EX-10
Exhibit 10.30.1 Credit Agmt with US Bank
EXHIBIT 10.30.1
CREDIT 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 CREDIT AGREEMENT is entered into as of December 22, 1997 (this
"Agreement") by and among LITHIA MOTORS, INC., an Oregon corporation, having
its chief executive office at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000
(the "Borrower") and the Borrower's Affiliates and Subsidiaries listed on
Schedule 1-A attached to this Agreement or who subsequently become a party to
this Agreement (each, jointly and severally with the Borrower, a "Loan
Party" and together with the Borrower, the "Loan Parties"); U.S. BANK NATIONAL
ASSOCIATION, a national bank having an office at 000 Xxxx Xxxx Xxxxxx,
Xxxxxxx, Xxxxxx 00000 ("U.S. Bank") and the other financial institutions
listed on Schedule 1-B attached to this Agreement or who subsequently become
a party to this Agreement (together with U.S. Bank, the "Lenders"); and
U.S. Bank National Association, as agent for the Lenders (in such capacity,
the "Agent").
A. Borrower owns and operates through its various Subsidiaries and
Affiliates automobile dealerships and desires to finance the acquisition of
its inventory pursuant to the terms and conditions of this Agreement. The
Borrower also desires to have the Lenders finance its acquisition of other
automobile dealerships.
B. The Lenders are willing to finance the acquisition of the
Borrower's inventory and the acquisition of other automobile dealerships by
making loans or advances to the Borrower and its Subsidiaries and Affiliates
pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are by this
Agreement acknowledged, the parties to this Agreement agree as follows:
SECTION I.
DEFINITIONS
1.1 Definitions. All capitalized terms used in this Agreement, or in
the Notes, Loan Documents, or in any certificate, report or other document
made or delivered pursuant to this Agreement (unless otherwise defined
therein) shall have the meanings assigned to them below:
Acquisition. See Section 5.17.
Acquisition Approval Documents. A Pro Forma Compliance Certificate
indicating the Loan Parties' compliance with the terms, conditions and
covenants of this Agreement after giving effect to the Acquisition and such
other documents as the Agent may reasonably request including without
limitation financial statements of the Acquisition Target.
Acquisition Loan. An Acquisition Revolving Loan and/or the Acquisition
Term Loan.
Acquisition Revolving Loan. See Section 2.1(e).
Acquisition Target. See Section 5.17.
Acquisition Term Loan. See Section 2.1(e).
Affected Loans. See Section 2.11(a).
Affiliate. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by or
under direct or indirect common control of that Person, (iii) any other
1
Person directly or indirectly holding 5% or more of any class of the capital
stock or other equity interests (including options, warrants, convertible
securities and similar rights) of that Person and (iv) any other Person 5% or
more of any class of whose capital stock or other equity interests (including
options, warrants, convertible securities and similar rights) is held
directly or indirectly by that Person other than a person who has acquired
such securities in the ordinary course of business and not with the purpose
nor with the effect of changing or influencing the control of the Borrower,
nor in connection with or as a participant in any transaction having such
purposes, and that person is a broker or dealer registered under the
Securities Exchange Act of 1934, as amended, and otherwise qualifies as a
passive investor entitled to file a Schedule 13G Disclosure with the
Securities and Exchange Commission; a bank or trust company; an insurance
company; an investment company registered under the Investment Company Act of
1940, as amended; an investment adviser registered under the Investment
Advisers Act of 1940, as amended, or under the securities laws of any state
or the District of Columbia; or an employee benefit plan or pension plan
which is subject to the provisions of ERISA, or a trust fund of such a plan,
for which no Loan Party is a participating employer; provided, however, that
for purposes of the definitions of "Plan" and "Multiemployer Plan" in this
Section 1.1 and for purposes of Sections 4.15, 5.10, 7.8 and 8.1(h) of this
Agreement, "Affiliate" shall mean, within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended, only (i) any
member of a controlled group of corporations which includes the Borrower or
any Subsidiary of the Borrower, (ii) any trade or business, whether or not
incorporated, under common control with the Borrower or any Subsidiary of the
Borrower, (iii) any member of an affiliated service group which includes the
Borrower or any Subsidiary of the Borrower, and (iv) any member of a group
treated as a single employer by regulation with the Borrower or a Subsidiary
of the Borrower.
Agreement. This Credit Agreement, including the Exhibits and Schedules
to this Agreement, as the same may be supplemented or amended from time to
time.
Applicable Margin. As of any date, with respect to a LIBOR Loan that
is a New Vehicle Loan, Program and Used Vehicle Loan, or an Acquisition Loan,
the applicable percentage set forth below opposite the applicable Debt to
Cash Flow Ratio:
Applicable Margin
New Vehicle Program and Acquisition
Debt to Cash Loans Used Vehicle Revolving
Flow Ratio Loans Loans and
Acquisition
Term Loan
greater than 3.00:1.00 1.75% 2.75% 2.75%
3.00:1.00 or less and 1.50% 2.25% 2.25%
greater than 2.50:1.00
2.50:1.00 or less and 1.50% 2.15% 2.15%
greater than 1.00:1.00
1.00:1.00 or less 1.50% 2.05% 2.05%
Swingline Loans and Demonstrator Vehicle Loans shall not be LIBOR Loans.
2
As of any date, with respect to any Prime Rate Loan that is a New
Vehicle Loan, a Swingline Loan, a Program and Used Vehicle Loan, a
Demonstrator Vehicle Loan, or an Acquisition Loan, the applicable percentage
set forth below opposite the applicable Debt to Cash Flow Ratio:
Applicable Margin
Debt to Cash New Vehicle Program and Demonstrator Acquisition
Flow Ratio Loans or Used Vehicle Vehicle Loans Revolving
Swingline Loans Loans Loans or
Acquisition
Term Loan
greater than 0% .25% 0% .25%
3.00:1.00
3.00:1.00 or 0% .25% 0% .25%
less
Assignee. See Section 9.1.
Attorneys' Fees. See Section 11.2.
Borrower. See Preamble.
Borrower's Accountants. Independent certified public accountants
selected by the Borrower and reasonably acceptable to the Agent.
Borrowing Base. (i) With respect to New Vehicle Loans or Swingline
Loans, 100% of the value, equal to the lower of cost using the specific
identification method or Reserve Adjusted Value, of (a) that portion of the
inventory consisting of New Vehicles in which the Lenders have a perfected
first-priority security interest, and (b) without duplication, Sold New
Vehicles; (ii) with respect to Program and Used Vehicle Loans, 80% of the
combined value, equal to the lower of cost using the specific identification
method or Reserve Adjusted Value, of that portion of the inventory consisting
of Program Vehicles and Used Vehicles in which the Lenders have a perfected
first-priority security interest; and (iii) with respect to Acquisition
Loans, an amount equal to the sum of (a) 70% of Vehicle Equity, (b) 70% of
Fixed Asset Value, (c) 70% of Franchise Value, and (d) 70% of Leased Vehicle
Equity. Notwithstanding anything to the foregoing, the value of any Vehicle
shall not be included in the calculation of more than one Borrowing Base or
Commitment at any given time, and the value of any Vehicle owned by Lithia
Financial Corporation shall not be included in the calculation of any
Borrowing Base applicable to a Vehicle Loan.
Business Day. (i) For all purposes other than as covered by clause
(ii) below, any day other than a Saturday, Sunday or legal holiday on which
banks in Portland, Oregon, Minneapolis, Minnesota and New York, New York are
open for the conduct of a substantial part of their commercial banking
business; and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, LIBOR Loans, any
day that is a Business Day described in clause (i) and that is also a day on
which trading may be carried on by the Agent in the interbank eurodollar
market.
Capital Expenditures. Without duplication, any expenditure for fixed
or capital assets, leasehold improvements, capital leases, installment
purchases of machinery and equipment, acquisitions of real estate and other
similar expenditures including (i) in the case of a purchase, the entire
purchase price, whether or not paid during the fiscal period in question,
(ii) in the case of a capital lease, the entire rental amount for the lease
term, and (iii) expenditures in any construction in progress account of any
Loan Party.
Closing Date. The first date on which the conditions set forth in
Sections 3.1 and 3.2 have been satisfied and any Loans are to be made under
this Agreement.
3
Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented
or amended and remain in effect.
Collateral. See Section 5.19.
Commitment. With respect to each Lender, such Lender's New Vehicle
Commitment, Swingline Commitment, Program and Used Vehicle Commitment,
Demonstrator Vehicle Commitment, or Acquisition Loan Commitment, as the
context requires.
Commitment Fee. See Section 2.6(a).
Consolidated Current Assets. The consolidated current assets (other
than cash or cash equivalents) of the Borrower and its Subsidiaries as
determined in accordance with GAAP.
Consolidated Current Liabilities. The consolidated current liabilities
of the Borrower and its Subsidiaries as determined in accordance with GAAP.
Consolidated Earnings Available for Fixed Charges. With respect to the
Borrower and its Subsidiaries on a consolidated basis, for any period for
which the amount thereof is to be determined, EBITDA, plus all payments due,
whether made or accrued, under real or personal property leases during the
applicable period, less income taxes paid.
Consolidated Fixed Charges. With respect to the Borrower and its
Subsidiaries on a consolidated basis, for any period for which the amount
thereof is to be determined, the sum of Interest Expense, plus all payments
due, whether made or accrued, under real or personal property leases during
the applicable period, plus scheduled principal payments with respect to any
Indebtedness (excluding payments, whether made or accrued, to sellers on
Indebtedness associated with an Acquisition, to the extent such payments are
made with the proceeds of a Loan), plus Restricted Payments paid in cash,
plus Capital Expenditures paid in cash for tangible personal property and
intangible personal property (excluding Capital Expenditures for
Acquisitions).
Consolidated Net Income. For any fiscal period, the consolidated net
income of the Borrower and its Subsidiaries for such period determined in
accordance with GAAP, but in any event there shall be excluded or deducted
from such net income: (i) any gain or loss arising from any write-up,
re-appraisal or re-evaluation of assets; (ii) earnings of any Subsidiary
accrued prior to the date it became a Subsidiary; (iii) any extraordinary or
nonrecurring gains; (iv) any deferred or other credit representing any excess
of the equity of any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary; (v) the net earnings of any business
entity (other than a Subsidiary) in which the Borrower or any Subsidiary has
an ownership interest, except to the extent such net earnings shall have
actually been received by the Borrower or such Subsidiary in the form of cash
distributions; (vi) the proceeds of any life insurance policy; and (vii) any
reversal of any contingency reserve, except to the extent that provision for
such contingency reserve shall be made from income arising during such period.
Consolidated Net Worth. At any date as of which the amount thereof
shall be determined, the consolidated total assets of the Borrower and its
Subsidiaries, as determined in accordance with GAAP, with inventory of
vehicles valued at the lower of cost using the specific identification method
or Reserve Adjusted Value, and other inventory valued at the lower of cost of
goods or market value determined on a "first in, first out" basis consistent
with the Borrower's past practices, minus (a) Consolidated Total Liabilities
and (b) the sum of any amounts attributable to (i) all reserves not already
deducted from assets or included in Consolidated Total Liabilities, (ii) any
write-up in the book value of assets resulting from any revaluation thereof
subsequent to the Closing Date, (iii) the value of any minority interests in
Subsidiaries, (iv) intercompany accounts with Subsidiaries and Affiliates
(including receivables due from Subsidiaries and Affiliates), (v) the value,
if any, attributable to any capital stock of the Borrower or any Subsidiary
held in treasury, and (vi) the value, if any, attributable to any notes or
subscriptions receivable due from stockholders with respect to capital stock.
Consolidated Total Liabilities. At any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP, be classified as liabilities on the consolidated balance sheet of the
Borrower and its Subsidiaries.
4
Contracts in Transit. The amount owed to a Loan Party by a financial
institution for the purchase by such financial institution of a retail
installment contract arising from the sale of a Vehicle by such Loan Party.
Debt to Cash Flow Ratio. See Section 6.2.
Default. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
Demonstrator Vehicle. A Vehicle which has never been titled and has
500 or more miles; provided, however, that a Vehicle shall cease to be a
Demonstrator Vehicle on June 30 of the calendar year following its model year.
Demonstrator Vehicle Loan. See Section 2.1(d).
Drawdown Date. The Business Day on which any Loan is made.
EBITDA. For any period, an amount equal to Consolidated Net Income for
such period, plus the following, to the extent deducted or excluded in
computing such Consolidated Net Income: (i) Interest Expense, (ii) income
taxes, (iii) depreciation, and (iv) amortization.
Encumbrances. See Section 7.3.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
Environmental Laws. Any and all applicable federal, state and local
environmental, health or safety statutes, laws, regulations, rules and
ordinances (whether now existing or hereafter enacted or promulgated), of all
governmental agencies, bureaus, or departments to the extent the foregoing
may now or subsequently have jurisdiction over any of the Loan Parties and
all applicable judicial and administrative and regulatory decrees, judgments
and orders, including common law rulings and determinations, relating to
injury to, or the protection of, real or personal property or human health or
the environment, including, without limitation, all requirements pertaining
to reporting, licensing, permitting, investigation, remediation and removal
of emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
such Hazardous Materials.
Event of Default. Any event described in Section 8.1.
Federal Funds Rate. For any day, a fluctuating interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received
by the Agent from three Federal funds brokers of recognized standing selected
by the Agent.
Fees. Commitment Fees and other fees agreed to between the Borrower
and the Agent and/or the Lenders.
Fixed Asset Value. As of any date of determination, the difference
between (a) the book value of the Loan Parties' fixed assets (excluding any
interest in real property other than fixtures) in which the Lenders have a
perfected first-priority security interest (or a perfected second-priority
security interest with respect to the fixed assets (excluding any interest
in real property other than fixtures) of Lithia Financial Corporation) and
(b) the amount of any Indebtedness (excluding Total Loan Outstandings)
secured by a lien or other interest against the Loan Parties' fixed assets
(excluding any interest in real property other than fixtures).
Floor Plan Financings. As of the date of determination, an amount
equal to the sum of the outstanding principal balances of the Vehicle Loans.
Franchise Value. The portion of goodwill included on the consolidated
balance sheet of the Borrower and its Subsidiaries, which represents the
excess of purchase price over the fair value of the assets acquired in
connection with an Acquisition, in accordance with GAAP and in accordance
with the Borrower's past practices.
5
Funded Indebtedness. As applied to the Borrower and its Subsidiaries,
without duplication, (i) Indebtedness for borrowed money, (ii) Indebtedness
with respect to capitalized lease obligations and synthetic lease
obligations, (iii) all obligations with respect to letters of credit
(including without limitation the maximum amount available for drawing under
letters of credit plus all unpaid reimbursement obligations), (iv) all other
interest bearing obligations which, in accordance with GAAP, would be
included as a liability on the consolidated balance sheet of the Borrower and
its Subsidiaries, and (v) all Guarantees.
GAAP. Generally accepted accounting principles, consistently applied,
and as in effect as of the date of application thereof.
Guarantees. As applied to the Loan Parties, all guarantees,
endorsements or other contingent or surety obligations with respect to
obligations of others whether not reflected on the consolidated balance sheet
of the Borrower or its Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements,
by agreement to keep-well or otherwise), through the purchase of goods,
supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for
the purpose of payment of obligations of any other Person or entity. The
amount of any Guarantee shall be deemed to be the amount of the primary
obligation in respect of which such Guarantee is made.
Guaranty. The Guaranty, dated as of the Closing Date, executed by each
of the Loan Parties in favor of the Agent for the benefit of the Lenders,
guarantying all of the Obligations under this Agreement.
Hazardous Material. Any substance (i) the presence of which requires
or may hereafter require notification, removal or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste,"
"dangerous waste," "extremely hazardous waste," "hazardous material" or
"hazardous substance" under any present or future Environmental Law or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and any applicable local statutes and the regulations
promulgated thereunder; (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and which is or becomes regulated pursuant to any Environmental Law
by any governmental authority, agency, department, commission, board, agency
or instrumentality of the United States, any state of the United States, or
any political subdivision thereof; or (iv) without limitation, which contains
gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCB's").
Indebtedness. As applied to the Loan Parties, without duplication,
(i) all obligations for borrowed money or other extensions of credit, whether
secured or unsecured, absolute or contingent, including, without limitation,
synthetic and capital leases, unmatured reimbursement obligations with
respect to letters of credit or guarantees issued for the account of or on
behalf of any Loan Party, all obligations under conditional sale or other
title retention agreement, and all obligations representing the deferred
purchase price of property, other than accounts payable and accrued
liabilities arising in the ordinary course of business, (ii) all obligations
evidenced by bonds, notes, debentures or other similar instruments, (iii) all
obligations secured by any mortgage, pledge, security interest or other lien
on property owned or acquired by any of the Loan Parties, whether or not the
obligations secured thereby shall have been assumed, (iv) that portion of all
obligations arising under leases that is required to be capitalized on the
consolidated balance sheet of the Borrower and its Subsidiaries, (v) all
Guarantees, (vi) all obligations that are immediately due and payable out of
the proceeds of property now or hereafter owned or acquired by any of the
Loan Parties, and (vii) all other obligations which, in accordance with GAAP,
would be included as a liability on the consolidated balance sheet of the
Loan Parties but excluding anything in the nature of capital stock, capital
surplus and retained earnings.
Initial Financial Statement. See Section 4.7.
Initial Lenders. U.S. Bank and the other financial institutions who
have signed this Agreement and have become Lenders on the date of this
Agreement.
Interest Expense. For any period, the consolidated interest expense
(including imputed interest on capitalized lease obligations and synthetic
lease obligations) and amortized debt discount on Indebtedness of the Loan
Parties for such period.
6
Interest Period. With respect to each LIBOR Loan, the period
commencing on the date of the making or continuation of or conversion to such
LIBOR Loan and ending one (1), two (2), or three (3) months thereafter, as
the Borrower may elect in the applicable Notice of Borrowing or Conversion;
provided that:
(i) any Interest Period that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iii) no Interest Period shall end after the Maturity Date; and
(iv) no Interest Period shall extend beyond the date that any
payment of principal under the Acquisition Term Loan is due, unless the
sum of the principal amounts of the Acquisition Term Loan bearing
interest at (A) the LIBOR Rate (plus the Applicable Margin) with
Interest Periods ending on or before such due date, plus (B) the Prime
Rate (plus the Applicable Margin), at least equals the amount of such
principal payment.
Investment. As applied to the Loan Parties, the purchase or
acquisition of any share of capital stock, partnership interest, evidence of
indebtedness or other equity security of any other Person (including any
Subsidiary), any loan, advance or extension of credit (excluding Accounts
Receivable arising in the ordinary course of business) to, or contribution to
the capital of, any other Person (including any Subsidiary), any real estate
held for sale or investment, any securities or commodities futures contracts
held, any other investment in any other Person (including any Subsidiary),
and the making of any commitment or acquisition of any option to make an
Investment.
Leased Vehicle Equity. The difference between (a) the value, equal to
the lower of cost using the specific identification method, or Reserve
Adjusted Value of the Vehicles owned by Lithia Financial Corporation and
leased to its customers (including another Loan Party) in which the Lenders
have a perfected second-priority security interest, less (b) the amount of
any Indebtedness (excluding Total Loan Outstandings) secured by a lien or
other interest against such Vehicles.
Lenders. U.S. Bank, the other financial institutions listed on
Schedule 1-B attached to this Agreement and each other Person that may after
the date of this Agreement become a party to this Agreement as a "Lender"
under this Agreement. Unless the context clearly indicates otherwise, the
term "Lenders" shall include the Swingline Lender.
LIBOR. The average offered rate for deposits in United States Dollars
(rounded upwards, if necessary, to the nearest 1/16 of 1%) for delivery of
such deposits on the first day of an Interest Period of a LIBOR Loan, for the
number of days comprised therein, which appears on the Reuters Screen LIBO
Page as of 11:00 a.m., London time (or such other time as of which such rate
appears) on the day that is two (2) Business Days preceding the first day of
the Interest Period or the rate for such deposits determined by the Agent at
such time based on such other published service of general application as
shall be selected by the Agent for such purpose; provided, that in lieu of
determining the rate in the foregoing manner, the Agent may determine the
rate based on rates offered to the Agent for deposits in United States
Dollars (rounded upwards, if necessary, to the nearest 1/16 of 1%) in the
interbank eurodollar market at such time for delivery on the first day of the
Interest Period for the number of days comprised therein.
LIBOR Loan. Any Loan bearing interest at a rate determined with
reference to the LIBOR Rate plus the Applicable Margin; provided, however,
that no Swingline Loan or Demonstrator Vehicle Loan shall be a LIBOR Loan;
LIBOR Rate. A rate per annum (rounded upward, if necessary, to the
nearest 1/16 of 1%) calculated for the Interest Period of a LIBOR Loan in
accordance with the following formula:
LR = LIBOR
1-LRP
7
In such formula, "LRP" means "LIBOR Reserve Percentage" and "LR" means "LIBOR
Rate," in each instance determined by the Agent for the applicable Interest
Period. The Agent's determination of all such rates for any Interest Period
shall be conclusive in the absence of manifest error.
LIBOR Reserve Percentage. For any Interest Period, the aggregate of
the maximum reserve percentages (including any basic, marginal, special,
emergency or supplemental reserves), expressed as a decimal, established, or
as may be modified or adopted, by the Board of Governors of the Federal
Reserve System and any other banking authority, domestic or foreign, to which
any Lender is subject with respect to "Eurocurrency Liabilities" (as defined
in regulations issued from time to time by such Board of Governors) or
applicable to extensions of credit by the Lenders the rate of interest on
which is determined with regard to rates applicable to "Eurocurrency
Liabilities." The LIBOR Reserve Percentage shall be adjusted automatically
on and as of the effective date of any change in any such reserve percentage.
Loan Commitment. Any or all of the Total New Vehicle Commitment, the
Swingline Commitment, the Total Program and Used Vehicle Commitment, the
Total Demonstrator Vehicle Commitment, or the Total Acquisition Loan
Commitment, as the context requires.
Loan Documents. This Agreement, the Notes, and the Security Documents,
including without limitation the Security Agreement, the Guaranty, and the
UCC Financing Statements, together with any agreements, certificates,
instruments or documents executed and delivered pursuant to or in connection
with any of the foregoing.
Loan Party. Each party to this Agreement or any Loan Document other
than the Agent or a Lender.
Loan(s). The loans made or to be made by the Lenders to the Borrower
pursuant to Section II of this Agreement, including the New Vehicle Loans,
the Swingline Loans, the Program and Used Vehicle Loans, the Demonstrator
Vehicle Loans, and the Acquisition Loans.
Maturity Date. October 1, 1998.
Material Agreement. See Section 4.23.
Medford Office. Agent's office in Medford, Oregon located at 000 Xxxx
Xxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000, or such other office as Agent may
designate from time to time for any particular purpose under this Credit
Agreement.
Minimum Net Worth. See Section 6.1.
Multiemployer Pension Plan. A Multiemployer Plan that is subject to
Subtitle E of Title IV of ERISA.
Multiemployer Plan. An employee benefit plan that is a Multiemployer
Plan within the meaning of Section 3(37) of ERISA to which the Borrower or
any Affiliate of the Borrower contributes or has been obligated to contribute.
Net Worth Ratio. See Section 6.4.
New Vehicle. A Vehicle, which has never been titled and has less than
500 miles; provided, however, that a Vehicle shall cease to be a New Vehicle
on June 30 of the calendar year following its model year.
New Vehicle Loan. See Section 2.1(a).
Note Record. Any internal record, including a computer record,
maintained by any Lender with respect to any Loan.
Notes. Any or all of the New Vehicle Notes, the Swingline Notes, the
Program and Used Vehicle Notes, the Demonstrator Vehicle Notes, the
Acquisition Revolving Notes, and the Acquisition Term Loan Notes.
Notice of Borrowing or Conversion. The notices, substantially in the
forms of Exhibits B-1 and B-2 to this Agreement, to be signed by a
Responsible Officer and given by the Borrower to the Agent to request a Loan,
in accordance with Section 2.3 or a Seller's invoice and/or draft for a
Swingline Loan.
8
Obligations. Any and all obligations of any Loan Party to the Agent
and the Lenders of every kind and description pursuant to or in connection
with the Loan Documents, direct or indirect, absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument, if any, and
including obligations to perform acts and refrain from taking action as well
as obligations to pay money, whether for principal, interest, Fees,
Attorneys' Fees, expenses or otherwise.
Other Purpose Loan. A New Vehicle Loan used for any purpose other
than to acquire a New Vehicle.
Parent. Lithia Holding Company, LLC, an Oregon limited liability
company.
Participant. See Section 9.2.
PBGC. The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
Pension Plan. Any Plan which is an "employee pension benefit plan" (as
defined in ERISA).
Permitted Encumbrances. See Section 7.3.
Person. Any individual, corporation, limited liability company,
partnership, trust, unincorporated association, other legal entity, and any
government or governmental agency or political subdivision thereof.
Plan. Any "employee pension benefit plan" or "employee welfare benefit
plan" (each as defined in ERISA) maintained by the Borrower or any Affiliate
of the Borrower.
Prime Rate. The rate of interest that U.S. Bank from time to time
establishes as its prime rate, which is not, for example, the lowest rate of
interest that U.S. Bank collects from any Borrower or class of Borrowers.
When the Prime Rate is applicable, the interest rate shall be adjusted
without notice effective on the day U.S. Bank's Prime Rate changes.
Prime Rate Loan. Any Loan bearing interest at the Prime Rate plus the
Applicable Margin.
Pro Forma Consolidated EBITDA. For any period for which the amount
thereof is to be determined, consolidated EBITDA of the Borrower and its
Subsidiaries plus (or minus), without duplication, the EBITDA of any
Subsidiary acquired during such period for each full fiscal quarter included
in the applicable computation period prior to such Acquisition (plus the
fiscal quarter during which it was acquired), determined on a consolidated
basis. EBITDA of any such acquired Subsidiary shall be adjusted for those
identifiable and quantifiable items of income and expense that will increase
or decrease subsequent to the date of Acquisition, such adjustments to be
reasonably acceptable to Agent and set forth by Borrower in the applicable
Compliance Certificate delivered pursuant to Section 5.1.
