EX-10
Exhibit 10.30.2 Security Agmt with US Bank
EXHIBIT 10.30.2
SECURITY AGREEMENT
AMONG
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
AND
LITHIA MOTORS, INC., and its
AFFILIATES and SUBSIDIARIES
Dated: December 22, 1997
This SECURITY AGREEMENT, dated as of December 22, 1997 (this
"Agreement"), is entered into by and among LITHIA MOTORS, INC., LITHIA
HOLDING COMPANY, L.L.C., LITHIA TLM, L.L.C., LITHIA'S GRANTS PASS AUTO
CENTER, L.L.C., LITHIA DODGE, L.L.C., LITHIA CHRYSLER PLYMOUTH JEEP EAGLE,
INC., LITHIA MTLM, INC., LGPAC, INC., LITHIA DM, INC., SATURN OF SOUTHWEST
OREGON, INC., LITHIA HPI, INC., LITHIA DE, INC., LITHIA DC, INC., LITHIA FN,
INC., LITHIA TKV, INC., LITHIA FVHC, INC., LITHIA VWC, INC., LITHIA NB, INC.,
LITHIA BB, INC., LITHIA MB, INC., LITHIA XXX, INC., LITHIA RENTALS, INC.,
LITHIA AUTO SERVICES, INC., LITHIA SALMIR, INC., LITHIA BNM, INC., LITHIA
MMF, INC., LITHIA FMF, INC., LITHIA JEF, INC., LITHIA NF, INC., and LITHIA
FINANCIAL CORPORATION, (each a "Loan Party" and collectively, the "Loan
Parties") and the Lenders (each as defined below), and U.S. Bank National
Association, as agent for the Lenders, as defined below, (in such capacity,
the "Agent"). The Agent's address for purposes hereof is U.S. Bank National
Association, 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000. The mailing
address for all Loan Parties for purposes of this Security Agreement and any
financing statements is 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000.
A. Concurrently with execution of this Agreement, Lithia Motors,
Inc. (the "Borrower") and the Loan Parties have entered a Credit Agreement
with U.S. Bank National Association and the financial institutions who are
from time to time parties thereto (the "Lenders") and U.S. Bank National
Association, as agent for the Lenders (in such capacity, the "Agent"), (as
the same may be amended, modified, supplemented or extended from time to time
and any number of substitutions, renewals and replacements thereof or
therefor, the "Credit Agreement"), pursuant to which the Lenders have agreed
to extend credit to the Borrower for the benefit of the Loan Parties from
time to time.
B. It is a condition precedent to the Agent and the Lenders entering
into the Credit Agreement and making extensions of credit under the Credit
Agreement that the Loan Parties execute and deliver this Agreement and grant
the security interests provided in this Agreement;
NOW, THEREFORE, to induce the Agent and the Lenders to enter into the
Credit Agreement and the Lenders to make or extend to the Borrower one or
more loans, advances or other extensions of credit upon the terms and subject
to the conditions set forth therein, and in consideration thereof, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each Loan Party agrees as follows:
Section 1. Definitions.
(a) Capitalized terms used in this Agreement but not defined in this
Agreement shall have the meaning ascribed to them in the Credit Agreement.
All terms defined in the UCC shall have the meanings ascribed in the UCC.
(b) Collateral. All of each Loan Parties' right, title, and interest
in and to the following personal property, whether now owned or existing or
subsequently acquired or arising or in which any Loan Party now has or
subsequently acquires any rights: (i) accounts (including without limitation
accounts receivable and rebates, credits, refunds, and similar items),
instruments, chattel paper, documents, contracts (including without
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limitation the Material Agreements), general intangibles, goods (including
without limitation all Vehicles and all other inventory, equipment and
consumer goods), proceeds of letters of credit, and fixtures; (ii) all
products, proceeds, rents and profits thereof; and (iii) all of the books and
records related to any of the foregoing.
(c) Security Interests. The security interests and liens granted
pursuant to Section 2 of this Agreement, as well as all other security
interests created or assigned as additional security for the Obligations
pursuant to this Agreement or any other Loan Document.
(d) UCC. The Uniform Commercial Code as the same may, from time to
time, be in effect in the state of Oregon; provided however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in the jurisdiction other than
the State of Oregon, the term "UCC" shall mean the Uniform Commercial Code as
in effect in such other jurisdiction for purposes of the provisions of this
Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
Section 2. Grant.
To secure the full and punctual payment and performance of the
Obligations (including, without limitation, arising under or relating to the
Notes or the Guaranty), each Loan Party hereby assigns and pledges to the
Agent for the benefit of the Lenders all of its respective rights, title and
interest in, and grants to the Agent for the benefit of the Lenders a
continuing security interest in the Collateral. The Security Interests are
granted as security only and shall not subject the Agent or the Lenders to,
or transfer to the Agent or the Lenders or in any way affect or modify, any
obligation or liability of any Loan Party with respect to any of the
Collateral or any transaction in connection therewith. Each of the Lenders
shall be deemed to hold an equitable interest, proportionate to such Lender's
Commitment in relation to the Total Commitment, in the Collateral.
