EXHIBIT 10.3
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT dated as of July7, 1998 (this
"Amendment"), amends that certain Credit Agreement dated as of December 22,
1997, as amended by a First Amendment to Credit Agreement dated as of April 9,
1998, and as further amended by a Second Amendment to Credit Agreement dated as
of April29, 1998 (as so amended, the "Credit Agreement") entered in to 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 who are from time to time parties
thereto (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 who are from time to time
parties thereto (together with U.S. Bank, the "Lenders"); and U.S. Bank National
Association, as agent for the Lenders (in such capacity, the "Agent") and is
entered into by and among the Borrower, the other Loan Parties, the Lenders and
the Agent.
RECITALS
1. The Borrower desires to amend certain provisions of the Credit
Agreement and has requested the Agent and the Lenders to waive certain Events of
Default.
2. The Agent and the Lenders have agreed to make such amendments and
waive such Events of Default, subject to the terms and conditions set forth in
this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as follows:
2.1 Definitions.
(a) The definitions of "Loan Documents", "Maturity Date", "Required
Lenders","Swingline Commitment", "Total New Vehicle Commitment", and "Total
Program and Used Vehicle Commitment" contained in Section 1.1 of the Credit
Agreement are amended to read in their entireties as follows:
Loan Documents. This Agreement, as supplemented by Supplement No.
1 hereto, the Notes, the Security Documents, including without
limitation the Security Agreement, the Guaranty, and the UCC Financing
Statements, and the Letter of Credit-Related Documents, together with
any agreements, certificates, instruments or documents executed and
delivered pursuant to or in connection with any of the foregoing.
Maturity Date. December1, 1998.
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,
excluding outstanding Swingline Overdraft Loans, to the Lenders on the
basis of their respective Pro Rata Share of the Total New Vehicle Loan
Outstandings), plus all outstanding Letter of Credit Obligations.
Swingline Commitment. The commitment of the Swingline Lender, as
in effect from time to time, to advance Swingline Loans, which on and
after the Third Amendment Date shall be $10,000,000 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.^
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 on and after the Third Amendment Date shall be
$140,000,000 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,
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based on the amounts listed on Schedule1-B to this Agreement, as
modified from time to time pursuant to Section IX of this Agreement.
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 Program and Used Vehicle Loans, which on and after
the Third Amendment Date shall be $35,000,000 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.
(b) Section 1.1 of the Credit Agreement is further amended by adding
the definitions of "SupplementNo.1" and "Third Amendment Date" thereto in
correct alphabetical order:
Supplement No. 1. Supplement No.1 in the form attached to the
Third Amendment.
Third Amendment Date. The effective date of that certain Third
Amendment to Credit Agreement dated as of July7, 1998, by and among
the Loan Parties, the Lenders and the Agent.
(c) Section1.2 of the Credit Agreement is amended by adding clause(i)
as follows:
(i) Definitions contained in SupplementNo. 1 hereto are hereby
incorporated as part of Section1.1 hereof.
2.2 New Vehicle Loans. Section 2.1(a)(i)(A) is amended to read in its
entirety as follows:
(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;
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2.3 Swingline Loans. Section2.1(b)(i)(B) of the Credit Agreement is
amended to read in its entirety as follows:
(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
2.4 Conditions to Swingline Loans. Section2.1(b)(ii) of the Credit
Agreement is amended to ready in its entirety as follows:
(ii) Each request for a Swingline Loan under this Agreement
(including any presentation of a draft or other request for payment by
a Seller pursuant to Section 2.3(a)(i)) 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.
2.5 Notice of Borrowing or Conversion of Loans. Sections 2.3(a)(i) and
2.3(b) are amended to read in their entireties as follows:
(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 New 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 New Vehicle 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 New Vehicle
to the Loan Parties. Neither Borrower nor any Loan Party shall
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arrange for the payment of Vehicles other than New Vehicles by
the presentation of drafts or draft authorizations.
(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 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. A written Notice of Borrowing or Conversion with respect to an
Acquisition Revolving Loan shall indicate whether the proceeds thereof
will be used to fund an Acquisition or will be used for other
purposes. 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.
2.6 Acquisition Loans.
(a) Sections2.1(e)(i)(A) and (B) of the Credit Agreement are
amended to read in their entirety as follows:
(A) After giving effect to all requested Acquisition Loans
and all requested Letters of Credit, the Total Acquisition Loan
Outstandings plus all outstanding Letter of Credit
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Obligations 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 plus such Lender's Pro Rata
Share of all outstanding Letter of Credit Obligations shall not
at any time (after giving effect to all requested Acquisition
Loans and all requested Letters of Credit) exceed such Lender's
Acquisition Loan Commitment.
(b) The opening paragraph of Section2.1(e)(ii)of the Credit
Agreement is amended to read in its entirety as follows:
(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 Acquisition Revolving Loans used to finance
Acquisitions permitted by this Agreement 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.
2.7 Funding of Loans. The opening paragraph of Section 2.4(b) of the
Credit Agreement is amended to read in its entirety as follows:
(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 (i) one Business Day prior
to the Maturity Date, (ii) on the date of occurrence of any Default or
Event of Default, including, without limitation, the failure to make
any prepayments required by Section2.7(b); provided, that in the case
of a prepayment required by Section2.7(b)(i), demand, unless sooner
made, shall be deemed given upon the occurrence of an Event of Default
thereunder, or (iii)on the exercise of any remedies under Section 8.2
of this Agreement, as the case may be, in which case any such demand
may be in an amount less than $500,000. 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
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unconditionally agrees that immediately on receipt of such notice to
pay the Swingline Lender such Lender's Pro Rata Share of such Loan.
2.8 Funding of Loans. Section 2.4(b)(iii) of the Credit Agreement is
amended to read in its entirety as follows:
(iii) Each Lender shall comply with its obligation under this
Section 2.4(b) 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), with appropriate changes in details as may be required by
Agent to reflect the terms of this Section 2.4(b). The repayment of
any Swingline Loan pursuant hereto 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)
(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.
2.9 Prepayments. Sections2.7(b) and 2.7(c) of the Credit Agreement are
amended as follows:
(a) Section 2.7(b) is amended to read in its entirety as follows:
(b) Prepayments. If at any time and for any reason:
(i) the aggregate of the Total New Vehicle Loan
Outstandings plus the Swingline Loan Outstandings shall
exceed the Total New Vehicle Commitment;
(ii) 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
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(whether reflected on a Borrowing Base Certificate,
determined by a Collateral inspection, or otherwise);
(iii) the aggregate of the Swingline Loan Outstandings
shall exceed the Swingline Commitment;
(iv) 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);
(v) the aggregate of the Total Demonstrator Vehicle
Loan Outstandings shall exceed the Total Demonstrator
Vehicle Commitment; or
(vi) the aggregate of the Total Acquisition Loan
Outstandings plus all outstanding Letter of Credit
Obligations 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),
then upon the occurrence of any of the foregoing, 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, except as otherwise provided by Section2.4 of
Supplement No.1 hereto with respect to any excess of the type
specified in clause(i)above.
(b) Section 2.7(c) is amended by inserting between the existing
first and second sentences thereof, the following new sentence:
Any failure to make the foregoing required payment within
the specified five Business Days shall not constitute an Event of
Default unless the audit conducted by the Agent that discloses
such failure indicates that the total number of Vehicles with
respect to which the Borrower and any applicable Loan Parties on
a combined basis failed to make the required payments within the
specified time period exceeded two percent (2%) of the total
number of Vehicles inspected during such audit of all Loan
Parties by the Agent.