Pro Forma Floor Plan Interest Expense. For any period for which the
amount thereof is to be determined, the Interest Expense for such period with
respect to the Floor Plan Financings of the Loan Parties plus, without
duplication, the Interest Expense of any Subsidiary acquired during such
period for each full fiscal quarter included in the applicable computation
period prior to such Acquisition (plus the fiscal quarter during which it was
acquired), determined on a consolidated basis. Interest Expense of any such
acquired Subsidiary shall be adjusted for those identifiable and quantifiable
items of expense that will increase or decrease subsequent to the date of
Acquisition, such adjustments to be reasonably acceptable to Agent and set
forth by Borrower in the applicable Compliance Certificate delivered pursuant
to Section 5.1.
Pro Rata Share. With respect to any Lender, a fraction (expressed as a
percentage), the numerator of which shall be the amount of such Lender's
Commitment for any Loan and the denominator of which shall be the aggregate
amount of all the Commitments of the Lenders for that Loan, as adjusted from
time to time in accordance with Sections 2.1 and 8.2 of this Agreement.
Program and Used Vehicle Loan. See Section 2.1(c).
Program Vehicle. A Vehicle not older than the then current model year
or the immediately preceding model year, but previously in service and with
fewer than 30,000 miles, purchased at closed auctions or from rental
companies, manufacturers, national fleet vehicles, and rental service
companies; or a Vehicle, which was a New Vehicle or Demonstrator Vehicle,
after June 30 of the year after the Vehicle's model year. Any vehicle which
9
becomes a Program Vehicle will no longer be a Program Vehicle when its
mileage exceeds 30,000 miles or it is older than the then current model year
or the immediately preceding model year.
Prohibited Transaction. Any "prohibited transaction" as defined in
ERISA and Section 4975 of the Code.
Qualified Investments. As applied to the Loan Parties, investments in
(i) notes, bonds or other obligations of the United States of America or any
agency thereof that as to principal and interest constitute direct
obligations of or are guaranteed by the United States of America;
(ii) certificates of deposit, demand deposit accounts or other deposit
instruments or accounts maintained in the ordinary course of business with
banks or trust companies organized under the laws of the United States or any
state thereof that have capital and surplus of at least $100,000,000,
(iii) commercial paper that is rated not less than prime-one or A-1 or their
equivalents by Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors, (iv) any repurchase agreement
secured by any one or more of the foregoing, and (v) advances to employees
for business related expenses to be incurred in the ordinary course of
business and consistent with past practices in an amount not to exceed
$100,000 in the aggregate outstanding at any one time, provided that advances
to any single employee shall not exceed $10,000 in the aggregate.
Real Property Security Documents. Any and all documents required by
the Agent in connection with any Acquisition Loan, the proceeds of which will
be used to acquire an interest in real property, including without
limitation, deeds of trust, assignments of rents and leases, security
agreements, fixture filings, Uniform Commercial Code Financing Statements,
indemnity agreements regarding hazardous materials and access laws, and
collateral assignment of permits, licenses, approvals and contracts, between
the Borrower and the Agent, and title, damage, and liability insurance
policies, in each case as amended and in effect from time to time.
Repurchase Agreements. See Section 5.20.
Required Lenders. As of any date the holders of sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment or, if the Commitments
have been terminated, the holders of sixty-six and two-thirds percent
(66 2/3%) of the principal amount of the Total Loan Outstandings on such date
(allocating outstanding Swingline Loans to the Lenders on the basis of their
respective Pro Rata Share of the Total New Vehicle Loan Outstandings).
Reserve Adjusted Value. The cost of a Vehicle less the markdowns or
reductions taken in accordance with the Borrower's past practices as of the
date of the Initial Financial Statements.
Responsible Officer. The chief financial officer of the Borrower and
any other officer of the Borrower, who by written notice to the Agent, is
designated by such chief financial officer to sign Notices of Borrowing or
Conversion or request Loans pursuant to the terms of this Agreement.
Restricted Payment. Any dividend, distribution, loan, advance,
guaranty, extension of credit, increase in salary or compensation, or other
payment, whether in cash or property to or for the benefit of any Person who
holds an equity interest in the Borrower or any of its Subsidiaries, whether
or not such interest is evidenced by a security, and any purchase,
redemption, retirement or other acquisition for value of any capital stock or
equity interest of the Borrower or any of its Subsidiaries, whether now or
hereafter outstanding, or of any options, warrants or similar rights to
purchase such capital stock or equity interest or any security convertible
into or exchangeable for such capital stock or equity interest, but not
including (i) a loan or extension of credit made in the ordinary course of
business to a person who is not an Affiliate of a Loan Party for the purchase
or lease of a Vehicle to be operated by such person for personal or business
use or (ii) increase in salary or compensation in the ordinary course of
business made to employees of Borrower or employees of a Loan Party other
than the chief executive officer, president, chief financial officer, and
other senior management position of Borrower or another Loan Party.
Reuters Screen LIBO Page. The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO Page on that service for the purpose of displaying London interbank
offered rates of major banks for United States dollar deposits).
Security Agreement. The Security Agreement between the Loan Parties
and the Agent, dated the Closing Date, as amended and in effect from time to
time.
10
Security Documents. The Security Agreement, the Real Property Security
Documents, the Guaranty, Title Documents, Uniform Commercial Code Financing
Statements, and any additional documents evidencing or perfecting the Agent's
lien on the Collateral on and subsequent to the Closing Date, in each case as
amended and in effect from time to time.
Seller. The manufacturer, distributor, or other seller of a Vehicle or
Vehicles from which a Loan Party acquires Vehicle inventory in the normal
course of its business or the Acquisition Target from which a Loan Party
acquires Vehicles pursuant to an Acquisition.
Sold New Vehicle. A New Vehicle sold by any Loan Party in the ordinary
course of such Loan Party's business (and in which the Lenders' held a
perfected first-priority security interest immediately prior to such sale)
for which payment is not yet due pursuant to Section 2.7(c).
Stockholders' Equity. The consolidated stockholders' equity (including
paid-in capital and retained earnings) of the Borrower and its Subsidiaries
determined in accordance with GAAP.
Subsidiary. Any corporation, association, limited liability company,
joint stock company, business trust or other similar organization of which
50% or more of the ordinary voting power for the election of a majority of
the members of the board of directors or other governing body of such entity
is held or controlled by the Borrower or a Subsidiary of the Borrower; or any
other such organization the management of which is directly or indirectly
controlled by the Borrower or a Subsidiary of the Borrower through the
exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, or partnership in which the Borrower has a 50% or
greater ownership interest.
Swingline Commitment. The commitment of the Swingline Lender, as in
effect from time to time, to advance Swingline Loans, which as of the Closing
Date shall be $5,000,000 and which may be any lesser amount, including zero,
resulting from a termination or reduction of such amount in accordance with
Sections 2.1 and 8.2 of this Agreement, or a greater amount in accordance
with the proviso to Section 11.7(b).
Swingline Lender. U.S. Bank.
Swingline Loan. See Section 2.1(b).
Swingline Loan Outstandings. At any time, the aggregate outstanding
balance of the Swingline Loans.
Title Documents. All manufacturers' certificate of origin,
manufacturers' statement of origin, certificates of title and/or any and all
other title documents for each item of inventory.
Total Acquisition Loan Commitment. The sum of the Lenders' Acquisition
Loan Commitments, as in effect from time to time, to advance Acquisition
Loans, which as of the Closing Date shall be $30,000,000 and which may be any
lesser amount, including zero, resulting from a termination or reduction of
such amount in accordance with Sections 2.1 and 8.2 of this Agreement. Each
Lender's Acquisition Loan Commitment shall equal its pro rata share of the
Total Acquisition Loan Commitment, based on the amounts listed on Schedule
1-B to this Agreement, as modified from time to time pursuant to Section IX
of this Agreement.
Total Acquisition Loan Outstandings. At any time, the aggregate
outstanding principal balance of the Acquisition Loans.
Total Commitment. At any time, the sum of the Total New Vehicle
Commitment (which includes the Swingline Commitment), Total Program and Used
Vehicle Commitment, Total Demonstrator Vehicle Commitment, and Total
Acquisition Loan Commitment.
Total Debt Service. For any period, the sum of (i) Interest Expense
for such period, plus (ii) the aggregate amount of all principal payments
made, accrued or becoming due during such period with respect to any
Indebtedness of the Loan Parties, plus (iii) declared or paid cash dividends,
(iv) cash taxes paid, plus (v) Capital Expenditures.
Total Demonstrator Vehicle Commitment. The sum of the Lenders'
Demonstrator Vehicle Commitments, as in effect from time to time, to advance
Demonstrator Vehicle Loans, which as of the Closing Date shall be $750,000
and which may be any lesser amount, including zero, resulting from a
termination or reduction of such amount in accordance with Sections 2.1 and
11
8.2 of this Agreement. Each Lender's Demonstrator Vehicle Commitment shall
equal its pro rata share of the Total Demonstrator Vehicle Commitment, based
on the amounts listed on Schedule 1-B to this Agreement, as modified from
time to time pursuant to Section IX of this Agreement.
Total Demonstrator Vehicle Loan Outstandings. At any time, the
aggregate outstanding principal balance of the Demonstrator Vehicle Loans.
Total Loan Outstandings. At any time, the aggregate outstanding
balance of the Loans.
Total New Vehicle Commitment. The sum of the Lenders' New Vehicle
Commitments, as in effect from time to time, to advance New Vehicle Loans,
which as of the Closing Date shall be $80,000,000 and which may be any lesser
amount, including zero, resulting from a termination or reduction of such
amount in accordance with Sections 2.1 and 8.2 of this Agreement. Each
Lender's New Vehicle Commitment shall equal its pro rata share of the Total
New Vehicle Commitment, based on the amounts listed on Schedule 1-B to this
Agreement, as modified from time to time pursuant to Section IX of this
Agreement.
Total New Vehicle Loan Outstandings. At any time, the aggregate
outstanding principal balance of the New Vehicle Loans.
Total Program and Used Vehicle Commitment. The sum of the Lenders'
Program and Used Vehicle Commitments, as in effect from time to time, to
advance of the Program and Used Vehicle Loans, which as of the Closing Date
shall be $30,000,000 and which may be any lesser amount, including zero,
resulting from a termination or reduction of such amount in accordance with
Sections 2.1 and 8.2 of this Agreement. Each Lender's Program and Used
Vehicle Commitment shall equal its pro rata share of the Total Program and
Used Vehicle Commitment, based on the amounts listed on Schedule 1-B to this
Agreement, as modified from time to time pursuant to Section IX of this
Agreement.
Total Program and Used Vehicle Loan Outstandings. At any time, the
aggregate outstanding principal balance of the Program and Used Vehicle Loans.
Type. The type of a Loan is either a Prime Rate Loan or a LIBOR Loan.
Used Vehicle. A Vehicle previously in service, which has been titled,
that is not a Program Vehicle.
Vehicle. Cars, vans, pick-ups, sport utility vehicles, and other light
trucks sold in the ordinary course of a Loan Party's business (or leased to
others in the ordinary course of Lithia Financial Corporation's business.)
Vehicle Equity. With respect to the Loan Parties, an amount equal to
(a) cash deposited in an account with the Agent as of the date of
determination (plus, in the Agent's discretion, the cash deposited in a
non-Agent bank account on such date), plus (b) Contracts in Transit from the
sale of Vehicles by a Loan Party, plus (c) the value, equal to the lower of
cost using the specific identification method or Reserve Adjusted Value, of
Vehicles in which the Lenders have a perfected first-priority security
interest (excluding Vehicles owned by Lithia Financial Corporation) less an
amount equal to the Floor Plan Financings.
Vehicle Loan. Any New Vehicle Loan, Swingline Loan, Program and Used
Vehicle Loan, or Demonstrator Vehicle Loan.
Working Capital. The excess of Consolidated Current Assets over
Consolidated Current Liabilities.
1.2 Rules of Interpretation.
(a) All terms of an accounting character used in this Agreement
but not defined in this Agreement shall have the meanings assigned to them by
GAAP. All calculations for the purposes of this Agreement shall be made in
accordance with GAAP. If GAAP changes during the term of this Agreement such
that any covenants contained in this Agreement would then be calculated in a
materially different manner or using materially different components, the
Loan Parties, the Lenders, and the Agent agree to negotiate in good faith to
amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating the Loan Parties' financial condition to
substantially the same criteria as were in effect before such change in GAAP;
provided, however, that until the Loan Parties, the Lenders, and the Agent so
amend this Agreement, all such covenants shall be calculated in accordance
with GAAP as in effect on the date of this Agreement.
12
(b) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
(c) The singular includes the plural and the plural includes
the singular.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) The words "include", "includes" and "including" are not
limiting.
(f) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(g) All terms not specifically defined in this Agreement or by
GAAP that are defined in the Uniform Commercial Code as in effect in the
State of Oregon, have the meanings assigned to them in such Uniform
Commercial Code.
(h) The term "to the best knowledge of" or any other term of
similar import, means to the actual knowledge of any executive officer of a
Loan Party or any officer of a Loan Party with management responsibility for
the subject matter as to which a Loan Party's knowledge is relevant after due
inquiry.
SECTION II.
DESCRIPTION OF CREDIT
2.1 Loans.
(a) New Vehicle Loans.
(i) Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of the Loan Parties in this Agreement and the other Loan Documents, each of
the Lenders agrees, severally and not jointly, to make "New Vehicle Loans" to
the Borrower. The Borrower may borrow, repay, prepay and reborrow New
Vehicle Loans for any purpose (except to acquire any interest in real
property other than fixtures), subject to the terms of this Agreement and up
to the limits imposed by this Section 2.1(a), from time to time between the
Closing Date and the Maturity Date upon request given to the Agent pursuant
to Section 2.3(b), provided that:
(A) After giving effect to all requested New
Vehicle Loans, the Total New Vehicle Loan Outstandings (which equals the sum
of (x) the outstanding principal amount of New Vehicle Loans specifically
advanced to finance the purchase of New Vehicles for inventory, plus (y) the
outstanding principal amount of Other Purpose Loans) plus the Swingline Loan
Outstandings, shall not at any time exceed the Total New Vehicle Commitment;
(B) The sum of the aggregate principal amount of
outstanding New Vehicle Loans made by each Lender shall not at any time
(after giving effect to all requested New Vehicle Loans) exceed such Lender's
New Vehicle Commitment;
(C) No Other Purpose Loan shall be made if the
Total New Vehicle Loan Outstanding plus the Swingline Loan Outstandings
(after giving effect to all requested New Vehicle Loans) would exceed the
applicable Borrowing Base; and
(D) No New Vehicle Loan used to purchase a New
Vehicle for inventory shall exceed the cost of the New Vehicle to be
acquired, as stated on the Seller's invoice to the Loan Party, which cost
shall not include any additional charges except charges for delivery of the
Vehicle to the Loan Party if the invoice includes such charges. All Vehicles
acquired with a New Vehicle Loan shall be stored and exhibited for sale (but
not lease) in the ordinary course of a Loan Party's business, and the Loan
Party shall not use the Vehicles for any other purpose.
(ii) Each request for a New Vehicle Loan under this
Agreement shall constitute a representation and warranty by the Borrower and
the other Loan Parties (A) that the conditions set forth in Sections 3.1 and
3.2 have been satisfied as of the date of such request, and (B) that if the
New Vehicle Loan is advanced to finance the purchase of a Vehicle, (x) the
Vehicle is a New Vehicle, (y) the Vehicle is either in the applicable Loan
13
Party's possession or has been ordered and shipped to the Loan Party for
whose benefit the New Vehicle Loan was advanced, and (z) the Seller's invoice
correctly states the amount of the purchase price for the Vehicle and such
amount is reasonable.
(iii) Each New Vehicle Loan may be either a Prime Rate Loan
or a LIBOR Loan and, subject to the provisions of Section 2.5(d), shall bear
interest as provided in Section 2.5(a) or 2.5(b), respectively.
(b) Swingline Loans.
(i) Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of the Loan Parties in this Agreement and the other Loan Documents, the
Swingline Lender agrees to make "Swingline Loans" to the Borrower. The
Borrower may borrow, repay, prepay and reborrow Swingline Loans, subject to
the terms of this Agreement and up to the limits imposed by this
Section 2.1(b), from time to time between the Closing Date and the Maturity
Date upon request given to the Agent pursuant to Section 2.3(a)(ii), provided
that:
(A) The Total Swingline Loan Outstandings (after
giving effect to all requested Swingline Loans) shall not at any time exceed
the Swingline Commitment in the aggregate;
(B) The sum of the Total Swingline Loan
Outstandings plus the Total New Vehicle Loan Outstandings (after giving
effect to all requested New Vehicle Loans and Swingline Loans) shall not
exceed the Total New Vehicle Commitment; and
(C) Except as contemplated by Section 2.7(a)(ii), a
Swingline Loan shall only be used to finance the purchase of a New Vehicle
from a Seller for inventory. No Swingline Loan shall exceed the cost of the
New Vehicle to be acquired, as stated on the Seller's invoice to the Loan
Party, which cost shall not include any additional charges except charges for
delivery of the Vehicle to the Loan Party if the invoice includes such
charges. All Vehicles acquired with a Swingline Loan shall be stored and
exhibited for sale (but not lease) in the ordinary course of a Loan Party's
business, and the Loan Party shall not use the Vehicles for any other
purpose.
(ii) Each request for a Swingline Loan under this
Agreement shall constitute a representation and warranty by the Borrower and
the other Loan Parties (A) that the conditions set forth in Sections 3.1 and
3.2 have been satisfied as of the date of such request, and (B) unless the
Swingline Loan is advanced pursuant to Section 2.7(a)(ii) that as to the
Vehicle to be acquired with the advance of the Swingline Loan (I) the Vehicle
is a New Vehicle, (II) the Vehicle is either in the applicable Loan Party's
possession or has been ordered and shipped to the Loan Party for whose
benefit the Swingline Loan was advanced, and (III) the Seller's invoice
correctly states the amount of the purchase price for the Vehicle and such
amount is reasonable.
(iii) Each Swingline Loan shall be a Prime Rate Loan and,
subject to the provisions of Section 2.5(d), shall bear interest as provided
in Section 2.5(a).
(c) Program and Used Vehicle Loans.
(i) Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of the Loan Parties in this Agreement and the other Loan Documents, each of
the Lenders agrees, severally and not jointly, to make "Program and Used
Vehicle Loans" to the Borrower. The Borrower may borrow, repay, prepay and
reborrow Program and Used Vehicle Loans for any purpose (except to acquire
any interest in real property other than fixtures), subject to the terms of
this Agreement and up to the limits imposed by this Section 2.1(c), from time
to time between the Closing Date and the Maturity Date upon request given to
the Agent pursuant to Section 2.3(b), provided that:
(A) After giving effect to all requested Program
and Used Vehicle Loans, the Total Program and Used Vehicle Loan Outstandings
shall not at any time exceed the lesser of Total Program and Used Vehicle
Commitment or the applicable Borrowing Base;
(B) The sum of the aggregate principal amount of
outstanding Program and Used Vehicle Loans made by each Lender shall not at
any time (after giving effect to all requested Program and Used Vehicle
Loans) exceed such Lender's Program and Used Vehicle Commitment; and
14
(C) All Vehicles acquired with a Program and Used
Vehicle Loan shall be stored and exhibited for sale (but not lease) in the
ordinary course of a Loan Party's business, and the Loan Party shall not use
the Vehicles for any other purpose.
(ii) Each request for a Program and Used Vehicle Loan
under this Agreement shall constitute a representation and warranty by the
Borrower and the other Loan Parties (A) that the conditions set forth in
Sections 3.1 and 3.2 have been satisfied as of the date of such request, and
(B) that if the Program and Used Vehicle Loan is advanced to finance the
purchase of a Vehicle, (x) the Vehicle is a Program Vehicle or a Used
Vehicle, (y) the Vehicle is either in the applicable Loan Party's possession
or has been ordered and shipped to the Loan Party for whose benefit the
Program and Used Vehicle Loan was advanced, and (z) the Seller's invoice or
other sales documentation correctly states the amount of the purchase price
for the Vehicle and such amount is reasonable and does not include any other
costs except for the cost of delivery or a reasonable amount for
reconditioning.
(iii) Each Program and Used Vehicle Loan may be either a
Prime Rate Loan or a LIBOR Loan and, subject to the provisions of Section
2.5(d), shall bear interest as provided in Section 2.5(a) or 2.5(b),
respectively.
(d) Demonstrator Vehicle Loans.
(i) Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of the Loan Parties in this Agreement and the other Loan Documents, each of
the Lenders agrees, severally and not jointly, to make "Demonstrator Vehicle"
Loans to the Borrower. The Borrower may borrow, repay, prepay and reborrow
Demonstrator Vehicle Loans to acquire Demonstrator Vehicles or to refinance a
New Vehicle Loan with respect to a New Vehicle that becomes a Demonstrator
Vehicle, subject to the terms of this Agreement and up to the limits imposed
by this Section 2.1(d), from time to time between the Closing Date and the
Maturity Date upon request given to the Agent pursuant to Section 2.3(b),
provided that:
(A) After giving effect to all requested
Demonstrator Vehicle Loans, the Total Demonstrator Vehicle Loan Outstandings
shall not at any time exceed the Total Demonstrator Vehicle Commitment;
(B) The sum of the aggregate principal amount of
outstanding Demonstrator Vehicle Loans made by each Lender shall not at any
time (after giving effect to all requested Demonstrator Vehicle Loans) exceed
such Lender's Demonstrator Vehicle Commitment; and
(C) No Demonstrator Vehicle Loan used to purchase a
Demonstrator Vehicle for inventory shall exceed the cost of the Demonstrator
Vehicle to be acquired, as stated on the Seller's invoice to the Loan Party,
which cost shall not include any additional charges except charges for
delivery of the Vehicle to the Loan Party if the invoice includes such
charges. All Vehicles acquired with a Demonstrator Vehicle Loan or that
become Demonstrator Vehicles shall be stored and exhibited for sale (but not
lease) in the ordinary course of a Loan Party's business, and the Loan Party
shall not use the Vehicles for any other purpose.
(ii) Each request for a Demonstrator Vehicle Loan under
this Agreement shall constitute a representation and warranty by the Borrower
and the other Loan Parties (A) that the conditions set forth in Sections 3.1
and 3.2 have been satisfied as of the date of such request, (B) that the
Vehicle is a Demonstrator Vehicle, (C) the Vehicle is either in the
applicable Loan Party's possession or has been ordered and shipped to the
Loan Party for whose benefit the Demonstrator Vehicle Loan was advanced, and
(D) the Seller's invoice correctly states the amount of the purchase price
for the Vehicle and such amount is reasonable.
(iii) Each Demonstrator Vehicle Loan shall be a Prime Rate
Loan and, subject to the provisions of Section 2.5(d), shall bear interest as
provided in Section 2.5(a).
(e) Acquisition Loans.
(i) Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of the Loan Parties in this Agreement and the other Loan Documents, each of
the Lenders agrees, severally and not jointly, to make "Acquisition Revolving
Loans" to the Borrower. The Borrower may borrow, repay, prepay and reborrow
15
Acquisition Revolving Loans for any purpose, subject to the terms of this
Agreement and up to the limits imposed by this Section 2.1(e)(i), from time
to time between the Closing Date and the Maturity Date upon request given to
the Agent pursuant to Section 2.3(b), provided that:
(A) After giving effect to all requested
Acquisition Loans, the Total Acquisition Loan Outstandings shall not at any
time exceed the lesser of the Total Acquisition Loan Commitment or the
applicable Borrowing Base; and
(B) The sum of the aggregate principal amount of
outstanding Acquisition Loans made by each Lender shall not at any time
(after giving effect to all requested Acquisition Loans) exceed such Lender's
Acquisition Loan Commitment.
In connection with an Acquisition, the Lenders shall make advances under the
Acquisition Loan from time to time provided the Loan Parties specifically
comply with the requirements of Section 5.17 of this Agreement in addition to
the other requirements of this Agreement. If any portion of the Acquisition
Revolving Loan is used to acquire any interest in real property other than
fixtures, that portion of the Acquisition Revolving Loan cannot exceed 75% of
the appraised value of the real property interest to be acquired (not
including the value of the fixtures to be acquired). Inventory acquired from
any portion of Acquisition Revolving Loan shall be used exclusively for the
purpose of storing and exhibiting the inventory for sale (but not for lease)
in the ordinary course of the Loan Parties' business. The Loan Parties shall
not use the inventory for any other purpose. Each request for a Acquisition
Revolving Loan under this Agreement shall constitute a representation and
warranty by the Borrower and the other Loan Parties that the conditions set
forth in Sections 3.1 and 3.2 have been satisfied as of the date of such
request. Each Acquisition Revolving Loan may be either a Prime Rate Loan or
a LIBOR Loan and, subject to the provisions of Section 2.5(d), shall bear
interest as provided in Section 2.5(a) or 2.5(b), respectively.
(ii) Subject to the provisions of Section 3.2 and this
Section 2.1(e)(ii), the Borrower may elect to convert all or a portion of the
Acquisition Revolving Loans to an amortizing term loan (the "Acquisition Term
Loan") on the Maturity Date. No earlier than sixty (60) days and no later
than thirty (30) days prior to the Maturity Date, the Borrower shall give the
Agent written notice, which notice shall be irrevocable, of the portion of
the outstanding principal balance of all Acquisition Revolving Loans that it
intends to convert to the Acquisition Term Loan; provided, however, that on
the Maturity Date the Borrower shall pay to the Agent for the benefit of the
Lenders:
(A) An amount equal to the amount of each
Acquisition Revolving Loan used to purchase an interest in real property
(other than fixtures);
(B) The unpaid principal balance of all Acquisition
Revolving Loans that do not convert to the Acquisition Term Loan (or the
entire unpaid principal balance of all Acquisition Revolving Loans if the
Borrower failed to give the notice required by this Section 2.1(e)(ii)); and
(C) All accrued and unpaid interest on the
outstanding principal balance of all Acquisition Revolving Loans and all Fees
and other Obligations with respect thereto.