Section 3. Representations, Warranties and Covenants.
The Loan Parties do hereby, jointly and severally, make the following
representations and warranties and agree to the following covenants, each of
which representations, warranties and covenants shall be continuing and in
force so long as this Agreement is in effect or any Obligation remains
outstanding:
3.1 Name; Location; Changes.
(a) The name of each Loan Party set forth in Section 1(a) of its
Perfection Certificate, in the form attached hereto as Exhibit A is the true
and correct legal name of such Loan Party and, except as otherwise disclosed
to the Agent in the Perfection Certificate, such Loan Party has not done
business as or used any other name.
(b) The address of each Loan Party set forth in Section 2(a) of its
Perfection Certificate is such Loan Party's chief executive office and the
place where its business records are kept. Except as disclosed in the
Perfection Certificate, all tangible Collateral of such Loan Party is located
at such chief executive office.
(c) No Loan Party will change its name, identity or chief executive
office or place where its business records are kept; or move any tangible
Collateral to a location other than those set forth in its Perfection
Certificate unless the Borrower shall have given the Agent at least 30 days'
prior written notice thereof and such Loan Party shall have delivered to the
Agent such new UCC financing statements or other documentation as may be
necessary or required by the Agent to ensure the continued perfection and
priority of the Security Interest.
(d) If any Collateral is leased or held for lease to customers of any
Loan Party and is of a type normally used in more than one state (such as
Vehicles and similar items), the Loan Party's chief executive office is the
address shown at the beginning of this Agreement.
3.2 Ownership of Collateral; Absence of Liens and Restrictions. Each
Loan Party is, and in the case of property acquired after the date of this
Agreement will be, the sole legal and equitable owner of the Collateral of
such Loan Party, holding good and marketable title to the same, free and
clear of all Encumbrances except for the Security Interests and Permitted
Encumbrances, and has good right and legal authority to assign, deliver and
create a security interest in such Collateral in the manner contemplated by
this Agreement. The Collateral is genuine and is what it is purported to
be. The Collateral is not subject to any restriction that would prohibit or
restrict the assignment, delivery or creation of the Security Interests
contemplated under this Agreement.
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3.3 First Priority Security Interest. This Agreement creates a valid
and continuing lien on and security interest in the Collateral, and upon the
filing of UCC financing statements in the appropriate offices for the
locations of Collateral listed in each Loan Party's Perfection Certificate,
the Security Interests will be perfected (except to the extent a security
interest may not be perfected by filing under the UCC) before all other
Encumbrances, except for Permitted Encumbrances and as contemplated by
Section 9.3 of the Credit Agreement, and will be enforceable as such against
creditors of the Loan Party, any owner of the real property where any of the
Collateral is located, any purchaser of such real property and any present or
future creditor obtaining a lien on such real property.
3.4 No Conflicts. Neither any Loan Party nor any of the Loan Party's
respective predecessors has performed any acts or is bound by any agreements
that might prevent the Agent from enforcing the Security Interests or any of
the terms of this Agreement or that would limit the Agent in any such
enforcement. Except as specifically disclosed in a Perfection Certificate,
no financing statement under the UCC of any state or other instrument
evidencing a lien that names any Loan Party as debtor is on file in any
jurisdiction, and no Loan Party has signed any such document or any agreement
authorizing the filing of any such financing statement or instrument.
3.5 Sales and Further Encumbrances. No Loan Party will sell, grant,
assign or transfer any interest in, or permit to exist any Encumbrance on,
any of the Collateral of such Loan Party, except the Security Interests and
as permitted by the Credit Agreement.
3.6 Fixture Conflicts; Required Waivers. Each Loan Party intends
that the Collateral of such Loan Party shall remain personal property of such
Loan Party and shall not be deemed to be a fixture irrespective of the manner
of its attachment to any real estate. Each Loan Party will deliver to the
Agent such disclaimers, waivers, or other documents as the Agent may request
to confirm the foregoing, executed by each person having an interest in such
real estate.
3.7 Validity of Receivables. Each account, document chattel paper,
instrument and general intangible (collectively, "Receivable") constituting
Collateral arises and will arise in the ordinary course of a Loan Party's
business out of or in connection with the sale or lease of goods or the
rendering of services and is and shall be a valid, legal and binding
obligation of the party purported to be obligated thereon, enforceable in
accordance with its terms and free of material setoffs, defenses or
counterclaims. No Loan Party has any knowledge of any fact that would
materially impair the validity or collectibility of any Receivable.
