn: Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
The Bank: NationsBank, N.A.
Dealer Financial Services
Attn: Xxxxxxx X. Xxxxxxx, Vice President
0000 Xxx Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
provided that any notice, request or demand to or upon the Bank shall not be
effective until received.
Section 8.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder or under any Loan Document, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein or therein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
Section 8.4 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made under any Loan Document and in any document,
certificate or statement delivered pursuant thereto or in connection therewith
shall survive the execution and delivery of such Loan Document.
Section 8.5 Payment of Expenses and Taxes. The Company agrees (a) to pay
-----------------------------
or reimburse the Bank for all of its out-of-pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to the Loan Documents and any other
documents prepared in connection therewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
fees and disbursements of counsel to the Bank, (b) to pay or reimburse the Bank
for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under the Loan Documents and any such other
documents, including, without limitation, fees and disbursements of counsel to
the Bank, (c) to pay, indemnify, and to hold the Bank harmless from, any
engineering fees, any and all recording and filing fees and taxes and any and
21
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery and recordation of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of
the Loan Documents, and any such other documents, and (d) to pay, indemnify, and
hold the Bank harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of the Loan
Documents or any transaction financed in whole or in part directly or indirectly
with the proceeds of any loans made under this Agreement (all the foregoing,
collectively, the "indemnified liabilities"), provided, that the Company shall
--------
have no obligation hereunder with respect to indemnified liabilities arising
from (i) the gross negligence or willful misconduct of the Bank or (ii) legal
proceedings commenced against the Bank by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such or (iii) a breach of this Agreement
by the Bank. The agreements in this Section shall survive repayment of the Note
and all other amounts payable hereunder.
Section 8.6 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the Company and the Bank, all future holders of the
Note and their respective successors and assigns, except that the Company may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Bank.
Section 8.7 Setoff.
------
(a) The Company agrees that the Bank shall have the right to set off
and apply against all amounts owing to the Bank by the Company under the Note or
any other Loan Document any amount owing to the Company from the Bank.
(b) In addition to any rights and remedies of the Bank provided by
law, the Bank shall have the right, without prior notice to the Company, any
such notice being expressly waived by the Company to the extent permitted by
applicable law, upon the filing of a petition under any of the provisions of the
federal bankruptcy act or amendments thereto, by or against; the making of an
assignment for the benefit of creditors by; the application for the appointment,
or the appointment of any receiver of, or of any of the property of; the
issuance of any execution against any of the property of; the issuance of a
subpoena or order, in supplementary proceedings, against or with respect to any
of the property of; or the issuance of a warrant of attachment against any of
the property of; the Company, to set off and apply against all amounts owing to
the Bank by the Company under the Note or any other Loan Documents, and against
any other Indebtedness, whether matured or unmatured, of the Company to the
Bank, any amount owing from the Bank to the Company, at or at any time after the
happening of any of the above-mentioned events, and the aforesaid right of set
off may be exercised by the Bank against the Company or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of the Company, or any
of
22
them, or against anyone else claiming through or against the Company or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set off shall not have been
exercised by the Bank prior to the making, filing or issuance, or service upon
the Bank of, or of notice of, any such petition; assignment for the benefit of
creditors; appointment or application for the appointment of a receiver; or
issuance of execution, subpoena or order or warrant.
Section 8.8 Counterparts. This Agreement may be executed by one or more
------------
of the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Company and the Bank.
Section 8.9 Governing Law. The Loan Documents and the rights and
-------------
obligations of the parties thereunder shall be governed by, and construed and
interpreted in accordance with, the law of the State of _________, except to the
extent that the law of other states governs creation and perfection of security
interests in collateral located in such states.
Section 8.10 Arbitration. Any controversy or claim between or among the
-----------
parties hereto including but not limited to those arising out of or relating to
the Note, this Agreement or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a.) Special Rules The arbitration shall be conducted in the city of the
-------------
Company's domicile at time of this Agreement's execution and administered
by J.A.M.S.; if J.A.M.S. is unable or legally precluded from administering
the arbitration, then the American Arbitration Association shall administer
such arbitration. All arbitration hearings will be commenced within 90
days of demand for arbitration; further, the arbitrator shall only, upon a
showing of cause, be permitted to extend the commencement of such hearing
for an additional 60 days.
(b.) Reservation of Rights Nothing in this Agreement shall be deemed to
---------------------
(A) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (B) be
a waiver by the Bank of the protection afforded to it by 12 U.S.C. (S)91
or any substantially equivalent state law; or (C) limit the right of any
party hereto to exercise self-help remedies such as (but not limited to)
setoff, or to
23
foreclose against any real or personal property collateral, or to obtain
from a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. Any party may exercise
such self-help rights, foreclose upon such property, or obtain such
provisional or ancillary remedies before, during or after the pendency of
any arbitration proceeding brought pursuant to this Agreement. At the
Bank's option, foreclosure under a deed of trust or mortgage may be
accomplished by either the exercise of power of sale under the deed of
trust or mortgage, or by judicial sale under the deed of trust or mortgage,
or by judicial foreclosure. Neither exercise of self-help remedies nor the
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
Section 8.11 Waiver of Jury Trial. THE COMPANY AND THE BANK EACH WAIVE ALL
--------------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER ON ANY MATTER ARISING OUT OF THIS AGREEMENT, THE
NOTE, THE SECURITY DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed, sealed and delivered by their properly and duly authorized officers
as of the day and year first above-written.
CAPITAL AUTOMOTIVE, L.P.
By: CAPITAL AUTOMOTIVE REIT,
General Partner
By: [Seal]
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Title:
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NATIONSBANK, N.A.
By: [Seal]
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Title:
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24