The Total Acquisition Loan Outstandings may not at any time, including
without limitation on or after the Maturity Date, exceed the applicable
Borrowing Base, and no Acquisition Loans shall be made after the Maturity
Date. The Acquisition Term Loan shall be either a Prime Rate Loan or LIBOR
Loan and, subject to the provisions of Section 2.5(d), shall bear interest as
provided in Section 2.5(a) or 2.5(b), respectively .
(f) Limitations. No LIBOR Loan shall be requested or made for
less than a minimum of $500,000 in principal amount and in integral multiples
of $500,000 in excess of such minimum amount. No more than five (5) LIBOR
Loans under each of the Total New Vehicle Loan Commitment, the Total Program
and Used Vehicle Loan Commitment, or the Total Acquisition Loan Commitment
may be outstanding at any time. No Prime Rate Loan that is a New Vehicle
Loan or a Program and Used Vehicle Loan shall be requested or made for less
than a minimum of $500,000 in principal amount. With respect to Swingline
Loans requested pursuant to Section 2.3(a)(ii) but not with respect to
Swingline Loans advanced pursuant to Sections 2.3(a)(i) or 2.7(a)(ii), the
maximum principal amount advanced by the Swingline Lender on any Business Day
shall not exceed $250,000.
16
(g) Conversion of Loans. Upon the terms and subject to the
conditions of this Agreement, the Borrower may convert all or any part (in
integral multiples of $500,000) of any outstanding Loan (other than a
Swingline Loan or a Demonstrator Vehicle Loan) of one Type into a Loan of
another Type on any Business Day (which, in the case of a conversion of an
outstanding LIBOR Loan, shall be the last day of the Interest Period
applicable to such LIBOR Loan). The Borrower shall give the Agent prior
notice of each such conversion (which notice shall be effective upon receipt)
in accordance with Section 2.3.
(h) Termination or Limitations of Commitments.
(i) Each of the Lenders' New Vehicle Commitment, Program
and Used Vehicle Commitment, Demonstrator Vehicle Commitment, and Acquisition
Loan Commitments shall terminate on the Maturity Date. The Swingline
Lender's Swingline Commitment shall terminate on the Maturity Date.
(ii) From time to time, the Agent, in its sole discretion
without consent or approval of any other Lender, may place or modify
limitations on the maximum amount of the New Vehicle Loan Outstandings, the
Program and Used Vehicle Loan Outstandings, the Demonstrator Vehicle Loan
Outstandings and/or the Acquisition Loan Outstandings to be advanced for the
benefit of any one Loan Party other than the Borrower. Additionally, from
time to time, the Swingline Lender, at its sole discretion, may place or
modify limitations on the maximum amount payable to any Seller or other
appropriate party under a debit or draft authorization (or similar instrument
or arrangement). The Agent or the Swingline Lender, respectively, shall
notify Borrower of any such limits not less than 24 hours prior to the time
they become effective. Nothing in this Section 2.1(h)(ii) shall alter the
provisions of Section 11.7(b)(ii)(A).
(iii) The Swingline Lender or the Agent may give notice to
any Seller or other appropriate party terminating any debit or
draft authorization (or similar instrument or arrangement) so
that the Swingline Lender has no obligation to honor any debit or
draft authorization (or similar instrument or arrangement) on or
after the Maturity Date. Additionally, if an Event of Default
has occurred, the Swingline Lender may give notice to any Seller
or other appropriate party terminating any debit or draft
authorization (or similar instrument or arrangement).
(iv) No termination of any Commitment may be reinstated.
2.2 The Notes.
(a) The New Vehicle Loans shall be evidenced by separate
promissory notes for each Lender in a principal amount equal to such Lender's
New Vehicle Commitment, each such note to be substantially in the form of
Exhibit A-1 to this Agreement, dated as of the Closing Date, and completed
with appropriate insertions (each such note being referred to in this
Agreement as a "New Vehicle Note" and collectively as the "New Vehicle
Notes").
(b) The Swingline Loan shall be evidenced by a Promissory Note
for the Swingline Lender in a principal amount equal to the Swingline
Lender's Swingline Commitment, substantially in the form of Exhibit A-2 to
this Agreement, dated as of the Closing Date, and completed with appropriate
insertions (the "Swingline Note").
(c) The Program and Used Vehicle Loans shall be evidenced by
separate promissory notes for each Lender in a principal amount equal to such
Lender's Program and Used Vehicle Commitment, each such note to be in
substantially the form of Exhibit A-3 to this Agreement, dated as of the
Closing Date, and completed with appropriate insertions (each such note being
referred to as a "Program and Used Vehicle Note" and collectively as the
"Program and Used Vehicle Notes").
(d) The Demonstrator Vehicle Loans shall be evidenced by
separate promissory notes for each Lender in a principal amount equal to such
Lender's Demonstrator Vehicle Commitment, if any, each such note to be in
substantially the form of Exhibit A-4 to this Agreement, dated as of the
Closing Date, and completed with appropriate insertions (each such note being
referred to as a "Demonstrator Vehicle Note" and collectively as the
"Demonstrator Vehicle Notes").
17
(e) The Acquisition Revolving Loans shall be evidenced by
separate promissory notes for each Lender in a principal amount equal to such
Lender's Acquisition Loan Commitment, each such note to be in substantially
the form of Exhibit A-5A to this Agreement, dated as of the Closing Date, and
completed with appropriate insertions (each such note being referred to as an
"Acquisition Revolving Note" and collectively as the "Acquisition Revolving
Notes"). The Acquisition Term Loan shall be evidenced by separate promissory
notes for each Lender in a principal amount equal to such Lender's Pro Rata
Share of each Acquisition Term Loan (based on the Lender's Pro Rata Share of
the Total Acquisition Loan Commitment), each such note to be in substantially
the form of Exhibit A-5B to this Agreement, dated as of the Maturity Date,
and completed with appropriate insertions (each such note being referred to
as an "Acquisition Term Note" and collectively as the "Acquisition Term
Notes").
(f) The Borrower irrevocably authorizes the Agent and each of
the Lenders to make or cause to be made, at or about the time of the Drawdown
Date of any Loan or at the time of receipt of any payment of principal on the
Notes, an appropriate notation on its Note Record reflecting the making of
such Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Loans set forth on the Note Records shall be prima
facie evidence of the principal amount thereof owing and unpaid to the
Lenders, but the failure to record, or any error in so recording, any such
amount on the Agent's or on any Lender's Note Record shall not limit or
otherwise affect the obligations of the Borrower under this Agreement, any
Loan Document, or under any Note to make payments of principal of or interest
on any Note when due.
2.3 Notice and Manner of Borrowing or Conversion of Loans.
(a) With respect to Swingline Loans:
(i) Subject to Sections 2.1(b) and (h), the Swingline
Lender may from time to time advance sums of money on behalf of the Loan
Parties to any Seller for whose benefit U.S. Bank has executed a debit or
draft authorization (or similar instrument or arrangement) for the purpose of
enabling the Loan Parties to acquire Vehicle inventory. Presentation of
drafts or other requests for payment by a Seller shall be in lieu of a Notice
of Borrowing for the amount of the Swingline Loan. The invoices or other
sales documentation submitted by the Sellers from whom the Loan Parties
purchase inventory and/or the drafts or debits paid by the Swingline Lender
shall serve as conclusive evidence of each such Swingline Loan. The Loan
Parties irrevocably authorize the Swingline Lender to pay all drafts or
invoices upon presentation by a Seller supplying the Vehicle to the Loan
Parties.
(ii) Whenever the Borrower desires to obtain a Swingline
Loan under this Agreement other than pursuant to Section 2.3(a)(i) or
2.7(a)(ii), the Borrower shall give the Agent a written Notice of Borrowing
or Conversion (or a telephonic notice promptly confirmed by a written Notice
of Borrowing or Conversion), which Notice shall be irrevocable and which must
be received no later than 9:00 a.m. (Portland, Oregon time) on the Business
Day on which the requested Swingline Loan is to be made. Such Notice of
Borrowing or Conversion shall specify the effective date and amount of each
Swingline Loan to be made. If the written confirmation of any telephonic
notification differs in any material respect from the action taken by the
Agent, the records of the Agent shall control absent manifest error. The
Swingline Lender shall initiate the transfer of funds representing the
Swingline Loan to the Borrower (or to the entity that the Borrower designates
in writing in the Notice) by 4:00 p.m. (Portland, Oregon time) on the
Business Day of the requested advance.
(b) Whenever the Borrower desires to obtain a Loan under this
Agreement (other than a Swingline Loan), to continue an outstanding LIBOR
Loan for a new Interest Period, or to convert an outstanding Loan into a Loan
of another Type, the Borrower shall give the Agent a written Notice of
Borrowing or Conversion (or a telephonic notice promptly confirmed by a
written Notice of Borrowing or Conversion), which Notice shall be irrevocable
and which must be received no later than 9:00 a.m. (Portland, Oregon time)
(and a Borrowing Base Certificate if such Notice relates to a Program and
Used Vehicle Loan or an Acquisition Revolving Loan) on the date (i) one
Business Day before the day on which the requested Loan is to be made as or
converted to a Prime Rate Loan, and (ii) three Business Days before the day
on which the requested Loan is to be made or continued as or converted to a
LIBOR Loan. Such Notice of Borrowing or Conversion shall specify (x) the
effective date and amount of each Loan or portion thereof requested to be
made, continued or converted, subject to the limitations set forth in Section
2.1, (y) the interest rate option requested to be applicable thereto, and (z)
the duration of the applicable Interest Period, if any (subject to the
provisions of the definition of the term "Interest Period"). If such Notice
18
fails to specify the interest rate option to be applicable to the requested
Loan, then the Borrower shall be deemed to have requested a Prime Rate Loan.
If the written confirmation of any telephonic notification differs in any
material respect from the action taken by the Agent, the records of the Agent
shall control absent manifest error.
(c) Subject to the provisions of the definition of the term
"Interest Period" in this Agreement, the duration of each Interest Period for
a LIBOR Loan shall be as specified in the applicable Notice of Borrowing or
Conversion. If no Interest Period is specified in a Notice of Borrowing or
Conversion with respect to a requested LIBOR Loan, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. If the
Agent receives a Notice of Borrowing or Conversion after the time specified
in subsection (a) above, such Notice shall not be effective. If the Agent
does not receive an effective Notice of Borrowing or Conversion with respect
to an outstanding LIBOR Loan, or if, when such Notice must be given prior to
the end of the Interest Period applicable to such outstanding Loan, the
Borrower shall have failed to satisfy any of the conditions of this
Agreement, the Borrower shall be deemed to have elected to convert such
outstanding Loan in whole into a Prime Rate Loan on the last day of the then
current Interest Period with respect thereto.
(d) Notwithstanding any contrary provision of this Agreement
and without limiting any other rights of any Lender if a Default or Event of
Default has occurred and is continuing, the Borrower (i) may not select a
LIBOR Loan, (ii) may not convert a Prime Rate Loan to a LIBOR Loan, and
(iii) no LIBOR Loan may continue as a LIBOR Loan for a new Interest Period.
If a Default or Event of Default has occurred and is continuing, each LIBOR
Loan shall automatically convert to a Prime Rate Loan at the expiration of
the applicable Interest Period.
(e) If at any time the Borrower desires to transfer a New
Vehicle, acquired using a New Vehicle Loan, to a Program Vehicle or a
Demonstrator Vehicle, or the Borrower desires to transfer a Demonstrator
Vehicle, acquired or refinanced using a Demonstrator Vehicle Loan, to a
Program Vehicle, then the Borrower must refinance an amount equal to such New
Vehicle Loan or Demonstrator Vehicle Loan advanced with respect to the
Vehicle, together with all accrued and unpaid interest thereon and all Fees
with respect thereto, with a Program and Used Vehicle Loan or Demonstrator
Vehicle Loan, as the case may be, by providing the Agent with a written
Notice of Borrowing or Conversion (or telephonic notice promptly confirmed by
a written Notice of Borrowing or Conversion), which notice shall be
irrevocable and which must be received no later than 9:00 a.m. (Portland,
Oregon time), at least three Business Days before the day on which the
Vehicle will be placed as a Program Vehicle or a Demonstrator Vehicle, and a
Borrowing Base Certificate if the New Vehicle Loan or the Demonstrator Loan
will be converted to a Program and Used Vehicle Loan. The Notice of
Borrowing or Conversion shall also specify for each such Vehicle the make,
model and model year, Loan Party in possession of the Vehicle, serial and
motor number
(f) Each Loan Party (other than the Borrower) hereby appoints the
Borrower as its agent with respect to the receiving and giving of any
notices, requests, instructions, reports, schedules, revisions, financial
statements or any other written or oral communications under this Agreement
or any other Loan Document. The Borrower shall keep complete, correct and
accurate records of all Loans and the application of proceeds thereof and all
payments with respect to the Loans and other amounts due under this Agreement
or any other Loan Document. The Borrower shall determine the allocation of
proceeds of Loans among the Loan Parties, subject to the other terms and
conditions of this Agreement. The Lenders are hereby entitled to rely on any
communications given or transmitted by the Borrower as if such communication
were given or transmitted by each and every Loan Party; provided, however,
that any communication given or transmitted by any Loan Party other than the
Borrower shall be binding with respect to such Loan Party. Any communication
given or transmitted by the Agent or any Lender to the Borrower shall be
deemed given and transmitted to each and every Loan Party. Notwithstanding
the foregoing, all Obligations of the Loan Parties under this Agreement shall
be joint and several.
2.4 Funding of Loans.
(a) Loans shall be made by the Lenders pro rata in accordance
with their respective Commitments, provided, however that the failure of any
Lender to make any Loan shall not relieve any other Lender of its obligation
19
to lend under this Agreement (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender).
(b) From time to time, the Swingline Lender at its discretion
may demand repayment of its Swingline Loans by an advance of any other Prime
Rate Loan, in which case the Borrower shall be deemed to have requested such
Prime Rate Loan in accordance with Section 2.3 of this Agreement. With
respect to a demand resulting in an advance for a New Vehicle Loan or a
Program and Used Vehicle Loan, each demand shall be in an amount not less
than $500,000. Each such demand by the Swingline Lender shall be deemed to
have been given one Business Day prior to the Maturity Date, on the date of
occurrence of any Default or Event of Default, or on the exercise of any
remedies under Section 8.2 of this Agreement, as the case may be. To the
extent that the Swingline Lender demands repayment of any portion of its
Swingline Loans, the Swingline Lender shall notify the Lenders on any
Business Day and require the Lenders to advance their respective Pro Rata
Shares of the Loan based on the Lender's Pro Rata Share of the Loan
Commitment of the Loan to be advanced. Such notice shall specify the Loan
and the aggregate amount of the Loan that Lenders will advance. Each Lender
absolutely and unconditionally agrees that immediately on receipt of such
notice to pay the Swingline Lender such Lender's Pro Rata Share of such Loan.
(i) Each Lender acknowledges and agrees that its
obligation to pay its Pro Rata Share of the Loan pursuant to this Section
2.4(b) is absolute, irrevocable and unconditional and shall not be affected
by any circumstance whatsoever, including:
(A) the occurrence and continuance of a Default or
Event of Default,
(B) the fact that the amount of such advance does
not comply with any minimum requirement;
(C) whether any conditions specified in Section 3.1
and 3.2 are then satisfied;
(D) the failure of any such request or deemed
request for a Loan to be made by the time otherwise required under this
Agreement;
(E) the fact that the date of borrowing is not a
date on which such Loan is otherwise permitted to be made under this
Agreement;
(F) in the case of an advance to honor a debit or
draft authorization (or similar instrument or arrangement) on presentation by
a Seller or other appropriate party, any termination of the Loan Commitment
relating thereto occurring less than thirty days prior to the advance, or
contemporaneously with the advance;
(G) the fact that the Swingline Loan Outstandings
exceed the Total Swingline Commitment (as the Lenders acknowledge that the
primary purpose of the Swingline Commitment is to honor drafts of Sellers
with respect to the purchase of Vehicle inventory by the Loan Parties and
that, subject to the draft authorizations from the Swingline Lender in favor
of various Sellers, it may be difficult for the Swingline Lender to confirm
at any given time the Swingline Loan Outstandings; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, the
Lenders shall have no obligation whatsoever, whether directly or indirectly,
to fund any amount in excess of their respective Commitments); and
(H) the fact that the request for the Loan is made
after the Maturity Date so long as the applicable Swingline Loans are
advanced pursuant to Section 2.3(a)(i) on or before the Maturity Date; and
(ii) Each Lender further acknowledges and agrees that each
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever.
(iii) Each Lender shall comply with its obligation under
this Section 2.4(b)(iii) by wire transfer of immediately available funds, in
the same manner as provided in Section 2.4(c) with respect to the Loans made
by such Lender, and such Section 2.4(c) shall generally apply to the payment
obligations of the Lenders arising under this Section 2.4(b)(iii), with
appropriate changes in details as may be required by Agent to reflect the
terms of this Section 2.4(b)(iii). The repayment of any Swingline Loan
20
pursuant to this paragraph shall not relieve the Borrower (or other party
liable for obligations of the Borrower) of any default in the payment
thereof. In the event that any Loan cannot for any reason be made on the
date otherwise required in this Section 2.4(b)(iii) (including without
limitation as a result of the commencement of a proceeding under Xxxxx 00,
Xxxxxx Xxxxxx Code, with respect to any Loan Party), then each Lender agrees
that it shall immediately purchase (as of the date such advance would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the Swingline
Lender such participation in the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such Swingline Loans ratably
based on its Pro Rata Share of the Total New Vehicle Commitment (determined
before giving effect to any termination of the Commitments), provided that
all interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective participation is
purchased.
(c) The Agent shall promptly notify the Lenders of any
requested Loan and of the Drawdown Date thereof and the amount of each
Lender's Pro Rata Share of such Loan. If the Agent gives such notice before
12:00 p.m. (Portland, Oregon time) on the Business Day immediately preceding
the proposed Drawdown Date, each Lender will, not later than 1:00 p.m.
(Portland, Oregon time) on the proposed Drawdown Date of such Loan, make
available to the Agent, at 00000 XX 0xx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000, in immediately available funds, the amount of such Lender's Pro Rata
Share of the amount of such requested Loan. Upon receipt by the Agent of
such amount, and upon receipt of the documents required by Section 3 and the
satisfaction of the other conditions set forth therein (to the extent
applicable), the Agent will make available to the Borrower the aggregate
amount of such Loan. The failure or refusal of any Lender to make available
to the Agent at the aforesaid time and place on any Drawdown Date the amount
of its Pro Rata Share of any requested Loans shall not relieve any other
Lender from its several obligation under this Agreement to make available to
the Agent the amount of such other Lender's Pro Rata Share of any requested
Loans. The Agent may, unless notified to the contrary by any Lender prior to
a Drawdown Date, assume that each such Lender has made available to the Agent
on such Drawdown Date the amount of such Lender's Pro Rata Share of the Loans
to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Lender makes available to the Agent
such amount on a date after such Drawdown Date, such Lender shall pay to the
Agent on demand an amount equal to the product of (i) the average, computed
for the period referred to in clause (iii) below, of the Federal Funds Rate
for each day included in such period, times (ii) the amount of such Lender's
Pro Rata Share of any such Loans times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Drawdown Date
to the date on which the amount of such Lender's Pro Rata Share of such Loans
shall become immediately available to the Agent, and the denominator of which
is 360. A statement of the Agent submitted to such Lender with respect to
any amounts owing under this paragraph shall be prima facie evidence of the
amount due and owing to the Agent by such Lender. If the amount of such
Lender's Pro Rata Share of such Loans is not made available to the Agent by
such Lender with three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on demand,
with interest thereon at the rate per annum applicable to the Loans made on
such Drawdown Date.
(d) The failure or refusal of any Lender to make available to
the Agent at the aforesaid time and place on any Drawdown Date the amount of
its Pro Rata Share of any Loans shall not relieve any other Lender from its
several obligation under this Agreement to make available to the Agent the
amount of such other Lender's Pro Rata Share of any Loans.
2.5 Interest Rates and Payments of Interest.
(a) Each Loan, which is a Prime Rate Loan, shall bear interest
on the outstanding principal amount thereof at a rate per annum equal to the
Prime Rate plus the Applicable Margin, which rate shall change
contemporaneously with any change in the Prime Rate or the Applicable Margin,
as provided below. All interest accrued during each calendar month shall be
paid on or before the tenth day of the following calendar month.
(b) Each Loan, which is a LIBOR Loan, shall bear interest on
the outstanding principal amount thereof, for each Interest Period applicable
thereto, at a rate per annum equal to the LIBOR Rate plus the Applicable
Margin, which rate shall change with any change in the LIBOR Rate or the
Applicable Margin, as provided below. All interest accrued during each
calendar month shall be paid on or before the tenth day of the following
calendar month.
21
(c) If the Borrower chooses a LIBOR Loan, the Borrower shall
pay interest based at the LIBOR Rate plus the Applicable Margin, together
with any other applicable taxes or charges under this Agreement, even though
any Lender may have obtained the funds loaned to the Borrower from sources
other than the applicable eurodollar market and at interest rates other than
the LIBOR Rate. The Agent's determination of the LIBOR Rate shall be
conclusive in the absence of manifest error.
(d) If a Default or Event of Default occurs and is continuing,
then (i) all LIBOR Loans shall bear interest at a rate equal to the LIBOR
Rate plus the Applicable Margin plus 3% per annum until the end of the
applicable LIBOR Interest Period and shall be automatically converted into a
Prime Rate Loan at the end of the applicable LIBOR Interest Period, and
(ii) all Prime Rate Loans shall bear interest at the Prime Rate plus the
Applicable Margin plus 3%.
(e) The Applicable Margin under any Type of Loan shall be
automatically adjusted as of the first day of the calendar month following
the Agent's receipt of a Compliance Certificate, pursuant to Section 5.1(g)
of this Agreement, based on the Debt to Cash Flow Ratio as of the last day of
the fiscal quarter for which the Compliance Certificate was prepared;
provided, however, that if the Borrower does not timely furnish any
Compliance Certificate to the Lenders, the Applicable Margin shall increase
without notice to the highest percentage for the applicable Type of Loan as
of the first day of the calendar month following the due date of the
Compliance Certificate. On the first Business Day of the second calendar
month after the date the Agent receives the late Compliance Certificate, the
Applicable Margin will change to the Applicable Margin, based on the Debt to
Cash Flow Ratio, for the applicable Type of Loan.
2.6 Fees.
(a) The Borrower shall pay to the Agent for the ratable benefit
of the Lenders a commitment fee (the "Commitment Fee"), payable quarterly in
arrears on the first Business Day of each calendar quarter and on the
Maturity Date for the quarter just completed (or if the Maturity Date occurs
during a fiscal quarter, from the end of the prior fiscal quarter through the
Maturity Date), equal to the sum of (i) .125% multiplied by the average daily
amount for such quarter just completed or partial quarter, as the case may
be, of the difference between (A) the Total New Vehicle Commitment and
(B) the Total New Vehicle Loan Outstandings (the Swingline Loan Outstandings
shall not be included in this calculation), plus (ii) .125% multiplied by the
average daily amount for such quarter just completed or partial quarter, as
the case may be, of the difference between (A) the Total Program and Used
Vehicle Commitment and (B) the Total Program and Used Vehicle Loan
Outstandings, plus (iii) .125% multiplied by the average daily amount for
such quarter just completed or partial quarter, as the case may be, of the
difference between (A) the Total Acquisition Loan Commitment and (B) the
Total Acquisition Loan Outstandings.
(b) The Borrower shall pay to the Swingline Lender for its sole
account a fee in an amount agreed to between the Borrower and the Swingline
Lender pursuant to the terms of any fee letter.
(c) The Borrower shall pay to the Agent, solely for the account
of the Agent, such other fees pursuant to the terms of any fee letter.
(d) On or before the Closing Date, the Borrower shall pay to
the Agent for the benefit of the Initial Lenders an up-front fee in the
amount of $150,000 in connection with the Total Acquisition Loan Commitment.
(e) The Borrower authorizes the Agent and the Lenders to charge
(no such charge shall be deemed to be a set-off) to their Note Records, as of
the date due to the Lender or paid by the Lender, the interest, fees,
charges, taxes and expenses provided for in this Agreement, the Security
Documents or any other document executed or delivered in connection with this
Agreement.
2.7 Payments and Prepayments of the Loans.
(a) Cash Sweep Service.
(i) In addition to Swingline Loans requested pursuant to
Section 2.1(b), the Borrower may also receive and repay advances in
accordance with the provisions of this Section 2.7(a) (the "Cash Sweep
22
Service"). Such advances shall be Swingline Loans and shall be subject to
the limits set forth in Section 2.1(b).
(ii) Subject to Section 2.7(a)(iii), funds will be
transferred between the Borrower's deposit account number 025-000-1187
("DDA") maintained with U.S. Bank and Swingline Lender at the close of each
Business Day so that the DDA maintains a collected balance equal to a
pre-established balance (the "Peg Balance"). Any amounts advanced by
Swingline Lender to increase the collected balance in the DDA to the Loan Peg
Balance shall be Swingline Loans. Any collected funds in the DDA that exceed
the Peg Balance ("Excess Collected Funds") will be applied as payments to
reduce the Total Swingline Loan Outstandings. The Swingline Lender may limit
the amount of Excess Collected Funds that it will transfer to or from the
Swingline Commitment on any particular day. Should the collected funds in
the DDA be less than the Peg Balance, a Swingline Loan will be made to
restore the DDA to the Peg Balance. Should Swingline Loan Outstandings be
zero, and should Excess Collected Funds exceed $1,000,000, the full amount
collected shall be applied to Prime Rate Loans in the following order:
(w) first, to the New Vehicle Loan Outstandings, (x) second, to the Total
Program and Used Vehicle Loan Outstandings, and (y) third, to the portion of
the Total Acquisition Loan Outstandings attributable to Acquisition Revolving
Loans. Any remaining Excess Collected Funds shall be maintained in the DDA
unless otherwise agreed.