3.8 Inspection; Verification of Receivables. Each Loan Party shall
keep complete and accurate books and records relating to the Collateral, and
upon request of the Agent shall stamp or otherwise xxxx such books and
records in such manner as the Agent may reasonably request to reflect the
Security Interests. Each Loan Party will allow the Agent or its designees to
examine, inspect and make extracts from or copies of such Loan Party's books
and records, inspect the Collateral and arrange for verification of
Receivables constituting Collateral directly with any debtors or by other
methods, under reasonable procedures established by the Agent after
consultation with such Loan Party. The Agent may require each Loan Party to
assemble the Collateral for such inspection in a reasonably convenient place,
and in all other ways each Loan Party shall assist the Agent in making such
inspection. The Borrower agrees to pay in full any item or unit of
Collateral that is not located at a Loan Party's premises or accounted for by
a Loan Party to the Agent in accordance with the terms of the Credit
Agreement.
3.9 Receivables: Collection and Delivery of Proceeds. Each Loan
Party will diligently collect all of its Receivables constituting Collateral
until the Agent exercises its rights to collect the Receivables pursuant to
this Agreement. If any Receivables are at any time evidenced by promissory
notes, trade acceptances or other instruments for the payment of money, such
Loan Party will promptly deliver the same to the Agent appropriately endorsed
to the Agent's order, and, regardless of the form of such endorsement, each
Loan Party hereby waives presentment, demand, notice of dishonor, protest,
notice of protest and all other notices with respect thereto. Each Loan
Party shall, at the request of the Agent at any time, notify debtors, and the
Agent may itself, after the occurrence and during the continuance of a
Default, notify debtors directly of the security interest of the Agent in any
Receivable and that payment thereof is to be made directly to the Agent. Any
proceeds of Receivables or inventory constituting Collateral received by each
Loan Party, whether in the form of cash, checks, notes or other instruments,
shall be held in trust for the Agent, and, if requested by the Agent, such
Loan Party shall deliver said proceeds daily to the Agent, without
commingling, in the identical form received (properly endorsed or assigned
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where required to enable the Agent to collect same). Upon request of the
Agent at any time, each Loan Party will (i) enter into a lockbox arrangement
with one or more financial institutions (which may include the Agent or any
of the Lenders) deemed acceptable by the Agent for the collection of such
proceeds and/or (ii) maintain its deposit accounts at the Agent or at another
financial institution that has agreed to accept drafts drawn on it by the
Agent under a written depository transfer agreement or other arrangement with
the Agent and to block such account and waive its own rights as against such
account.
3.10 Inventory. At least monthly and whenever else reasonably
requested by the Agent, each Loan Party shall make a physical count of all
Vehicle inventory and shall furnish to the Agent a report (certified by an
authorized officer of the Loan Party to be true, correct and complete) of
such physical count, such report to be in such form and with such specificity
as may be reasonably requested by the Agent.
3.11 Insurance. Each Loan Party will keep the Collateral of such Loan
Party insured at all times by insurance in such form and amounts as may be
reasonably satisfactory to the Agent, and in any event (without specific
request by the Agent) will insure such Collateral against physical hazard on
an "all risks" basis, including fire, theft and, in the case of Vehicles,
collision. Such insurance shall be with insurance companies reasonably
satisfactory to the Agent and shall be payable to the Agent as loss payee and
such Loan Party, as their respective interests may appear. Such insurance
shall provide for not less than 30 days' prior notice of cancellation, change
in form or nonrenewal to the Agent and shall insure the interest of the Agent
regardless of any breach or violation by such Loan Party or any other person
of the warranties, declarations or covenants contained in such policies.
Each Loan Party shall insure the Collateral in amounts sufficient to prevent
the application of any co-insurance provisions and shall insure the
Collateral at all times in an amount at least equal to the amount of the
Obligations. Each Loan Party shall evidence its compliance with the
foregoing by delivering a certificate with respect to each policy
concurrently with the execution of this Agreement, annually thereafter, and
from time to time upon the request of the Agent.
WARNING
Unless each Loan Party provides the Agent with evidence of the
insurance coverage as required by the Credit Agreement or any Loan Document,
the Agent may purchase insurance at the Loan Party's expense to protect the
Lenders' interest. This insurance may, but need not, also protect the Loan
Party's interest. If the Collateral becomes damaged, the coverage the Agent
purchases may not pay any claim any Loan Party makes or any claim made
against any Loan Party. Each Loan Party may later cancel this coverage by
providing evidence that the Loan Party has obtained property coverage
elsewhere.
Each Loan Party is responsible for the cost of any insurance purchased
by the Agent. The cost of this insurance may be added to the Total Loan
Outstandings. If the cost is added to the Total Loan Outstandings, the
highest interest rate on the underlying Loan will apply to this added
amount. The effective date of coverage may be the date any Loan Party's
prior coverage lapsed or the date the Loan Party failed to provide proof of
coverage.
The coverage the Agent purchases may be considerably more expensive
than insurance any Loan Party can obtain on its own and may not satisfy any
need for property damage coverage or any mandatory liability insurance
requirements imposed by applicable law.
3.12 Maintenance and Use; Payment of Taxes. Each Loan Party will
preserve, protect and keep the Collateral of such Loan Party in good order
and repair, will not use the same in violation of law or any policy of
insurance thereon and will pay promptly when due all taxes and assessments on
such Collateral or on its use or operation, except as otherwise permitted by
the Credit Agreement.