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2.10 Method and Allocation of Payments. Section 2.8(d) of the Credit
Agreement is amended to read in its entirety as follows:
(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 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 Priority Swingline
Overdraft Loans; (v) fifth, to the payment of 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; (vi) sixth, to
the payment of any other Obligations payable by the Borrower; and
(vii) any remaining funds shall be paid to whoever shall be entitled
thereto or as a court of competent jurisdiction shall direct.
2.11 Conditions Precedent to All Loans. The opening paragraph of
Section 3.2 of the Credit Agreement is amended to read in its entirety as
follows:
Conditions Precedent to All Loans. The obligation of the Issuing
Bank to issue any Letter of Credit and the obligation of the Lenders
to make any Loan, including the initial Loans, or continue or convert
a Loan are further subject to the following conditions:
2.12 Representations and Warranties. Section IV of the Credit
Agreement is amended as follows:
(a) The opening paragraph of Section IV of the Credit Agreement
is amended to read in its entirety as follows:
In order to induce the Agent and the Lenders to enter into
this Agreement and to make Loans under this Agreement and to
induce the Issuing Bank to issue Letters of Credit 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
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in sections corresponding to the lettered and numbered sections
contained in this Section IV):
(b) Section IV is further amended by adding new Section 4.25 as
follows:
4.25 Year 2000. The Borrower has reviewed and assessed its
business operations and computer systems and applications and
those of the Loan Parties to address the "year 2000 problem"
(that is, that computer applications and equipment used by the
Borrower and the Loan Parties directly, or indirectly through
third parties, may be unable to properly perform date-sensitive
functions before, during and after January 1, 2000). Based on
that review and assessment, the Borrower reasonably believes that
the year 2000 problem will not result in a material adverse
change in the business condition (financial or otherwise),
operations and prospects of the Borrower and the Loan Parties or
in their ability to repay the Lenders.
2.13 Affirmative Covenants. The opening paragraph of Section V of the
Credit Agreement is amended to read in its entirety as follows:
Each Loan Party covenants that so long as any Loan or other
Obligation or any Letter of Credit 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 or the Issuing Bank has any obligation to issue any Letter
of Credit under this Agreement:
2.14 Acquisitions. Section5.17 of the Credit Agreement is amended to
read in its entirety as follows:
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,
directly or through a Subsidiary that is a Loan Party, may make such
Acquisitions if:
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(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;
(iii) the Borrower delivers to the Agent the Acquisition
Approval Documents at least three Business Days before the
closing of the Acquisition; and
(iv) the Borrower complies with the provisions of Section3.2
of Supplement No.1 hereto.
2.15 Real Estate. Section 5.18 of the Credit Agreement is amended to
read in its entirety as follows:
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. In the case of any and all acquisitions of
any interest in real property using any portion of any Acquisition
Revolving Loan, a Lien on such acquired real property shall be granted
to Agent for the ratable benefit of the Lenders to secure such amount
as the Agent may deem appropriate. Such financing 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.
2.16 Personal Property Collateral.
(a) Section 5.19(d)(iii) is amended to read in its entirety as
follows:
(iii) the amount advanced under this Agreement to purchase a
New Vehicle; and
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(b) Section5.19(e) is hereby deleted in its entirety.
2.17 Financial Covenants. SectionVI of the Credit Agreement is amended
as follows:
(a) The opening paragraph of Section VI of the Credit Agreement
is amended to read in its entirety as follows:
Each Loan Party covenants that so long as any Loan or other
Obligation or any Letter of Credit 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 or the Issuing Bank has any obligation
to issue any Letter of Credit under this Agreement:
(b) The first sentence in Section6.5 of the Credit Agreement is
amended to read in its entirety as follows:
During the period from the Closing Date through October1,
1998, or during any twelve consecutive month period after
October1, 1998, 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.
2.18 Negative Covenants. The opening paragraph of SectionVII of the
Credit Agreement is amended to read in its entirety as follows:
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 or the Issuing Bank has any
obligation to issue any Letter of Credit under this Agreement:
2.19 Indebtedness. Section 7.1(e)(i) of the Credit Agreement is
amended to read in its entirety as follows:
(e) Indebtedness for Capital Expenditures incurred in the
ordinary course of the Loan Parties' 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 for all
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Loan Parties or does not exceed $500,000 in any fiscal year for
all Loan Parties; or
2.20 Survival of Covenants, Etc. Section 11.4 of the Credit Agreement
is amended to read in its entirety as follows:
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 or the Issuing Bank has any obligation to
issue any Letter of Credit 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.
2.21 Supplement No. 1. The Credit Agreement is supplemented by terms
of SupplementNo.1 to Credit Agreement in the form attached to this
Amendment as Exhibit A, which is made a part of the Credit Agreement as
Supplement No.1 thereto.
2.22 Swingline Note. Exhibit A-2 to the Credit Agreement is amended to
read as set forth on ExhibitB attached to this Amendment ("Amended
Swingline Note") which is made a part of the Credit Agreement as ExhibitA-2
thereto.
2.23 Commitments. The Commitments of the Lenders set forth on
Schedule1-B to the Credit Agreement are restated in their entireties as set
forth on ExhibitC attached to this Amendment, which is made a part of the
Credit Agreement as Schedule1-B thereto and amends and restates Schedule1-B
in its entirety.
Section 3. Effectiveness of Amendments. The amendments contained in this
Amendment shall become effective upon satisfaction of the following conditions
as determined by the Agent:
3.1 Execution and delivery of this Amendment by each party whose name
appears on the signature page.
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3.2 Execution and delivery by the Borrower to (a)the Swingline Lender
of the Amended Swingline Note and (b)to each Lender that is increasing
either or both of its New Vehicle Commitment or its Program and Used
Vehicle Commitment, a new Vehicle Note and/or Program and Used Vehicle Note
in the appropriate amounts.
3.3 Delivery to the Agent of a copy of the resolutions of the Board of
Directors of each Loan Party authorizing the execution, delivery and
performance of this Amendment and, in the case of the Borrower, the Amended
Swingline Note certified as true and accurate by its Secretary or Assistant
Secretary, along with a certification by such Secretary or Assistant
Secretary (i)certifying that there has been no amendment to the Articles or
Certificate of Incorporation or Bylaws of such Loan Party since true and
accurate copies of the same were delivered to the Agent with a certificate
of the Secretary of such Loan Party dated December29, 1997, and
(ii)identifying each officer of such Loan Party authorized to execute this
Amendment and any other instrument or agreement executed by such Loan Party
in connection with this Amendment (collectively, the "Amendment
Documents"), and certifying as to specimens of such officer's signature and
such officer's incumbency in such offices as such officer holds.
3.4 Delivery by the Loan Parties of certified copies of all documents
evidencing any necessary corporate action, consent or governmental or
regulatory approval (if any) with respect to this Amendment and any other
documents as the Agent may reasonably request.
3.5 The Borrower shall have paid to the Agent for the account of the
Lenders an amendment and waiver fee in the amount of $80,000. Each Lender
shall receive the amount set forth opposite on Schedule3.5 to this
Amendment.
3.6 The Loan Parties shall have delivered to the Agent good standing
certificates from the jurisdictions of their respective organizations as of
a date satisfactory to the Agent.
3.7 The Loan Parties shall have satisfied such other conditions as
specified by the Agent, including payment of all unpaid legal fees and
expenses incurred by the Agent and the Initial Lenders through the date of
this Amendment in connection with the Credit Agreement and the Amendment
Documents.
Section 4. Defaults and Waivers.
4.1 Events of Default and Unmatured Events of Default.
(a) Payment Requirements. Under Section 2.7(c) of the Credit
Agreement, the Borrower or the applicable Loan Party is required to
14
remit to the Agent within five Business Days following the sale of a
Vehicle, or on the receipt of proceeds with respect to such sale,
whichever occurs first, an amount at least equal to the amount of any
Loan advanced for that Vehicle. The Borrower and certain Loan Parties
have failed in some circumstances to remit the required payments
within the specified time period.
(b) Reporting Requirements. Under Section5.1(f) of the Credit
Agreement, the Borrower agreed to deliver certain reports with respect
to deposit accounts maintained by the Loan Parties. The Borrower
failed to provide such reports for the period after the Closing Date
and prior to May1, 1998.
(c) Personal Property Collateral.
(i) Under Section5.19(d) of the Credit Agreement, the
Borrower is required to provide the Agent with certain
information each month regarding each Vehicle owned or in the
possession of each Loan Party, including mileage and the amount
advanced under the Credit Agreement to purchase such Vehicle.
Information concerning mileage and amounts advanced has not been
provided to the Agent in such reports.
(ii) Under Section5.19 (e) of the Credit Agreement, each
Loan Party is required to notify the Agent within one (1)
Business Day following the Sale of a Vehicle and to include in
such Notice certain information. The Loan Parties have not
complied with all of the requirements of this provision.
(d) Acquisitions. Pursuant to Section5.17(iii), the Borrower is
required to deliver to the Agent Acquisition Approval Documents at
least three Business Days before the closing of an Acquisition. The
Borrower has closed six Acquisitions since the Closing Date and with
respect to certain of such closings failed to deliver the Acquisition
Approval Documents as required by Section5.17.
(e) Indebtedness. Under Section7.1 of the Credit Agreement, the
Indebtedness of Loan Parties is limited to, among other things,
Indebtedness existing on the Closing Date and disclosed in Section4.7
of ExhibitC to the Agreement. The Borrower failed to disclose in said
Section4.7 a certain guaranty with respect to obligations of Lithia
Properties, LLC dated June11, 1996 in favor of U.S. Bank and a certain
letter of credit in the original face amount of $500,000 issued by
U.S. Bank dated August28, 1997. Accordingly, the existence of such
Indebtedness constitutes a breach under Section 7.1.
15
(f) Repurchase Agreements. Under Section5.20 of the Credit
Agreement, the Borrower was required to deliver to the Agent certain
acknowledgments from Sellers extending any applicable repurchase
agreements on the part of such Sellers to Agent for the benefit of the
Lenders. The Borrower is in the process of seeking to obtain such
acknowledgments as may be available as more particularly described on
Schedule4.1(f) hereto. The Borrower requests a waiver as to the
delivery of any such other acknowledgments.
(g) Releases and Waivers. Under Section5.21 of the Credit
Agreement, the Borrower was required to deliver to the Agent certain
releases and waivers with respect to leased or mortgaged premises. The
Borrower is in the process of obtaining such releases and waivers as
may be available as more particularly described on Schedule4.1(g)
hereto. The Borrower requests a waiver as to the delivery of any such
other releases and waivers.
4.2 Waiver. Upon the date on which this Amendment becomes effective,
the Lenders hereby waive the Events of Default described in the preceding
Sections 4.1(a) through 4.1(g) that occurred prior to the date hereof (the
"Existing Defaults"). This waiver shall be null and void, however, with
respect to acknowledgments or releases and waivers to be signed by any
third party described on Schedules4.1(f) and (g) hereto unless the required
signed documents are delivered to the Agent no later than September 30,
1998; provided, however, that the Agent may, without the consent of the
Required Lenders, extend such date or waive the delivery of any such
documents. The waiver of the Existing Defaults set forth above is limited
to the express terms thereof, and nothing herein shall be deemed a waiver
by the Lenders of any other term, condition, representation or covenant
applicable to the Loan Parties under the Credit Agreement (including but
not limited to any future occurrence similar to the Existing Defaults) or
any of the other agreements, documents or instruments executed and
delivered in connection therewith, or of the covenants described therein.
The waivers set forth herein shall not constitute a waiver by the Lender of
any other Default or Event of Default, if any, under the Credit Agreement,
and shall not be, and shall not be deemed to be, a course of action with
respect thereto upon which the Loan Parties may rely in the future, and the
Loan Parties hereby expressly waive any claim to such effect.
Section 5. Representations, Warranties, Authority, No Adverse Claim.
5.1 Reassertion of Representations and Warranties, No Default. The
Loan Parties hereby represent that on and as of the date hereof and after
giving effect to this Amendment (a)all of the representations and
warranties contained in the Credit Agreement are true, correct and complete
in all respects as of the
16
date hereof as though made on and as of such date, except for changes
permitted by the terms of the Credit Agreement, and (b) there will exist no
Defaults or Event of Default under the Credit Agreement as amended by this
Amendment on such date which have not been waived by the Lenders.
5.2 Authority, No Conflict, No Consent Required. Each Loan Party
represents and warrants that such Loan Party has the power and legal right
and authority to enter into the Amendment Documents and has duly authorized
as appropriate the execution and delivery of the Amendment Documents and
other agreements and documents executed and delivered by such Loan Party in
connection herewith or therewith by proper corporate, and none of the
Amendment Documents nor the agreements contained herein or therein
contravene or constitute a default under any agreement, instrument or
indenture to which such Loan Party is a party or a signatory or a provision
of such Loan Party's Articles of Incorporation, Bylaws or any other
agreement or requirement of law, or result in the imposition of any Lien on
any of its property under any agreement binding on or applicable to such
Loan Party or any of its property except, if any, in favor of the Lenders.
Each Loan Party represents and warrants that no consent, approval or
authorization of or registration or declaration with any Person, including
but not limited to any governmental authority, is required in connection
with the execution and delivery by such Loan Party of the Amendment
Documents or other agreements and documents executed and delivered by such
Loan Party in connection therewith or the performance of obligations of
such Loan Party therein described, except for those which such Loan Party
has obtained or provided and as to which such Loan Party has delivered
certified copies of documents evidencing each such action to the Agent or
Lenders.
5.3 No Adverse Claim. Each Loan Party warrants, acknowledges and
agrees that no events have been taken place and no circumstances exist at
the date hereof which would give any Loan Party a basis to assert a
defense, offset or counterclaim to any claim of the Lenders with respect to
the Obligations.
Section 6. Affirmation of Credit Agreement, Further References, Affirmation
of Security Interest. The Agent, the Lenders and the Loan Parties each
acknowledge and affirm that the Credit Agreement, as hereby amended, is hereby
ratified and confirmed in all respects and all terms, conditions and provisions
of the Credit Agreement, except as amended by this Amendment, shall remain
unmodified and in full force and effect. All references in any document or
instrument to the Credit Agreement are hereby amended and shall refer to the
Credit Agreement as amended by this Amendment. Loan Parties confirm to the
Lender that the Obligations are and continue to be secured by the security
interest granted by the Loan Parties in favor of the Agent under the Security
Documents, and all of the terms, conditions, provisions, agreements,
requirements, promises, obligations, duties, covenants and representations of
the Loan Parties under such documents and any and all other documents and
agreements entered into with respect to the obligations under the Credit
Agreement are
17
incorporated herein by reference and are hereby ratified and
affirmed in all respects by the Loan Parties.
Section 7. Merger and Integration, Superseding Effect. This Amendment, from
and after the date hereof, embodies the entire agreement and understanding
between the parties hereto and supersedes and has merged into this Amendment all
prior oral and written agreements on the same subjects by and between the
parties hereto with the effect that this Amendment, shall control with respect
to the specific subjects hereof and thereof.
Section 8. Severability. Whenever possible, each provision of this
Amendment and the other Amendment Documents and any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto
shall be interpreted in such manner as to be effective, valid and enforceable
under the applicable law of any jurisdiction, but, if any provision of this
Amendment, the other Amendment Documents or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto shall
be held to be prohibited, invalid or unenforceable under the applicable law,
such provision shall be ineffective in such jurisdiction only to the extent of
such prohibition, invalidity or unenforceability, without invalidating or
rendering unenforceable the remainder of such provision or the remaining
provisions of this Amendment, the other Amendment Documents or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto in such jurisdiction, or affecting the effectiveness, validity
or enforceability of such provision in any other jurisdiction.
Section 9. Successors. The Amendment Documents shall be binding upon the
Loan Parties, the Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Loan Parties, the Agent and the
Lenders and the successors and assigns of the Lenders.
Section 10. Legal Expenses. As provided in Section11.2 of the Credit
Agreement, the Loan Parties agree to reimburse the Agent and the Initial
Lenders, upon execution of this Amendment, for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses of Xxxxxx & Xxxxxxx LLP,
special counsel for the Agent) incurred in connection with the Credit Agreement,
including in connection with the negotiation, preparation and execution of the
Amendment Documents and all other documents negotiated, prepared and executed in
connection with the Amendment Documents, and to pay and save the Lender harmless
from all liability for, any stamp or other taxes which may be payable with
respect to the execution or delivery of the Amendment Documents, which
obligations of the Borrower shall survive any termination of the Credit
Agreement.
Section 11. Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a part of
this Amendment.
18
Section 12. Counterparts. The Amendment Documents may be executed in
several counterparts as deemed necessary or convenient, each of which, when so
executed, shall be deemed an original, provided that all such counterparts shall
be regarded as one and the same document, and either party to the Amendment
Documents may execute any such agreement by executing a counterpart of such
agreement.
Section 13. Governing Law. Under Oregon law, most agreements, promises and
commitments made by Lenders after October31, 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 Lender to be enforceable.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
19
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER:
LITHIA MOTORS, INC.
By
Its
AGENT:
U.S. BANK NATIONAL ASSOCIATION
By
Its
AFFILIATES AND SUBSIDIARIES:
LITHIA HOLDING COMPANY, L.L.C.
By
Its
LITHIA TLM, L.L.C.
By: Lithia Motors, Inc., as Manager
By
Its
20
LITHIA'S GRANTS PASS AUTO CENTER, L.L.C.
By: Lithia Motors, Inc., as Manager
By
Its
LITHIA DODGE, L.L.C.
By: Lithia Motors, Inc., as Manager
By
Its
LITHIA CHRYSLER PLYMOUTH JEEP EAGLE, INC.
By
Its
LITHIA MTLM, INC.
By
Its
LGPAC, INC.
By
Its
21
LITHIA DM, INC.
By
Its
SATURN OF SOUTHWEST OREGON, INC.
By
Its
LITHIA HPI, INC.
By
Its
LITHIA DE, INC.
By
Its
LITHIA DC, INC.
By
Its
LITHIA FN, INC.
By
Its
22
LITHIA TKV, INC.
By
Its
LITHIA FVHC, INC.
By
Its
LITHIA VWC, INC.
By
Its
LITHIA NB, INC.
By
Its
LITHIA BB, INC.
By
Its
LITHIA CIMR, INC.
(formerly known as Lithia MB, Inc.)
By
Its
23
LITHIA XXX, INC.
By
Its
LITHIA RENTALS, INC.
By
Its
LITHIA AUTO SERVICES, INC.
By
Its
LITHIA SALMIR, INC.
By
Its
LITHIA BNM, INC.
By
Its
LITHIA MMF, INC.
By
Its
24
LITHIA FMF, INC.
By
Its
LITHIA JEF, INC.
By
Its
LITHIA NF, INC.
By
Its
LITHIA FINANCIAL CORPORATION
By
Its
LITHIA TR, INC.
By
Its
25
LENDERS:
U.S. BANK NATIONAL ASSOCIATION
By
Its
COMERICA BANK
By
Its
XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES
INC.
By
Its
THE BANK OF TOKYO-MITSUBISHI, LTD.
By
Its
BANK OF SCOTLAND
By
Its
BNY FINANCIAL CORPORATION
By
Its
26
FIRST SECURITY BANK
By
Its
FIRST HAWAIIAN BANK
By
Its
NATIONSBANK, N.A.
By
Its
27
EXHIBIT A TO
THIRD AMENDMENT
SUPPLEMENT NO. 1
to
REVOLVING CREDIT AGREEMENT
Dated as of December 22, 1997 Between
U.S. BANK NATIONAL ASSOCIATION, as Agent (in such capacity, the "Agent")
and Lender
and such other Lenders as are signatories thereto (collectively, the "Lenders")
and
LITHIA MOTORS, INC. (the "Borrower" and a "Loan Party") and certain of
its Affiliates and Subsidiaries ("Loan Parties")
1. Credit Agreement Reference. This Supplement No.1, as it may be amended
or modified from time to time, is a part of the Revolving Credit Agreement,
dated as of December 22, 1997, between the Loan Parties and the Lenders, as
amended by that certain First Amendment to Credit Agreement dated as of April9,
1998 and by that certain Second Amendment to Credit Agreement dated as of
April29, 1998 (together with all amendments, modifications and supplements
thereto, the "Credit Agreement"). Capitalized terms used herein which are
defined in the Credit Agreement shall have the meanings given such terms in the
Credit Agreement unless the context otherwise requires.
2. Additional Provisions Regarding Swingline Overdraft Loans.
2.1 Definitions.
(a) Swingline Overdraft Loan. At any time that (i) Swingline
Loans are outstanding and (ii) the aggregate of the Total New Vehicle
Loan Outstandings plus the Swingline Loan Outstandings exceeds the
Total New Vehicle Commitment, the amount that is equal to the lesser
of (x) such excess or (y) the amount of outstanding Swingline Loans.
(b) Priority Swingline Overdraft Loan. At any time that (i)
Swingline Loans are outstanding and (ii) the aggregate of the Total
Loan Outstandings exceeds the Total Commitment, the amount that is
equal to the lesser of (x) such excess or (y) the amount of
outstanding Swingline Loans.
2.2 Each Swingline Overdraft 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).
28
2.3 Priority Swingline Overdraft Loans shall be made only by the
Swingline Lender, solely for its own account and shall not be subject to
the provisions of Section 2.4 of the Credit Agreement, provided, however,
at any time a Priority Swingline Overdraft Loan is outstanding, the payment
of principal and interest with respect to all Loans shall be subordinated
in right of payment and priority to the prior payment in full of the
Priority Swingline Overdraft Loans and the Agent and the Lenders, as the
case may be, shall remit to the Swingline Lender, and the Swingline Lender
shall have the right to receive, all payments of principal and interest
made by any Loan Party in respect of any Loan and all other proceeds of
Collateral securing the Loans for application and reduction of the
aggregate principal amount of outstanding Priority Swingline Overdraft
Loans.
2.4 If at any time that Swingline Overdraft Loans are outstanding the
aggregate of the Total New Vehicle Loan Outstandings plus the Swingline
Loan Outstandings exceeds (A) one hundred five percent (105%) of the Total
New Vehicle Commitment as of such date and such condition exists for two
(2) consecutive Business Days or (B) one hundred percent (100%) of the
Total New Vehicle Commitment as of such date and such condition exists for
five (5) consecutive Business Days then, in such event, such occurrence
shall constitute an Event of Default and the Agent acting in its sole
discretion may, and upon the election of the Required Lenders shall (y)
take any and all actions reasonably necessary to suspend and/or terminate
any debits or draft authorizations or other requests for payment by a
Seller and (z) elect by written notice to the Borrower to terminate the
Commitment. At any time that Swingline Overdraft Loans are outstanding, and
so long as no Swingline Overdraft Loan is a Priority Swingline Overdraft
Loan, the failure to make the immediate prepayment required by
Section2.7(b)(i) of the Credit Agreement at any time that Total New Vehicle
Loan Outstandings plus the Swingline Loans Outstandings exceed the Total
New Vehicle Commitment shall constitute a Default until such time as the
Event of Default specified above occurs. At any time that Priority
Swingline Overdraft Loans are outstanding, the Borrower immediately shall
pay all such Priority Swingline Overdraft Loans.
2.5 The Borrower and Loan Parties acknowledge that no Swingline Loan
will be made pursuant to either Section 2.3(a)(ii) or 2.7(a)(ii) of the
Credit Agreement, unless the making of any such Loan would be in compliance
with all applicable requirements of the Credit Agreement, including without
limitation, the requirements of Section 2.1(b) of the Credit Agreement. Any
Swingline Loan made pursuant to either Section2.3(a)(ii) or
Section2.7(a)(ii) in violation of the Credit Agreement shall be prepaid
immediately. The Swingline Lender will notify the Agent, which in turn will
notify the Lenders, promptly upon the making of any Swingline Loan and the
amount thereof. The failure to give any such notice shall not affect the
rights of the Swingline Lender or the obligations
29
of the Lenders under the Credit Agreement as supplemented by this
Supplement No. 1.
3. Additional Provisions Regarding Acquisition Loans and Acquisitions.
3.1 Notwithstanding the provisions of Section 2.1(e) of the Credit
Agreement, in the event that on any day the aggregate of the Total New
Vehicle Loan Outstandings plus the Swingline Loan Outstandings plus any
requests for Loans pursuant to the Total New Vehicle Commitment exceeds
ninety-five percent (95%) of the Total New Vehicle Commitment as of such
date, then, (i) a portion of the Total Acquisition Loan Commitment (the
"Reserve Commitment") in an amount equal to the lesser of (A) Seven Million
Dollars ($7,000,000), (B) the entire remaining unused portion of the Total
Acquisition Loan Commitment as of such date or (C) the entire remaining
unused portion of the Borrowing Base applicable to Acquisition Loans and
Letters of Credit shall be reserved and shall no longer be available for
funding Acquisition Loans or supporting Letters of Credit, and (ii) no
further Acquisition Loans or issuance of Letters of Credit (after giving
effect to the Reserve Commitment in clause (i) hereof) shall be available
to the Borrower until the next Business Day on which such condition no
longer exists.
3.2 In addition to the requirements of Section 5.17 of the Credit
Agreement, the Borrower shall satisfy the following conditions in
connection with any Acquisition that is closed on or after July1, 1998:
(a) the Borrower shall have given the Agent at least 30 days (or
ten Business Days, in the case of clause (ii below) prior written
notice of any such proposed Acquisition (each of such notices, an
"Acquisition Notice"), which notice shall (i) contain the estimated
date such proposed Acquisition is scheduled to be consummated, (ii)
attach a true and correct copy of the executed purchase agreement,
letter of intent, description of material terms or similar agreements
executed by the parties thereto in connection with such proposed
Acquisition, (iii)contain the estimated aggregate purchase price of
such proposed Acquisition and the amount of related costs and expenses
and the intended method of financing thereof, (iv) contain the
estimated amount of Acquisition Loans required to effect such proposed
Acquisition; and, (v) describe any real property included in the
Acquisition (whether the Acquisition is a purchase of capital stock or
an asset purchase) and the amount of the purchase price allocable
thereto;
(b) the Borrower shall have provided the Lenders with all
information related to the Acquisition Target and the proposed
Acquisition as the Agent shall reasonably request, including, without
limitation, delivery of the expert reports (if any) prepared by
accounting,
30
environmental, and/or other experts which the Borrower has obtained as
the Agent shall reasonably request;
(c) as soon as available but no later than three Business Days
before the closing of the Acquisition (i)all related agreements,
schedules and exhibits with respect to such proposed Acquisition and
(ii) certification from the Borrower as to the purchase price for the
acquisition (or a formula therefor) and the estimated amount of all
related costs, fees and expenses and that, except as described, there
are no other amounts which will be payable in connection with the
respective proposed Acquisition;
(d) the Borrower shall have delivered updated schedules of the
Credit Agreement to the Agent; and
(e) prior to the consummation of the respective proposed
Acquisition, the Borrower shall furnish the Agent an officer's
certificate executed by the chief financial officer of the Borrower,
certifying as to compliance with the requirements of the applicable
preceding clauses (a) through (d). The consummation of each
Acquisition shall be deemed to be a representation and warranty by the
Borrower that all conditions thereto have been satisfied and that same
is permitted in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a representation and
warranty for all purposes hereunder.
4. Letter of Credit Facility.
4.1 Definitions.
Fronting Fees. See Section4.8(a) of Supplement No.1.
Governmental Authority. Any nation or government, any state or
other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
Honor Date. See Section 4.4(b).
Insolvency Proceeding. Any case, action or proceeding relating to
bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangements in respect of its
creditors generally or any
31
substantial portion of a Person's creditors, undertaken under federal
or state law.
Issue. With respect to any Letter of Credit, to issue or to
extend the expiration date of, or to renew or increase the amount of,
such Letter of Credit; and the terms "Issued," "Issuing" and
"Issuance" have corresponding meanings.
Issuing Bank. U.S. Bank National Association in its capacity as
issuer of one or more Letters of Credit hereunder, together with any
successor letter of credit issuer and any replacement letter of credit
issuer.
Letter of Credit. Any letter of credit issued by the Issuing Bank
pursuant to Section4 of Supplement No.1.
Letter of Credit Advance. Each Lender's participation in any
Letter of Credit Borrowing in accordance with its Pro Rata Share of
the Acquisition Loan Commitment.
Letter of Credit Application and Letter of Credit Amendment
Application. An application form for Issuance of, and for amendment
of, Letters of Credit as shall at any time be in use at the Issuing
Bank, as the Issuing Bank shall request.
Letter of Credit Borrowing. An extension of credit resulting from
a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made from proceeds of Acquisition Loans
under Section4.4(b) of Supplement No.1.
Letter of Credit Commitment. The commitment of the Issuing Bank
to Issue, and the commitment of the Lenders severally to participate
in, Letters of Credit from time to time Issued or outstanding under
Section4 of Supplement No.1 in an aggregate amount not to exceed on
any date the amount of Ten Million Dollars ($10,000,000); provided
that the Letter of Credit Commitment is a part of the combined
Acquisition Loan Commitment, rather than a separate, independent
commitment.
Letter of Credit Fees. See Section4.8(a) of Supplement No.1.
Letter of Credit Obligations. At any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding Letter of Credit Borrowings.
Letter of Credit-Related Documents. The Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Amendment
32
Applications and any other document relating to any Letter of Credit,
including any of the Issuing Bank's standard for documents for Letter
of Credit Issuances.
Letter of Credit Termination Date. See Section4.2(a) of
Supplement No.1.
Requirement of Law. As to any Person, any law (statutory or
common), treaty, rule or regulation or determination of any arbitrator
or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any
of its property is subject.
4.2 Commitment.
(a) On the terms and conditions set forth herein (i) the Issuing
Bank agrees from time to time on any Business Day during the period
from the Closing Date to the last Business Day thirty (30) days prior
to the Maturity Date (the "Letter of Credit Termination Date") to
issue Letters of Credit for the account of the Borrower, and to amend
or renew Letters of Credit previously issued by it, in accordance with
Section 4.3; and (ii) the Lenders severally agree to participate in
Letters of Credit Issued for the account of the Borrower; provided,
that the Issuing Bank shall not be obligated to Issue, and no Lender
shall be obligated to participate in, any Letter of Credit if, as of
the date of issuance of such Letter of Credit, after giving effect to
the maximum amount payable under such Letter of Credit, (y) the
aggregate principal amount of all Letter of Credit Obligations
outstanding shall at any time exceed Ten Million Dollars ($10,000,000)
or (z) the aggregate principal amount of Acquisition Loans outstanding
plus the Letter of Credit Obligations outstanding as of such day shall
exceed the Total Acquisition Loan Commitment; further, the aggregate
principal amount of all Letter of Credit Obligations outstanding, plus
the aggregate principal amount of all Loans outstanding shall not at
any time exceed the Total Commitment. Within the foregoing limits, and
subject to the other terms and conditions hereof, the ability of the
Borrower to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit which have expired or
which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any Letter
of Credit if: (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from Issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Bank or any request or
directive (whether or
33
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit Issuing Bank, or
request that the Issuing Bank refrain, from the Issuance of Letters of
Credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Bank any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and
which the Issuing Bank in good xxxxx xxxxx material to it; (ii) the
Issuing Bank has received written notice from any Lender, the Agent or
the Borrower, on or prior to the Business Day prior to the requested
date of Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Section3.2 of the Credit Agreement
is not then satisfied; (iii) the expiration date of any requested
Letter of Credit is more than one (1) year from the date of Issuance
thereof or after the Maturity Date; (iv) any requested Letter of
Credit does not provide for drafts, or is not otherwise in form and
substance acceptable to the Issuing Bank, or the Issuance of a Letter
of Credit shall violate any applicable policies of the Issuing Bank,
or the Issuance of a Letter of Credit is for an amount less than One
Hundred Thousand Dollars ($100,000) or to be denominated in a currency
other than U.S. Dollars.
4.3 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the Issuing Bank (with a
copy sent by the Borrower to the Agent) at least three (3) days (or
such shorter time as the Issuing Bank may agree in a particular
instance in its sole discretion) prior to the proposed date of
Issuance. Each such request for Issuance of a Letter of Credit shall
be by facsimile, confirmed immediately in an original writing, in the
form of a Letter of Credit Application, and shall specify in form and
detail satisfactory to the Issuing Bank such matters as the Issuing
Bank may require. Each Letter of Credit (i) will be for the account of
the Borrower, (ii) will be a (A)nontransferable standby letter of
credit to support certain performance obligations of the Borrower, or
(B) non-transferable standby letter of credit to support certain
payment obligations of the Borrower that are not prohibited by this
Agreement, (iii) will be for purposes reasonably satisfactory to the
Issuing Bank and (iv) will contain such terms and provisions as may be
customarily required by the Issuing Bank.
(b) Prior to the Issuance of any Letter of Credit, the Issuing
Bank will confirm with the Agent (by telephone or in writing) that the
Agent has received a copy of the Letter of Credit Application or
Letter of Credit
34
Amendment Application from the Borrower and, if not, the Issuing Bank
will provide the Agent with a copy thereof. Unless the Issuing Bank
has received notice prior to its Issuance of a requested Letter of
Credit from the Agent (i) directing the Issuing Bank not to Issue such
Letter of Credit because such Issuance is not then permitted under
this Section 4.3, or (ii) that one or more conditions specified in
Section3.2 of the Credit Agreement are not then satisfied or waived;
then, subject to the terms and conditions hereof, the Issuing Bank
shall, on the requested date, Issue a Letter of Credit for the account
of the Borrower in accordance with the Issuing Bank's usual and
customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Letter of Credit Termination Date, the Issuing Bank will,
upon the written request of the Borrower received by the Issuing Bank
(with a copy sent by the Borrower to the Agent) at least three (3)
days (or such shorter time as the Issuing Bank may agree in particular
instance in its sole discretion) prior to the proposed date of
amendment or extension, amend any Letter of Credit Issued by it or
extend the expiry date. Each such request for amendment or extension
of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in such form as the Issuing
Bank shall require. The Issuing Bank shall be under no obligation to
amend or extend the expiry date any Letter of Credit if: (i) the
Issuing Bank would have no obligation at such time to Issue such
Letter of Credit in its amended form under the terms of this
Agreement; or (ii) the beneficiary of any such Letter of Credit does
not accept the proposed amendment to the Letter of Credit.
(d) Upon receipt of notice from the Issuing Bank, the Agent will
promptly notify the Lenders of the Issuance of a Letter of Credit and
any amendment or extension thereto.
(e) If any outstanding Letter of Credit shall provide that it
shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be
renewed, the Issuing Bank shall be permitted to allow such Letter of
Credit to renew, and the Borrowers and the Lenders hereby authorize
such renewal. The Issuing Bank shall not be obligated to allow such
Letter of Credit to renew if the Issuing Bank would have no obligation
at such time to Issue or amend such Letter of Credit under the terms
of this Agreement.
(f) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Required Lenders), deliver any notices
of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any
35
time and from time to time, in order to cause the expiration date of
any Letter of Credit to be a date not later than the Maturity Date.
(g) This Agreement shall control in the event of any conflict
with any Letter of Credit-Related Document.
(h) The Issuing Bank will also deliver to the Agent, concurrently
or promptly following its delivery of a Letter of Credit, or amendment
or extension to a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit,
amendment, or extension to a Letter of Credit.
4.4 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Issuing Bank a participation in such
Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Lender in the Acquisition
Loan Commitment, times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing
respectively. Each Issuance of a Letter of Credit shall be deemed to
use the Acquisition Loan Commitment of each Lender by an amount equal
to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will
promptly notify the Borrower. In the case of Letters of Credit under
which drawings are payable one or more Business Days after the drawing
is made, the Issuing Bank will give such notice to the Borrower at
least one Business Day prior to the Honor Date. The Borrower shall
reimburse the Issuing Bank prior to 11:00 a.m. (Portland, Oregon,
time), on each date that any amount is paid by the Issuing Bank under
any Letter of Credit (each such date, an "Honor Date") in an amount
equal to the amount so paid by the Issuing Bank. In the event the
Borrower fails to reimburse the Issuing Bank for the full amount of
any drawing under any Letter of Credit by 11:00a.m. (Portland, Oregon,
time), on the Honor Date, the Issuing Bank will promptly notify the
Agent and the Agent will promptly notify each Lender thereof, and the
Borrower shall be deemed to have requested a Prime Rate Loan be made
by the Lenders to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unused portion of the Acquisition
Loan Commitment and subject to the conditions set forth in Section3.2
of the Credit Agreement. Any notice given by the Issuing Bank or the
Agent pursuant to this Section 4.4(b) may be oral if immediately
confirmed in writing (including by facsimile);
36
provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to Section4.4(b)
make available to the Agent for the account of the Issuing Bank an
amount in immediately available funds equal to its Pro Rata Share of
the amount of the drawing, whereupon the participating Lenders shall
each be deemed to have made an Acquisition Loan consisting of a Prime
Rate Loan to the Borrower in that amount. If any Lender so notified
fails to make available to the Agent for the account of the Issuing
Bank the amount of such Lender's Pro Rata Share of the amount of the
drawing by no later than 12:00 noon (Portland, Oregon, time), on the
Honor Date, then interest shall accrue on such Lender's obligation to
make such payment, from the Honor Date to the date such Lender makes
such payment, [at the rate per annum equal to the Federal Funds Rate
in effect from time to time during such period]. The Agent will
promptly give notice to each Lender of the occurrence of the Honor
Date, but failure of the Agent to give any such notice on the Honor
Date or in sufficient time to enable any Lender to effect such payment
on such date shall not relieve such Lender from its obligations under
this Section 4.4(c).
(d) With respect to any unreimbursed drawing that is not
converted into a Prime Rate Loan to the Borrower in whole or in part,
because of failure of the Borrower to satisfy the conditions set forth
in Section3.2 or for any other reason, the Borrower shall be deemed to
have incurred from the Issuing Bank a Letter of Credit Borrowing in
the amount of such drawing, which Letter of Credit Borrowing shall be
due and payable on demand (together with interest) and shall bear
interest at a rate per annum equal to the Prime Rate plus two percent
(2%) per annum, and each Lender's payment to the Issuing Bank pursuant
to Section 4.4(c) of Supplement No.1 shall be deemed payment in
respect of its participation in such Letter of Credit Borrowing and
shall constitute a Letter of Credit Advance from such Lender in
satisfaction of its participation obligation under this Section4.4.
(e) Each Lender's obligation in accordance herewith to make
Acquisition Loans or Letter of Credit Advances, as contemplated by
this Section 4.4, as a result of a drawing under the Letter of Credit,
shall be absolute and unconditional and without recourse to the
Issuing Bank and shall not be affected by any circumstance, including
(i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Issuing Bank, the Borrower or
Loan Party or any other Person for any reason whatsoever, (ii) the
occurrence or continuance of a Default or an Event of Default; or
(iii) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing;
37
provided, however, that each Lender's obligation to make Acquisition
Loans under this Section 4.4 is subject to the conditions set forth in
Section3.2 of the Credit Agreement.
4.5 Repayment of Participation.
(a) When the Agent receives (and only if the Agent receives), for
the account of the Issuing Bank, immediately available funds from the
Borrower or any Loan Party or from any proceeds of Collateral (i) in
respect of which any Lender has paid the Agent for the account of the
Issuing Bank for such Lender's participation in the Letter of Credit
Advance pursuant to Section 4.4 or (ii) in payment of interest
thereon, the Agent will pay to each Lender, in the same funds as those
received by the Agent for the account of the Issuing Bank, the amount
of such Lender's Pro Rata Share of such funds and the Issuing Bank
shall receive and retain the amount of the Pro Rata Share of such
funds of any Lender that did not so pay the Agent for the account of
the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Borrower or to a trustee, receiver, liquidator,
custodian, or any official in an Insolvency Proceeding, any portion of
the payments made by the Borrower or any Loan Party to the Agent for
the account of the Issuing Bank pursuant to Section4.5(a) of
Supplement No.1 in reimbursement of a payment made under the Letter of
Credit Advance or interest thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent or the Issuing Bank the
amount of its Pro Rata Share of any amounts so returned by the Agent
or the Issuing Bank plus interest thereon from the date such demand is
made to the date such amounts are returned by such Lender to the Agent
or the Issuing Bank, at a rate per annum equal to the Federal Funds
Rate in effect from time to time.
4.6 Role of the Issuing Bank.
(a) Each Lender and each Loan Party agrees that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft,
certificates and other documents, if any, expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or
accuracy of any such document or the authority of the Person executing
or delivering any such document.
(b) Neither the Issuing Bank nor any of its correspondents,
participants or assignees shall be liable to any Lender for: (i) any
action taken or omitted in connection herewith at the request or with
the approval of the Lenders (including the Required Lenders, as
applicable);
38
(ii) any action taken or omitted in the absence of gross negligence or
willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any Letter of Credit-Related Document.
(c) The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Borrower from pursuing such
rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement or assume risks or
losses arising out of the gross negligence, bad faith or wilful
misconduct of the Issuing Bank. Neither the Issuing Bank, nor any
correspondents, participants or assignees of the Issuing Bank, shall
be liable or responsible for any of the matters described in clauses
(i) through (vii) of Section 4.7 of Supplement No.1; provided,
however, that the Borrower may have a claim against the Issuing Bank,
and the Issuing Bank may be liable to the Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered or incurred by the Borrower which are
caused by the Issuing Bank's willful misconduct or gross negligence
(i) in failing to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft, certificate(s)
and any other documents, if any, strictly complying with the terms and
conditions of such Letter of Credit, (ii) in its paying under a Letter
of Credit against presentation of a sight draft, certificate(s) or
other documents not complying with the terms of such Letter of Credit
or (iii) its failure to comply with the obligations imposed upon it,
as an issuing bank, under applicable state law; provided, however,
that (y) the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and (z) the
Issuing Bank shall not be responsible for the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer
or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason, provided that any such instrument
appears on its face to be in order.
4.7 Obligations Absolute. The Obligations of the Loan Parties under
this Agreement and any Letter of Credit-Related Document to reimburse the
Issuing Bank for a drawing under a Letter of Credit, and to repay any
Letter of Credit Borrowing and any drawing under a Letter of Credit
converted into an Acquisition Loan, shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement
and each such other Letter of Credit dated Document under all
circumstances, including the following: (i) any lack of validity or
enforceability of this Agreement or any Letter of Credit-Related Document;
(ii) any change in the time, manner or place
39
of payment of, or in any other term of, all or any of the Letter of Credit
Obligations of the Borrower or any Loan Party, (iii) the existence of any
claim, set-off, defense or other right that the Borrower or any Loan Party
may have at any time against any beneficiary or any such transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by
the Letter of Credit- Related Documents or any unrelated transaction other
than the defense of payment or claims arising out of the gross negligence,
bad faith or wilful misconduct of the Agent or the Issuing Bank; (iv) any
draft, demand, certificate or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit; (v) any
payment by the Issuing Bank under any Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of
any Letter of Credit; or any payment made by the Issuing Bank under any
Letter of Credit to any trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of a successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with any Insolvency
Proceeding; (vi) any exchange, release or nonperfection of any Collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the Obligations of the Borrower or any
Loan Party in respect of any Letter of Credit; or (vii) any other
circumstance that might otherwise constitute a defense available to, or
discharge of, the Borrower or any Loan Party.
4.8 Letter of Credit Fees.
(a) Letter of Credit Fees. The Borrower shall pay to the Agent
for the account of each of the Lenders a letter of credit fee (the
"Letter of Credit Fees") with respect to outstanding Letters of Credit
equal to the Applicable Margin for LIBOR Loans which are Acquisition
Loans by the average daily maximum amount available to be drawn on
such outstanding Letters of Credit.
(b) Fronting Fees. The Borrower shall pay to the Issuing Bank for
its own account a letter of credit fronting fee (the "Fronting Fees")
for each Letter of Credit Issued by the Issuing Bank equal to .125%
per annum multiplied by the average daily maximum amount available to
be drawn on such outstanding Letters of Credit.
(c) Calculation of Fees. The Letter of Credit Fees and the
Fronting Fees each shall be computed on a quarterly basis in arrears
on the last Business Day of each calendar quarter based upon Letters
of
40
Credit outstanding for that quarter as calculated by the Agent
(computed on the basis of the actual number of days elapsed over a
year of 360 days). Such fees shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter during which
Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the Closing Date, through the Maturity
Date, with the final payment to be made on the Maturity Date.
(d) Other. The Borrower shall pay to the Issuing Bank from time
to time on demand the normal issuance, presentation, amendment and
other processing-fees, and other standard costs and charges of the
Issuing Bank relating to Letters of Credit as from time to time in
effect.
4.9 Cash Collateralization.
(a) If any Event of Default shall occur and be continuing, or the
Acquisition Loan Commitment is terminated or reduced to an amount
insufficient to fund the outstanding Letter of Credit Obligations, the
Borrower shall on the Business Day it receives notice from the Agent,
acting upon instructions of the Required Lenders, deposit in an
account (the "Cash Collateral Account") held by the Agent, for the
benefit of the Lenders, an amount of cash equal to the Letter of
Credit Obligations as of such date. Such deposit shall be held by the
Agent as Collateral for the payment and performance of the
Obligations. The Agent shall have exclusive dominion and control,
including exclusive right of withdrawal, over such account. Cash
Collateral shall be held in a blocked, interest-bearing account held
by the Agent upon such terms and in such type of account as customary
at the depository institution. The Borrower shall pay any fees charged
by the Agent which fees are of the type customarily charged by such
institution with respect to such accounts. Moneys in such account
shall (i) be applied by the Agent to the payment of Letter of Credit
Borrowings and interest thereon, (ii) be held for the satisfaction of
the reimbursement Obligations of the Borrower in respect of Letters of
Credit, and (iii) in the event the maturity of the Loans has been
accelerated, with the consent of the Required Lenders, be applied to
satisfy the Obligations. If the Borrower shall provide Cash Collateral
under this Section 4.9(a) or shall prepay any Letter of Credit and
thereafter either (i) drafts or other demands for payment complying
with the terms of such Letters of Credit are not made prior to the
respective expiration dates thereof, or (ii) such Event of Default
shall have been waived or cured, then the Agent, the Issuing Bank and
the Lenders agree that the Agent is hereby authorized, without further
action by any other Person, to release the Lien in such cash and will
direct the Agent to remit to the Borrower amounts for which the
contingent obligations evidenced by such Letters of Credit have
ceased.
41
(b) As security for the payment of all Obligations, the Borrower,
and to the extent that any Loan Party provides cash for the Cash
Collateral Account, such Loan Party, hereby grants, conveys, assigns,
pledges, sets over and transfers to the Agent, and creates in the
Agent's favor a Lien on, and security interest in, all money,
instruments and securities at any time held in or acquired in
connection with the Cash Collateral Account, together with all
proceeds thereof. At any time and from time to time, upon the Agent's
request, the Borrower and any such Loan Party promptly shall execute
and deliver any and all such further instruments and documents as may
be reasonably necessary, appropriate or desirable in the Agent's
judgment to obtain the full benefits (including perfection and
priority) of the security interest created or intended to be created
by this Section4.9(b) and of the rights and powers herein granted.
Dated: July 7, 1998
EXHIBIT B TO
THIRD AMENDMENT
EXHIBIT A-2 TO CREDIT AGREEMENT
FORM OF AMENDED
SWINGLINE NOTE
$10,000,000 July 7, 1998
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of [Swingline 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 TEN MILLION DOLLARS
($10,000,000) 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 December22, 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
42
(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 Payee 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 Payee'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 is made and delivered in substitution for, and amends in its
entirety, that certain Swingline Note of the Borrower dated April9, 1998 in the
stated principal
43
amount of $30,000,000 (the "$30,000,000 Swingline Note"). The substitution of
this Note for the $30,000,000 Swingline Note shall be effective upon (i)the
effective date of the Third Amendment to Credit Agreement dated as of the date
hereof to be entered into by and among the Lenders, the Payee, the Agent and the
Borrower and the Loan Parties (as defined in the Credit Agreement), and
(ii)payment of all accrued interest on the $30,000,000 Swingline Note and all
outstanding principal thereunder in excess of $10,000.000.
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.
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
Its
44
EXHIBIT C TO
THIRD AMENDMENT
SCHEDULE 1-B TO CREDIT AGREEMENT
COMMITMENTS OF THE LENDERS
Program and Demonstrator Acquisition
New Vehicle Swingline Used Vehicle Vehicle Loan
Lender Commitment Commitment Commitment Commitment Commitment
------ ---------- ---------- ---------- ---------- ----------
U.S. Bank National
Association $22,477,526.11 $10,000,000.00 $4,260,452.97 $750,000.00 $6,262,020.92
Comerica Bank $23,035,714.29 -0- $3,750,000.00 -0- $3,214,285.71
NationsBank $20,500,000.00 -0- $5,100,000.00 -0- $4,400,000.00
Xxxxxxx Xxxxx Business
Financial Services Inc. $ 9,714,285.72 -0- $3,142,857.14 -0- $2,142,857.14
The Bank of Tokyo-
Mitsubishi, Ltd. $10,243,902.44 -0- $2,560,975.61 -0- $2,195,121.95
Bank of Scotland $14,171,428.58 -0- $4,614,285.71 -0- $3,214,285.71
BNY Financial Corporation $11,428,571.42 -0- $4,285,714.29 -0- $4,285,714.29
First Security Bank $17,714,285.72 -0- $5,142,857.14 -0- $2,142,857.14
First Hawaiian Bank $10,714,285.72 -0- $2,142,857.14 -0- $2,142,857.14
-------------- --- ------------- --- -------------
Total $140,000,000.00 $10,000,000.00 $35,000,000.00 $750,000.00 $30,000,000.00
--------------- -------------- -------------- ----------- --------------
--------------- -------------- -------------- ----------- --------------
45