(iii) All Swingline Loans made pursuant to this Section
2.7(a) shall be deemed to have been requested by Borrower and shall be
subject to the terms and conditions of this Agreement and the Loan Documents.
(iv) The Peg Balance for the DDA will be the amount agreed
upon from time to time between Swingline Lender and the Borrower. On the
date of this Agreement, the amount of the Peg Balance shall equal $0.00. The
Swingline Lender shall not be accountable for errors in judgment in
performing any service hereunder.
(v) The Swingline Lender shall not be required to comply
with any direction of the Borrower that in its judgment may subject it to
liability, or to defend or prosecute any suit or action unless indemnified in
a manner and amount satisfactory to it. The Swingline Lender is authorized
to accept oral instructions, including telephone instructions, from any
Responsible Officer.
(vi) The Borrower may terminate the Cash Sweep Service by
written notice executed by Borrower and delivered to the Swingline Lender and
indemnifying Swingline Lender to its satisfaction against liabilities
incurred in the administration of the account. The Swingline Lender may
change the terms of or discontinue the Cash Sweep Service at any time upon
written notice. On the termination of the Cash Sweep Service, the Swingline
Commitment shall terminate, and the Borrower shall pay in full the unpaid
principal balance of the Swingline Loans, together with all accrued and
unpaid interest thereon and all Fees and other amounts due with respect
thereto.
(b) Prepayments. If at any time and for any reason the
aggregate of the Total New Vehicle Loan Outstandings plus the Swingline Loan
Outstandings shall exceed the Total New Vehicle Commitment, the Borrower
shall immediately pay the amount of such excess to the Agent for application
in accordance with the terms of Section 2.8(d) of this Agreement. If at any
time Total New Vehicle Loan Outstandings include amounts advanced as Other
Purpose Loans and for any reason the aggregate amount outstanding of Total
New Vehicle Loan Outstandings plus Swingline Loan Outstandings shall exceed
the applicable Borrowing Base (whether reflected on a Borrowing Base
Certificate, determined by a Collateral inspection, or otherwise), the
Borrower shall immediately pay the amount of such excess to the Agent for
application in accordance with the terms of Section 2.8(d) of this
Agreement. If at any time and for any reason the aggregate of the Swingline
Loan Outstandings shall exceed the Swingline Commitment, the Borrower shall
immediately pay the amounts of such excess to the Agent for application in
accordance with the terms of Section 2.8(d) of this Agreement. If at any
time and for any reason the aggregate of the Total Program and Used Vehicle
Loan Outstandings shall exceed the lesser of the Total Program and Used
Vehicle Commitment or the applicable Borrowing Base (whether reflected on a
Borrowing Base Certificate, determined by a Collateral inspection, or
otherwise), the Borrower shall immediately pay the amount of such excess to
the Agent for application in accordance with the terms of Section 2.8(d) of
this Agreement. If at any time and for any reason the aggregate of the Total
Demonstrator Vehicle Loan Outstandings shall exceed the Total Demonstrator
Vehicle Commitment, the Borrower shall immediately pay the amount of such
23
excess to the Agent for application in accordance with the terms of
Section 2.8(d) of this Agreement. If at any time and for any reason the
aggregate of the Total Acquisition Loan Outstandings shall exceed the lesser
of the Total Acquisition Loan Commitment or the applicable Borrowing Base
(whether reflected on a Borrowing Base Certificate, determined by a
Collateral inspection, or otherwise), the Borrower shall immediately pay the
amount of such excess to the Agent for application in accordance with the
terms of Section 2.8(d) of this Agreement.
(c) Proceeds of Vehicle Sales. Within five Business Days
following the sale of a Vehicle, or on the receipt of proceeds with respect
to such sale, whichever occurs first, the Borrower or the applicable Loan
Party shall remit to the Agent an amount at least equal to the amount of any
Loan advanced for that Vehicle. If (i) a New Vehicle has not been sold on or
before the earlier of the Maturity Date or June 30 of the calendar year after
its model year, (ii) if a New Vehicle becomes a Demonstrator Vehicle, a
Program Vehicle or a Used Vehicle, or (iii) if a Demonstrator Vehicle becomes
a Program Vehicle or a Used Vehicle, the Borrower shall pay to the Agent on
the first of those dates to occur, an amount equal to the amount advanced for
the Vehicle. In addition, the Borrowers shall immediately pay to the Agent
an amount equal to the amount of any refund, rebate, credit or similar item
received by any Loan Party with respect to a Vehicle.
(d) Mandatory Payments of Vehicle Loans. On the Maturity Date,
the Borrower shall pay in full to the Agent (i) the unpaid principal balance
of the New Vehicle Loans, together with all accrued and unpaid interest
thereon and all Fees and other amounts due with respect thereto, (ii) the
unpaid principal balance of the Swingline Loans, together with all accrued
and unpaid interest thereon and all Fees and other amounts due with respect
thereto, (iii) the unpaid principal balance of the Program and Used Vehicle
Loans, together with all accrued and unpaid interest thereon and all Fees and
other amounts due with respect thereto, and (iv) the unpaid principal balance
of the Demonstrator Vehicle Loans, together with all accrued and unpaid
interest thereon and all Fees and other amounts due with respect thereto.
(e) Mandatory and Optional Payments of Acquisition Loans. On
the Maturity Date, the Borrower shall pay in full to the Agent the amounts
required by Section 2.1(e)(ii) of this Agreement. The Acquisition Term Loan
shall be repaid in fifty-nine (59) equal monthly installments of principal
plus all interest accrued through the end of the preceding month and one
final installment of the entire then outstanding principal balance, together
with all accrued and unpaid interest thereon and all Fees with respect
thereto. Each monthly principal payment shall be in the amount of one
sixtieth (1/60th) of the original principal balance of the Acquisition Term
Loan. The first payment shall be due on the tenth day of the month following
the date that the aggregate unpaid principal balance of all Acquisition
Revolving Loans converts to the Acquisition Term Loan, and each subsequent
payment will be due on the same day of each consecutive month until the last
month when the entire unpaid principal balance, together with all accrued and
unpaid interest thereon and all Fees with respect thereto, shall be due and
payable.
(f) Collateral Issues. The Agent may reject as Collateral any
item of inventory received by any Loan Party in damaged condition. Neither
the Agent, nor any Lender, has any obligation to inspect inventory for damage
before advancing a Loan. If the Lenders have advanced a Loan on damaged
inventory, the Borrower shall direct the Seller who received the amount of
the Loan advanced, to refund the Loan directly to the Agent. If the Seller
fails to refund the Loan within 5 days, the Borrower shall immediately repay
the Loan with respect to the damaged Vehicle. In any event, the Borrower
shall pay the Lenders all accrued and unpaid interest on the amount of the
Loan advanced with respect to the damaged Vehicle and all Fees with respect
thereto. Additionally, the Loan Parties shall be responsible for the
quantity, quality, condition and value of the inventory selected by the Loan
Parties financed under this Agreement. The Lenders shall have no liability
of any nature because of the failure of any item of inventory to conform to
any of the Loan Parties' specifications, and any dispute between the
manufacturer (or other entity from whom a Loan Party acquired an item of
inventory) and a Loan Party with respect to such inventory shall not in any
way change, modify, affect, or alter the Loan Parties' obligations under this
Agreement. Inspections of inventory will be conducted from time to time in
accordance with Section 5.5. Within five Business Days following a request
from the Agent, the Borrower agrees to pay in full to the Agent for the
benefit of the Lenders, together with all accrued and unpaid interest thereon
and all Fees with respect thereto, an amount equal to the amount of the Loan
advanced, plus 1% of the total amount due, for any item or unit of Collateral
24
(i) not located on the premises of the Loan Party (except for a Vehicle sold
the proceeds of which sale are not yet due under Section 2.7(c) of this
Agreement) or (ii) for which the Loan Party no longer has the requisite Title
Documents.
(g) Breakage Charge. The Borrower may prepay Loans that are
LIBOR Loans on three Business Days' written notice and on payment of the
amounts required by Section 2.9. The Borrower may prepay Loans that are
Prime Rate Loans at any time, without premium or penalty, upon one Business
Day's notice. Any such notice of prepayment shall be irrevocable.
Prepayments will not postpone the date or reduce the amount of any regularly
scheduled payment on the Acquisition Term Loan.
(h) Late Charge. Without limiting any of the Lender's other
rights under this Agreement or by law, if any Loan or portion thereof, or any
interest thereon or any Fees with respect thereto, or any other amount
payable under this Agreement or any other Loan Document is not paid within 10
days after its due date, then the Borrower shall pay to the Agent for the
benefit of the Lenders or demand a late payment charge equal to 5% of the
amount of the payment due.
2.8 Method and Allocation of Payments.
(a) All payments by the Borrower under this Agreement and under
any of the other Loan Documents shall be made without set-off or counterclaim
and free and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied
by any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it under this Agreement or
under any of the other Loan Documents, the Borrower will pay to each Lender
such additional amount in U.S. Dollars as shall be necessary to enable such
Lender to receive the same net amount which such Lender would have received
on such due date had no such obligation been imposed upon the Borrower. The
Borrower will deliver promptly to each Lender certificates or other valid
vouchers or other evidence of payment reasonably satisfactory to the Agent
for all taxes or other charges deducted from or paid with respect to payments
made by the Borrower under this Agreement or under such other Loan Document.
The Lenders may, and the Borrower by this Agreement authorizes the Lenders
to, debit the amount of any payment not made by such time to the demand
deposit accounts of the Borrower with the Lenders or to their Note Records.
(b) All payments of principal of and interest with respect to
the Loans shall be made to the Agent, for the benefit of the Lenders, pro
rata in accordance with their respective Commitments for such Loans, all
payments of Commitment Fees shall be made to the Agent for the benefit of the
Lenders, pro rata in accordance with their respective Commitments for the
Loans, and payment of any other amounts due under this Agreement shall be
made to the Agent to be allocated among the Agent and the Lenders as their
respective interests appear. All such payments shall be made at the Agent's
office at 00000 XX 0xx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000 or at such
other location that the Agent may from time to time designate, in each case
in immediately available funds.
(c) Each Lender shall maintain in accordance with its usual
practice a Note Record evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement. The Agent shall maintain a
Note Record in which it will record (i) the amount of each Loan made
hereunder, the Type thereof and the Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Agent hereunder from the Borrower or any Loan Party
on behalf of the Borrower and each Lender's share thereof. The entries made
in the accounts maintained pursuant to subparagraphs (i), (ii) and (iii)
above shall be prima facie evidence of the existence and amount of the
obligations therein recorded; provided, however, that the failure of any
Lender or the Agent to maintain such accounts or any error therein shall not
in any manner affect the obligations of the Borrower to repay the Loans in
accordance with their terms.
(d) If the Commitments shall have been terminated or the
Obligations shall have been declared immediately due and payable pursuant to
Section 8.2, all funds received from or on behalf of the Borrower (including
as proceeds of Collateral) by any Lender with respect to Obligations (except
funds received by any Lenders as a result of a purchase of a participant
25
interest pursuant to Section 2.8(e) below) shall be remitted to the Agent,
and all such funds, together with all other funds received by the Agent from
or on behalf of the Borrower (including proceeds of Collateral) with respect
to Obligations, shall be applied by the Agent in the following manner and
order: (i) first, to reimburse the Agent and the Lenders, in that order, for
any amounts payable pursuant to Sections 11.2 and 11.3 of this Agreement;
(ii) second, to the payment of the Fees; (iii) third, to the payment of
interest due on the Loans; (iv) fourth, to the payment of the outstanding
principal balance of the Swingline Loans and then the other Loans, pro rata
to the outstanding principal balance of each of the Loans, unless otherwise
specified in writing by all of the Lenders; (v) fifth, to the payment of any
other Obligations payable by the Borrower; and (vi) any remaining funds shall
be paid to whoever shall be entitled thereto or as a court of competent
jurisdiction shall direct.
(e) Each of the Lenders and the Agent by this Agreement agrees
that if it should receive any amount (whether by voluntary payment, by
realization upon security, by the exercise of the right of set-off or
banker's lien, by counterclaim or cross action, by the enforcement of any
right under the Loan Documents, or otherwise) with respect to principal of,
or interest on, any Loans or any Fees which are to be shared pro rata among
the Lenders, which, as compared to the amounts thereto received by the other
Lenders with respect to such principal, interest or Fees, is in excess of
such Lender's Pro Rata Share of such principal interest or Fees, such Lender
shall share such excess, less the costs and expenses (including, reasonable
Attorneys' Fees and disbursements) incurred by such Lender in connection with
such realization, exercise, claim or action, pro rata with the other Lenders
in proportion to their respective Commitments for such Loans, and such
sharing shall be deemed a purchase (without recourse) by such sharing party
of participant interests in such Loans or such Fees, as the case may be, owed
to the recipients of such shared payments to the extent of such shared
payments; provided, however, that if all or any portion of such excess amount
is thereafter recovered from such Lender, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
2.9 LIBOR Indemnity. If the Borrower for any reason (including,
without limitation, pursuant to Sections 2.7, 2.11 and 8.2 of this Agreement)
makes any payment of principal with respect to any LIBOR Loan on any day
other than the last day of an Interest Period applicable to such LIBOR Loan,
or fails to borrow or continue or convert to a LIBOR Loan after giving a
Notice of Borrowing or Conversion thereof pursuant to Section 2.3, or fails
to prepay a LIBOR Loan after having given notice thereof, the Borrower shall
pay to the Agent for the benefit of the Lenders any amount required to
compensate the Lenders for any lost profit, additional losses, costs or
expenses which they may reasonably incur as a result of such payment or
failure, including, without limitation, any loss (including loss of
anticipated profits), costs or expense incurred by reason of the liquidation
or re-employment of deposits or other funds required by the Lenders to fund
or maintain such LIBOR Loan. The Borrower shall pay such amount upon
presentation by the Agent of a statement setting forth the amount and the
Agent's (or the affected Lenders') calculation thereof pursuant to this
Agreement, which statement shall be deemed true and correct absent manifest
error.
2.10 Computation of Interest and Fees. Interest and all Fees payable
under this Agreement shall be computed daily on the basis of a year of 360
days and paid for the actual number of days for which due. If the due date
for any payment of principal is extended by operation of law, interest shall
be payable for such extended time. If any payment required by this Agreement
becomes due on a day that is not a Business Day such payment may be made on
the next succeeding Business Day (subject to the definition of the term
"Interest Period"), and such extension shall be included in computing
interest in connection with such payment.
2.11 Changed Circumstances; Illegality.
(a) Notwithstanding any other provision of this Agreement, in
the event that:
(i) on any date on which the LIBOR Rate would otherwise
be set the Agent shall have determined in good faith (which determination
shall be final and conclusive) that adequate and fair means do not exist for
ascertaining the LIBOR Rate, or
(ii) at any time the Agent or any Lender shall have
determined in good faith (which determination shall be final and conclusive
and, if made by any Lender, shall have been communicated to the Agent in
writing) that:
26
(A) the making or continuation of or conversion of
any Loan to a LIBOR Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
interbank LIBOR market, or (2) compliance by the Agent or such Lender in good
faith with any applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental authority charged
with the interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having the force
of law); or
(B) The LIBOR Rate shall no longer represent the
effective cost to the Agent or such Lender on U.S. dollar deposits in the
Interbank market for deposits in which it regularly participates;
then, and in any such event, the Agent shall promptly notify the Borrower
thereof. Until the Agent notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the obligation of the Lenders to allow
selection by the Borrower of the Type of Loan affected by the contingencies
described in this Section (the "Affected Loans") shall be suspended. If, at
the time the Agent so notifies the Borrower, the Borrower has previously
given the Agent a Notice of Borrowing or Conversion with respect to one or
more Affected Loans but such Loans have not yet gone into effect, such
notification shall be deemed to be a request for Prime Rate Loans.
(b) In the event of a determination of illegality pursuant to
subsection (a)(ii)(A) above, the Borrower shall, with respect to the
outstanding Affected Loans, prepay the same, together with interest thereon
and any amounts required to be paid pursuant to Section 2.9, on such date as
shall be specified in such notice (which shall not be earlier than the date
such notice is given) and may, subject to the conditions of this Agreement,
borrow a Loan of another Type in accordance with section 2.1 of this
Agreement by giving a Notice of Borrowing or Conversion pursuant to Section
2.3 of this Agreement.
2.12 Increased Costs. In case any change in law, regulation, treaty
or official directive or the interpretation or application thereof by any
court or by any governmental authority charged with the administration
thereof or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law):
(i) subjects any Lender to any tax with respect to payments of
principal or interest or any other amounts payable under this Agreement
by the Borrower or otherwise with respect to the transactions
contemplated by this Agreement (except for taxes on the overall net
income of such Lender imposed by the United States of America or any
political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, any
Lender (other than such requirements as are already included in the
determination of the LIBOR Rate), or
(iii) imposes upon any Lender any other condition with respect to
its obligations or performance under this Agreement, and
(iv) the result of any of the foregoing is to increase the cost
to the Lender, reduce the income receivable by such Lender or impose
any expense upon such Lender with respect to any Loans or its
obligations under this Agreement, such Lender shall notify the Borrower
and the Agent thereof. The Borrower agrees to pay to such Lender the
amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation
thereof and the assumptions upon which such calculation was based,
which statement shall be deemed true and correct absent manifest error.
2.13 Capital Requirements. If after the date of this Agreement any
Lender determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change in the interpretation or application thereof
by any governmental authority charged with the administration thereof, or
(ii) compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law), has the effect of reducing the
return on such Lender's or such holding company's capital as a consequence of
27
such Lender's Commitments or Loans under this Agreement to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or
such holding company's then existing policies with respect to capital
adequacy and assuming the full utilization of such entity's capital) by any
amount deemed by such Lender to be material, then such Lender shall notify
the Borrower and the Agent thereof. The Borrower agrees to pay to such
Lender the amount of such reduction of return on capital as and when such
reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail
such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct
absent manifest error) unless within such 30 day period the Borrower shall
have prepaid in full all Obligations to such Lender, in which event no amount
shall be payable to such Lender under this Section. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
SECTION III.
CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Loans. The obligation of the
Lenders to make the initial Loans is subject to the satisfaction of the
following conditions precedent on or prior to the Closing Date:
(a) The Agent shall have received the following agreements,
documents, certificates and opinions in form and substance reasonably
satisfactory to the Agent and the Initial Lenders and duly executed and
delivered by the parties to this Agreement:
(i) this Agreement;
(ii) the Notes, substantially in the form of Exhibits X-0, X-0,
X-0, X-0, and A-5A to this Agreement;
(iii) the Security Documents, including the Security Agreement,
and a guaranty of the Obligations under this Agreement from the Loan
Parties;
(iv) UCC-1 and UCC 1-A and similar Financing Statements;
(v) UCC-3 and UCC 3-A and similar Termination Statements;
(vi) true and correct copies of all Material Agreements and
amendments thereto;
(vii) landlord's consents and waivers from each lessor who leases
any interest in real property to any Loan Party;
(viii) Certificates of insurance or insurance binders
evidencing compliance with Section 5.3 of this Agreement and the
applicable provisions of the Loan Documents;
(ix) a Notice or Notices of Borrowing or Conversion as of the
Closing Date as to initial Loans;
(x) a certificate with respect to the solvency of each of the
Loan Parties, a Borrowing Base Certificate for each applicable Loan
Commitment, and a Compliance Certificate, each signed by the Borrower's
Chief Financial Officer;
(xi) a certificate of the Secretary or an Assistant Secretary of
each Loan Party with respect to resolutions of the Board of Directors
as to a corporation or the Managers as to a limited liability company
authorizing the execution and delivery of the Loan Documents and
identifying the officer(s) authorized to execute, deliver and take all
other actions required under this Agreement, and providing specimen
signatures of such officers;
(xii) the Articles of Incorporation (or the equivalent document
depending on the form of entity) of each Loan Party and all amendments
and supplements thereto, as filed in the office of the Secretary of
State of its jurisdiction of incorporation, certified by said Secretary
of State as being a true and correct copy thereof;
28
(xiii) the Bylaws (or the equivalent document depending on
the form of entity) of each Loan Party and all amendments and thereto,
certified by the Secretary or an Assistant Secretary of each Loan Party
as being a true and correct copy thereof;
(xiv) a certificate of the Secretary of State of each Loan
Party's jurisdiction of incorporation or organization as to the legal
existence and status of each Loan Party in such state;
(xv) a certificate of the Secretaries of State of each
jurisdiction identified in Section 4.1 of this Agreement as to the due
qualification and good standing of each Loan Party as a foreign
corporation or entity in such states;
(xvi) consents to the security interests granted to the Lenders
by Lithia Financial Corporation from each Affiliate which leases a
Vehicle or other property from Lithia Financial Corporation;
(xvii) an opinion addressed to the Lenders from Xxxxxx,
Pepper & Shefelman, counsel to the Borrower, in such form and substance
acceptable to the Agent in its sole discretion;
(xviii) the acknowledgments required by Section 5.20 hereof
and the waivers and consents required by Section 5.21 hereof; and
(xix) such other documents, instruments, opinions and
certificates and completion of such other matters, as the Agent or any
Initial Lender may reasonably deem necessary or appropriate.
(b) No litigation, arbitration, proceeding or investigation shall be
pending or threatened which questions the validity or legality of the
transactions contemplated by any Loan Document or seeks a restraining order,
injunction or damages in connection therewith, or which, in the judgment of
the Agent or the Initial Lenders, might adversely affect the transactions
contemplated by this Agreement or might have a materially adverse effect on
the assets, business, financial condition or prospects of any Loan Party.
(c) All necessary filings and recordings against the Collateral shall
have been completed and the Agent's liens on the Collateral shall have been
perfected, as contemplated by the Security Documents, which liens shall
constitute a first-priority security interest (except as contemplated by
Section 9.3 of this Agreement), and no other Encumbrance, except Permitted
Encumbrances, shall exist against the Collateral.
(d) The Agent and the Initial Lenders shall have received the
Borrower's pro forma consolidated balance sheet as of the Closing Date and
its projections of future consolidated results of operations, all in form and
substance satisfactory to the Agent and the Initial Lenders.
(e) The Agent and the Initial Lenders shall be satisfied with the
Borrower's and the Parent's capital structure.
(f) The Borrower shall have delivered the Initial Financial Statement
to the Initial Lenders.
(g) Any obligation of any Loan Party to U.S. Bank outstanding prior
to the date of this Agreement (except for such amounts loaned from U.S. Bank
directly to Lithia Financial Corporation or under letters of credit issued by
U.S. Bank for the benefit of a Loan Party) and any other Indebtedness not
permitted by this Agreement shall have been repaid in full.
(h) The Borrower shall have paid to the Agent all Fees to be paid
under this Agreement (including without limitation pursuant to Section 2.6(d)
of this Agreement) or agreed to between the Borrower and the Agent on or
prior to the Closing Date.
(i) The representations and warranties of Section IV are true and
correct.
3.2 Conditions Precedent to All Loans. The obligation of the Lenders
to make any Loan, including the initial Loans, or continue or convert a Loan
is further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing;
(b) the outstanding Loans do not and, after giving effect to
any requested Loan, will not exceed the limitations set forth in Sections 2.1;
29
(c) the representations and warranties contained in Section IV
shall be true and accurate in all material respects on and as of the date of
such Notice of Borrowing and on the effective date of the making,
continuation or conversion of each Loan as though made at and as of each such
date (except to the extent that such representations and warranties expressly
relate to an earlier date);
(d) no Default or Event of Default shall have occurred and be
continuing at the time of and immediately after the making of such requested
Loan;
(e) the resolutions referred to in Section 3.1 shall remain in
full force and effect;
(f) each of the Loan Parties shall have complied in full with
all covenants and conditions and the Lenders shall have received all of the
documents, including without limitation the Security Documents, the Real
Property Security Documents, the Acquisition Approval Documents and any other
documents reasonably required by the Lenders in connection with the making of
the Loan;
(g) with respect to the Acquisition Term Loan, the Borrower
shall have executed and delivered to the Agent the Acquisition Term Notes for
each Lender; and
(h) for a particular Lender, no change shall have occurred in
any law or regulation or interpretation thereof that, in the opinion of
counsel for that Lender, would make it illegal or against the policy of any
governmental agency or authority for such Lender to make Loans under this
Agreement (as the case may be).
The making or continuation or conversion of each Loan shall be deemed
to be a representation and warranty by the Borrower on the date of the making
or continuation of such Loan as to the accuracy of the facts referred to in
subsection (c) of this Section 3.2 and of the satisfaction of all of the
conditions set forth in this Section 3.2.
SECTION IV.
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make Loans under this Agreement, the Loan Parties, jointly
and severally, represent and warrant to the Agent and the Lenders that except
as set forth on Exhibit C attached to this Agreement (Exhibit C shall be
arranged in sections corresponding to the lettered and numbered sections
contained in this Section IV):
4.1 Organization; Qualification; Business.
(a) The Borrower (i) is a corporation duly organized and
validly existing under the laws of the state of Oregon, (ii) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated and (iii) is duly qualified and in
good standing as a foreign corporation and is duly authorized to do business
in each jurisdiction (all of which are listed on Exhibit C attached to this
Agreement) where the nature of its properties or business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, financial condition, assets or
properties of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
(b) Each of the Parent and the other Loan Parties (i) is duly
organized and validly existing under the laws of its jurisdiction of
organization, (ii) has all requisite power to own its property and conduct
its business as now conducted and as presently contemplated and (iii) is duly
qualified and in good standing as a foreign corporation or entity and is duly
authorized to do business in each jurisdiction (all of which are listed on
Exhibit C attached to this Agreement) where the nature of its properties or
business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, financial
condition, assets or properties of the Borrower or of the Borrower and its
Subsidiaries taken as a whole.