3.13 General Intangibles.
(a) Each Loan Party will apply for, and diligently pursue
applications for, registration of its ownership of the general intangibles
constituting Collateral and for which registration is appropriate, and will
use such other measures as are appropriate to preserve its rights in its
other general intangibles constituting Collateral. Each Loan Party will, at
the reasonable request of the Agent, retain off-site current copies of all
materials created by or furnished to such Loan Party on which is recorded
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then-current information about any computer programs or data bases that such
Loan Party has developed or otherwise has the right to use from time to
time. Such materials include, without limitation, magnetic or other computer
media on which object, source or other code is recorded or that contain
documentation of those computer programs or data bases, in the nature of
listing printouts, narrative descriptions, flow diagrams and similar things.
Each Loan Party will, at the request of the Agent, deliver a set of such
copies to the Agent for safekeeping and retention or transfer in the event of
foreclosure.
(b) The Loan Parties shall timely and diligently pursue the
enforcement of each material covenant or obligation of each other party to
each Material Agreement. The Borrower will promptly notify the Agent in
writing of any material default under any such agreement or any revocation,
termination, cancellation or expiration thereof (other than with respect to
Material Agreements that are purchase and sale agreements in connection with
an Acquisition), specifying the nature and period of existence thereof and
what action the Loan Parties are taking or propose to take with respect
thereto. Promptly upon becoming available, the Borrower shall deliver to the
Agent copies of all notices and other documents received by any Loan Party
that describe any event which would materially and adversely affect (i) the
condition (financial or otherwise), operations, business, or properties of
any Loan Party or the ability of any Loan Party to perform timely its
obligations under any such material agreement or any Loan Document, or
(ii) the ability of any other party to any such Material Agreement to perform
timely its obligations under any such Material Agreement to which it is a
party.
No Loan Party will cause, or suffer to exist, any expiration,
termination, revocation, or cancellation of, or material default under, any
Material Agreement, regardless of cause, or cause, or suffer to exist, any
such Material Agreement to not be in full force and effect or not constitute
the legal, valid and binding obligations of the parties thereto, or assign or
grant to a Person any right or interest arising therefrom and will not,
without the prior written consent of the Required Lenders, materially modify
or amend any such Material Agreement.
3.14 Further Assurances. Upon the reasonable request of the Agent,
and at the sole expense of such Loan Party, the Loan Party will promptly
execute and deliver such further instruments and documents and take such
further actions as the Agent may deem desirable to obtain the full benefits
of this Agreement and of the rights and powers in this Agreement granted,
including, without limitation, filing of any financing statement or notice
under the UCC or other applicable law, execution of assignments or mortgages
of general intangibles and transfer of Collateral (other than inventory and
equipment) to the Agent's possession. Each Loan Party authorizes the Agent
to file any such financing or continuation statement, or amendments thereto,
without the signature of such Loan Party to the extent permitted by
applicable law and to file a copy of this Agreement in lieu of a financing
statement. If any amount payable under or in connection with any of the
Collateral of any Loan Party shall be or become evidenced by any promissory
note or other instrument, such note or instrument shall be immediately
delivered to the Agent, duly endorsed in a manner satisfactory to it. If any
Receivables of any Loan Party arise from contracts with the United States of
America or any department, agency or instrumentality thereof, such Loan Party
will immediately notify the Agent thereof and execute any assignments and
take any steps reasonably requested by the Agent in order that all monies due
and to become due thereunder shall be assigned and paid to the Agent under
the Assignment of Claims Act of 1940. If any Collateral is at any time in
the possession or control of any warehouseman, bailee or agents of any Loan
Party or processors, such Loan Party shall, upon request of the Agent, notify
such warehouseman, bailee, agent or processor of the Security Interests and
to hold all such Collateral for the Agent's Receivable subject to the Agent's
instructions.
3.15 Obligation to Enter Into the Guaranty Agreement. The Loan
Parties shall promptly sign the Guaranty as required by the Credit Agreement.
Section 4. Notices and Reports Pertaining to Collateral.
Each Loan Party will, with respect to the Collateral:
(a) promptly furnish to the Agent, from time to time upon request,
reports in form and detail satisfactory to the Agent;
(b) promptly notify the Agent of (i) any Encumbrance (except
Permitted Encumbrances) asserted against the Collateral, including any
attachment, levy, execution or other legal process levied against any of the
Collateral, (ii) any default or event of default (including any occurrence
that with the giving of notice or the passage of time would constitute a
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default) under any Material Agreement, and (iii) of any information received
by the Loan Party relating to the Collateral, including the Receivables, the
debtors or other persons obligated in connection therewith, that may in any
way adversely affect the value of the Collateral or the rights and remedies
of the Agent with respect thereto;
(c) promptly notify the Agent when it obtains knowledge of actual or
imminent bankruptcy or other insolvency proceeding of any account debtor or
issuer of securities;
(d) deliver to the Agent, as the Agent may from time to time request,
delivery receipts, customers' purchase orders, shipping instructions, bills
of lading and any other evidence of shipping arrangements;
(e) concurrently with the reports required to be furnished under
subsection (a) of this Section, and immediately if material in amount, notify
the Agent of any return or adjustment, rejection, repossession or loss or
damage of or to merchandise represented by Receivables or constituting
inventory and of any credit, adjustment or dispute arising in connection with
the goods or services represented by Receivables or constituting inventory;
and
(f) promptly after the application by such Loan Party for
registration of any general intangibles, or promptly after the execution and
delivery of any Material Agreement, notify the Agent thereof.