(c) Since the date of the Initial Financial Statement, each of
the Loan Parties has continued to engage in substantially the same business
as that in which it was then engaged and is engaged in no unrelated
business. The Loan Parties' sole line of business is new and used automotive
retailing and parts, service, and financing related thereto.
30
4.2 Authority.
(a) The execution, delivery and performance of the Loan
Documents and the transactions contemplated by the Loan Documents are within
the corporate power and authority of the Borrower, have been authorized by
all necessary corporate action, and do not and will not (i) contravene any
provision of the Articles of Incorporation or bylaws of the Borrower or any
law, rule or regulation applicable to the Borrower, (ii) contravene any
material provision of, or constitute an event of default or event that, but
for the requirement that time elapse or notice be given, or both, would
constitute an event of default under, any other material agreement,
instrument, order or undertaking binding on the Borrower, or (iii) result in
or require the imposition of any Encumbrance on any of the properties, assets
or rights of the Borrower, except in favor of the Agent and the Lenders.
(b) The execution, delivery and performance of the Loan
Documents and the transactions contemplated by the Loan Documents are within
the power and authority of each Loan Party other than Borrower, have been
authorized by all necessary action, and do not and will not (i) contravene
any provision of the Articles of Incorporation or bylaws (or Articles of
Organization or Operating Agreement if the Loan Party is a limited liability
company) of the Loan Party or the Parent, or any law, rule or regulation
applicable to the Loan Party or the Parent, (ii) contravene any material
provision of, or constitute an event of default or event that, but for the
requirement that time elapse or notice be given, or both, would constitute an
event of default under, any other material agreement, instrument, order or
undertaking binding on the Loan Party or the Parent, or (iii) result in or
require the imposition of any Encumbrance on any of the properties, assets or
rights of the Loan Party or the Parent, except in favor of the Agent and the
Lenders.
4.3 Valid Obligations. The Loan Documents have been duly and validly
executed and delivered and all of their respective terms and provisions are
the legal, valid and binding obligations of the Borrower or the Loan Party,
as the case may be, enforceable in accordance with their respective terms
except as limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally,
and except as the remedy of specific performance or of injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought. The Security Documents have effectively created in favor of
the Agent and the Lenders legal, valid and binding security interests in the
Collateral enforceable in accordance with their terms, and such security
interests are fully perfected first priority security interests (except with
respect to the fixed assets owned by Lithia Financial Corporation and
Vehicles owned by Lithia Financial Corporation leased to others, which
security interest shall be a perfected second priority security interest),
subject only to Permitted Encumbrances.
4.4 Consents or Approvals. The execution, delivery and performance
of the Loan Documents and the transactions contemplated by this Agreement do
not require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other Person, except under
or as contemplated by the Security Documents, all of which have been obtained.
4.5 Title to Properties; Absence of Encumbrances. Each of the Loan
Parties has good and marketable title to all of the properties, assets and
rights of every type and nature now purported to be owned by it, including,
without limitation, such properties, assets and rights as are reflected in
the Initial Financial Statement (except such properties, assets or rights as
have been disposed of in the ordinary course of business since the date
thereof), free from all Encumbrances except Permitted Encumbrances, and,
except as so disclosed, free from all defects of title that might materially
adversely affect the properties, assets or rights of the Loan Parties, taken
as a whole. All material property owned or leased by the Borrower, the
Parent, or any other Loan Party is described in Exhibit C to this Agreement.
Exhibit C also contains a true and complete list of each Loan Party's deposit
or similar accounts.
4.6 Location of Real Property and Leased Premises. Section 4.6(a) of
Exhibit C lists completely and correctly all material real property owned by
any Loan Party and the addresses thereof. The Loan Parties own in fee all
the real property set forth on Section 4.6(a) of Exhibit C. Section 4.6(b)
of Exhibit C lists completely and correctly all real property leased by any
Loan Party and the owners and addresses thereof. The Loan Parties have valid
leases in all the real property listed on Section 4.6(b) of Exhibit C.
31
4.7 Financial Statements. The Borrower has furnished to the Lenders
its consolidated balance sheet as of December 31, 1996 and its consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal year then ended, and related footnotes audited and certified by the
Borrower's Accountants, and its consolidated balance sheet as of
September 30, 1997 and its consolidated statements of income, changes in
stockholders' equity and cash flow for the current fiscal year through such
date, and related footnotes (the "Initial Financial Statement"). All such
financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods specified and present fairly the
financial position of the Borrower and its Subsidiaries as of such dates and
the results of the operations of the Borrower and its Subsidiaries for such
periods. The Borrower has also furnished to the Lenders its pro forma
balance sheet, of September 30, 1997, and as of the Closing Date and
projections of its future results of operations, all of which were reasonable
when made and continue to be reasonable at the date of this Agreement. At
the date of this Agreement, no Loan Party has any Indebtedness or other
material liabilities, debts or obligations, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, including, but not
limited to, liabilities or obligations on account of taxes or other
governmental charges, that are not set forth on Exhibit C to this Agreement,
and the security interests and the Obligations secured by such security
interests shall rank senior to the Indebtedness. None of the Loan Parties
finance any of its Vehicle inventory with any other source or acquire
inventory from any entity on credit except as set forth on Exhibit C to this
Agreement.
4.8 Changes. Since the date of the Initial Financial Statement,
there have been no changes in the assets, liabilities, financial condition,
business or prospects of any Loan Party other than changes in the ordinary
course of business, the effect of which has not, in the aggregate, been
materially adverse to the Borrower and its Subsidiaries taken as a whole.
4.9 Insurance. Exhibit C sets forth a true, complete and correct
description of all material insurance maintained by the Borrower or any Loan
Party as of the Closing Date. As of such date, such insurance is in full
force and effect and all premiums have been duly paid. The Borrower and the
Loan Parties have insurance in such amounts and covering such risks and
liabilities as are in accordance with the requirements of the Agent.
4.10 Solvency. After giving effect to the Loans and after giving
effect to the application of the proceeds of such Loans, (a) the fair value
of the assets of each Loan Party, at a fair valuation, will exceed its debts
and liabilities, subordinated, unliquidated, unmatured, contingent (except
for that portion of the Guaranty in excess of the proceeds of Loans received
by such Loan Party) or otherwise; (b) the present fair saleable value of the
property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, unliquidated, unmatured, contingent (except for that portion of
the Guaranty in excess of the proceeds of Loans received by such Loan Party)
or otherwise, as such debts and other liabilities become absolute and mature;
(c) each Loan Party will be able to pay (and does not intend to incur debts
beyond its ability to pay) its debts and liabilities, subordinated,
unliquidated, unmatured, contingent (except for that portion of the Guaranty
in excess of the proceeds of Loans received by such Loan Party) or otherwise,
as such debts and liabilities become absolute and mature; and (d) each Loan
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
4.11 Defaults. As of the date of this Agreement, no Default exists.
4.12 Taxes. The Loan Parties have filed all federal, state and other
material tax returns required to be filed, and all taxes, assessments and
other governmental charges due from the Loan Parties have been fully paid,
except for such taxes, assessments or charges that are being contested in
good faith by appropriate proceedings and with respect to which (a) adequate
reserves have been established and are being maintained in accordance with
GAAP and (b) no lien has been filed to secure such taxes, assessments or
charges. All such contests at the date of this Agreement are described on
Exhibit C to this Agreement. No Loan Party has executed any waiver that
would have the effect of extending the applicable statute of limitations with
respect to tax liabilities. The federal and state income tax returns of the
Loan Parties have not been audited or otherwise examined by any federal or
state taxing authority. The Loan Parties have established on their books
reserves adequate for the payment of all federal, state and other tax
liabilities.
32
4.13 Litigation. There is no litigation, arbitration, proceeding or
investigation pending, or, to the knowledge of the any of the Loan Parties'
officers, threatened against any Loan Party that, if adversely determined,
may reasonably be expected to result in a material judgment not fully covered
by insurance, may reasonably be expected to result in a forfeiture of all or
any substantial part of the property of any Loan Party, or may reasonably be
expected to have a material adverse effect on the assets, business or
prospects of the Borrower and its Subsidiaries taken as a whole.
4.14 Subsidiaries. Exhibit C sets forth the name, address,
jurisdiction of incorporation or organization and stockholders or equity or
ownership interest holders of each Loan Party, other than public shareholders
of the Borrower who are not Affiliates, and the shares of capital stock or
other equity interests owned by each Loan Party. The Borrower or
Subsidiaries of the Borrower are the owners, free and clear of all
Encumbrances, of all of the issued and outstanding stock or equity or other
ownership interests of each Subsidiary. All shares of such stock or equity
or other ownership interests have been validly issued and are fully paid and
nonassessable, and no rights to subscribe to any additional shares or equity
or other ownership interests have been granted, and no options, warrants or
similar rights are outstanding.
4.15 Investment Company Act. None of the Loan Parties are subject to,
or controlled by an entity that is subject to, regulation under the
Investment Company Act of 1940, as amended.
4.16 Compliance. Each Loan Party has all necessary permits,
approvals, authorizations, consents, licenses, franchises, distributorships,
registrations and other rights and privileges (including patents, trademarks,
trade names and copyrights) necessary to the conduct of its business and to
allow it to own and operate its business without any violation of law or the
rights of others, except to the extent that any such violation would not have
a material adverse effect on the business, financial condition or results of
operations of the Borrower and its Subsidiaries taken as a whole; and each
Loan Party is duly authorized, qualified and licensed under and in compliance
with all applicable laws, regulations, authorizations and orders of public
authorities (including, without limitation, Environmental Laws as provided in
Section 4.18), except to the extent that any such failure to be so
authorized, qualified, licensed or in compliance would not have a material
adverse effect on the business, financial condition or results of operations
of the Borrower and its Subsidiaries taken as a whole. The Loan Parties have
performed all obligations required to be performed by them under, and are not
(or would not be with the passage of time or the giving of notice) in default
under or in violation of, their Articles of Incorporation or Bylaws (or
Articles of Organization or Operating Agreement if the Loan Party is a
limited liability company), or any contract, agreement, lease, mortgage,
note, bond, indenture, license, permit or other instrument or undertaking to
which any of them is a party or by which any of them or any of their
properties are bound, except for violations none of which, either
individually or in the aggregate, would have any material adverse effect on
the business, condition (financial or otherwise) or assets of the Borrower
and its Subsidiaries taken as a whole.
4.17 ERISA. The Borrower and each of its Affiliates are in compliance
in all material respects with ERISA and the provisions of the Code applicable
to the Plans; neither the Borrower nor any of its Affiliates have engaged in
a Prohibited Transaction which would subject the Borrower, any of its
Affiliates or any Plan to a material tax or penalty imposed on a Prohibited
Transaction; no Plan has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived; except as set forth in the Initial Financial Statement, the aggregate
fair market value of all assets of the Plans which are single-employer plans
is at least equal to the aggregate present value of all accrued benefits
under such Plans, both as determined in the most recent actuarial reports for
such Plans using the actuarial assumptions used for funding purposes therein;
neither the Borrower nor any of its Affiliates have incurred any liability to
the Pension Benefit Guaranty Corporation over and above premiums required by
law; and neither the Borrower nor any of its Affiliates have terminated any
Plan in a manner which could result in the imposition of a lien on the
property of the Borrower or any of its Affiliates. None of the Borrower or
its Affiliates have contributed, or been obligated to contribute, to any
Multiemployer Pension Plan on or after September 26, 1980.
4.18 Environmental Matters.
(a) The Loan Parties have obtained all permits, licenses and
other authorizations which are required under all Environmental Laws, except
to the extent failure to have any such permit, license or authorization would
not have a material adverse effect on the business, financial condition or
results of operations of the Borrower and any of its Subsidiaries, taken as a
whole. The Loan Parties are in compliance with the terms and conditions of
all such permits, licenses and authorizations, and are also in compliance
33
with all applicable orders, decrees, judgments and injunctions, issued,
entered, promulgated or approved under any Environmental Law, except to the
extent failure to comply would not have a material adverse effect on the
business, financial condition or results of operations of the Borrower and
its Subsidiaries, taken as a whole.
(b) No written notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity (i) with respect to
any alleged failure by any Loan Party to comply with any Environmental Laws
or to have any permit, license or authorization required by any Environmental
Law in connection with the conduct of its business or (ii) regarding the
presence of any Hazardous Material at, on or under any property now or
previously owned, leased or used by any Loan Party or any other location to
which Hazardous Materials from such property had been transported or at which
they have been disposed of.
(c) No material oral or written notification of a release of a
Hazardous Material has been filed by or on behalf of any Loan Party and no
property now or previously owned, leased or used by any Loan Party is listed
or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, or on any similar state list of sites requiring investigation or
clean-up.
(d) There are no liens or Encumbrances arising under or
pursuant to any Environmental Law on any of the real property or properties
owned, leased or used by any Loan Party and no governmental actions have been
taken or are in process which could subject any of such properties to such
liens or Encumbrances.
(e) No Loan Party nor any previous owner, tenant, occupant or
user of any property owned, leased or used by any Loan Party have (i) engaged
in or permitted any operations or activities upon or any use or occupancy of
such property, or any portion thereof, for the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials on, under, in or about such property,
except to the extent commonly used in day-to-day operations of such property
and in such case only in compliance in all material respects with all
Environmental Laws, or (ii) transported any Hazardous Materials to, from or
across such property except to the extent commonly used in day-to-day
operations of such property and, in such case, in compliance in all material
respects with all Environmental Laws; nor to the knowledge of the officers of
Borrower and other Loan Parties have any Hazardous Materials migrated from
other properties upon, about or beneath such property, nor are any Hazardous
Materials presently constructed, deposited, stored or otherwise located on,
under, in or about such property except to the extent commonly used in
day-to-day operations of such property and, in such case, in compliance in
all material respects with all Environmental Laws.
4.19 Restrictions on the Borrower. None of the Loan Parties is a
party to or bound by any contract, agreement or instrument, nor subject to
any charter or other corporate restriction which will, under current or
foreseeable conditions, materially and adversely affect the business,
property, assets, operations or conditions, financial or otherwise, of the
Borrower or any of its Subsidiaries.
4.20 Labor Relations. There is (i) no unfair labor practice complaint
pending or threatened against any Loan Party before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending or threatened against
any Loan Party except for such complaints, grievances and arbitration
proceedings which, if adversely decided, would not have a material and
adverse effect on the condition (financial or otherwise), properties,
business or results of operations of the Borrower and its Subsidiaries, taken
as a whole, (ii) no strike, labor dispute, slowdown or stoppage pending or
threatened against any Loan Party, except for any such labor action as would
not have a material and adverse effect on the condition (financial or
otherwise), properties, business or results of operations of the Borrower and
its Subsidiaries, taken as a whole and (iii) no union representation question
existing with respect to the employees of any Loan Party and no union
organizing activities are taking place, except for any such question or
activities as would not have a material and adverse effect on the condition
(financial or otherwise), properties, business or results of operations the
Borrower and its Subsidiaries, taken as a whole.
34
4.21 Margin Rules. None of the Loan Parties own or have any present
intention of purchasing or carrying, and no portion of any Loan shall be
used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, (a) for purchasing or carrying, any "margin security" or
"margin stock" as such terms are used in Regulations G, T, U or X of the
Board of Governor's of the Federal Reserve System, or (b) otherwise for any
purpose that entails any violation of, or that is inconsistent with, the
provisions of the regulations of the Board of Governor's of the Federal
Reserve System, including Regulations G, T, U or X.
4.22 SEC Documents. The Borrower has furnished to the Agent true and
complete copies of (a) its Registration Statement on Form S-1, as declared
effective by the U.S. Securities and Exchange Commission (the "SEC") on
December 18, 1996, and (b) all reports and registration statements filed with
the SEC under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), since such date, all in the form (including exhibits) so
filed (collectively, the "SEC Documents"). As of their respective filing
dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed SEC
Document. As of the date of this Agreement, no additional filings or
amendments to previously filed SEC Documents are required pursuant to such
rules and regulations.
4.23 Material Agreements. Exhibit C lists all material agreements to
which any Loan Party is a party, including without limitation those
agreements (any of which will be considered material) relating to the lease
of real property, the right to use a third party's intellectual property, the
purchase of inventory, the ability or license to sell or distribute inventory
(including without limitation franchise agreements, distributorship
agreements, or similar agreements), the financing of inventory, or the
re-purchase of inventory (each a "Material Agreement"). The Borrower has
furnished to the Agent true and complete copies of these agreements. With
respect to each such agreement: (a) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (b) no
party is in material breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under the agreement; (c)
no party has repudiated any material provision of the agreement; and (d) no
Loan Party has assigned or granted any Person a right or an interest in the
agreement.
4.24 Disclosure. No representation or warranty made by any of the
Loan Parties in any Loan Document and no document or information furnished to
the Lenders by or on behalf of or at the request of any of the Loan Parties
in connection with any of the transactions contemplated by the Loan Documents
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances in which they are made. There is no
fact known to any Loan Party that is reasonably likely to have a material
adverse effect on the assets, business or prospects of any Loan Party, which
has not been disclosed to Lenders in writing prior to the date of this
Agreement.
SECTION V.
AFFIRMATIVE COVENANTS
Each Loan Party covenants that so long as any Loan or other Obligation
remains outstanding, any debit or draft authorization (or similar instrument
or arrangement) remains in effect, or the Lenders have any obligation to lend
under this Agreement:
5.1 Financial Statements. The Loan Parties shall furnish to the
Lenders at their sole cost and expense:
(a) as soon as available to the Loan Parties, but in any event
within 95 days after the end of each fiscal year, the Parent's and the
Borrower's consolidated balance sheet as of the end of, and related
consolidated statements of income, retained earnings and cash flow for, such
year, prepared in accordance with GAAP and audited and certified by the
Borrower's Accountants; and, concurrently with such financial statements, a
copy of the Borrower's Accountants management report and a written statement
by the Borrower's Accountants that, in the making of the audit necessary for
their report and opinion upon such financial statements they have obtained no
knowledge of any breach of a Financial Covenant under Section VI hereof or,
if in the opinion of such accountants any such breach exists, they shall
disclose in such written statement the nature and status thereof;
35
(b) as soon as available to the Loan Parties, but in any event
within 50 days after the end of each fiscal quarter, a consolidated balance
sheet as of the end of, and related consolidated statements of income,
retained earnings and cash flow for, the fiscal quarter then ended and the
portion of the year then ended, in each case setting forth in comparative
form the projections provided for such period pursuant to Section 5.1(d),
prepared in accordance with GAAP and certified by the chief financial officer
of the Borrower, subject to normal, recurring year-end adjustments that shall
not in the aggregate be material in amount;
(c) promptly after the receipt thereof by any Loan Party,
copies of any management report submitted to the Loan Party by independent
public accountants in connection with any annual or interim review of the
accounts of the Loan Party made by such accountants;
(d) on the Closing Date and 60 days before the beginning of
each fiscal year, projections and budget, certified by the Borrower's chief
financial officer, prepared on a quarterly basis for the following fiscal
year, including consolidated balance sheets and statements of income,
retained earnings and cash flows;
(e) within five Business Days after the same are delivered to
its stockholders or the Securities and Exchange Commission, copies of all
proxy statements, financial statements and reports or other documents as the
Borrower shall send to its stockholders or as the Borrower may file with the
Securities and Exchange Commission or any similar document filed with any
state or District of Columbia securities regulatory authority at any time
having jurisdiction over the Borrower or its Subsidiaries;
(f) on the first Business Day of each week, a report,
substantially in the form of Exhibit D to this Agreement signed on behalf of
the Loan Parties by the Borrower's chief financial officer, involving among
other things the amounts contained in each of the Loan Parties' deposit or
similar accounts as of the end of the prior week;
(g) as soon as available, but in any event within 50 days after
the end of each fiscal quarter, the Borrower shall deliver to the Agent and
each Lender a Compliance Certificate, substantially in the form attached as
Exhibit E, signed by its chief financial officer;
(h) as soon as available to the Loan Parties, but in any event
within 20 days after the end of each calendar month and with each Notice of
Borrowing or Conversion with respect to an Other Purpose Loan, a Program and
Used Vehicle Loan or an Acquisition Revolving Loan, the Borrower shall
deliver to the Agent and each Lender a Borrowing Base Certificate,
substantially in the form attached as Exhibit F, signed by its chief
financial officer;
(i) projections and budget, dated no earlier than July 1, 1998
and no later than July 31, 1998, and certified by the Borrower's chief
financial officer, prepared on a quarterly basis for each of the following
five years, including consolidated balance sheets and statements of income,
retained earnings and cash flows;
(j) as soon as available, but in any event within 15 days after
the end of each month, a "factory" franchise statement for each Subsidiary;
and
(k) from time to time, such other financial data and
information about any of the Loan Parties as the Agent or the Lenders may
reasonably request.
5.2 Conduct of Business. The Loan Parties shall:
(a) duly observe and comply in all material respects with all
applicable laws, regulations, decrees, orders, judgments and valid
requirements of any governmental authorities relative to their corporate
existence, rights and franchises, to the conduct of their business and to
their property and assets (including without limitation all Environmental
Laws and ERISA), and shall maintain and keep in full force and effect and
comply with all licenses and permits necessary in any material respect to the
proper conduct of their business;
(b) maintain their corporate or other organizational, as the
case may be, existence and remain in the same business as that in which they
are now engaged, and in no unrelated business, as described in Section 4.1(c);
(c) maintain all of its deposit and similar accounts at a
branch of U.S. Bank, provided that U.S. Bank has a branch within a reasonable
geographic area of the Loan Party's place of business; and
36
(d) maintain each of the deposit or similar accounts listed on
Schedule 4.5 to Exhibit C of this Agreement and provide the Agent with
written notice before opening any new deposit or similar account.
5.3 Maintenance and Insurance.
(a) The Loan Parties shall maintain their properties (including all
Collateral) in good repair, working order and condition as required for the
normal conduct of their business. The Loan Parties shall maintain all
assets, licenses, patents, copyrights, trademarks, service marks, trade
names, permits and other governmental approvals necessary to conduct its
business.
(b) The Loan Parties shall at all times maintain liability and
casualty insurance on their properties with financially sound and reputable
insurers in such amounts and with such coverages, endorsements, deductibles
and expiration dates as the Agent reasonably deems appropriate, including,
without limitation, casualty and liability insurance, as are customary in the
industry for companies of established reputation engaged in the same or
similar business and owning or operating similar properties. The Agent shall
be named as loss payee and additional insured as under such insurance as the
Agent shall require from time to time, and the Borrower shall provide to the
Agent lender's loss payable endorsements in form and substance reasonably
satisfactory to the Agent. The Agent shall be given thirty (30) days advance
notice of any cancellation of insurance. In the event of failure to provide
and maintain insurance as provided in this Agreement, the Agent may, at its
option, provide such insurance and charge the amount thereof to the Borrower
as any Type of Loan under any Commitment that Agent chooses in its sole
discretion. On an annual basis, the Loan Parties shall furnish to the Agent
certificates, duplicate copies of the policies, or other evidence
satisfactory to the Agent of compliance with the foregoing insurance
provisions. The Agent shall not, by the fact of approving, disapproving or
accepting any such insurance, incur any liability for the form or legal
sufficiency of insurance contracts, solvency of insurance companies or
payment of law suits, and the Loan Parties by this Agreement expressly assume
full responsibility therefor and liability, if any, thereunder.
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.
5.4 Taxes. The Loan Parties shall pay or cause to be paid all taxes,
assessments or governmental charges on or against any of them or their
properties on or prior to the time when they become delinquent, except for
any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with GAAP if no
Encumbrance (other than a Permitted Encumbrance) shall have been filed to
secure such tax, assessment or charge.
5.5 Inspections. The Loan Parties shall permit the Agent, any Lender
and their designees, at any time with or without notice, (a) to visit and
inspect the properties of the Loan Parties for the purpose, among other
things, to inspect and verify the Collateral under procedures established by
the Agent, (b) examine and make copies of and take abstracts from the books
and records (maintained in any format) of the Loan Parties, and (c) during
regular business hours, to discuss the affairs, finances and accounts of the
37
Loan Parties with their appropriate officers, employees and accountants, all
at the expense of the Loan Parties. Without limiting the generality of the
foregoing, the Loan Parties will permit periodic reviews (as determined by
the Agent) of their books and records (maintained in any format) of the Loan
Parties to be carried out by the Agent's commercial finance examiners, and
Agent will conduct, and each Loan Party will permit, audits of Collateral at
least four times during each calendar year, which audits will be conducted by
the Agent's collateral examiners. The inspections and examinations under
this Section 5.5 shall be at the expense of the Loan Parties; provided,
however, that, unless a Default or Event of Default has occurred and is
continuing, the Agent shall pay for the first two inspections described in
subclause 5.5(a) in any calendar year.
5.6 Maintenance of Books and Records. The Loan Parties at their sole
cost and expense shall keep adequate books and records of account, in which
true and complete entries will be made reflecting all of their business and
financial transactions, in accordance with GAAP and applicable law. The Loan
Parties shall at all times keep correct and accurate records itemizing and
describing the kind, type, location, quality and quantity of inventory, the
Loan Parties' cost for the inventory, in accordance with procedures
established by the Agent, all of which records shall be updated at least
weekly (or more frequently if reasonably requested by the Agent or, after
Default, by any Lender) and shall be available during the Loan Parties' usual
business hours at the request of any of the Agent's officers, employees or
agents. The Loan Parties shall at their sole cost and expense conduct a
physical count of the vehicle inventory at least once each month (or more
often if deemed prudent by the Agent in its sole discretion), and promptly
following such physical vehicle inventory count shall supply the Agent with
the information required by Section 5.19(d) of this Agreement. The Borrower
shall also conduct a physical vehicle inventory count whenever reasonably
requested to do so by the Agent or by the Required Lenders.