Each Loan Party authorizes the Agent to destroy all invoices, delivery
receipts, reports and other types of documents and records submitted to the
Agent in connection with the transactions contemplated in this Agreement at
any time after 12 months from the time such items are delivered to the Agent.
Section 5. Agent's Rights and Remedies in General.
(a) So long as any Event of Default has occurred and is continuing:
(i) the Agent may, at its option, without notice or demand,
cause all of the Obligations to become immediately due and payable and take
immediate possession of the Collateral, and for that purpose the Agent may,
so far as any Loan Party can give authority therefor, enter upon any premises
on which any of the Collateral is situated and remove the same therefrom or
remain on such premises and in possession of such Collateral for purposes of
conducting a sale or enforcing the rights of the Agent;
(ii) each Loan Party will, upon demand, assemble the Collateral
and make it available to the Agent at a place and time designated by the
Agent that is reasonably convenient to both parties;
(iii) the Agent may collect and receive all income and proceeds
in respect of any Collateral and exercise all rights of any Loan Party with
respect thereto;
(iv) the Agent may sell, lease or otherwise dispose of any
Collateral at a public or private sale, with or without having such
Collateral at the place of sale and upon such terms and in such manner as the
Agent may determine, and the Agent may purchase any Collateral at any such
sale. Unless such Collateral threatens to decline rapidly in value or is of
the type customarily sold on a recognized market, the Agent shall send to the
Loan Party owning such Collateral prior written notice (which, if given
within five (5) days of any sale, shall be deemed to be reasonable) of the
time and place of any public sale of such Collateral or of the time after
which any private sale or other disposition thereof is to be made. Each Loan
Party agrees that upon any such sale such Collateral shall be held by the
purchaser free from all claims or rights of every kind and nature, including
any equity of redemption or similar rights, and all such equity of redemption
and similar rights are hereby expressly waived and released by such Loan
Party. In the event any consent, approval or authorization of any
governmental agency is necessary to effectuate any such sale, such Loan Party
shall execute all applications or other instruments as may be required; and
(v) in any jurisdiction where the enforcement of its rights
under this Agreement is sought, the Agent shall have, in addition to all
other rights and remedies, the rights and remedies of an Agent under the
Uniform Commercial Code and other applicable law.
(b) The Agent may perform any covenant or agreement of any Loan Party
contained in this Agreement that the Loan Party has failed to perform, and in
so doing the Agent may expend such sums as it may reasonably deem advisable
in the performance thereof, including, without limitation, the payment of any
taxes or insurance premiums, payment to obtain a release of an Encumbrance or
potential Encumbrance, expenditures made in defending against any adverse
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claim and all other expenditures that the Agent may make for the protection
of any Collateral or that it may be compelled to make by operation of law.
All such sums and amounts so expended shall be repaid by the Loan Party upon
demand, shall constitute additional Obligations and shall bear interest from
the date such amounts are expended at the highest rate per annum provided in
the Credit Agreement to be paid on Prime Rate Loans after the occurrence of
an Event of Default. No such performance of any covenant or agreement by the
Agent on behalf of such Loan Party, and no such advance or expenditure
therefor, shall relieve the Loan Party of any Event of Default under the
terms of this Agreement or the other Loan Documents.
(c) Before any disposition of Collateral pursuant to this Agreement,
the Agent may, at its option, cause any of the Collateral to be repaired or
reconditioned (but not upgraded unless mutually agreed) in such manner and to
such extent as to make it saleable.
(d) The Agent is hereby granted a license or other right to use,
without charge, each Loan Party's labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks and advertising matter,
or any property of a similar nature, relating to the Collateral in completing
the production of, advertising for sale and selling any Collateral; and each
Loan Party's rights under all licenses and all franchise agreements shall
inure to the Agent's benefit (provided, however, that nothing in this
Agreement shall require the Agent to operate the business of any Loan Party
in connection with the sale of any Collateral).
(e) The Agent shall be entitled to retain the proceeds of any
disposition of the Collateral and to apply them, first, to its reasonable
expenses of retaking, holding, protecting and maintaining and preparing for
disposition and disposing of the Collateral, including attorneys' fees and
other legal expenses incurred by it in connection therewith; and second, to
the payment of the Obligations in such order of priority as the Agent shall
determine. Any surplus remaining after such application shall be paid to the
Loan Parties or to whomever may be legally entitled thereto, provided that in
no event shall the Loan Parties be credited with any part of the proceeds of
the disposition of the Collateral until such proceeds shall have been
received in cash by the Agent. The Loan Parties shall remain liable for any
deficiency.