5.7 Use of Proceeds.
(a) The Borrower will use the proceeds of Loans solely for the
purpose described in this Agreement with respect to each type of Loan, and
such proceeds shall not be used to acquire inventory for or to benefit any
Person who is not a Loan Party.
(b) No portion of any Loan shall be used for the "purpose of
purchasing or carrying" any "margin stock" or "margin security" as such terms
are used in Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, or otherwise in violation of such regulations.
5.8 Further Assurances. At any time and from time to time each Loan
Party shall execute and deliver such further documents and instruments and
take such further action as may reasonably be requested by the Agent to
effect the purposes of the Loan Documents and in order to grant, preserve,
protect and perfect the validity and priority of the security interest
created or intended to be created by the Security Documents. The Borrower
will cause any subsequently acquired, created, or organized Subsidiary to
execute and deliver a Joinder Agreement, substantially in the form attached
as Exhibit G to this Agreement, and execute all other Loan Documents,
including but not limited to Uniform Commercial Code financing statements and
other Security Documents, required by the Agent. The Loan Parties will also
deliver or cause to be delivered to the Agent all information regarding the
condition (financial or otherwise), business, properties and results of
operations of such Subsidiary as the Agents or any Lender reasonably deems
appropriate. From time to time, the Loan Parties will, at their cost and
expense, promptly secure the Obligations by pledging or creating, or causing
to be pledged or created, a perfected security interest with respect to each
of their respective assets and properties as the Agent or the Required
Lenders shall designate. Such security interest will be created under the
Security Documents and other security agreements, Title Documents, Uniform
Commercial Code financing statements, mortgages, deeds of trust and other
instruments and documents in form and substance satisfactory to the Agent,
and the Loan Parties shall deliver or cause to be delivered to the Lenders
all such instruments and documents as the Agent shall reasonably request as
evidence of compliance with this Section 5.8. The Loan Parties agree to
provide such evidence as the Agent shall reasonably request as to the
perfection and priority status of each such security interest. Without
limiting the generality of the foregoing (a) on the reasonable request of the
Agent or the Required Lenders, the Loan Parties shall execute, or cause the
appropriate Subsidiary of the Borrower to execute, a mortgage in form
reasonably satisfactory to the Agent and deliver other instruments and
documents reasonably requested by the Agent or the Required Lenders in
connection with creating a security interest in favor of the Agent for the
benefit of the Lenders with respect to any real property interest acquired
38
using any portion of any Loan, and (b) the Loan Parties shall insure that the
applicable security interest created under this Agreement and the Loan
Documents with respect to any property acquired using the proceeds of any
Loan shall be a binding, first-priority perfected security interest.
5.9 Notification Requirements. The Loan Parties shall furnish to the
Agent and the Lenders:
(a) immediately upon becoming aware of the existence of any
condition or event that constitutes a Default, written notice of the Default
specifying the nature and duration of the Default and the action being or
proposed to be taken with respect to the Default;
(b) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against any Loan Party of which it has notice, in which the amount
of damages claimed (excluding punitive damages) exceeds $500,000 or the
outcome of which would or could reasonably be expected to have a materially
adverse effect on the assets, business or prospects of any Loan Party or the
Borrower and its Subsidiaries on a consolidated basis, written notice of the
litigation or proceeding and the action being or proposed to be taken with
respect to the litigation or proceeding; and
(c) promptly after any occurrence or after becoming aware of
any condition affecting any Loan Party which constitutes or could reasonably
be expected to constitute a material adverse change in or which has or could
reasonable be expected to have a material adverse effect on the business,
properties or condition (financial or otherwise) of any Loan Party or the
Borrower and its Subsidiaries, taken as a whole, written notice of the
condition.
5.10 ERISA Reports. With respect to any Plan, the Loan Parties shall,
or shall cause their Affiliates to, furnish to the Agent and the Lenders
promptly (i) written notice of the occurrence of a "reportable event" (as
defined in Section 4043 of ERISA), excluding any such event notice of which
has been waived by regulation, (ii) a copy of any request for a waiver of the
funding standards or an extension of the amortization periods required under
Section 412 of the Code and Section 302 of ERISA, (iii) a copy of any notice
of intent to terminate any Pension Plan, (iv) notice that the Borrower or any
Affiliate will or may incur any liability to or on account of a Plan under
Sections 4062, 4063, 4064, 4201 or 4204 of ERISA, (v) a copy of the annual
report of each Pension Plan (Form 5500 or comparable form) required to be
filed with the IRS and/or the Department of Labor; (vi) notice of any
complete or partial withdrawal from any Multiemployer Pension Plan, (vii) a
copy of any notice with respect to a Multiemployer Pension Plan that such
plan is terminated or is "insolvent" (as defined in Section 4245 of ERISA),
or in "reorganization" (as defined in Section 4241 of ERISA, and a (viii) a
copy of any assessment of withdrawal liability (or preliminary estimate
thereof following a complete or partial withdrawal by a Borrower or
Affiliate) with respect to a multiemployer Pension Plan. Any notice to be
provided to the Agent and the Lenders under this Section shall include a
certificate of the chief financial officer of the Borrower setting forth
details as to such occurrence and the action, if any, which such Borrower or
the Affiliate is required or proposes to take, together with any notices
required or proposed to be filed with or by the Borrower, any Affiliate, the
PBGC, the IRS, the trustee or the plan administrator with respect thereto.
Promptly after the adoption of any Pension Plan, the Loan Parties shall
notify the Agent and the Lenders of such adoption.
5.11 Environmental Compliance.
(a) The Loan Parties will comply in all material respects with
all applicable Environmental Laws in all jurisdictions in which any of them
operates now or in the future, and the Loan Parties will comply in all
material respects with all such Environmental Laws that may in the future be
applicable to any of their business, properties and assets.
(b) If any Loan Party shall (i) receive notice that any
material violation of any Environmental Law may have been committed or is
about to be committed by any Loan Party, (ii) receive notice that any
administrative or judicial complaint or order has been filed or is about to
be filed against any Loan Party alleging a material violation of any
Environmental Law or requiring any Loan Party to take any action in
connection with the release of Hazardous Materials into the environment,
(iii) receive any notice from a federal, state or local government agency or
private party alleging that any Loan Party may be liable or responsible for
any material amount of costs associated with a response to or cleanup of a
release of Hazardous Materials into the environment or any damages caused
thereby, or (iv) become aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against any Loan
Party regarding any potential violation of Environmental Laws or any spill,
39
release, discharge or disposal of any Hazardous Material the Borrower shall,
within 10 days thereof, notify the Agent and the Lenders thereof (together
with a copy of any such notice) and of any action being or proposed to be
taken with respect thereto.
(c) Within thirty (30) days after any Loan Party has learned of
the enactment or promulgation of any Environmental Law which could reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, of any Loan Party, the Loan Party shall notify the
Agent and the Lenders.
(d) No later than thirty (30) days following the end of each
calendar quarter, the Loan Parties shall deliver to the Agent and the Lenders
a written report, in a form and with such specificity as is reasonably
satisfactory to the Agent and the Lenders, describing the Loan Parties'
actions taken during such calendar quarter to assure their compliance with
all applicable Environmental Laws (including the receipt of any notice that
any administrative or judicial complaint or order has been filed or is about
to be filed against any Loan Party, regardless of whether such notice is
required to be delivered by any Loan Party pursuant to subsection (b) above)
as well as the status of any pending environmental matters described in
Exhibit C attached to this Agreement.
5.12 Material Agreements. 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,
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.
5.13 Management. Maintain in the positions of chief executive
officer, president, chief financial officer, and other senior management or
executive positions of the Borrower persons of demonstrated skill and
experience in the duties of such position, and, in the event that any person
holding such a position leaves the employ of or otherwise ceases to hold such
a position with the Borrower, the Borrower shall promptly notify the Agent of
such vacancy and shall, immediately upon employing a replacement, and in no
event later than five (5) Business Days thereafter, so notify the Agent.
5.14 Loss or Depreciation of Collateral. The Loan Parties shall
notify the Agent promptly of the occurrence at any time of the following
event if, individually or in the aggregate, the amount involved in connection
with such events exceeds $500,000: (i) loss or depreciation in value of
inventory resulting from events, other than changes in the market price for
such inventory, and the amount of the loss or depreciation; (ii) rejection or
return of any inventory either from a customer to any Loan Party or from any
Loan Party to the Seller from whom the Loan Party acquired the item of
inventory; (iii) repossession, loss of or damage to any inventory; or
(iv) any other event materially and adversely affecting inventory or the
value or amount thereof. In the event of any loss or depreciation in the
value of any Vehicle which exceeds five percent of the value of the Vehicle
reflected on the most recent Borrowing Base Certificate or other report
delivered to the Agent, the Loan Parties shall immediately notify the Agent
of such loss or depreciation in the amount of the Vehicle affected thereby.
5.15 Title Documents. All Title Documents shall remain in possession
of the Borrower; provided, however, that the Borrower shall keep the Title
Documents in a reasonable and accessible manner. The Borrower shall deliver
any and all Title Documents to the Agent immediately on receipt of a written
request from the Agent, whether or not there has been a Default or Event of
Default. All Certificates of Title with respect to any Vehicle shall be
marked "U.S. Bank National Association, as Agent," to indicate the Agent's
security interest in the Vehicle.
5.16 Commodity Transactions. Neither any Borrower nor any of its
Subsidiaries shall, at any time, engage in any speculative transactions with
respect to commodities.
40
5.17 Acquisitions. Without the prior written consent of the Required
Lenders, no Loan Party will, and will not permit any Subsidiary to, acquire
by purchase, merger or consolidation (a) the power to direct or cause the
direction of the management and policies of any other Person (the
"Acquisition Target"), directly or indirectly, whether through the ownership
of voting securities or by contract or otherwise or (b) more than 20% of the
capital stock or other equity interest of any such other Person or all or
substantially all of the assets or properties of any such other Person (the
events described in clauses (a) and (b) of this Section 5.17 of this
Agreement referred to as "Acquisitions"), except that the Borrower may make
such Acquisitions if:
(i) the Acquisition Target, if such Acquisition Target
becomes a Subsidiary, (A) executes and delivers a Joinder
Agreement, substantially in the form attached as Exhibit G to
this Agreement, (B) executes and delivers all other Loan
Documents, including but not limited to Uniform Commercial Code
financing statements and other Security Documents, required by
the Agent, and (C) unless waived by the Agent in writing without
the consent of the Required Lenders, obtains a landlord's waiver
and consent from the Acquisition Target's lessor in such form and
substance satisfactory to the Agent in its sole discretion;
(ii) prior to and immediately after making such
Acquisition, no Default or Event of Default has occurred and is
continuing or would exist; and
(iii) the Borrower delivers to the Agent the Acquisition
Approval Documents at least three Business Days before the
closing of the Acquisition.
5.18 Real Estate. If the Borrower uses any portion of any Loan to
acquire any interest in real property, then the real property interest shall
be owned and recorded in the name of the Borrower until the applicable
portion of the Acquisition Revolving Loan is paid in full, together with all
accrued and unpaid interest thereon and with all Fees with respect thereto.
Any and all acquisitions of any interest in real property using any portion
of any Acquisition Revolving Loan shall be secured by the real property
acquired and shall conform fully to all of the Agent's real estate financing
policies and procedures, including without limitation, those items listed on
Exhibit H to this Agreement.
5.19 Personal Property Collateral.
(a) All present and future indebtedness and Obligations of the
Loan Parties to the Lenders under this Agreement, the Notes, and the Loan
Documents shall be secured by a perfected first priority security interest
(except as set forth in Section 9.3 with respect to certain fixed assets,
leased vehicles, leases and chattel paper owned by Lithia Financial
Corporation, in which instance the security interest created pursuant to this
Agreement shall be a perfected second priority security interest) 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
(collectively, the "Collateral"):
All of each Loan Parties' (i) accounts (including
without limitation account receivables and rebates,
credits, refunds, and similar items), instruments,
chattel paper, documents, contracts (including
without limitation the Material Agreements), general
intangibles, goods (including without limitation
inventory, equipment and consumer goods), proceeds of
letters of credit, and fixtures; (ii) all products,
proceeds, rents and profits thereof; (iii) all of the
books and records related to any of the foregoing.
(b) The security interest in the Collateral shall be evidenced
by such security agreements, Uniform Commercial Code financing statements,
Title Documents, Real Estate Security Documents, and other Security Documents
covering the Collateral as the Agent may at any time reasonably require.
(c) Notwithstanding any contrary provision of any Security
Document executed by any Loan Party, if it is asserted in any action or
proceeding that any security interest granted to the Agent and the Lenders by
any Loan Party is subject to avoidance as a fraudulent transfer or fraudulent
conveyance or any similar term under any applicable state or federal law, the
security interest of the Agent and the Lenders in the Collateral shall be
41
limited to the Collateral having a value equal to the maximum amount that can
or could be transferred to the Agent and the Lenders without rendering such
Loan Party's grant of a security interest subject to avoidance under such law
and such action or proceeding.
(d) Within ten (10) days following the end of each month, the
Borrower shall provide the Agent with a list of the Vehicles owned by or in
the possession of each Loan Party, which list shall specify for each Vehicle:
(i) its make, model, model year, and mileage;
(ii) its vehicle identification number and license number
(if applicable);
(iii) the amount advanced under this Agreement to purchase
the Vehicle; and
(iv) its cost or Reserve Adjusted Value.
(e) A Loan Party shall notify the Agent within one (1) Business
Day following the sale of a Vehicle, which Notice shall state the total sale
price and the vehicle identification number for the Vehicle.
5.20 Repurchase Agreements. On or before the Closing Date, each Loan
Party shall obtain from any Seller an acknowledgment from the Seller that any
agreement between the Seller and the Loan Party and/or U.S. Bank with respect
to the repurchase of Vehicles by the Seller (the "Repurchase Agreements")
shall be extended to the Agent for the benefit of the Lenders under this
Agreement. Additionally, prior to entering into any franchise agreement,
distributorship agreement or similar agreement, each Loan Party shall obtain
from that Seller a Repurchase Agreement in accordance with that Seller's
normal business practices for the benefit of the Agent on behalf of the
Lenders. Notwithstanding the foregoing, the Agent without obtaining the
consent of the Required Lenders may waive in any particular instance the
requirements of this Section 5.20.
5.21 Leases. On or before the Closing Date, each Loan Party shall
obtain from any lessor or other holder of any interest in real property a
landlord's or interest holder's waiver and consent in form and substance
satisfactory to the Agent in its sole discretion. Additionally, prior to
entering into assuming, or guaranteeing any lease pertaining to any interest
in real property, each Loan Party shall obtain from the lessor a landlord's
waiver and consent in such form and substance satisfactory to the Agent in
its sole discretion. Notwithstanding the foregoing, the Agent without
obtaining the consent of the Required Lenders may waive in any particular
instance the requirements of this Section 5.21.
5.22 Guarantees. All present and future Obligations of the Loan
Parties to the Lenders shall be guaranteed by each of the other Loan
Parties. Notwithstanding any contrary provision of any guarantee executed by
a Loan Party in favor of the Lenders, if any action or proceeding is
commenced asserting that any such guarantee is subject to avoidance as a
fraudulent transfer or fraudulent conveyance or any similar term under any
applicable state or federal law, the obligations of such Loan Party under
such guarantee shall be limited to the maximum amount that would not render
such Loan Party's obligations subject to avoidance under such law and such
action or proceeding.
5.23 Solvency. The fair value of the assets of each Loan Party, at a
fair valuation, shall exceed its debts and liabilities, subordinated,
unliquidated, unmatured, contingent (except for that portion of the Guaranty
in excess of the proceeds of Loans received by such Loan Party) or
otherwise. The present fair salable value of the property of each Loan Party
will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, unliquidated,
unmatured, contingent (except for that portion of the Guaranty in excess of
the proceeds of Loans received by such Loan Party) or otherwise, as such
debts and other liabilities become absolute and mature. Each Loan Party will
be able to pay (and does not intend to incur debts beyond its ability to pay)
its debts and liabilities, subordinated, unliquidated, unmatured, contingent
(except for that portion of the Guaranty in excess of the proceeds of Loans
received by such Loan Party) or otherwise, as such debts and liabilities
become absolute and mature. Each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the
Closing Date.
42
SECTION VI.
FINANCIAL COVENANTS
Each Loan Party covenants that so long as any Loan or other Obligation
remains outstanding, any debit or draft authorization (or similar instrument
or arrangement) remains in effect, or the Lenders have any obligation to make
any Loan under this Agreement:
6.1 Minimum Net Worth. Consolidated stockholders' equity (including
paid-in-capital and retained earnings) of the Borrower and its Subsidiaries,
determined in accordance with GAAP, shall at all times be greater than the
Minimum Net Worth. "Minimum Net Worth" shall mean an amount equal to the sum
of (a) $29,660,400, which equals 90 percent of the consolidated stockholders'
equity (including paid-in-capital and retained earnings) of the Borrower and
its Subsidiaries, determined in accordance with GAAP as of March 31, 1997,
plus (b) 75 percent of any positive Consolidated Net Income subsequent to
March 31, 1997, plus (c) 100 percent of the value of the net proceeds (cash
or non-cash) received by the Borrower from the issuance of capital stock
after the Closing Date.
6.2 Debt to Cash Flow Ratio. The Loan Parties shall not permit the
Debt to Cash Flow Ratio as of any date after the Closing Date to exceed
3.50:1. The "Debt to Cash Flow Ratio" shall be determined as of the last day
of each fiscal quarter and shall mean the ratio of (a) Funded Indebtedness as
of such date less the principal amount outstanding under Floor Plan
Financings as of such date to (b) the difference between (i) Pro Forma
Consolidated EBITDA for the four consecutive fiscal quarters ended on such
date less (ii) Pro Forma Floor Plan Interest Expense for the four consecutive
fiscal quarters ended on such date. The Loan Parties shall furnish to the
Agent supporting calculations for Pro Forma Consolidated EBITDA and such
other information as the Agent may reasonably request to determine the
accuracy of such calculation, including, without limitation, financial
statements of any Acquisition Target acceptable to the Agent in its
discretion for the periods to be included in the computation period.
6.3 Fixed Charge Coverage. The Loan Parties shall not permit the
ratio of Consolidated Earnings Available for Fixed Charges to Consolidated
Fixed Charges to be less than 1.50:1 as of the last day of any fiscal quarter
for the four consecutive fiscal quarters ended on such date.
6.4 Net Worth Ratio. The Loan Parties shall not permit the Net Worth
Ratio as of any date after the Closing Date to exceed 4.50:1.00. For
purposes of this Agreement, the Net Worth Ratio shall mean Consolidated Total
Liabilities less the outstanding principal balance of any amount owed by the
Borrower for money borrowed which, by agreement acceptable to the Agent, is
subordinate in the right of payment to any Loan or other Obligation and if
secured, is secured by a lien junior to the Lender's security interest in the
Collateral (the "Subordinated Debt") to (b) Consolidated Net Worth plus the
Subordinated Debt.
6.5 Capital Expenditures. During the period from the Closing Date
through the Maturity Date, or during any twelve consecutive month period
after the Maturity Date, the Loan Parties shall not make aggregate Capital
Expenditures in excess of $5,000,000 other than with a Loan without the
consent of the Required Lenders. This limitation shall not prohibit the
Borrower from incurring Indebtedness for Capital Expenditures directly
arising from the financing of the purchase price for the acquisition of a
Vehicle dealership, including real estate associated with a Vehicle
dealership, through another Person.
SECTION VII.
NEGATIVE COVENANTS
Except with the prior written consent of the Lenders in accordance with
Section 11.7 of this Agreement, the Loan Parties covenant that so long as any
Loan or other Obligation remains outstanding, any debit or draft
authorization (or similar instrument or arrangement) remains in effect, or
the Lenders have any obligation to make any Loan under this Agreement:
7.1 Indebtedness. None of the Loan Parties shall create, incur,
assume, guarantee or be or remain liable with respect to any Indebtedness
other than the following:
(a) Obligations;
(b) Indebtedness existing on the Closing Date and disclosed in
Section 4.7 of Exhibit C to this Agreement, but not any increase of the
principal amounts thereof;
43
(c) Indebtedness for taxes, assessments or governmental charges
to the extent that payment therefor shall at the time not be required to be
made in accordance with Section 5.4;
(d) current liabilities on open account for the purchase price
of services, materials and supplies incurred by the Borrower in the ordinary
course of business (not as a result of borrowing), so long as all of such
open account Indebtedness shall be promptly paid and discharged when due or
in conformity with customary trade terms and practices, except for any such
open account Indebtedness which is being contested in good faith by the
Borrower, as to which adequate reserves required by GAAP have been
established and are being maintained and as to which no Encumbrance has been
placed on any property of the Borrower or any of its Subsidiaries;
(e) Indebtedness for Capital Expenditures incurred in the
ordinary course of the Borrower's business and renewals and refinancings
thereof, provided that:
(i) such Indebtedness for Capital Expenditures does not
exceed $750,000 in the aggregate at any time outstanding or does not exceed
$500,000 in any fiscal year; or
(ii) such Indebtedness for Capital Expenditures directly
arises from the financing of the purchase for the acquisition of a Vehicle
dealership, including real estate associated with a Vehicle dealership; and
(f) Indebtedness with respect to any loans made by U.S. Bank
directly to Lithia Financial Corporation.
7.2 Contingent Liabilities. None of the Loan Parties shall create,
incur, assume, guarantee or be or remain liable with respect to any
Guarantees, except under the Guaranty.
7.3 Encumbrances. None of the Loan Parties shall create, incur,
assume or suffer to exist any mortgage, pledge, security interest, lien or
other charge or encumbrance of any kind, including the lien or retained
security title of a conditional vendor upon or with respect to any of their
property or assets ("Encumbrances"), or assign or otherwise convey any right
to receive income, including the sale or discount of Accounts Receivable with
or without recourse, except the following ("Permitted Encumbrances"):
(a) Encumbrances in favor of the Agent or any of the Lenders to
secure Obligations;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in Exhibit C to this Agreement, which secures Indebtedness
permitted under Section 7.1(b);
(c) Encumbrances securing Indebtedness for Capital Expenditures
to the extent such Indebtedness is permitted by Section 7.1(e), provided that
(i) each such Encumbrance is given solely to secure the purchase price of
such property, does not extend to any other property and is given
contemporaneously with the acquisition of the property, and (ii) the
Indebtedness secured thereby does not exceed the lesser of the cost of such
property or its fair market value at the time of acquisition;
(d) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
(e) landlords' and lessors' liens with respect to rent not in
default or liens with respect to pledges or deposits under workmen's
compensation, unemployment insurance, social security laws, or similar
legislation (other than ERISA) or in connection with appeal and similar bonds
incidental to litigation; mechanics', warehouseman's, laborers' and
materialmen's and similar liens, if the obligations secured by such liens are
not then delinquent; liens securing the performance of bids, tenders,
contracts (other than for the payment of money); and liens securing statutory
obligations or surety, indemnity, performance, or other similar bonds
incidental to the conduct of the Loan Party's business in the ordinary course
and that do not in the aggregate materially detract from the value of its
property or materially impair the use thereof in the operation of its
business;
(f) judgment liens securing judgments that (i) are fully
covered by insurance, and (ii) shall not have been in existence for a period
longer than 10 days after the creation of this Agreement or, if a stay of
execution shall have been obtained, for a period longer than 10 days after
the expiration of such stay;
44
(g) rights of lessors under capital leases to the extent such
capital leases are permitted under this Agreement;
(h) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering in a
material way with the ordinary conduct of the Borrower's business; and
(i) liens constituting a renewal, extension or replacement of
any Permitted Encumbrance other than those Permitted Encumbrances described
in Section 7.3(f).
7.4 Merger; Consolidation; Sale or Lease of Assets. None of the Loan
Parties shall liquidate, dissolve, reorganize, merge or consolidate into or
with any other Person or entity, or sell, lease or otherwise dispose of any
assets or properties, other than in the ordinary course of business. For
purposes of this Section 7.4, (i) sales of inventory consistent with past
practice, (ii) Qualified Investments, and (iii) sales of obsolete or replaced
equipment shall be considered to be in the ordinary course of business.
7.5 Stock Issuances. The Loan Parties shall not amend their Articles
of Incorporation or bylaws (or Articles of Organization or Operating
Agreement if the Loan Party is a limited liability company) or issue any
additional shares of their capital stock or other equity securities, any
options therefor or any securities convertible thereto, other than issuances
by a Subsidiary to the Borrower. Neither the Parent, Borrower nor any of its
Subsidiaries shall sell, transfer or otherwise dispose of any of the capital
stock or other equity securities or ownership interests of a Subsidiary,
except to another Loan Party. The following issuances and transfers of
publicly traded, Class A Common Stock in the Borrower are also permitted:
(a) Issuances and transfers pursuant to the Borrower's existing
stock option plan; and
(b) Issuances and transfers in furtherance of prudent business
practices pursuant to an employee stock purchase plan or a 401(k) pension
plan which is subject to ERISA, in which plan(s) the Borrower or another Loan
Party is a participating employer, and which plan(s) are designed as
supplemented compensation for all full time employees of Borrower or a Loan
Party.
Notwithstanding the foregoing, the issuances and transfers
under Section 7.5(a) and (b) above are not permitted to the extent that they
would have the effect of, whether singularly, cumulatively or in combination
with other issuances or transfers of any kind, making the recipient an
Affiliate, or would result in a breach of the ownership and control
requirements set forth in Article 8, Section 8.1(k) or (l).
7.6 Restricted Payments. None of the Loan Parties shall pay, make,
declare or authorize any Restricted Payment other than:
(a) compensation paid to employees, officers and directors in
the ordinary course of business and consistent with prudent business
practices;
(b) dividends payable solely in capital stock;
(c) dividends paid by any Subsidiary to the Borrower for
purposes of making any payment required by this Agreement; and
(d) stock splits affecting all outstanding shares of a class of
stock.
7.7 Investments; Purchases of Assets. None of the Loan Parties shall
make or maintain any Investments or purchase or otherwise acquire any
material amount of assets other than:
(a) Qualified Investments;
(b) Capital Expenditures;
(c) purchases of inventory in the ordinary course of business;
and
(d) normal trade credit extended in the ordinary course of
business and consistent with prudent business practice.
7.8 ERISA Compliance. Neither the Borrower nor any of its Affiliates
nor any Plan shall (i) engage, or shall have engaged, in any Prohibited
Transaction which would have a material adverse effect on the business,
financial condition or operations of the Borrower and its Subsidiaries taken
45
as a whole, (ii) incur any "accumulated funding deficiency" (as defined in
Section 412(a) of the Code and Section 302 of ERISA) whether or not waived
which would have a material adverse effect on the business, financial
condition or operations of the Borrower and its Subsidiaries taken as a
whole, (iii) fail to satisfy any additional funding requirements set forth in
Section 412 of the Code and Section 302 of ERISA or to make any other
contribution required under the terms of any Pension Plan or any collective
bargaining agreement with respect to a Multiemployer Plan which would have a
material adverse effect on the business, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole, (iv) terminate any
Pension Plan in a manner which could result in the imposition of a lien on
any property of the Borrower or any of its Subsidiaries; or (v) withdraw (in
a complete or partial withdrawal within the meaning of Section 4203 or
Section 4205 of ERISA, respectively) from a Multiemployer Pension Plan if
such withdrawal would have a material adverse effect on the business,
financial condition or operations of the Borrower and its Subsidiaries taken
as a whole. Each Plan shall comply in all material respects with ERISA,
except to the extent failure to comply in any instance would not have a
material adverse effect on the business, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole.
7.9 Transactions with Affiliates. The Loan Parties shall not,
directly or indirectly, enter into any purchase, sale, lease or other
transaction with any Affiliate except (i) transactions in the ordinary course
of business on terms that are no less favorable to the Borrower than those
which might be obtained at the time in a comparable arm's-length transaction
with any Person who is not an Affiliate, and (ii) employment contracts with
senior management of the Borrower entered into in the ordinary course of
business and consistent with prudent business practices. Notwithstanding the
foregoing, the Borrower will not, and will not permit any Subsidiary to,
directly or indirectly, pay any management, consulting, overhead, indemnity,
guarantee or other similar fee or charge to any Affiliate.
7.10 Sale and Lease-Back Transactions. No Loan Party shall enter into
any arrangement, directly or indirectly, with any Person pursuant to which it
shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or subsequently acquired, and thereafter rent or
lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred. Subject to the provisions of Section 7.9, nothing in this
Section 7.10 will prohibit any Loan Party from entering into any of the
transactions described in this Section 7.10 with another Loan Party or with
Lithia Real Estate, Inc. or Lithia Properties, Inc. as to real property and
fixtures.
7.11 Material Agreements. No Loan Party will cause, or suffer to
exist, any termination, expiration, 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,
other than Material Agreements that are purchase and sale agreements relating
to Acquisitions.
7.12 Structure. None of the Loan Parties shall make any change in its
corporate or organizational structure and shall not create or acquire any
Subsidiary except in connection with an Acquisition and provided that such
new Subsidiary becomes a Loan Party and executes and delivers a Joinder
Agreement and such other applicable Loan Documents.
7.13 Fiscal Year and Accounting Policies. The Loan Parties shall not
change their fiscal year without the prior written consent of the Required
Lenders. Neither the Borrower nor any other Loan Party shall make any
significant change in accounting policies or reporting practices other than
changes required by GAAP or otherwise required by law.
SECTION VIII.
DEFAULTS
8.1 Events of Default. There shall be an Event of Default under this
Agreement if any of the following events occurs:
46
(a) The Borrower shall fail to pay any principal or interest
with respect to any Loan, Fees or other amounts owing under any Loan Document
or with respect to any Obligation when the same shall become due and payable,
whether at maturity, at any accelerated date of maturity or at any other date
fixed for payment;
(b) (i) Any Loan Party shall breach, shall fail to perform or
shall fail to be in full compliance with any term, covenant or agreement
contained in Section VI of this Agreement, or (ii) any Loan Party shall
breach, shall fail to perform or shall fail to be in full compliance with any
term, covenant or agreement applicable to them contained in this Agreement or
any other Loan Document and such Default shall continue for 10 days; or
(c) Any representation or warranty of any Loan Party made in
this Agreement or any other Loan Document or in any certificate, notice or
other writing delivered under this Agreement or under any other Loan Document
shall prove to have been false or misleading in any material respect upon the
date when made or deemed to have been made; or
(d) Default or termination (or the occurrence of any other
event which gives another party thereto a right of acceleration or
termination) under any Material Agreement; or
(e) Any Loan Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), (iv) take any action or commence any
case or proceeding under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, or any
other law providing for the relief of debtors, (v) fail to contest in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the United States Bankruptcy Code or
other law, (vi) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (vii) take
any corporate action for the purpose of effecting any of the foregoing; or
(f) a proceeding or case shall be commenced against any Loan
Party without the application or consent of such Loan Party in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding up, or composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of its assets, or (iii) similar
relief with respect to it, under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts or any other
law providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of 45 days; or
an order for relief shall be entered in an involuntary case under the United
States Bankruptcy Code, against such Loan Party; or action under the laws of
the jurisdiction of incorporation or organization of any Loan Party similar
to any of the foregoing shall be taken with respect to the Loan Party and
shall continue unstayed and in effect for a period of 45 days; or
(g) a judgment or order for the payment of money shall be
entered against any Loan Party by any court, or a warrant of attachment or
execution or similar process shall be issued or levied against property of
the Loan Party, that in the aggregate exceeds $100,000 in value, the payment
of which is not fully covered by insurance in excess of any deductibles not
exceeding $10,000 in the aggregate, and such judgment, order, warrant or
process shall continue undischarged or unstayed for 30 days; or
(h) any default by any Loan Party under any Indebtedness the
effect of which permits the holder of such Indebtedness to cause such
Indebtedness to become due and payable prior to its maturity date; or
(i) the Borrower or any Affiliate shall fail to pay when due
any amount that they shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA, unless such liability is being contested in good
faith by appropriate proceedings, the Borrower or the Affiliate, as the case
may be, has established and is maintaining adequate reserves in accordance
with GAAP and no lien shall have been filed to secure such liability; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans; or a
condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any such Plan or Plans must be terminated; or
47
(j) any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise then in accordance with the express terms
hereof or thereof or with the express prior written agreement, consent or
approval of the Lenders, or any action at law or in equity or other legal
proceeding to cancel, revoke or rescind any Loan Document shall be commenced
by or on behalf of any Loan Party, or any court or other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or shall issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; or
(k) Xxxxxx X. XxXxxx, or a successor or successors reasonably
acceptable to Agent and Required Lenders, shall fail to own and control, free
and clear of Encumbrances (except Encumbrances pursuant to the Security
Documents), a sufficient percentage of the voting interests of Parent to
enable him at all times to approve any matter to be voted by the managers or
members of the Parent, including, without limitation, the right at all times
to elect the managers of the Parent; or
(l) the Parent shall fail to own of record and beneficially,
free and clear of any and all Encumbrances (except Encumbrances pursuant to
the Security Documents), sufficient issued and outstanding voting securities
of the Borrower to have the unfettered ability at all times to approve any
matter to be voted upon by the stockholders of the Borrower (except for those
matters on which the holders of the Borrower's Class A Common Stock have the
sole right to vote), and at all times to designate a majority of the Board of
Directors of the Borrower; or
(m) the Borrower shall fail to own beneficially, directly or
indirectly, 100 percent of the issued and outstanding capital stock or equity
or other ownership interests of any Loan Party other than the Parent; or
(n) the Lenders cease to have a valid, perfected first priority
security interest in the Collateral (except with respect to the fixed assets
owned by Lithia Financial Corporation or the Vehicles owned by Lithia
Financial Corporation leased to others, which security interest shall be a
valid, perfected second priority security interest); or
(o) the interruption or cessation of a material portion of the
ordinary business operations of the Borrower and its Subsidiaries, taken as a
whole; or
(p) the occurrence of any material adverse change in the
condition or affairs (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, or of any endorser, guarantor or surety for
any of the obligations and which is not a Loan Party, which materially
adverse change causes the Lenders reasonably to deem themselves insecure.
8.2 Remedies. Upon the occurrence of a Default or Event of Default
described in subsections 8.1(e) and (f), immediately and automatically, and
upon the occurrence of any other Event of Default, at any time thereafter
while such Event of Default is continuing, at the option of the Agent or the
Required Lenders (or the Swingline Lender in connection with Section 8.2(b))
and upon the Agent's declaration (which shall be given if the Required
Lenders (or the Swingline Lender in connection with Section 8.2(b)) so
directs):
(a) the obligation of the Lenders to make any further Loans
under this Agreement, including without limitation the obligation of the
Swingline Lender to honor any debits or draft authorizations (or similar
instruments or arrangements), and all Loan Commitments shall terminate;
(b) the Swingline Lender, in its sole discretion or at the
direction of the Required Lenders, may give notice to any Seller or other
appropriate party terminating any debit or draft authorization (or similar
instrument or arrangement); provided, however, that if the Loan Commitments
have terminated, then the Swingline Lender shall immediately take such action
as is necessary to terminate such debit or draft authorizations (or similar
instruments or arrangements), and on receipt of a copy of any such notice or
notice of any other action taken in connection with this Section 8.2(b), the
Borrower shall immediately deliver cash collateral to the Swingline Lender in
an amount that the Swingline Lender shall determine in its reasonable
discretion (based on the aggregate amount of debit or draft authorizations
(or similar instruments or arrangements) then in effect) as collateral for
the payment and performance of any and all debit or draft authorizations (or
similar instruments or arrangements) until all such debit or draft
authorizations (or similar instruments or arrangements) are terminated (and
all outstanding obligations have been honored) according to their respective
terms.
48
(c) the unpaid principal amount of the Loans together with
accrued and unpaid interest, all Fees, and all other Obligations shall become
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are by this Agreement expressly waived; and
(d) the Agent and the Lenders may exercise any and all rights
they have under this Agreement, the other Loan Documents, under the
applicable Uniform Commercial Code, or at law or in equity, and proceed to
protect and enforce their respective rights by any action at law or in equity
or by any other appropriate proceeding.
No remedy conferred upon the Agent and the Lenders in the Loan Documents is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute or
by any other provision of law. Without limiting the generality of the
foregoing or of any of the terms and provisions of any of the Security
Documents, if and when the Agent exercises remedies under the Security
Documents with respect to Collateral, the Agent may, in its sole discretion,
determine which items and types of Collateral to dispose of and in what order
and may dispose of Collateral in any order the Agent shall select in its sole
discretion, and the Borrower consents to the foregoing and waives all rights
of marshaling with respect to all Collateral. Nothing in this Agreement or
any Loan Document shall require the Agent to operate the business of any Loan
Party in connection with the disposition of any Collateral.
SECTION IX.
ASSIGNMENT AND PARTICIPATION
9.1 Assignment.
(a) Each Lender shall have the right to assign at any time any
portion of its Commitments under this Agreement and its interests in the risk
relating to any Loans in an amount equal to or greater than $10,000,000 (or
less than $10,000,000 with the Agent's prior written consent which will not
be unreasonably withheld) to other Lenders or to banks or financial
institutions reasonably acceptable to the Agent (each an "Assignee"),
provided that any Lender which proposes to assign less than all of its
Commitments must retain a Commitment of at least $10,000,000. Each Assignee
shall execute and deliver to the Agent and the Borrower an Assignment and
Acceptance Agreement substantially in the form of Exhibit I to this
Agreement, and the assigning Lender shall pay to the Agent, solely for the
account of the Agent, an assignment fee of $3,500. Upon the execution and
delivery of such Assignment and Acceptance Agreement and the Agent's receipt
of the assignment fee, (a) such Assignee shall, on the date and to the extent
provided in such Assignment and Acceptance Agreement, become a "Lender" party
to this Agreement and the other Loan Documents for all purposes of this
Agreement and the other Loan Documents and shall have all rights and
obligations of a "Lender" with Commitments as set forth in such Assignment
and Acceptance Agreement, and the assigning Lender shall, on the date and to
the extent provided in such Assignment and Acceptance Agreement, be released
from its obligations under this Agreement and under the other Loan Documents
to a corresponding extent (and, in the case of an assignment covering all of
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such transferor shall cease to be a party to this Agreement
but shall continue to be entitled to the benefits of Section 11.3 and to any
Fees accrued for its account under this Agreement and not yet paid); (b) the
assigning Lender, if it holds any Notes, shall promptly surrender such Notes
to the Agent for cancellation and delivery to the Borrower, provided that if
the assigning Lender has retained any Commitment, the Borrower shall, on the
request of the Agent, execute and deliver to the Agent for delivery to such
assigning Lender new Notes in the amount of the assigning Lender's retained
Commitment; (c) the Borrower shall issue to such Assignee Notes in the amount
of such Assignee's Commitments dated the Closing Date or such other date as
may be specified by such Assignee and otherwise completed in substantially
the form of Exhibits X-0, X-0, X-0, X-0, X-0X, xxx X-0X to this Agreement;
(d) this Agreement (including Schedule 1-B to this Agreement) shall be deemed
appropriately amended to reflect (i) the status of such Assignee as a party
to this Agreement and (ii) the status and rights of the Lenders under this
Agreement; and (e) the Borrower shall take such action as the Agent may
reasonably request to perfect any security interests or mortgages in favor of
the Lenders, including any Assignee which becomes a party to this Agreement.
49
(b) If the Assignee, or any Participant pursuant to Section 9.2
of this Agreement, is organized under the laws of a jurisdiction other than
the United States or any state thereof, such Assignee shall execute and
deliver to the Borrower, simultaneously with or prior to such Assignee's
execution and delivery of the Assignment and Acceptance Agreement described
above in Section 9.1(a), and such Participant shall execute and deliver to
the Lender granting the participation, a United States Internal Revenue
Service Form 4224 or Form 1001 (or any successor form), appropriately
completed, wherein such Assignee or Participant claims entitlement to
complete exemption from United States Federal Withholding Tax on all interest
payments under this Agreement and all Fees and other charges payable pursuant
to any of the Loan Documents. The Borrower shall not be required to pay any
increased amount to any Assignee or other Lender on account of taxes to the
extent such taxes would not have been payable if the Assignee or Participant
had furnished one of the Forms referenced in this Section 9.1(b) unless the
failure to furnish such a Form results from (i) a condition or event
affecting the Borrower or an act or failure to act of the Borrower or (ii)
the adoption of or change in any law, rule, regulation or guideline affecting
such Assignee or Participant occurring (x) after the date on which any such
Assignee executes and delivers the Assignment and Acceptance Agreement, or
(y) after the date such Assignee shall otherwise comply with the provisions
of Section 9.1(a), or (z) after the date a Participant is granted a
participation and Borrower would otherwise have been obligated to pay such
taxes under this Agreement.
9.2 Participations. Each Lender shall have the right to grant
participations to one or more banks or other financial institutions (each a
"Participant") in all or any part of any Loans owing to such Lender and the
Notes held by such Lender; provided that each participation shall be in the
minimum principal amount of $5,000,000. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents, provided that
the documents representing any such participation may provide that, except
with the consent of such Participant, such Lender will not consent to (a) the
reduction in or forgiveness of the stated principal of, rate of interest on,
or Commitment Fee, with respect to the portion of any Loan subject to such
participation, (b) the extension or postponement of any stated date fixed for
payment of principal or interest or Commitment Fee with respect to the
portion of any Loan subject to such participation, (c) the waiver or
reduction of any right to indemnification of such Lender under this
Agreement, or (d) except as otherwise permitted under this Agreement, the
release of any Collateral. Notwithstanding the foregoing, no participation
shall operate to increase the Total Commitment or the commitment available
under any Loan or otherwise alter the substantive terms of this Agreement.
In the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of such Notes for all purposes
under this Agreement and the Borrower and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall
have been declared or shall have become due and payable on the occurrence of
a Default or an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement or any Note to the same extent as if the amount of its
participating interest were owing directly to it under this Agreement or any
Note; provided that such right of setoff shall be subject to the obligation
of such Participant to share with the Lenders, and the Lenders agree to share
with such Participant, as provided in Section 2.8(e) of this Agreement. In
addition, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.9, 2.10, 2.11, 2.12, and 2.13 of this Agreement with
respect to its participation in the Loans outstanding from time to time;
provided that no Participant shall be entitled to receive any greater amount
than such Lender would have been entitled to receive with respect to the
amount transferred if no such transfer occurred.
9.3 Intercreditor Agreement. The Lenders acknowledge that U.S. Bank
has prior lending relationships with Lithia Financial Corporation, which will
continue after the Closing Date, secured by perfected first-priority liens
against a portion of the Collateral. Notwithstanding, to the extent
permitted by law, the date, manner or order of perfection of the security
interests and liens granted to the Lenders or U.S. Bank, and, to the extent
permitted by law, notwithstanding any provisions of the Uniform Commercial
Code of any state or any applicable law or decision, or the Loan Documents or
agreements entered into between U.S. Bank and the Lithia Financial
Corporation, or whether either the Lenders or U.S. Bank holds possession of
all or any part of the Collateral, the Lenders and U.S. Bank agree as follows:
50
The Lenders' security interests and liens in the following items
included in the Collateral shall be subordinate to the security interests and
liens granted by Lithia Financial Corporation to U.S. Bank, other than in
U.S. Bank's capacity as Agent or Lender under this Agreement, to secure the
obligations of Lithia Financial Corporation to U.S. Bank, other than in U.S.
Bank's capacity as Agent or Lender under this Agreement whether now owned or
existing or hereafter acquired or arising:
(a) the fixed assets owned by Lithia Financial
Corporation,
(b) the Vehicles owned by Lithia Financial Corporation
and leased to its customers in the ordinary course of its business,
(c) the fixed assets owned by a Loan Party to secure an
obligation of the Loan Party to Lithia Financial Corporation, which security
interest Lithia Financial Corporation assigned to U.S. Bank, other than in
U.S. Bank's capacity as Agent or Lender under this Agreement, and
(d) leases and chattel paper evidencing Lithia Financial
Corporation's lease of Vehicles or fixed assets to a Loan Party or other
Person.
SECTION X.
THE AGENT
10.1 Appointment of Agent; Powers and Immunities.
(a) Each Lender by this Agreement irrevocably appoints and
authorizes the Agent to act as its agent under this Agreement and under the
other Loan Documents and to execute the Loan Documents (other than this
Agreement) and all other instruments relating thereto. Each Lender
irrevocably authorizes the Agent to take such action on behalf of each of the
Lenders and to exercise all such powers as are expressly delegated to the
Agent under this Agreement and in the other Loan Documents and all related
documents, together with such other powers as are reasonably incidental
thereto. The obligations of the Agent under this Agreement are only those
expressly set forth in this Agreement. The Agent shall not have any
fiduciary relationship with any Lender and shall have no duties or
responsibilities except those expressly set forth in this Agreement.
(b) Neither the Agent nor any of its directors, officers,
employees or agents shall be responsible for any action taken or omitted to
be taken by any of them under this Agreement or in connection with this
Agreement, except for their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, neither the Agent nor any
of its Affiliates shall be responsible to the Lenders for, have any duty to
ascertain, inquire into or verify, or be deemed to have knowledge or notice
of: (i) any recitals, statements, representations or warranties made by any
Loan Party or any other Person whether contained in this Agreement or
otherwise; (ii) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the other Loan Documents or
any other document referred to or provided for in this Agreement or therein;
(iii) any failure by any Loan Party or any other Person to perform its
obligations under any of the Loan Documents; (iv) the satisfaction of any
conditions specified in Section 3 of this Agreement, other than receipt of
the documents, certificates and opinions specified in Section 3.1(a) of this
Agreement; (v) the existence or the possible existence of any Default or
Event of Default, (vi) the existence, value, collectibility or adequacy of
the Collateral or any part thereof or the validity, effectiveness, perfection
or relative priority of the liens and security interests of the Lenders
therein; or (vii) the filing, recording, refiling, continuing or re-recording
of any financing statement or other document or instrument evidencing or
relating to the security interests or liens of the Lenders in the Collateral.
(c) The Agent may employ agents, attorneys and other experts,
shall not be responsible to any Lender for the negligence or misconduct of
any such agents, attorneys or experts selected by it with reasonable care and
shall not be liable to any Lender for any action taken, omitted to be taken
or suffered in good faith by it in accordance with the advice of such agents,
attorneys and other experts. U.S. Bank in its separate capacity as a Lender
shall have the same rights and powers under the Loan Documents as any other
Lender and may exercise or refrain from exercising the same as though it were
not the Agent, and U.S. Bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Loan
Parties as if it were not the Agent.
51
10.2 Actions by Agent.
(a) The Agent shall be fully justified in failing or refusing
to take any action under this Agreement as it reasonably deems appropriate
unless it shall first have received such advice or concurrence of the Lenders
and shall be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any of the Loan Documents in accordance with a request of
the Lenders or the Required Lenders, as the case may be, and such request and
any action taken or failure to act pursuant to this Agreement shall be
binding on the Lenders and all holders of the Notes. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to the Loan Documents or applicable law. In absence of
instructions from the Lenders, the Agent shall have authority, in its sole
discretion, to take or not to take any action, and any such action or failure
to act shall be binding on the Lenders and on all holders of the Notes. Each
Lender and each holder of any Notes shall execute and delivery such
additional instruments, including powers of attorney in favor of the Agent,
as may be necessary or desirable to enable the Agent to exercise its powers
under this Agreement and under the Loan Documents.
(b) Whether or not a Default or Event of Default shall have
occurred, the Agent may from time to time exercise such rights of the Agent
and the Lenders under the Loan Documents as it determines may be necessary or
desirable to protect the Collateral and the interests of the Agent and the
Lenders therein and under the Loan Documents. In addition, the Agent may,
without the consent of the Lenders, release the Lender's security interest in
Collateral having an aggregate value equal to or less than $1,000,000 (as
valued by the Agent in its reasonable discretion) in any consecutive 12-month
period, which amount shall be in addition to the releases of security
interests with respect to sales which are otherwise permitted by this
Agreement.
(c) Neither the Agent nor any of its directors, officers,
employees or agents shall incur any liability by acting in reliance on any
notice, consent, certificate, statement or other writing (which may be a bank
wire, telex, facsimile or similar writing) believed by any of them to be
genuine or to be signed by the proper party or parties.
10.3 Indemnification. Without limiting the obligations of the
Borrower under this Agreement or under any other Loan Document, the Lenders
jointly and severally agree to indemnify the Agent (to the extent not
reimbursed by the Borrower), ratably in accordance with their Pro Rata Share
of their respective Loan Commitments (or if the Loan Commitments have
terminated, their Pro Rata Share of Total Loans Outstanding), jointly and
severally, for any and all liabilities, obligations, claims, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any documents contemplated by or
referred to in this Agreement or therein or the transactions contemplated by
this Agreement or thereby or the enforcement of any of the terms of this
Agreement or thereof or of any such other documents; provided, that no Lender
shall be liable for any of the foregoing to the extent they result from the
gross negligence or willful misconduct of the Agent. Without limiting the
foregoing, each Lender agrees to reimburse the Agent promptly on demand in
proportion to its share of its respective Commitments for any out-of-pocket
expenses, including attorney fees, including, without limitation at trial, on
appeal or review, or in a bankruptcy proceeding, incurred by the Agent in
connection with the negotiations, preparation, execution, delivery,
modification, administration or enforcement or preservation of any Loan
Document.
10.4 Reimbursement. Without limiting the provisions of Section 10.3,
the Lenders and the Agent by this Agreement agree that the Agent shall not be
obliged to make available to any Person any sum which the Agent is expecting
to receive for the account of that Person until the Agent has determined that
it has received that sum. The Agent may, however, disburse funds prior to
determining that the sums which the Agent expects to receive have been
finally and unconditionally paid to the Agent if the Agent wishes to do so.
If and to the extent that the Agent does disburse funds and it later becomes
apparent that the Agent did not then receive a payment in an amount equal to
the sum paid out, then any Person to whom the Agent made the funds available
shall, on demand from the Agent refund to the Agent the sum paid to that
Person. If the Agent in good faith reasonably concludes that the
distribution of any amount received by it in such capacity under this
52
Agreement or under the other Loan Documents might involve it in liability, it
may refrain from making the distribution until its right to make the
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any
amount received and distributed by the Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to the
Agent its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be determined
by such court.
10.5 Non-Reliance on Agent and Other Lenders. Each Lender represents
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Loan Parties and decision to enter into this Agreement and the other Loan
Documents and agrees that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own appraisals
and decisions in taking or not taking action under this Agreement or any
other Loan Document. The Agent shall not be required to keep informed as to
the performance or observance by the Loan Parties thereof, the other Loan
Documents or any other document referred to or provided for in this Agreement
or therein or by any other Person of any other agreement or to make inquiry
of, or to inspect the properties or books of, any Person. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent under this Agreement, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning any Person which may come into the possession of
the Agent or any of its affiliates. Unless any Lender shall, promptly after
obtaining knowledge thereof, object to any action taken by the Agent under
this Agreement (other than actions to which the provisions of Section 11.7(b)
are applicable and other than actions which constitute gross negligence or
willful misconduct by the Agent), such Lender shall conclusively be presumed
to have approved the same.
10.6 Resignation or Removal of Agent. The Agent may resign at any
time by giving 30 days prior written notice thereof to the Lenders and the
Borrower. Upon 30 days prior written notice from all Lenders except Agent
requesting that Agent resign, Agent will resign. In the event of
resignation, Agent may require that any successor Agent replace Agent as the
Swingline Lender. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or
within 30 days after Agent's resignation if requested by all Lenders except
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent. Upon the acceptance of any appointment as Agent under this
Agreement by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation, the provisions of this Agreement shall continue in effect for
its benefit with respect to any actions taken or omitted to be taken by it
while it was acting as Agent.
SECTION XI.
MISCELLANEOUS
11.1 Notices. Unless otherwise specified in this Agreement, all
notices under this Agreement to any party to this Agreement shall be in
writing and shall be deemed to have been given when delivered, if hand
delivered, and shall be deemed to have been given: when sent, if sent by
confirmed electronic facsimile transmission; when sent, if sent by telex
answer back received; on the first Business Day after being delivery to any
overnight delivery service for guaranteed next business day delivery; or
three days after being mailed, if sent by certified or registered mail,
return receipt requested, postage pre-paid; in each case addressed to such
party at its address indicated below:
If to the Borrower, at
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. XxXxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
53
with a copy to:
Xxxxxx, Pepper & Shefelman
000 XX Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Agent or U.S. Bank, at
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
U.S. Bank National Association
Ninth Floor
0000 Xxxxx Xxxxxx, XXX000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any other Lender, to its address set forth on Schedule 1-B
attached to this Agreement; or at any other address specified by such party
in writing.
11.2 Expenses. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Loan Parties jointly and severally
promise to reimburse (a) the Agent, and the Initial Lenders for all
reasonable out-of-pocket fees and disbursements (including all Attorneys'
Fees, appraisal and collateral examination fees, due diligence investigation
expenses and syndication expenses) incurred or expended in connection with
the negotiation, preparation, execution, delivery, filing or recording, or
the administration or interpretation of this Agreement and the other Loan
Documents, or the consummation of the transactions contemplated by this
Agreement, or any amendment, modification, approval, consent or waiver of
this Agreement or thereof, and (b) the Agent and all of the Lenders for all
reasonable out-of-pocket costs, fees and disbursements (including all
Attorneys' Fees, appraisal and collateral examination fees, and collection
expenses) incurred or expended in connection with the enforcement of any
Obligations, the exercise of any remedies under any Loan Documents or with
respect to the Collateral or the satisfaction of any Indebtedness of the
Borrower under this Agreement or thereunder, or in connection with any
litigation, proceeding or dispute in any way related to the credit under this
Agreement. The Borrower will pay any taxes (including any interest and
penalties in respect thereof), other than any Lender's federal and state
income taxes, payable on or with respect to the transactions contemplated by
the Loan Documents (the Borrower by this Agreement agreeing to indemnify the
Agent and the Lenders with respect thereto). For purposes of this Agreement
and the other Loan Documents, "Attorneys' Fees" shall mean the reasonable
fees and disbursements of attorneys (including all paralegals and other staff
54
employed by such attorneys and the reasonably allocated costs of internal
counsel), whether incurred at trial, on appeal or review, in a bankruptcy
proceeding or in any other way relating to Obligations, the Loan Documents
and the transactions contemplated by this Agreement, including, without
limitation as provided in Sections 11.2 and 11.3 of this Agreement.
11.3 Indemnification. The Loan Parties agrees to indemnify and hold
harmless the Agent and the Lenders, as well as their respective shareholders,
directors, offices, agents, attorneys, subsidiaries and affiliates, from and
against all damages, losses, settlement payments, obligations, liabilities,
claims, suits, penalties, assessments, citations, directives, demands,
judgments, actions or causes of action, whether statutorily created or under
the common law, all reasonable costs and expenses (including, without
limitation, Attorneys' Fees and reasonable fees and disbursements of
engineers and consultants) and all other liabilities whatsoever (including,
without limitation, liabilities under Environmental Laws) which shall at any
time or times be incurred, suffered, sustained or required to be paid by any
such indemnified Person (except any of the foregoing which result from the
gross negligence or willful misconduct of the indemnified Person) on account
of or in relation to or any way in connection with any of the arrangements or
transactions contemplated by, associated with or ancillary to this Agreement,
the other Loan Documents or any other documents executed or delivered in
connection herewith or therewith, all as the same may be amended from time to
time, whether or not all or part of the transactions contemplated by,
associated with or ancillary to this Agreement, any of the other Loan
Documents or any such other documents are ultimately consummated. In any
investigation, proceeding or litigation, or the preparation therefor, the
Lenders shall select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and
expenses of such counsel. In the event of the commencement of any such
proceeding or litigation, the Borrower shall be entitled to participate in
such proceeding or litigation with counsel of its choice at its own expense,
provided that such counsel shall be reasonably satisfactory to the Agent.
The Borrower authorizes the Agent and the Lenders to charge any deposit
account or Note Record which it may maintain with any of them for any of the
foregoing. The covenants of this Section 11.3 shall survive payment or
satisfaction of payment of all amounts owing with respect to the Notes, any
other Loan Document or any other Obligation.
11.4 Survival of Covenants, Etc. Unless otherwise stated in this
Agreement, all covenants, agreements, representations and warranties made in
this Agreement, in the other Loan Documents or in any documents or other
papers delivered by or on behalf of any Loan Party pursuant to this Agreement
shall be deemed to have been relied upon by the Agent and the Lenders,
notwithstanding any investigation thereto or hereafter made by any of them,
and shall survive the making by the Lenders of the Loans as in this Agreement
contemplated, and shall continue in full force and effect so long as any
Obligation remains outstanding and unpaid or any Lender has any obligation to
make any Loans under this Agreement. All statements contained in any
certificate or other writing delivered by or on behalf of the Borrower
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement shall constitute representations and
warranties by the Borrower under this Agreement.
11.5 Set-Off. Regardless of the adequacy of any Collateral or other
means of obtaining repayment of the Obligations, but subject to the
provisions of Section 2.8(d) of this Agreement, any deposits, balances or
other sums credited by or due from the head office of any Lender or any of
its branch offices to the Borrower may, at any time and from time to time
after the occurrence of a Default under this Agreement, upon notice to the
Agent but without notice to the Borrower or compliance with any other
condition precedent now or hereafter imposed by statute, rule of law, or
otherwise (all of which are by this Agreement expressly waived) be set off,
appropriated, and applied by such Lender against any and all Obligations of
the Borrower in such manner as the head office of such Lender or any of its
branch offices in its sole discretion may determine, and the Borrower by this
Agreement grants each such Lender a continuing security interest in such
deposits, balances or other sums for the payment and performance of all such
Obligations.
11.6 No Waivers. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege under this Agreement, under the
Notes or under any other Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver shall extend to or affect any Obligation not expressly waived or
impair any right consequent thereon. No course of dealing or omission on the
part of the Agent or the Lenders in exercising any right shall operate as a
55
waiver thereof or otherwise be prejudicial to this Agreement. No notice to
or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances. The rights and remedies
in this Agreement and in the Notes and the other Loan Documents are
cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
11.7 Amendments, Waivers, Etc.
(a) Except as otherwise set forth in this Agreement with
respect to actions by the Agent or as otherwise set forth in any Loan
Document, neither this Agreement, the Notes nor any other Loan Document nor
any provision of this Agreement, the Notes, or the Loan Documents may be
amended, waived, discharged or terminated except by a written instrument
signed by the Agent on behalf of the Lenders or by the Required Lenders, and
in the case of amendments, by the Borrower.
(b) (i) Except where this Agreement or any of the other Loan
Documents authorizes or permits the Agent to act alone and except as
otherwise expressly provided in this Section 11.7(b), any action to be taken
(including the giving of notice) by the Lenders may be taken, and any consent
or approval required or permitted by this Agreement or any other Loan
Document to be given by the Lenders may be given, and any term of this
Agreement, any other Loan Document or any other instrument, document or
agreement related to this Agreement or the other Loan Documents or mentioned
therein may be amended, and the performance or observance by the Borrower or
any other Person of any of the terms thereof and any Default or Event of
Default (as defined in any of the above-referenced documents or instruments)
may be waived (either generally or in a particular instance and either
retroactively or prospectively), in each case only with the written consent
of the Required Lenders; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Required Lenders or all the Lenders, as the case may be, affect the rights,
duties or liabilities of the Agent under this Agreement or any other Loan
Document, (b) any fee or other amount payable solely to the Agent may be
amended with the consent of Borrower and the Agent, (c) no amendment, waiver
or consent, unless in writing and signed by the Swingline Lender in addition
to the Required Lenders or all Lenders as the case may be, shall affect the
rights, duties or liabilities of the Swingline Lender under this Agreement or
any other Loan Document, and (d) no amendment, waiver or consent, unless in
writing and signed by U.S. Bank in addition to the Required Lenders or all
Lenders, as the case may be, shall affect the rights, duties or liabilities
of U.S. Bank under this Agreement or any other Loan Document with respect to
the Total Demonstrator Vehicle Commitment; provided, further, that the
Swingline Lender may increase the Swingline Commitment (not to exceed
$10,000,000) and the Fee associated with such Commitment without the consent
of any other Lender, and U.S. Bank may increase the Fee associated with the
Total Demonstrator Vehicle Commitment without the consent of any other Lender.
(ii) Notwithstanding the foregoing, no amendment, waiver
or consent shall do any of the following unless in writing and signed by ALL
of the Lenders:
(A) increase the amount of or extend the Maturity
Date or the termination date of any Commitment of any Lender, or increase the
Total New Vehicle Commitment, Total Program and Used Vehicle Commitment, the
Total Demonstrator Vehicle Commitment, or the Acquisition Loan Commitment;
(B) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to any Lender under this Agreement or under any
other Loan Document (except as they relate to Swingline Loans or Demonstrator
Vehicle Loans, which shall only require the consent of the Lender(s) having a
Swingline Loan Commitment or a Demonstrator Vehicle Loan Commitment,
respectively);
(C) reduce the principal of, or the rate of
interest on any Obligations, including any Loan, or any fees or other amounts
payable under this Agreement or under any other Loan Document (except as they
relate to Swingline Loans or Demonstrator Vehicle Loans, which shall only
require the consent of the Lender(s) having a Swingline Loan Commitment or a
Demonstrator Vehicle Loan Commitment, respectively);
(D) change the definition of Required Banks which
are required to take any action under this Agreement;
56
(E) amend this Section 11.7(b), or any provision in
this Agreement which requires consent on other action by all Lenders;
(F) release all or a substantial part of the
Collateral for the Obligations; or
(G) release any Guarantor.
11.8 Binding Effect of Agreement. This Agreement shall be binding
upon and inure to the benefit of the Loan Parties, the Agent, the Lenders and
their respective successors and assigns; provided that the Loan Parties may
not assign or transfer its rights or obligations under this Agreement.
11.9 Captions; Counterparts. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions of
this Agreement. 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. In proving this Agreement it
shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
11.10 Attorney-in-Fact. Each Loan Party irrevocably appoints the Agent
as its attorney-in-fact to execute, deliver and file from time to time in the
name of any Loan Party or the Lenders, any trust receipts, security
agreements, financing statements, continuation statements and amendments
thereto and any and all other documents and instruments that the Lenders may
require in connection with evidencing and securing the Obligations under this
Agreement and implementing the provisions of this Agreement, which
appointment shall be deemed to be a power coupled with an interest.
11.11 Entire Agreement, Etc. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated by
this Agreement and replace and supersede the Commitment Letter, dated
August 27, 1997, signed by the Borrower and U.S. Bank and any other agreement
between the Borrower and U.S. Bank specifically providing the Borrower with a
line of credit from U.S. Bank with respect to the financing of the Loan
Parties' inventory.
11.12 Waiver of Jury Trial. EACH LOAN PARTY, THE AGENT AND THE LENDERS
BY THIS AGREEMENT WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS UNDER
THIS AGREEMENT OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH LOAN PARTY BY THIS AGREEMENT
WAIVE ANY RIGHT THEY 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 OR THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE AGENT OR LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGE THAT THE AGENT AND THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, EACH LOAN
PARTY'S WAIVERS AND CERTIFICATIONS CONTAINED IN THIS AGREEMENT.
11.13 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 OREGON (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OF LAW OR CHOICE OF LAW, 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 SUIT TO ENFORCE THE RIGHTS OF THE LENDERS UNDER THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS. EACH LOAN PARTY IRREVOCABLY WAIVES ANY OBJECTION
WHICH THEY 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
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH ACTION THAT
SUCH ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
57
11.14 Payments Set Aside. 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.
11.15 Credit Agreement Controls. If there are any conflicts or
inconsistencies among this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall prevail and control.
11.16 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.
11.17 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.
11.18 Confidentiality. Agent and each Lender agree to take normal and
reasonable precautions and exercise due care to maintain the confidentiality
of all information identified as "confidential" or "secret" by Borrower and
provided to it by Borrower, or by the Agent on Borrower's behalf, under this
Agreement or any other Loan Document, and it shall not use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with Borrower; except to the extent such
information (a) was or becomes generally available to the public other than
as a result of disclosure by Agent or the Lender, or (b) was or becomes
available on a non-confidential basis from a source other than Agent or
Borrower; provided, however, that Agent and any Lender may disclose such
information (i) at the request or pursuant to any requirement of any
governmental body or regulatory or self-regulatory body to which the Agent or
Lender is subject or in connection with an examination of such Agent or
Lender by any such authority; (ii) pursuant to subpoena or other court
process; (iii) when required to do so in accordance with the provisions of
any applicable law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent, any Lender or their
respective Affiliates may be party; (v) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (vi) to such Agent or Lender's independent auditors and other
professional advisors provided that such Person agrees to keep such
information confidential to the same extent required of the Lenders
hereunder; (vii) to any Participant or Assignee, actual or potential,
provided that such Person agrees to keep such information confidential to the
same extent required of the Lenders hereunder; (viii) as to Agent or any
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is a
party or is deemed a party with such Lender or such Affiliate; and (ix) to
its Affiliates provided that such Person agrees to keep such information
confidential to the same extent required of the Lenders hereunder; provided,
that with respect to disclosures under clauses (ii), (iv), and (v), Agent and
such Lender shall use commercially reasonable efforts to notify the Borrower
(unless such notification is prohibited by any applicable law) of the
proposed disclosure before such disclosure is made to reasonably afford the
Borrower the opportunity to seek to prevent such disclosure. Agent and each
Lender acknowledge that Borrower has designated its projections, budgets and
pro forma financial statements as "confidential."
58
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date set forth in the preamble to this Agreement.
BORROWER:
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and
Chief Executive Officer
AGENT:
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
LENDERS:
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
U.S. BANK (for purposes of Section 9.3):
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
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
59
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
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
60
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
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
61
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
LITHIA JEF, INC.
By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx X. XxXxxx
Title: President
62
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
63
SCHEDULE 1-A
AFFILIATES AND SUBSIDIARIES
LITHIA HOLDING COMPANY, L.L.C.
LITHIA TLM, L.L.C.
Medford, OR
LITHIA'S GRANTS PASS AUTO CENTER, L.L.C.
Grants Pass, OR
LITHIA DODGE, L.L.C.
Medford, OR
LITHIA CHRYSLER PLYMOUTH JEEP EAGLE, INC.
Medford, OR
LITHIA MTLM, INC.
Medford, OR
LGPAC, INC.
Grants Pass, OR
LITHIA DM, INC.
Medford, OR
SATURN OF SOUTHWEST OREGON, INC.
Medford, OR
LITHIA HPI, INC.
Medford, OR
LITHIA DE, INC.
Eugene, OR
LITHIA DC, INC.
Concord, CA
LITHIA FN, INC.
Napa, CA
LITHIA TKV, INC.
Vacaville, CA
LITHIA FVHC, INC.
Concord, CA
LITHIA VWC, INC.
Concord, CA
LITHIA NB, INC.
Bakersfield, CA
LITHIA BB, INC.
Bakersfield, CA
LITHIA MB, INC.
Bakersfield, CA
LITHIA XXX, INC.
Bakersfield, CA
LITHIA RENTALS, INC.
Medford, OR
64
LITHIA AUTO SERVICES, INC.
Medford, OR
LITHIA SALMIR, INC.
Reno, NV
LITHIA BNM, INC.
Medford, OR
LITHIA MMF, INC.
Fresno, CA
LITHIA FMF, INC.
Fresno, CA
LITHIA JEF, INC.
Fresno, CA
LITHIA NF, INC.
Fresno, CA
LITHIA FINANCIAL CORPORATION
Medford, OR
65
SCHEDULE 1-B
COMMITMENTS OF THE LENDERS
Program and Demonstrator Acquisition
New Vehicle Swingline Used Vehicle Vehicle Loan
Commitment Commitment Commitment Commitment Commitment
U.S. Bank National 100% 100% 100% 100% 100%
Association
000 XX Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Total 100% 100% 100% 100% 100%
66
EXHIBIT A-1
FORM OF
NEW VEHICLE NOTE
$80,000,000 December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000, or at any such other place as the Agent may specify from time to
time, in lawful money of the United States of America:
(a) on the Maturity Date, the principal amount of EIGHTY
MILLION DOLLARS ($80,000,000) or, if less, the aggregate unpaid principal
amount of New Vehicle Loans advanced by the Payee to the Borrower pursuant to
the Credit Agreement, dated as of December 22, 1997, as amended or
supplemented from time to time (the "Credit Agreement"), by and among the
Borrower, the Agent and the Lenders (as defined therein); and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the New Vehicle Notes referred to
therein. The Payee and any holder thereof is entitled to the benefits and
subject to the conditions of the Credit Agreement and may enforce the
agreements of the Borrower contained therein, and any holder thereof may
exercise the respective remedies provided for by this Agreement or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. This Note is secured by the Security Documents described in the
Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
The Lender is hereby authorized to record (i) the date and amount of
each Loan made by it, (ii) the interest rate option selected, (iii) the
interest rate, (iv) the Interest Period applicable to LIBOR Loans and (v) the
date and amount of each continuation or conversion of, and each payment or
prepayment of principal of, any Loans, on its Note Record. No failure so to
record or any error in so recording shall affect the obligation of the
Borrower to repay the Lender's Loans, together with interest thereon, as
provided in the Credit Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or Person primarily or secondarily liable.
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.7 of the Credit Agreement.
Transfer, sale or assignment of any rights under this Note is subject to the
provision of Sections 9.1 and 9.2 of the Credit Agreement.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
67
Each Loan Party acknowledges receipt of a copy of this Agreement.
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, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
68
EXHIBIT A-2
FORM OF
SWINGLINE NOTE
$5,000,000 December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000, or at any such other place as the Agent may specify from time to
time, in lawful money of the United States of America:
(a) on the Maturity Date, the principal amount of FIVE MILLION
DOLLARS ($5,000,000) or, if less, the aggregate unpaid principal amount of
Swingline Loans advanced by the Payee to the Borrower pursuant to the Credit
Agreement, dated as of December 22, 1997, as amended or supplemented from
time to time (the "Credit Agreement"), by and among the Borrower, the Agent
and the Lenders (as defined therein); and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the Swingline Notes referred to
therein. The Payee and any holder thereof is entitled to the benefits and
subject to the conditions of the Credit Agreement and may enforce the
agreements of the Borrower contained therein, and any holder thereof may
exercise the respective remedies provided for by this Agreement or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. This Note is secured by the Security Documents described in the
Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
The Lender is hereby authorized to record (i) the date and amount of
each Loan made by it, (ii) the interest rate, and (iii) the date and amount
of each payment or prepayment of principal of, any Loans, on its Note
Record. No failure so to record or any error in so recording shall affect
the obligation of the Borrower to repay the Lender's Loans, together with
interest thereon, as provided in the Credit Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or Person primarily or secondarily liable.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.7 of the Credit Agreement.
Transfer, sale or assignment of any rights under this Note is subject to the
provision of Sections 9.1 and 9.2 of the Credit Agreement.
69
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.
Each Loan Party acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
70
EXHIBIT A-3
FORM OF
PROGRAM AND USED VEHICLE NOTE
$30,000,000 December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000, or at any such other place as the Agent may specify from time to
time, in lawful money of the United States of America:
(a) on the Maturity Date, the principal amount of THIRTY
MILLION DOLLARS ($30,000,000) or, if less, the aggregate unpaid principal
amount of Program and Used Vehicle Loans advanced by the Payee to the
Borrower pursuant to the Credit Agreement, dated as of December 22, 1997, as
amended or supplemented from time to time (the "Credit Agreement"), by and
among the Borrower, the Agent and the Lenders (as defined therein); and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the Program and Used Vehicle
Notes referred to therein. The Payee and any holder thereof is entitled to
the benefits and subject to the conditions of the Credit Agreement and may
enforce the agreements of the Borrower contained therein, and any holder
thereof may exercise the respective remedies provided for by this Agreement
or otherwise available in respect thereof, all in accordance with the
respective terms thereof. This Note is secured by the Security Documents
described in the Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
The Lender is hereby authorized to record (i) the date and amount of
each Loan made by it, (ii) the interest rate option selected, (iii) the
interest rate, (iv) the Interest Period applicable to LIBOR Loans and (v) the
date and amount of each continuation or conversion of, and each payment or
prepayment of principal of, any Loans, on its Note Record. No failure so to
record or any error in so recording shall affect the obligation of the
Borrower to repay the Lender's Loans, together with interest thereon, as
provided in the Credit Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or Person primarily or secondarily liable.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.7 of the Credit Agreement.
Transfer, sale or assignment of any rights under this Note is subject to the
provision of Sections 9.1 and 9.2 of the Credit Agreement.
71
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.
Each Loan Party acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
72
EXHIBIT A-4
FORM OF
DEMONSTRATOR VEHICLE NOTE
$750,000 December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000, or at any such other place as the Agent may specify from time to
time, in lawful money of the United States of America:
(a) on the Maturity Date, the principal amount of SEVEN HUNDRED
FIFTY THOUSAND ($750,000) or, if less, the aggregate unpaid principal amount
of Demonstrator Vehicle Loans advanced by the Payee to the Borrower pursuant
to the Credit Agreement, dated as of December 22, 1997, as amended or
supplemented from time to time (the "Credit Agreement"), by and among the
Borrower, the Agent and the Lenders (as defined therein); and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the Demonstrator Vehicle Notes
referred to therein. The Payee and any holder thereof is entitled to the
benefits and subject to the conditions of the Credit Agreement and may
enforce the agreements of the Borrower contained therein, and any holder
thereof may exercise the respective remedies provided for by this Agreement
or otherwise available in respect thereof, all in accordance with the
respective terms thereof. This Note is secured by the Security Documents
described in the Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
The Lender is hereby authorized to record (i) the date and amount of
each Loan made by it, (ii) the interest rate, and (iii) the date and amount
of each payment or prepayment of principal of, any Loans, on its Note
Record. No failure so to record or any error in so recording shall affect
the obligation of the Borrower to repay the Lender's Loans, together with
interest thereon, as provided in the Credit Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or Person primarily or secondarily liable.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.7 of the Credit Agreement.
Transfer, sale or assignment of any rights under this Note is subject to the
provision of Sections 9.1 and 9.2 of the Credit Agreement.
73
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.
Each Loan Party acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
74
EXHIBIT A-5A
FORM OF
ACQUISITION REVOLVING NOTE
$30,000,000 December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000, or at any such other place as the Agent may specify from time to
time, in lawful money of the United States of America:
(a) on the Maturity Date, the principal amount of THIRTY
MILLION DOLLARS ($30,000,000) or, if less, the aggregate unpaid principal
amount of Acquisition Revolving Loans advanced by the Payee to the Borrower
pursuant to the Credit Agreement, dated as of December 22, 1997, as amended
or supplemented from time to time (the "Credit Agreement"), by and among the
Borrower, the Agent and the Lenders (as defined therein); and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the Acquisition Revolving Notes
referred to therein. The Payee and any holder thereof is entitled to the
benefits and subject to the conditions of the Credit Agreement and may
enforce the agreements of the Borrower contained therein, and any holder
thereof may exercise the respective remedies provided for by this Agreement
or otherwise available in respect thereof, all in accordance with the
respective terms thereof. This Note is secured by the Security Documents
described in the Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
The Lender is hereby authorized to record (i) the date and amount of
each Loan made by it, (ii) the interest rate option selected, (iii) the
interest rate, (iv) the Interest Period applicable to LIBOR Loans and (v) the
date and amount of each continuation or conversion of, and each payment or
prepayment of principal of, any Loans, on its Note Record. No failure so to
record or any error in so recording shall affect the obligation of the
Borrower to repay the Lender's Loans, together with interest thereon, as
provided in the Credit Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or Person primarily or secondarily liable.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 11.7 of the Credit Agreement.
Transfer, sale or assignment of any rights under this Note is subject to the
provision of Sections 9.1 and 9.2 of the Credit Agreement.
75
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.
Each Loan Party acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
76
EXHIBIT A-5B
FORM OF
ACQUISITION TERM NOTE
[$________________] December 22, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [LENDER] ("Payee") at the
office of U.S. Bank National Association, 00000 XX 0xx, Xxxxx 000, Xxxxxxxx,
XX 00000.
(a) the principal amount of [_______________________________
DOLLARS ($_______________)] in installments as provided in the Credit
Agreement, dated as of December 22, 1997, as amended or supplemented from
time to time (the "Credit Agreement"), by and among the Borrower, the Agent
and the Lenders (as defined therein), with the unpaid balance thereof due and
payable in full on the date five years from the Maturity Date; and
(b) interest on the principal balance thereof from time to time
outstanding from the date thereof through and including the date on which
such principal amount is paid in full, at the times and at the rates provided
in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the
terms of the Credit Agreement and is one of the Acquisition Term Notes
referred to therein. The Payee and any holder thereof is entitled to the
benefits and subject to the conditions of the Credit Agreement and may
enforce the agreements of the Borrower contained therein, and any holder
thereof may exercise the respective remedies provided for by this Agreement
or otherwise available in respect thereof, all in accordance with the
respective terms thereof. This Note is secured by the Security Documents
described in the Credit Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented by this Agreement waive presentment, demand, notice,
protest and all other demands and notice in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
This Note shall be deemed to take effect under the laws of the state of
Oregon and for all purposes shall be construed in accordance with such laws
(without regard to conflicts of laws or choice of laws, rules or principles).
77
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.
77
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by
its duly authorized officer as of the day and year first above written.
LITHIA MOTORS, INC.
By: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Chairman of the Board and Chief Executive Officer
78