(f) Each Loan Party hereby appoints the Agent and each of the Agent's
designees or agents as attorney-in-fact of such Loan Party, irrevocably and
with power of substitution, with full authority in the name of such Loan
Party, the Agent or otherwise, for sole use and benefit of the Agent, but at
such Loan Party's expense, so long as an Event of Default is continuing, to
take any and all of the actions specified above in this Section and elsewhere
in this Agreement. This power of attorney is a power coupled with an
interest and shall be irrevocable for so long as any of the Obligations or
Commitments remain outstanding.
Section 6. Agent's Rights and Remedies with Respect to Collateral.
The Agent may, at its option, at any time and from time to time after
the occurrence and during the continuance of an Event of Default, without
notice to or demand on any Loan Party, take the following actions with
respect to the Collateral:
(a) with respect to any Receivable (i) demand, collect and receipt
for any amounts relating thereto, as the Agent may determine; (ii) commence
and prosecute any actions in any court for the purposes of collecting any
such Receivables and enforcing any other rights in respect thereof;
(iii) defend, settle or compromise any action brought and, in connection
therewith, give such discharges or releases as the Agent may deem
appropriate; (iv) receive, open and dispose of mail addressed to any Loan
Party and endorse title documents, checks, notes, drafts, acceptances, money
orders, bills of lading, warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving rise to such
Receivables or securing or relating to such Receivables, on behalf of and in
the name of such Loan Party; and (v) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or exercise rights in respect
of, any such Receivables or the goods or services that have given rise
thereto, as fully and completely as though the Agent were the absolute owner
thereof for all purposes; and
(b) with respect to any equipment and inventory (i) make, adjust and
settle claims under any insurance policy related thereto and place and pay
for appropriate insurance thereon; (ii) discharge taxes and other
Encumbrances at any time levied or placed thereon; (iii) make repairs or
provide maintenance with respect thereto; and (iv) pay any necessary filing
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fees and any taxes arising as a consequence of any such filing. The Agent
shall have no obligation to make any such expenditures, nor shall the making
thereof relieve the Loan Party of its obligation to make such expenditures.
Section 7. The Agent's Duties.
The powers conferred on the Agent under this Agreement are solely to
protect its and the Lenders' interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it under this Agreement, the Agent shall have no duty as to
maturities, tenders, or other matters relative to any Collateral, whether or
not the Agent or any Lender has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which it accords its own
property.
Section 8. Setoff Rights.
Regardless of the adequacy of any Collateral or any other means of
obtaining repayment for any Obligations, the Agent may at any time and from
time to time, after the occurrence of an Event of Default and without notice
to the Borrower or any other Loan Party (any such notice being expressly
waived by the Borrower and each other Loan Party) and to the fullest extent
permitted by law, set off and apply any and all deposits (general or special,
time or demand, provisional or final) and other sums credited by or due from
the Agent to the Borrower or any other Loan Party or subject to withdrawal by
the Borrower or any other Loan Party and any other property and securities at
any time in the possession or control of the Agent against any Obligations,
whether or not the Agent shall have made any demand for such Obligations and
although such Obligations may be contingent or unmatured.
Section 9. Security Interest Absolute.
All rights of the Agent or the Lenders and the Security Interest
granted under this Agreement, and all obligations of each Loan Party under
this Agreement, shall be absolute and unconditional, notwithstanding:
9.1 Any lack of validity, regularity, or enforceability of the Credit
Agreement, the Notes, any other Loan Document or any other agreement or
instrument relating thereto;
9.2 Any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, the
Notes or the other Loan Documents, including, without limitation, any
increase in the Obligations resulting from the extension of any additional
credit to any Loan Party;
9.3 Any taking, exchange, substitution, release, or nonperfection of
any other Collateral, or taking, release, or amendment or waiver of or
consent to departure from any Guaranty, for all or any of the Obligations;
Section 10. Continuing Security Interest.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the later of
(i) the payment in full of the Obligations and all other amounts payable
under this Agreement and the complete performance of all other Obligations
and (ii) the expiration or termination of the Commitments; (b) be binding on
each Loan Party, and its successors and assigns; and (c) inure to the benefit
of, and be enforceable by, the Agent and its successors, transferees, and
assigns. To the extent any payments on the Obligations or proceeds of any
Collateral or the proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other Person
under any law or equitable cause, then, to the extent of such recovery, the
Obligation or part thereof originally intended to be satisfied, and all
rights and remedies therefor, shall be revived and shall continue in full
force and effect, and the Agent's and the Lenders' rights, powers and
remedies under this Agreement and each other Loan Document shall continue in
full force and effect, as if such payment had not been made or such
enforcement or setoff had not occurred. In such event, each Loan Document
shall be automatically reinstated and the Loan Parties shall take such action
as may be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
8
Section 11. Waivers.
Each Loan Party waives presentment, demand, notice, protest, notice of
acceptance of this Agreement, notice of any loans made, credit or other
extensions granted, Collateral received or delivered and any other action
taken in reliance hereon and all other demands and notices of any
description, except for such demands and notices as are expressly required to
be provided to such Loan Party under this Agreement or any other document
evidencing the Obligations. Each Loan Party waives, to the full extent
permitted by law, the benefit of all appraisement, valuation, stay, extension
and redemption laws now or hereafter in force and all rights of marshaling in
the event of any sale or disposition of any of the Collateral. With respect
to both the Obligations and any Collateral, each Loan Party assents to any
extension or postponement of the time of payment or any other forgiveness or
indulgence; to any substitution, exchange or release of Collateral; to the
addition or release of any party or person primarily or secondarily liable;
and to the acceptance of partial payment thereon and the settlement,
compromise or adjustment of any thereof, all in such manner and at such time
or times as the Agent may deem advisable. The Agent may exercise its rights
with respect to any Collateral without resorting, or regard, to other
collateral or sources of reimbursement for Obligations. The Agent shall not
be deemed to have waived any of its rights with respect to the Obligations or
the Collateral unless such waiver is in writing and signed by the Agent. No
delay or omission on the part of the Agent in exercising any right and no
course of dealing shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not bar or waive the exercise of
any right on any future occasion. All rights and remedies of the Agent in
the Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, are cumulative and not exclusive of any remedies
provided by law or any other agreement and may be exercised separately or
concurrently.
Section 12. Expenses.
Each Loan Party agrees to indemnify, defend, reimburse, and hold the
Agent and Each Lender harmless from and against any and all claims, losses,
damages, judgments, liabilities, penalties, fines, fees, costs and expenses
(including attorneys' fees and expenses) arising from or relating to this
Agreement (including, without limitation, enforcement of this Agreement).
Each Loan Party shall, on demand, pay or reimburse the Agent for all
reasonable expenses (including attorneys' fees and disbursements of outside
counsel and allocated costs of in-house counsel) (whether or not there is a
lawsuit, and including without limitation for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, petitions for review and any anticipated post judgment collection
services) incurred or paid by the Agent in connection with the preparation,
negotiation, and closing and the administration or enforcement of this
Agreement; its periodic examinations of the Collateral and any other amounts
permitted to be expended by the Agent hereunder, including, without
limitation, such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, priority and value of any Security
Interest created by this Agreement; the custody, collection, sale,
realization or other disposition of, or the use or operation of, any of the
Collateral; or the exercise by the Agent of any of the rights conferred upon
it under this Agreement. The obligation to pay any such amount shall be an
additional Obligation secured hereby, and each such amount shall bear
interest from the time of demand at the rate per annum equal to the Prime
Rate plus the Applicable Margin plus 3%.
Section 13. Notices.
Any demand or notice to be given pursuant to this Agreement shall be
given in accordance with the terms of Section 11.1 ("Notices") of the Credit
Agreement.
Section 14. Joinder.
Each Loan Party agrees that from time to time in the event that it
shall acquire or form any Subsidiary or Affiliate, it shall cause such
Subsidiary or Affiliate to execute and deliver the Joinder Agreement and a
Perfection Certificate, and that upon the execution and delivery of the
Joinder Agreement, this Agreement shall become the binding obligation of such
Subsidiary or Affiliate and shall create a valid and continuing lien on and
security interest in the Collateral of such Subsidiary or Affiliate.
Section 15. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of each
Loan Party and its respective successors and assigns, and shall be binding
upon, inure to the benefit of and be enforceable by the Agent, the Lenders
and their respective successors and assigns; provided that no Loan Party
shall assign or transfer its rights or obligations under this Agreement.
9
Section 16. Governing Law.
THIS AGREEMENT IS A CONTRACT UNDER THE LAWS OF THE STATE OF OREGON AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OR OREGON (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OF
LAW OR CHOICE OF LAW PROVISIONS, RULES, OR PRINCIPLES). EACH LOAN PARTY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY OF THE FEDERAL OR STATE
COURTS LOCATED IN MULTNOMAH COUNTY IN THE STATE OF OREGON IN CONNECTION WITH
ANY ACTION TO ENFORCE THE RIGHTS OF THE AGENT UNDER THIS AGREEMENT. EACH
LOAN PARTY IRREVOCABLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS REFERRED TO
IN THE PRECEDING SENTENCE AND HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
Section 17. Waiver of Jury Trial.
EACH LOAN PARTY AND THE AGENT HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
EACH LOAN PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES. EACH LOAN PARTY (a) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE AGENT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BECAUSE OF, AMONG OTHER THINGS, SUCH LOAN PARTY'S
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS AGREEMENT.
Section 18. Credit Agreement Controls.
If there are any conflicts or inconsistencies among the Credit
Agreement and this Agreement, the provisions of the Credit Agreement shall
prevail and control.
Section 19. Severability.
The provisions of this Agreement are severable and if any one clause or
provision of this Agreement shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part of this Agreement, in
such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
Section 20. General.
This Agreement and the other Loan Documents constitute the entire
understanding and agreement of the parties with respect to the matters set
forth in this Agreement. This Agreement may not be amended or modified
except by a writing signed by the Borrower, the Agent and the Loan Party
against whom enforcement is sought. This Agreement and any amendment of this
Agreement may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one instrument.
Section headings are for convenience of reference only and are not a part of
this Agreement. In the event that any Collateral or any deposit or other sum
due from or credited by the Agent is held or stands in the name of any Loan
Party and another or others jointly, the Agent may deal with the same for all
purposes as if it belonged to or stood in the name of such Loan Party alone.
10
Section 21. Disclosure.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE
LENDERS AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
SIGNED BY THE LENDERS TO BE ENFORCEABLE.
IN WITNESS WHEREOF, each Loan Party has duly executed this Agreement as
of the date set forth in the preamble to this Agreement.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and
Chief Executive Officer
AFFILIATES AND SUBSIDIARIES:
LITHIA HOLDING COMPANY, L.L.C.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X. XxXxxx
Title: Manager
LITHIA TLM, L.L.C.
By: Lithia Motors, Inc. as Manager
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: Chairman of the Board and
Chief Executive Officer
LITHIA'S GRANTS PASS AUTO CENTER, L.L.C.
By: Lithia Motors, Inc. as Manager
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: Chairman of the Board and
Chief Executive Officer
LITHIA DODGE, L.L.C.
By: Lithia Motors, Inc. as Manager
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: Chairman of the Board and
Chief Executive Officer
LITHIA CHRYSLER PLYMOUTH JEEP EAGLE, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA MTLM, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
11
LGPAC, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA DM, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
SATURN OF SOUTHWEST OREGON, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA HPI, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA DE, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA DC, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA FN, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA TKV, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA FVHC, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA VWC, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
12
LITHIA NB, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA BB, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA MB, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA XXX, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA RENTALS, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA AUTO SERVICES, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA SALMIR, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA BNM, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA MMF, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA FMF, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
13
LITHIA JEF, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA NF, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
LITHIA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X.XxXxxx
Title: President
ACCEPTED IN PORTLAND,
OREGON AS OF THE DATE
FIRST ABOVE WRITTEN
U.S. BANK NATIONAL ASSOCIATION, as Agent
By: /s/ U.S. Bank National Association
Name:
Title:
14
Exhibit A
PERFECTION CERTIFICATE
TO
SECURITY AGREEMENT
dated _____________________
of _______________________
The undersigned, ________________________________________, a
[corporation/llc] (the "Loan Party"), hereby certifies to U.S. Bank National
Association, with reference to a certain Security Agreement dated December
22, 1997 between the Borrower, the other Loan Parties, and the Agent (terms
defined in such Security Agreement shall have the same meanings in this
Perfection Certificate as specified in the Security Agreement), as follows:
Section 1. Names.
(a) The exact corporate name of the Loan Party as it appears on its
organizational documents and its taxpayer identification number are as
follows:
(b) The following is a list of all other names (including trade names
or similar appellations) used by the Loan Party, and any other businesses or
organizations to which the Loan Party became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, now or at any previous time:
Section 2. Locations.
(a) The chief executive office of the Loan Party is located at the
following address:
(b) The following is a list of all other locations in the United
States of America in which the Loan Party maintains any books or records
relating to any of the Collateral consisting of Accounts, chattel paper,
General Intangibles or mobile goods:
Currently:
Street and Number County State Zip Code
Within the last four months, if different:
Street and Number County State Zip Code
(c) The following is a list of all other places of business of the
Loan Party in the United States of America:
Currently:
Street and Number County State Zip Code
Within the last four months, if different:
Street and Number County State Zip Code
(d) The following is a list of all other locations in the United
States of America where any of the Collateral is located:
Currently:
Street and Number County State Zip Code
Within the last four months, if different:
Street and Number County State Zip Code
(e) The following are the names and addresses of all persons or
entities other than the Loan Party, such as lessees, consignees, warehousemen
or purchasers of chattel paper, that have possession or are intended to have
possession of any of the Collateral consisting of chattel paper, inventory or
equipment:
00
Xxxxxxxxx:
Xxxxxx and Number County State Zip Code
Within the last four months, if different:
Street and Number County State Zip Code
Section 3. Fixtures.
Set forth below is the information required by UCC ? 9-402(5) of each
state in which any of the Collateral consisting of fixtures are or are to be
located and the name and address of each real estate recording office where a
mortgage on the real estate on which such fixtures are or are to be located
would be recorded:
Section 4.
Other UCC Filings. Financing statements in favor of secured parties
other than the Agent have been filed in the Uniform Commercial Code filing
offices in the jurisdictions and real estate recording offices identified
below:
Filing No. Date Filing Office Secured Party
Collateral
IN WITNESS WHEREOF, the undersigned executes this Perfection
Certificate on ________________, 199_.
[LOAN PARTY]
By: ____________________________________
Name:
Title:
