EXHIBIT 10.13
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CREDIT AGREEMENT
DATED AS OF FEBRUARY 25, 2003
AMONG
LITHIA MOTORS, INC.,
VARIOUS FINANCIAL INSTITUTIONS
AND
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC,
AS AGENT
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS....................................................................................... 1
1.1 Definitions................................................................................... 1
1.2 Other Interpretive Provisions................................................................. 14
SECTION 2. COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF CREDIT PROCEDURES............................. 15
2.1 Commitments................................................................................... 15
2.1.1 Revolving Loan Commitment.............................................................. 15
2.1.2 L/C Commitment......................................................................... 15
2.2 Loan Procedures............................................................................... 15
2.3 Letter of Credit Procedures................................................................... 16
2.3.1 L/C Applications....................................................................... 16
2.3.2 Participations in Letters of Credit.................................................... 16
2.3.3 Reimbursement Obligations.............................................................. 16
2.3.4 Limitation on Obligations of Issuing Lender............................................ 17
2.3.5 Funding by Lenders to Issuing Lender................................................... 17
2.4 Commitments Several........................................................................... 17
2.5 Certain Conditions............................................................................ 18
2.6 Extension of Termination Date................................................................. 18
SECTION 3. NOTES EVIDENCING LOANS............................................................................ 18
3.1 Notes......................................................................................... 18
3.2 Recordkeeping................................................................................. 18
SECTION 4. INTEREST.......................................................................................... 18
4.1 Interest Rate................................................................................. 18
4.2 Interest Payment Dates........................................................................ 18
4.3 Computation of Interest....................................................................... 18
SECTION 5. FEES.............................................................................................. 19
5.1 Agent's Fee................................................................................... 19
5.2 Facility Fee.................................................................................. 19
5.3 Letter of Credit Fees......................................................................... 19
5.4 Computation of Fees........................................................................... 19
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(continued)
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SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT; PREPAYMENTS.......................... 19
6.1 Voluntary Reduction or Termination of Revolving Commitment Amount............................. 19
6.2 Voluntary Prepayments......................................................................... 19
6.3 Mandatory Prepayments......................................................................... 19
SECTION 7. MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................................................... 20
7.1 Making of Payments............................................................................ 20
7.2 Application of Certain Payments............................................................... 20
7.3 Due Date Extension............................................................................ 20
7.4 Setoff........................................................................................ 20
7.5 Proration of Payments......................................................................... 20
7.6 Taxes......................................................................................... 21
SECTION 8. WARRANTIES........................................................................................ 22
8.1 Organization.................................................................................. 22
8.2 Authorization; No Conflict.................................................................... 22
8.3 Validity and Binding Nature................................................................... 22
8.4 Financial Condition........................................................................... 22
8.5 No Material Adverse Change.................................................................... 23
8.6 Litigation and Contingent Liabilities......................................................... 23
8.7 Ownership of Properties; Liens................................................................ 23
8.8 Subsidiaries.................................................................................. 23
8.9 Pension Plans................................................................................. 23
8.10 Investment Company Act........................................................................ 23
8.11 Public Utility Holding Company Act............................................................ 24
8.12 Regulation U.................................................................................. 24
8.13 Taxes......................................................................................... 24
8.14 Solvency, etc................................................................................. 24
8.15 Environmental Matters......................................................................... 24
8.16 Insurance..................................................................................... 25
8.17 Information................................................................................... 25
8.18 Intellectual Property......................................................................... 26
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TABLE OF CONTENTS
(continued)
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8.19 Burdensome Obligations........................................................................ 26
8.20 Labor Matters................................................................................. 26
8.21 No Default.................................................................................... 26
8.22 Dealer Franchise Agreements; Material Business Relationships.................................. 26
SECTION 9. COVENANTS......................................................................................... 26
9.1 Reports, Certificates and Other Information................................................... 26
9.1.1 Annual Report.......................................................................... 27
9.1.2 Interim Reports........................................................................ 27
9.1.3 Compliance Certificates................................................................ 27
9.1.4 Reports to the SEC and to Shareholders................................................. 27
9.1.5 Notice of Default, Litigation and ERISA Matters........................................ 28
9.1.6 Borrowing Base Certificates............................................................ 28
9.1.7 Management Reports..................................................................... 29
9.1.8 Subordinated Debt Notices.............................................................. 29
9.1.9 Manufacturer/Dealer Statements......................................................... 29
9.1.10 Dealer Franchise Agreements............................................................ 29
9.1.11 Other Information...................................................................... 29
9.2 Books, Records and Inspections................................................................ 29
9.3 Maintenance of Property; Insurance............................................................ 30
9.4 Compliance with Laws; Payment of Taxes and Liabilities........................................ 30
9.5 Maintenance of Existence, etc................................................................. 30
9.6 Financial Covenants........................................................................... 30
9.6.1 Current Ratio.......................................................................... 30
9.6.2 Fixed Charge Coverage Ratio............................................................ 30
9.6.3 Interest Coverage Ratio................................................................ 31
9.6.4 Adjusted Leverage Ratio................................................................ 31
9.6.5 Working Capital........................................................................ 31
9.7 Limitations on Debt........................................................................... 31
9.8 Liens......................................................................................... 32
9.9 Restricted Payments........................................................................... 33
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TABLE OF CONTENTS
(continued)
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9.10 Mergers, Consolidations, Sales................................................................ 33
9.11 Modification of Organizational Documents...................................................... 34
9.12 Use of Proceeds............................................................................... 34
9.13 Further Assurances............................................................................ 34
9.14 Transactions with Affiliates.................................................................. 35
9.15 Employee Benefit Plans........................................................................ 35
9.16 Environmental Matters......................................................................... 35
9.17 Unconditional Purchase Obligations............................................................ 36
9.18 Inconsistent Agreements....................................................................... 36
9.19 Business Activities........................................................................... 36
9.20 Investments................................................................................... 36
9.21 Fiscal Year................................................................................... 37
9.22 Hedging Agreements............................................................................ 37
9.23 Negative Pledge............................................................................... 37
SECTION 10. EFFECTIVENESS; CONDITIONS OF LENDING, ETC........................................................ 37
10.1 Initial Credit Extension...................................................................... 37
10.1.1 Notes................................................................................. 38
10.1.2 Resolutions........................................................................... 38
10.1.3 Consents, etc......................................................................... 38
10.1.4 Incumbency and Signature Certificates................................................. 38
10.1.5 Guaranty.............................................................................. 38
10.1.6 Security Agreement.................................................................... 38
10.1.7 Pledge Agreement...................................................................... 38
10.1.8 Control Agreements.................................................................... 38
10.1.9 Opinion of Counsel.................................................................... 38
10.1.10 Insurance............................................................................. 38
10.1.11 Payment of Fees....................................................................... 39
10.1.12 Search Results; Lien Terminations..................................................... 39
10.1.13 Solvency Certificate.................................................................. 39
10.1.14 Closing Certificate................................................................... 39
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TABLE OF CONTENTS
(continued)
PAGE
10.1.15 Filings, Registrations and Recordings................................................. 39
10.1.16 Borrowing Base Certificate............................................................ 39
10.1.17 Documents............................................................................. 39
10.1.18 Good Standing Certificates............................................................ 39
10.1.19 Certified Articles.................................................................... 40
10.1.20 Other................................................................................. 40
10.2 Conditions.................................................................................... 40
10.2.1 Compliance with Warranties, No Default, etc........................................... 40
10.2.2 Confirmatory Certificate.............................................................. 40
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT............................................................... 40
11.1 Events of Default............................................................................. 40
11.1.1 Non-Payment of the Loans, etc......................................................... 40
11.1.2 Non-Payment of Other Debt............................................................. 41
11.1.3 Other Material Obligations............................................................ 41
11.1.4 Bankruptcy, Insolvency, etc........................................................... 41
11.1.5 Non-compliance with Loan Documents.................................................... 41
11.1.6 Warranties............................................................................ 41
11.1.7 Pension Plans......................................................................... 42
11.1.8 Judgments............................................................................. 42
11.1.9 Invalidity of Guaranty, etc........................................................... 42
11.1.10 Invalidity of Collateral Documents, etc............................................... 42
11.1.11 Invalidity of Subordination Provisions, etc........................................... 42
11.1.12 Change in Control..................................................................... 42
11.2 Effect of Event of Default.................................................................... 42
SECTION 12. THE AGENT........................................................................................ 43
12.1 Appointment and Authorization................................................................. 43
12.2 Delegation of Duties.......................................................................... 43
12.3 Liability of Agent............................................................................ 43
12.4 Reliance by Agent............................................................................. 44
12.5 Notice of Default............................................................................. 44
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(continued)
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12.6 Credit Decision............................................................................... 44
12.7 Indemnification............................................................................... 45
12.8 Agent in Individual Capacity.................................................................. 45
12.9 Successor Agent............................................................................... 46
12.10 Collateral Matters............................................................................ 46
12.11 Funding Reliance.............................................................................. 46
SECTION 13. GENERAL.......................................................................................... 47
13.1 Waiver; Amendments............................................................................ 47
13.2 Confirmations................................................................................. 47
13.3 Notices....................................................................................... 47
13.4 Computations.................................................................................. 48
13.5 Regulation U.................................................................................. 48
13.6 Costs, Expenses and Taxes..................................................................... 48
13.7 Subsidiary References......................................................................... 49
13.8 Captions...................................................................................... 49
13.9 Assignments; Participations................................................................... 49
13.9.1 Assignments........................................................................... 49
13.9.2 Participations........................................................................ 50
13.10 Governing Law................................................................................. 50
13.11 Counterparts.................................................................................. 51
13.12 Successors and Assigns........................................................................ 51
13.13 Indemnification by the Company................................................................ 51
13.14 Nonliability of Lenders....................................................................... 51
13.15 Forum Selection and Consent to Jurisdiction................................................... 52
13.16 Waiver of Jury Trial.......................................................................... 52
13.17 DCSNA Right of First Refusal on Floor Plan Financing.......................................... 52
13.18 Confidentiality............................................................................... 53
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TABLE OF CONTENTS
(continued)
SCHEDULES
SCHEDULE 2.1 Lenders and Pro Rata Shares
SCHEDULE 8.6 Litigation and Contingent Liabilities
SCHEDULE 8.8 Subsidiaries
SCHEDULE 8.15 Environmental Matters
SCHEDULE 8.16 Insurance
SCHEDULE 8.20 Labor Matters
SCHEDULE 8.22 Dealer Franchise Agreements
SCHEDULE 9.7 Permitted Existing Debt
SCHEDULE 9.8 Permitted Existing Liens
SCHEDULE 9.18 Permitted Restrictions
SCHEDULE 9.20 Permitted Existing Investments
SCHEDULE 10.1 Debt to be Repaid
SCHEDULE 13.3 Addresses for Notices
EXHIBITS
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 9.1.3)
EXHIBIT C Form of Guaranty (Section 1.1)
EXHIBIT D Form of Security Agreement (Section 1.1)
EXHIBIT E Form of Pledge Agreement (Section 1.1)
EXHIBIT F Form of Solvency Certificate (Section 10.1.13)
EXHIBIT G Form of Assignment Agreement (Section 13.9.1)
EXHIBIT H Form of Borrowing Base Certificate (Section 1.1)
EXHIBIT I Form of L/C Application (Section 1.1)
EXHIBIT J Form of Opinion of Counsel (Section 10.1.9)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of February 25, 2003 (this "Agreement") is
entered into among LITHIA MOTORS, INC. (the "Company"), the financial
institutions that are or may from time to time become parties hereto (together
with their respective successors and assigns, the "Lenders") and DAIMLERCHRYSLER
SERVICES NORTH AMERICA LLC (in its individual capacity, "DCSNA"), as agent for
the Lenders.
WHEREAS, the Lenders have agreed to make available to the Company a
revolving credit facility and to issue letters of credit for the account of the
Company upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
DEFINITIONS.
Definitions. When used herein the following terms shall have the following
meanings:
Account means, with respect to any Person, any right of such Person to
payment for goods sold or leased or for services rendered, whether or not
evidenced by an instrument or chattel paper and whether or not yet earned by
performance.
Acquisition means an acquisition by the Company or any Collateral
Subsidiary of all or substantially all the assets of a business unit or an
interest of at least 80% of the capital stock or other ownership interests of an
Automobile Dealership, whether through a purchase, merger, consolidation or
otherwise.
Acquisition Cost means, as of any date, (x) with respect to any New Motor
Vehicle, the wholesale purchase price charged by the Manufacturer thereof as
reflected in the invoice in respect of such New Motor Vehicle issued by such
Manufacturer to the Company, the applicable Collateral Subsidiary or any other
licensed automobile dealer from which such New Motor Vehicle was purchased by
the Company or the applicable Collateral Subsidiary less any related deductions
set forth on such invoice, and (y) with respect to any Used Motor Vehicle and/or
Auction Motor Vehicle, (i) the price paid by the Company or its applicable
Collateral Subsidiary to purchase such Used Motor Vehicle or Auction Motor
Vehicle minus (ii) any market value adjustments reasonably determined by the
Agent for such Used Motor Vehicle or Auction Motor Vehicle.
Adjusted Leverage Ratio means, with respect to any Person at any time, (a)
Total Liabilities of such Person and its Subsidiaries at such time divided by
(b) EBITDA of such Person and its Subsidiaries for the most recently completed
Computation Period.
Affiliate of any Person means (i) any other Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person
possesses, directly or indirectly, power to vote 5% or more of the securities
(on a fully diluted basis) having ordinary voting power for the election of
directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
Agent means DCSNA in its capacity as agent for the Lenders hereunder and
any successor thereto in such capacity.
Agreement - see the Preamble.
Assignee - see Section 13.9.1.
Assignment Agreement - see Section 13.9.1.
Attorney Costs means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
legal services of such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.
Auction Motor Vehicles means Motor Vehicles purchased at Manufacturer- or
Floor Plan Financing Provider-sponsored dealer-only closed auctions.
Automobile Dealership means a business that operates one or more
dealerships for the retail sale, or retail sale and lease, of new and/or used
automobiles or trucks and businesses ancillary to the operation of dealerships
owned or operated by the Company or its Subsidiaries, including service and
parts operations, body shops, the sale of finance, extended warranty and
insurance products (including after-market items), the financing of the purchase
of new and/or used vehicles, the purchase, sale and servicing of finance
contracts for new and/or used vehicles and other related businesses.
Borrowing Base means, at any time, the sum of the following: (a) an amount
equal to 100% of the sum of (i) all cash on deposit at such time in deposit
accounts of the Company, its Collateral Subsidiaries and Lithia Real Estate in
which the Agent has a perfected security interest pursuant to the Collateral
Documents, (ii) the amount at such time requested to be funded to the Company
and its Collateral Subsidiaries in respect of retail installment contracts with
respect to, and retail leases of, Motor Vehicles where the underlying contracts
and leases have been submitted in the ordinary course of business to a third
party purchaser that is a financial institution and that is not an Affiliate of
the Company for which purchase the Company and its Collateral Subsidiaries have
not yet been paid plus all other amounts owing at such time to the Company and
its Collateral Subsidiaries from purchasers or lessees of such Motor Vehicles in
respect of such purchases or leases and (iii) the difference between (x) the
Acquisition Cost of that portion of the Inventory of the Company and its
Collateral Subsidiaries that consists of New Motor Vehicles and (y) the
aggregate amount of Floor Plan Financing of the Company and its Collateral
Subsidiaries incurred in connection with such New Motor Vehicles; (b) an amount
equal to 65% of the Accounts of the Company and its Collateral Subsidiaries that
consist of Factory Receivables or Accounts owing from customers for service and
parts; (c) an amount equal to 60% of the Accounts of the Company and its
Collateral Subsidiaries that would be listed as "note and lease receivables" on
a consolidated balance sheet of the Company and its
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Collateral Subsidiaries at such time; (d) an amount equal to 65% of the book
value of the Inventory of the Company and its Collateral Subsidiaries that
consists of parts and accessories; (e) an amount equal to 80% of the difference
between (i) the Acquisition Cost of that portion of the Inventory of the Company
and its Collateral Subsidiaries that constitutes Used Motor Vehicles and/or
Auction Motor Vehicles (without duplication) and (ii) the aggregate amount of
any Floor Plan Financing of the Company and its Collateral Subsidiaries incurred
in connection with such Used Motor Vehicles and Auction Motor Vehicles; and (f)
an amount equal to 45% of the difference between (i) the book value of the
Equipment of the Company and its Collateral Subsidiaries and (ii) the aggregate
amount of Debt of the Company and its Collateral Subsidiaries incurred to
finance the purchase price of such Equipment. For purposes of greater clarity,
service loaners shall not constitute Inventory for purposes of calculating the
Borrowing Base.
Borrowing Base Certificate means a certificate in substantially the form
set forth in Exhibit H.
Business Day means any day of the year (other than any Saturday or Sunday)
that is not a day on which commercial banks are authorized or required by law to
close in Detroit, Michigan.
Capital Expenditures means all expenditures for property, plant and
equipment that, in accordance with GAAP, would be required to be capitalized and
shown on the consolidated balance sheet of the Company, but excluding (i)
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (x) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (y) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced and (ii)
expenditures made with net cash proceeds of the sales of assets (other than
sales of inventory in the ordinary course of business and sales to Affiliates).
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Collateralize means to deliver cash collateral to the Agent, to be
held as cash collateral for outstanding Letters of Credit, pursuant to
documentation reasonably satisfactory to the Agent and the Company. Derivatives
of such term have corresponding meanings.
Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case rated at least A-l by Standard & Poor's Ratings Group or P-l by
▇▇▇▇▇'▇ Investors Service, Inc., (c) any certificate of deposit (or time
deposits represented by such certificates of deposit) or banker's acceptance,
maturing not more than one year after such time, or overnight Federal Funds
transactions that are issued or sold by any Lender or its holding company or by
a commercial banking institution that is a member of the Federal Reserve System
and has a combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with DCSNA (or with a
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commercial banking institution of the stature referred to in clause (c)) that
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of DCSNA (or commercial banking institution) thereunder,
(e) shares of money market mutual funds within the definition of Rule 2a-7
promulgated by the SEC under the Investment Company Act of 1940 and (f) other
cash equivalent investments approved by the Agent.
CERCLA - see Section 8.15.
Change in Control means:
(a) Lithia Holding Company, L.L.C. ceases to own, directly or
indirectly, more than 51% of the voting power of the Company's capital
stock ordinarily having the right to vote at an election of directors or
the Principal ceases to control Lithia Holding Company, L.L.C.;
(b) during any period of 24 consecutive calendar months, individuals
(i) who were directors of the Company on the first day of such
period, or
(ii) whose election or nomination for election to the board of
directors of the Company was recommended or approved by at least a
majority of the directors then still in office who were directors of
the Company on the first day of such period, or whose election or
nomination for election was so approved,
shall cease to constitute a majority of the board of directors of
the Company; or
(c) the Company consolidates with or merges into another Person or
conveys, transfers or leases all or substantially all of its property to any
Person, or any Person consolidates with or merges into the Company, in either
event pursuant to a transaction in which the outstanding capital stock of the
Company is reclassified or changed into or exchanged for (i) cash or Cash
Equivalent Investments or (ii) securities, and the holders of the capital stock
in the Company immediately prior to such transaction do not, as a result of such
transaction, own, directly or indirectly, more than 51% of the combined voting
power of the Company's capital stock or the capital stock of its successor
entity in such transaction.
Closing Date - see Section 10.1.
Code means the Internal Revenue Code of 1986.
Collateral Documents means the Security Agreement, the Pledge Agreement,
each Control Agreement and any other agreement or instrument pursuant to which
the Company, any Subsidiary or any other Person grants collateral to the Agent
for the benefit of the Lenders to secure the obligations hereunder and under the
other Loan Documents.
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Collateral Subsidiary means each Subsidiary other than an Excluded
Subsidiary.
Commitment means, as to any Lender, such Lender's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
The initial amount of each Lender's Pro Rata Share of the Revolving Commitment
Amount is set forth on Schedule 2.1.
Company - see the Preamble.
Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.
Consolidated Current Assets means, at any date, the aggregate amount of
all assets of the Company and its Subsidiaries, as shown on the most recent
consolidated balance sheet of the Company and its Subsidiaries, that would be
classified as current assets (including cash, marketable securities, accounts
receivable, inventory and prepaid expenses) in accordance with GAAP.
Consolidated Current Liabilities means, at any date, the aggregate amount
of all liabilities of the Company and its Subsidiaries, as shown on the most
recent consolidated balance sheet of the Company and its Subsidiaries, that
would be classified as current liabilities in accordance with GAAP.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period.
Control Agreement means an agreement in form and substance satisfactory to
the Agent giving the Agent control (within the meaning of Section 8-106 or 9-104
of the Uniform Commercial Code) over a deposit account or securities account of
the Company or a Subsidiary.
Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control that, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.
DCSNA - see the Preamble.
Dealer Franchise Agreement - see Section 8.22.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases that have been recorded as liabilities on a balance sheet of such
Person in accordance with GAAP, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person, (e) all obligations, contingent or otherwise, with
respect to the face amount of all letters of credit (whether or not drawn) and
banker's acceptances issued for the account of such Person
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(including the Letters of Credit), (f) all Hedging Obligations of such Person,
(g) all Suretyship Liabilities of such Person and (h) all Debt of any
partnership of which such Person is a general partner.
Debt to be Repaid means Debt listed on Schedule 10.1.
Disposal - see the definition of "Release". Dollar and the sign "$" mean
lawful money of the United States of America.
EBITDA means, for any period, on a consolidated basis for the Company and
its Subsidiaries, the sum of the amounts for such period, without duplication,
of:
(i) Consolidated Net Income, plus
(ii) Interest Expense, to the extent deducted in computing Consolidated
Net Income, plus
(iii) charges against income for foreign, federal, state and local taxes,
to the extent deducted in computing Consolidated Net Income, plus
(iv) depreciation expense, to the extent deducted in computing
Consolidated Net Income, plus
(v) amortization expense, including amortization of goodwill, other
intangible assets and Transaction Costs, to the extent deducted in computing
Consolidated Net Income, plus
(vi) other non-cash charges classified as long-term deferrals in
accordance with GAAP, to the extent deducted in computing Consolidated Net
Income, minus
(vii) all extraordinary gains (and any nonrecurring unusual gains arising
in or outside of the ordinary course of business not included in extraordinary
gains determined in accordance with GAAP that have been included in the
determination of Consolidated Net Income).
EBITDA shall be calculated for any period by including the actual amount for the
applicable period ending on such day, including the EBITDA attributable to
Acquisitions permitted under Section 9.10 occurring during such period on a pro
forma basis for the period from the first day of the applicable period through
the date of the closing of each Acquisition permitted under Section 9.10,
utilizing (a) where available or required pursuant to the terms of this
Agreement, historical audited and/or reviewed unaudited financial statements
obtained from the seller, broken down by fiscal quarter in the Company's
reasonable judgment or (b) unaudited financial statements (where no audited or
reviewed financial statements are required pursuant to the terms of this
Agreement) reviewed internally by the Company, broken down in the Company's
reasonable judgment.
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▇▇▇▇▇▇▇ means, for any period, EBITDA for such period plus, to the extent
deducted in determining Consolidated Net Income for such period, Rental Expense
for such period.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.
Environmental Matters means any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.
Equipment has the meaning assigned thereto in the Uniform Commercial Code.
ERISA means the Employee Retirement Income Security Act of 1974.
Event of Default means any of the events described in Section 11.1.
Excluded Subsidiary means each of Lithia Financial and its Subsidiaries
and Lithia Real Estate and its Subsidiaries.
Factory Receivables of any Person means all of such Person's rights to
receive payment, credit and other compensation (including holdbacks, incentive
payments, stock rebates, allowances and additional "factory credits") from any
Manufacturer.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
Financed Capital Expenditures means any Capital Expenditure that is
financed by a Person other than the Company and its Subsidiaries at the time of
making the expenditure or, in the case of a Capital Expenditure for the
acquisition or improvement of real property, within 270 days of the making
thereof; provided, however, that to the extent any Capital Expenditure for the
acquisition or improvement of real property is financed at a later time, such
Capital Expenditure shall thereafter constitute a Financed Capital Expenditure
(but shall not constitute a Financed Capital Expenditure during the time from
the expiry of such 270-day period to the date such financing is funded).
-7-
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 2003") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fixed Charge Coverage Ratio means, for any Computation Period, the ratio
of (a) the total for such period of EBITDAR minus Capital Expenditures (other
than Financed Capital Expenditures) to (b) the sum of (i) Interest Expense for
such period plus (ii) Rental Expense for such period plus (iii) income tax
expense for such period of the Company and its Subsidiaries to the extent paid
in cash plus (iv) scheduled payments of principal of Debt for such period for
the Company and its Subsidiaries.
Floor Plan Financing means a financing undertaken by the Company or any
Collateral Subsidiary all of the proceeds of which are used to purchase New
Motor Vehicles or Auction Motor Vehicles to be sold and/or leased in the
ordinary course of business of the Company and its Collateral Subsidiaries.
Floor Plan Financing Provider means each provider of Floor Plan Financing
to the Company and its Collateral Subsidiaries.
Foreign Subsidiary means any Subsidiary of the Company that is not
incorporated or organized in the United States or in any State thereof.
FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.
GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substances - see Section 8.15.
Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
Hedging Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement.
Indemnified Liabilities - see Section 13.13.
-8-
Interest Coverage Ratio means, for any Computation Period, the ratio of
(a) EBITDA for such Computation Period to (b) Interest Expense for such
Computation Period.
Interest Expense means for any period the consolidated interest expense of
the Company and its Subsidiaries for such period (including all imputed interest
on Capital Leases).
Interest Rate means, for each day, a rate per annum equal to the sum of
(a) (i) in the case of any day from and including the first day of each calendar
month through and including the 15th day of such calendar month, the Eurodollar
Rate for the first day of such calendar month and (ii) in the case of any day
from and including the 16th day of each calendar month through and including the
last day of such calendar month, the Eurodollar Rate for the 16th day of such
calendar month plus (b) (i) to the extent that the Revolving Outstandings are
less than or equal to the Borrowing Base, a margin of two and three-quarters
percent (2.75%) per annum and (ii) to the extent that the Revolving Outstandings
exceed the Borrowing Base, a margin of three and one-half percent (3.50%) per
annum. The foregoing margins may be adjusted at any time in the Agent's sole and
absolute discretion upon 90 days' prior written notice from the Agent to the
Company; provided that (i) no more than one such adjustment may be made during
any period of twelve consecutive months and (ii) no such notice may be delivered
until the date which is 90 days prior to the first anniversary of the Closing
Date. Notwithstanding the foregoing, (i) at any time an Event of Default exists
under Section 11.1.1 or 11.1.4, if requested by the Required Lenders, the
applicable margin shall be increased by two percent (2.00%) per annum and (ii)
at any time an Event of Default exists other than an Event of Default under
Section 11.1.1 or 11.1.4, if requested by the Required Lenders, the applicable
margin shall be increased by one percent (1.00%) per annum. For purposes of this
definition, "Eurodollar Rate" means, for any day, the rate of interest (rounded
upwards, if necessary, to the next 1/16th of 1%) published in The Wall Street
Journal (Midwest Edition) on such day (or if not published on such day, for the
immediately preceding day on which it was published) in its "Money Rates" column
as the one-month London Interbank Offered Rate for Dollar-denominated deposits
(if The Wall Street Journal ceases to publish such a rate or substantially
changes the methodology used to determine such rate, then the rate shall be
otherwise independently determined by the Agent from an alternate source
selected by the Agent in its sole discretion or determined by the Agent on a
basis substantially similar to the methodology used by The Wall Street Journal
on the date of this Agreement). If the Company fails to deliver any Borrowing
Base Certificate required by Section 9.1.6 by the 45th day after any Fiscal
Quarter, then, until such Borrowing Base Certificate is delivered, the first
$50,000,000 of Revolving Loans shall bear interest at an Interest Rate
determined pursuant to clause (b)(ii) above, but subject to the fourth sentence
of this definition.
Inventory has the meaning assigned thereto in the Uniform Commercial Code.
Investment means, relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance or by becoming obligated with respect to a Suretyship Liability
in respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business). The amount of any
Investment shall be deemed to be the amount of cash invested (or, in the case of
property invested other than cash, the fair market value of the property
invested) less an amount equal to the lesser of the amount of cash received by
the investing person as a return on capital
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with respect to such Investment and the initial amount of such Investment, in
either case, less the cost of disposition of such Investment.
Issuing Lender means DCSNA in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.
L/C Application means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form of Exhibit I.
Lender - see the Preamble. References to the "Lenders" shall include the
Issuing Lender; for purposes of clarification only, to the extent that DCSNA (or
any successor Issuing Lender) may have any rights or obligations in addition to
those of the other Lenders due to its status as Issuing Lender, its status as
such will be specifically referenced.
Letter of Credit - see Section 2.1.2.
Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person that secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Lithia Aircraft means Lithia Aircraft, Inc., an Oregon corporation.
Lithia Financial means Lithia Financial Corporation, an Oregon
corporation.
Lithia Real Estate means Lithia Real Estate, Inc., an Oregon corporation.
Loan Documents means this Agreement, the Notes, the Guaranty, the Letters
of Credit and the Collateral Documents.
Loan Party means the Company, each Subsidiary party to any Loan Document
and each other Person party to any Loan Document.
Loans means Revolving Loans.
Majority Acquisition means any Acquisition of equity interests of an
entity, in which the Company is not permitted to hold 100% of such equity
interests because of limitations imposed by the relevant Manufacturer's Dealer
Franchise Agreement.
Manufacturer means the manufacturer or distributor of a new Motor Vehicle.
Manufacturer/Dealer Statement means a financial statement prepared by the
Company or one of its Subsidiaries for a Manufacturer and delivered to such
Manufacturer on a monthly basis.
Manufacturer's Certificate means a Manufacturer's Statement of Origin,
Manufacturer's Certificate, MSO, Certificate of Origin or other document
evidencing the ownership or transfer
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of ownership of a New Motor Vehicle from a Manufacturer to the Company or any of
its Subsidiaries.
Margin Stock means any "margin stock" as defined in Regulation U.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the condition (financial or otherwise),
operations, assets, business, properties or prospects of the Company and its
Subsidiaries taken as a whole, (b) a material impairment of the ability of the
Company or any Subsidiary to perform any of its obligations under any Loan
Document or (c) a material adverse effect upon any substantial portion of the
collateral under the Collateral Documents or upon the legality, validity,
binding effect or enforceability against the Company or any Subsidiary of any
Loan Document.
Motor Vehicle means an automobile, truck, van or other motor vehicle,
including New Motor Vehicles, Used Motor Vehicles and Auction Motor Vehicles,
that constitutes Inventory of the Company and its Collateral Subsidiaries,
excluding any motor vehicle not held for sale or lease.
Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.
New Motor Vehicle means any Motor Vehicle purchased by the Company or any
of its Collateral Subsidiaries directly from the Manufacturer of such Motor
Vehicle or from another licensed automobile dealer that has not been previously
owned by any other Person.
Note - see Section 3.1.
Operating Lease means any lease of (or other agreement conveying the right
to use) any property by the Company or any Subsidiary, as lessee, other than any
Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
Permitted Restrictions means restrictions on the ability of any Subsidiary
to declare or pay any dividend or make other distributions, or to advance or
loan funds, to the Company, or to grant Liens on the assets of such Subsidiary
to secure the obligations of the Company hereunder and under the other Loan
Documents: (i) as set forth on Schedule 9.18 on the Closing Date, including
restrictions imposed by existing Floor Plan Financing arrangements; (ii)
pursuant to modifications to any Floor Plan Financing arrangement, provided that
such modifications are not
-11-
materially more restrictive; (iii) applicable to a Person at the time such
Person becomes a Subsidiary and not created in contemplation of such an event;
(iv) resulting from manufacturer-imposed modifications to any franchise
agreement; or (v) imposed by applicable law.
Person means any natural person, corporation, partnership, joint venture,
trust, limited liability company, association, governmental authority or unit,
or any other entity, whether acting in an individual, fiduciary or other
capacity.
Pledge Agreement means a pledge agreement in substantially the form of
Exhibit E.
Prime Rate means, on any day, the rate of interest per annum published in
The Wall Street Journal (Midwest Edition) in its "Money Rates" column as the
Prime Rate for such day.
Principal means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or a successor, or successors, reasonably
acceptable to the Agent.
Pro Rata Share means, with respect to any Lender, the percentage which (a)
the amount of such Lender's Commitment is of (b) the Commitments of all Lenders;
provided that, after the Commitments have been terminated, "Pro Rata Share"
shall mean, as to any Lender, the percentage which the sum of the aggregate
principal amount of such Lender's Revolving Loans plus the participations of
such Lender in all Letters of Credit is of the sum of the aggregate principal
amount of all Revolving Loans plus the Stated Amount of all Letters of Credit.
The initial Pro Rata Share of each Lender is set forth on Schedule 2.1.
RCRA - see Section 8.15.
Refinancing Debt means Debt that refunds or refinances any Debt, including
Debt that refinances other Refinancing Debt; provided that (i) the Refinancing
Debt has a maturity no earlier than the maturity of the Debt being refinanced,
(ii) the Refinancing Debt has a weighted average life to maturity no earlier
than the weighted average life to maturity of the Debt being refinanced, (iii)
the Refinancing Debt is incurred in an aggregate principal amount (or, if issued
with original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or, if issued with original issue discount,
the aggregate accreted value) then outstanding of the Debt being refinanced and
(iv) if the Debt being refinanced is Subordinated Debt, the subordination terms
of the Refinancing Debt are at least as favorable to the Lenders as the
subordination terms of the Debt being refinanced.
Regulation U means Regulation U of the FRB.
Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" that is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
-12-
Rental Expense means, with respect to any period, all payments made or
required to be made by the Company and its Subsidiaries, as lessee or sublessee
under any Operating Lease, as rental payments or contingent rentals, as
calculated in accordance with GAAP.
Required Lenders means Lenders having Pro Rata Shares aggregating more
than 65%.
Revolving Commitment Amount means $200,000,000, as reduced from time to
time pursuant to Section 6.1.
Revolving Loan - see Section 2.1.1.
Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all Revolving Loans, plus (b) the Stated Amount of all
Letters of Credit.
SEC means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.
Security Agreement means a security agreement in substantially the form of
Exhibit D.
Stated Amount means, with respect to any Letter of Credit at any date of
determination, (a) the maximum aggregate amount available for drawing thereunder
under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
Subordinated Debt means unsecured Debt of the Company that has
subordination terms, covenants, pricing and other terms that have been approved
in writing by the Required Lenders.
Subsidiary means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares or
other ownership interests as have more than 50% of the ordinary voting power for
the election of directors or other managers of such corporation, partnership,
limited liability company or other entity. Unless the context otherwise
requires, each reference to Subsidiaries herein shall be a reference to
Subsidiaries of the Company.
Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Taxes - see Section 7.6.
-13-
Termination Date means the earlier to occur of (a) February __, 2006 (or
any later date that may be established as the Termination Date pursuant to
Section 2.6) or (b) such other date on which the Commitments terminate pursuant
to Section 6 or 11.
Total Liabilities means, with respect to any Person at any time, the total
of the following for such Person and its Subsidiaries at such time (a) all Debt
plus all other items which, in accordance with GAAP, would be included as
liabilities on the liability side of a consolidated balance sheet of such Person
prepared at such time minus (b) all accounts payable incurred on normal trade
terms in the ordinary course of business, all accrued expenses incurred in the
ordinary course of business, all Debt under Floor Plan Financings, all
Subordinated Debt and all Debt secured entirely by real property (or leasehold
interests therein) or fixtures that matures more than one year after such time.
Toyota Facility means the credit facility extended to Lithia Real Estate
evidenced by the Amended and Restated Revolving Loan and Security Agreement
dated May 10, 2002 between Lithia Real Estate and Toyota Motor Credit
Corporation.
Transaction Costs means the reasonable fees, costs and expenses payable by
the Company in connection with the execution, delivery and performance of the
Loan Documents and all documents, instruments and agreements entered into in
connection with any Acquisition.
Uniform Commercial Code means the Uniform Commercial Code as in effect
from time to time in the State of Michigan.
Unmatured Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.
US Bank Facility means the credit facility extended to Lithia Financial
evidenced by the Amended and Restated Loan Agreement, dated as of December 28,
2001, among the Company, Lithia Financial, Lithia Aircraft, Lithia Salmir, Inc.
and U.S. Bank, National Association.
Used Motor Vehicle means, at any time, a Motor Vehicle that is not a New
Motor Vehicle or an Auction Motor Vehicle.
Wholly-Owned Subsidiary means, as to any Person, another Person all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by such Person
and/or another Wholly-Owned Subsidiary of such Person.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) The term "including" is not limiting and means "including without
limitation."
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(d) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words "to" and
"until" each mean "to but excluding", and the word "through" means "to and
including."
(e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document and (ii) references to any statute or regulation
shall be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute or regulation.
(f) This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and each shall be
performed in accordance with its terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company,
the Lenders and the other parties thereto and are the products of all parties.
Accordingly, they shall not be construed against the Agent or the Lenders merely
because of the Agent's or Lenders' involvement in their preparation.
SECTION 2. COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF CREDIT
PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Lenders, severally and for itself alone, agrees to make
loans to, and to issue or participate in Letters of Credit for the account of,
the Company as follows:
2.1.1 Revolving Loan Commitment. Each Lender agrees to make loans on a
revolving basis ("Revolving Loans") to the Company from time to time until the
Termination Date in such Lender's Pro Rata Share of such aggregate amounts as
the Company may request; provided that (x) the Revolving Outstandings will not,
at any time, exceed the Revolving Commitment Amount and (y) the Revolving
Outstandings will not, at any time, exceed the Borrowing Base by more than
$50,000,000.
2.1.2 L/C Commitment. (a) The Issuing Lender will issue letters of credit,
in each case containing such terms and conditions as are permitted by this
Agreement and are reasonably satisfactory to the Issuing Lender (each a "Letter
of Credit"), at the request of and for the account of the Company from time to
time before the date that is 30 days prior to the Termination Date and (b) as
more fully set forth in Section 2.3.2, each Lender agrees to purchase a
participation in each such Letter of Credit; provided that (i) the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed $5,000,000,
(ii) the Revolving Outstandings will not at any time exceed the Revolving
Commitment Amount and (iii) the Revolving Outstandings will not, at any time,
exceed the Borrowing Base by more than $50,000,000.
-15-
2.2 Loan Procedures. The Company shall give written notice or telephonic
notice (followed immediately by written confirmation thereof) to the Agent of
each proposed borrowing not later than 1:00 p.m., Detroit time, at least two
Business Days prior to the proposed date of such borrowing. Each such notice
shall be effective upon receipt by the Agent, shall be irrevocable, and shall
specify the date and amount of borrowing. Within one Business Day of receipt of
such notice, the Agent shall advise each Lender thereof. Not later than 4:00
p.m., Detroit time, on the date of a proposed borrowing, each Lender shall
provide the Agent at the office specified by the Agent with immediately
available funds covering such Lender's Pro Rata Share of such borrowing and, so
long as the Agent has not received written notice that the conditions precedent
set forth in Section 10 with respect to such borrowing have not been satisfied,
the Agent shall pay over the funds received by the Agent to the Company on the
requested borrowing date. Each borrowing shall be on a Business Day.
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Company shall give notice to the Agent and the
Issuing Lender of the proposed issuance of each Letter of Credit on a Business
Day that is at least three Business Days (or such lesser number of days as the
Agent and the Issuing Lender shall agree in any particular instance in their
sole discretion) prior to the proposed date of issuance of such Letter of
Credit. Each such notice shall be accompanied by an L/C Application, duly
executed by the Company and in all respects reasonably satisfactory to the Agent
and the Issuing Lender, together with such other documentation as the Agent or
the Issuing Lender may reasonably request in support thereof, it being
understood that each L/C Application shall specify, among other things, the date
on which the proposed Letter of Credit is to be issued, the expiration date of
such Letter of Credit (which shall not be later than the earlier to occur of (x)
one year after the date of issuance thereof and (y) thirty days prior to the
scheduled Termination Date) and whether such Letter of Credit is to be
transferable in whole or in part. So long as the Issuing Lender has not received
written notice that the conditions precedent set forth in Section 10 with
respect to the issuance of such Letter of Credit have not been satisfied, the
Issuing Lender shall issue such Letter of Credit on the requested issuance date.
The Issuing Lender shall promptly advise the Agent and each Lender of the
issuance of each Letter of Credit and of any amendment thereto, extension
thereof or event or circumstance changing the amount available for drawing
thereunder. In the event of any inconsistency between the terms of any L/C
Application and the terms of this Agreement, the terms of this Agreement shall
control.
2.3.2 Participations in Letters of Credit. Concurrently with the issuance
of each Letter of Credit, the Issuing Lender shall be deemed to have sold and
transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty, an undivided interest and participation,
to the extent of such other Lender's Pro Rata Share, in such Letter of Credit
and the Company's reimbursement obligations with respect thereto. For the
purposes of this Agreement, the unparticipated portion of each Letter of Credit
shall be deemed to be the Issuing Lender's "participation" therein. The Issuing
Lender hereby agrees, upon request of the Agent or any Lender, to deliver to the
Agent or such Lender a list of all outstanding Letters of Credit issued by the
Issuing Lender, together with such information related thereto as the Agent or
such Lender may reasonably request.
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2.3.3 Reimbursement Obligations. The Company hereby unconditionally and
irrevocably agrees to reimburse the Issuing Lender for each payment or
disbursement made by the Issuing Lender under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Lender is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the Interest
Rate from time to time in effect plus, beginning on the third Business Day after
receipt of notice from the Issuing Lender of such payment or disbursement, 2%.
The Issuing Lender shall notify the Company and the Agent whenever any demand
for payment is made under any Letter of Credit by the beneficiary thereunder;
provided that the failure of the Issuing Lender to so notify the Company shall
not affect the rights of the Issuing Lender or the Lenders in any manner
whatsoever.
2.3.4 Limitation on Obligations of Issuing Lender. In determining whether
to pay under any Letter of Credit, the Issuing Lender shall not have any
obligation to the Company or any Lender other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and appear to comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Issuing Lender
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence and willful misconduct, shall not impose upon the
Issuing Lender any liability to the Company or any Lender and shall not reduce
or impair the Company's reimbursement obligations set forth in Section 2.3.3 or
the obligations of the Lenders pursuant to Section 2.3.5.
2.3.5 Funding by Lenders to Issuing Lender. If the Issuing Lender makes
any payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Lender in full for such payment or disbursement by 1:00
p.m., Detroit time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuing Lender from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Lender shall be obligated to pay to the Agent
for the account of the Issuing Lender, in full or partial payment of the
purchase price of its participation in such Letter of Credit, its Pro Rata Share
of such payment or disbursement (but no such payment shall diminish the
obligations of the Company under Section 2.3.3), and, upon notice from the
Issuing Lender, the Agent shall promptly notify each other Lender thereof. Each
other Lender irrevocably and unconditionally agrees to so pay to the Agent in
immediately available funds for the Issuing Lender's account the amount of such
other Lender's Pro Rata Share of such payment or disbursement. If and to the
extent any Lender shall not have made such amount available to the Agent by 2:00
p.m., Detroit time, on the Business Day following the date on which such Lender
receives notice from the Agent of such payment or disbursement, such Lender
agrees to pay interest on such amount to the Agent for the Issuing Lender's
account forthwith on demand, for each day from the date such amount was to have
been delivered to the Agent to the date such amount is paid, at a rate per annum
equal to (a) for the first three days after demand, the Federal Funds Rate from
time to time in effect and (b) thereafter, the Interest Rate from time to time
in effect. Any Lender's failure to make available to the Agent its Pro Rata
Share of any such payment or disbursement shall not relieve any other Lender of
its obligation hereunder to make available to the Agent such other Lender's Pro
Rata Share of such
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payment, but no Lender shall be responsible for the failure of any other Lender
to make available to the Agent such other Lender's Pro Rata Share of any such
payment or disbursement.
2.4 Commitments Several. The failure of any Lender to make a requested
Loan on any date shall not relieve any other Lender of its obligation (if any)
to make a Loan on such date, but no Lender shall be responsible for the failure
of any other Lender to make any Loan to be made by such other Lender.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Lender shall have an obligation to make any Loan, and the Issuing
Lender shall not have any obligation to issue any Letter of Credit, if an Event
of Default or Unmatured Event of Default has occurred and is continuing.
2.6 Extension of Termination Date. On each anniversary of the Closing
Date, the Termination Date shall be extended for an additional year if the Agent
(acting at the request of all of the Lenders) shall notify the Company in
writing on or prior to such anniversary that the Termination Date is so extended
for an additional year (such notice an "Extension Notice"). If the Agent shall
have issued an Extension Notice by the time required above, the Agent shall
promptly notify the Company and each Lender of the new Termination Date. If no
Extension Notice is received by the Company on or prior to any such anniversary,
the Termination Date shall not be extended on any such anniversary.
SECTION 3. NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Lender shall be evidenced by a promissory
note (each a "Note") substantially in the form set forth in Exhibit A, with
appropriate insertions, payable to the order of such Lender in full on the
Termination Date.
3.2 Recordkeeping. Each Lender shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Lender and each repayment thereof. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on such Note. The failure to so record any such amount
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Company hereunder or under any Note to
repay the principal amount of the Loans evidenced by such Note together with all
interest accruing thereon.
SECTION 4. INTEREST.
4.1 Interest Rate. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full at the Interest Rate.
4.2 Interest Payment Dates. Accrued interest on each Loan shall be payable
in arrears for each month on the 10th day of the next succeeding month and at
maturity. After maturity (whether by acceleration or otherwise), accrued
interest on all Loans shall be payable on demand.
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4.3 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The Interest Rate
shall change simultaneously with each change in the Eurodollar Rate referred to
in the definition of "Interest Rate."
SECTION 5. FEES.
5.1 Agent's Fee. Each Lender hereto that is not DCSNA agrees that it will
pay to the Agent an amount equal to 0.15% per annum of such Lender's Commitment
(regardless of usage) in advance on the Closing Date and on each anniversary
thereof. All fees under this Section are nonrefundable.
5.2 Facility Fee. The Company agrees to pay to the Agent for the account
of each Lender a facility fee, for the period from the Closing Date to the
Termination Date, at the rate of 0.10% per annum of such Lender's Pro Rata Share
(as adjusted from time to time) of the Revolving Commitment Amount (regardless
of usage). Such facility fee shall be payable in advance on the Closing Date, on
each anniversary of the Closing Date and on the Termination Date for any period
then ending for which such facility fee shall not have previously been paid. All
fees under this Section are nonrefundable.
5.3 Letter of Credit Fees. The Company agrees to pay to the Agent for the
account of each Lender a fee for each Letter of Credit equal to 1.50% per annum
of such Lender's Pro Rata Share (as adjusted from time to time) of the undrawn
amount of such Letter of Credit. Such letter of credit fee shall be payable
annually in advance (x) on the date of issuance of such Letter of Credit and (y)
on each anniversary of such date of issuance (or, if such day is not a Business
Day, on the next succeeding Business Day). All fees under this Section are
nonrefundable.
5.4 Computation of Fees. All fees hereunder shall be computed for the
actual number of days elapsed on the basis of a year of 360 days.
SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Voluntary Reduction or Termination of Revolving Commitment Amount. The
Company may from time to time on at least one Business Day's prior written
notice to the Agent (which shall promptly advise each Lender thereof)
permanently reduce the Revolving Commitment Amount to an amount not less than
the Revolving Outstandings. Concurrently with any reduction of the Revolving
Commitment Amount to zero, the Company shall pay all interest on the Revolving
Loans and all fees and shall Cash Collateralize in full all obligations arising
with respect to the Letters of Credit. All reductions of the Revolving
Commitment Amount shall reduce the Commitments pro rata among the Lenders
according to their respective Pro Rata Shares.
6.2 Voluntary Prepayments. The Company may from time to time prepay the
Loans in whole or in part, without premium or penalty; provided that the Company
shall give the Agent (which shall promptly advise each Lender) notice thereof
not later than 3:00 p.m., Detroit time, on the Business Day prior to the date of
such prepayment (which shall be a Business Day), specifying the Loans to be
prepaid and the date and amount of prepayment.
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6.3 Mandatory Prepayments. (a) If at any time (A) the sum of the Revolving
Outstandings exceeds (B) the sum of (i) the Borrowing Base in effect at such
time plus (ii) $50,000,000, the Company shall immediately prepay Loans and/or
Cash Collateralize Letters of Credit, or do a combination of the foregoing, in
an amount sufficient to eliminate such excess.
(b) If on any day on which the Revolving Commitment Amount is reduced
pursuant to Section 6.1 the Revolving Outstandings exceed the Revolving
Commitment Amount, the Company shall immediately prepay Loans and/or Cash
Collateralize Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.
SECTION 7. MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Agent in immediately
available funds at the office specified by the Agent not later than 3:00 p.m.,
Detroit time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the following Business Day. The
Agent shall remit to each Lender its share of all such payments received in
collected funds by the Agent for the account of such Lender no later than the
Business Day after it has received such collected funds.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment. Concurrently with each
remittance to any Lender of its share of any such payment, the Agent shall
advise such Lender as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day that is not a
Business Day, then such due date shall be extended to the immediately following
Business Day and, in the case of principal, additional interest shall accrue and
be payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Agent and each Lender have all
rights of set-off provided by applicable law, and in addition thereto, the
Company agrees that at any time any Event of Default or Unmatured Event of
Default exists, the Agent and each Lender may apply to the payment of any
obligations of the Company hereunder, whether or not then due, any and all
balances, credits, deposits, accounts or moneys of the Company then or
thereafter with the Agent or such Lender. The Agent or the Lender exercising the
set-off shall promptly notify the Company thereof after making such exercise;
provided that failure to give such notice shall not affect the validity of the
set-off.
7.5 Proration of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment pursuant to Section 13.9) on account of principal of
or interest on any Loan (or on account of its exposure under any Letter of
Credit) in excess of its pro rata share of payments and other recoveries
obtained by all Lenders on account of principal of and interest on the Loans (or
such exposure) then held by them, such Lender shall purchase from the other
Lenders such participations in the Loans (or subparticipations in Letters of
Credit) held by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably
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with each of them; provided that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and
all other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Lender's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount as is necessary to ensure that the net amount actually received by
each Lender will equal the full amount such Lender would have received had
no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Company will promptly pay such
additional amounts (including any penalty, interest or expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
If the Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Company shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this Section 7.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Company.
Each Lender that (a) is organized under the laws of a jurisdiction other
than the United States of America or a state thereof and (b)(i) is a party
hereto on the Closing Date or (ii) becomes an assignee of an interest under this
Agreement under Section 13.9.1 after the Closing Date (unless such Lender was
already a Lender hereunder immediately prior to such assignment) shall execute
and deliver to the Company and the Agent one or more (as the Company or the
Agent may reasonably request) United States Internal Revenue Service Form W-8ECI
or Form W-8BEN or such other forms or documents, appropriately completed, as may
be applicable to establish that such Lender is exempt from withholding or
deduction of Taxes. The Company shall not be required to pay additional amounts
to any Lender pursuant to this Section 7.6 to the
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extent that the obligation to pay such additional amounts would not have arisen
but for the failure of such Lender to comply with this paragraph.
SECTION 8. WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Lenders that:
8.1 Organization. The Company is a corporation validly existing under the
laws of the State of Oregon; each Subsidiary is validly existing and (to the
extent such concept is applicable) in good standing under the laws of the
jurisdiction of its organization; and each of the Company and each Subsidiary is
duly qualified to do business in each jurisdiction where, because of the nature
of its activities or properties, such qualification is required, except for such
jurisdictions where the failure to so qualify could not reasonably be expected
to have a Material Adverse Effect.
8.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly authorized to borrow monies hereunder and each
of the Company and each other Loan Party is duly authorized to perform its
obligations under each Loan Document to which it is a party. The execution,
delivery and performance by the Company of this Agreement and by each of the
Company and each other Loan Party of each Loan Document to which it is a party,
and the borrowings by the Company hereunder, do not and will not (a) require any
consent or approval of any governmental agency or authority (other than any
consent or approval that has been obtained and is in full force and effect), (b)
conflict with (i) any provision of law, (ii) the charter, by-laws or other
organizational documents of the Company or any other Loan Party or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, that is binding upon the Company or any other Loan Party or any of their
respective properties or (c) require, or result in, the creation or imposition
of any Lien on any asset of the Company, any Subsidiary or any other Loan Party
(other than Liens in favor of the Agent created pursuant to the Collateral
Documents).
8.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which the Company or any other Loan Party is a party is the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity.
8.4 Financial Condition. The audited consolidated financial statements of
the Company and its Subsidiaries as at December 31, 2001 and the unaudited
consolidated financial statements of the Company and its Subsidiaries as at
September 30, 2002, copies of each of which have been delivered to the Agent for
distribution to each Lender, were prepared in accordance with GAAP (subject, in
the case of such unaudited financial statements, to normal year-end audit
adjustments) and present fairly the consolidated financial condition of the
Company and its Subsidiaries as at such dates and the results of its operations
for the periods then ended.
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8.5 No Material Adverse Change. Since September 30, 2002 there has been no
material adverse change in the condition (financial or otherwise), operations,
assets, business, properties or prospects of the Company and its Subsidiaries
taken as a whole.
8.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary that might reasonably be expected to have a Material
Adverse Effect, except as set forth in Schedule 8.6. Other than any liability
incident to such litigation or proceedings, neither the Company nor any
Subsidiary has any material contingent liabilities not listed on Schedule 8.6.
8.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and, in the case of real property, marketable title to all
of its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights), and valid and enforceable leasehold interests in all of its leased
assets, and all such assets and property are free and clear of all Liens,
charges and claims (including infringement claims with respect to patents,
trademarks, service marks, copyrights and the like) except as permitted by
Section 9.8.
8.8 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those listed on Schedule 8.8.
8.9 Pension Plans. (a) During the twelve-consecutive-month period prior to
the date of the execution and delivery of this Agreement or the making of any
Loan or the issuance of any Letter of Credit, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan that could result in the incurrence by the Company
of any material liability, fine or penalty.
(b) All contributions (if any) have been made to any Multiemployer Pension
Plan that are required to be made by the Company or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Pension Plan, incurred any withdrawal liability with respect to any such plan or
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred that, if
continued, might result in a withdrawal or partial withdrawal from any such
plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent.
8.10 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
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8.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
8.12 Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
8.13 Taxes. Each of the Company and each Subsidiary has filed all Federal
and other material tax returns and reports required by law to have been filed by
it and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges that are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
8.14 Solvency, etc. On the Closing Date, and immediately prior to and
after giving effect to the issuance of each Letter of Credit and each borrowing
hereunder and the use of the proceeds thereof, (a) the assets of the Company and
the other Loan Parties, taken as a whole, will exceed the liabilities of the
Company and the other Loan Parties, taken as a whole, and (b) the Company and
the other Loan Parties, taken as a whole, will be solvent, will be able to pay
their debts as they mature, will own property with fair saleable value greater
than the amount required to pay their debts and will have capital sufficient to
carry on their business as then constituted.
8.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 8.15, neither the
Company nor any Subsidiary, nor any operator of the Company's or any
Subsidiary's properties, is in violation, or alleged violation, of any judgment,
decree, order, law, permit, license, rule or regulation pertaining to
Environmental Matters, including those arising under the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 or any other Environmental Law that individually or
in the aggregate otherwise might reasonably be expected to have a Material
Adverse Effect.
(b) Notices. Except as set forth on Schedule 8.15 and for matters arising
after the Closing Date, in each case none of which could singly or in the
aggregate be expected to have a Material Adverse Effect, neither the Company nor
any Subsidiary has received notice from any third party, including any Federal,
state or local governmental authority: (a) that any one of them has been
identified by the U.S. Environmental Protection Agency as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (b) that any hazardous waste, as
defined by 42 U.S.C. Section 6903(5), any hazardous substance as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) or any toxic substance, oil or hazardous material or other
chemical or substance regulated by any Environmental Law (all of the foregoing,
"Hazardous Substances") that any one of them has generated, transported or
disposed of has been found at any site at which a Federal, state or local agency
or other third party has conducted a remedial investigation,
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removal or other response action pursuant to any Environmental Law; (c) that the
Company or any Subsidiary must conduct a remedial investigation, removal,
response action or other activity pursuant to any Environmental Law; or (d) of
any Environmental Claim for which the Company or any Subsidiary may be liable.
(c) Handling of Hazardous Substances. Except as set forth on Schedule
8.15, (i) no portion of the real property or other assets of the Company or any
Subsidiary has been used for the handling, processing, storage or disposal of
Hazardous Substances except in substantial compliance with applicable
Environmental Laws and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii) in the
course of any activities conducted by the Company, any Subsidiary or the
operators of any real property of the Company or any Subsidiary, no Hazardous
Substances have been generated or are being used on such properties except in
substantial compliance with applicable Environmental Laws; (iii) there have been
no Releases or threatened Releases of Hazardous Substances on, upon, into or
from any real property or other assets of the Company or any Subsidiary, which
Releases singly or in the aggregate might reasonably be expected to have a
Material Adverse Effect; (iv) there have been no Releases on, upon, from or into
any real property in the vicinity of the real property or other assets of the
Company or any Subsidiary that, through soil or groundwater contamination, may
have come to be located on, and which might reasonably be expected to have a
material adverse effect on the value of, the real property or other assets of
the Company or any Subsidiary; and (v) any Hazardous Substances generated by the
Company and its Subsidiaries have been transported offsite only by properly
licensed carriers and delivered only to treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are operating in substantial
compliance with such permits and applicable Environmental Laws.
8.16 Insurance. Set forth on Schedule 8.16 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Company or any
Subsidiary).
8.17 Information. All information heretofore or contemporaneously herewith
furnished in writing by the Company or any Subsidiary to the Agent or any Lender
for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to the Agent or any Lender pursuant
hereto or in connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or certified, and none
of such information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by the Agent and the Lenders
that any projections and forecasts provided by the Company are based on good
faith estimates and assumptions believed by the Company to be reasonable as of
the date of the applicable projections or forecasts and that actual results
during the period or periods covered by any such projections and forecasts may
differ from projected or forecasted results).
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8.18 Intellectual Property. The Company and each Subsidiary owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights and copyrights as are necessary for the conduct of the
business of the Company and its Subsidiaries, without any infringement upon
rights of others, except to the extent that failure to comply with any of the
foregoing could not reasonably be expected to have a Material Adverse Effect.
8.19 Burdensome Obligations. Neither the Company nor any Subsidiary is a
party to any agreement or contract or subject to any corporate or partnership
restriction which might reasonably be expected to have a Material Adverse
Effect.
8.20 Labor Matters. Except as set forth on Schedule 8.20, neither the
Company nor any Subsidiary is subject to any labor or collective bargaining
agreement. There are no existing or threatened strikes, lockouts or other labor
disputes involving the Company or any Subsidiary that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Company and its Subsidiaries are not in
violation of the Fair Labor Standards Act or any other applicable law, rule or
regulation dealing with such matters.
8.21 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt hereunder or under
any other Loan Document.
8.22 Dealer Franchise Agreements; Material Business Relationships. As of
the Closing Date, neither the Company nor any of its Subsidiaries is a party to
any dealer franchise agreement ("Dealer Franchise Agreements") other than those
specifically disclosed in Schedule 8.22, which schedule shows the Manufacturer
and the Company or the Subsidiary, as the case may be, that is a party to each
such agreement, the date such agreement was entered into and the expiration date
of such agreement. Each of such Dealer Franchise Agreements is currently in full
force and effect, and neither the Company nor any Subsidiary has received any
notice of termination with respect to any such agreement; and, except as
disclosed on Schedule 8.22, neither the Company nor any Subsidiary is aware of
any event that with notice, lapse of time or both would allow any Manufacturer
that is a party to any Dealer Franchise Agreement to terminate any such
agreement. There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship
between the Company or any of its Subsidiaries and any customer or any group of
customers or with any Manufacturer that, in any case, could reasonably be
expected to have a Material Adverse Effect.
SECTION 9. COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full and all Letters of Credit have been Cash
Collateralized or terminated, the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent (except as provided in
Section 13.1) in writing, it will:
9.1 Reports, Certificates and Other Information. Furnish to the Agent:
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9.1.1 Annual Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year: (a) a copy of the annual report of the
Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries for such Fiscal Year, certified (without any
qualification arising from the scope of the audit or as to the ability of the
Company and its Subsidiaries to operate as a going concern) by independent
auditors of recognized standing selected by the Company and reasonably
acceptable to the Agent, together with (i) a written statement from such
accountants to the effect that in making the examination necessary for the
signing of such annual audit report by such accountants, nothing came to their
attention that caused them to believe that the Company was not in compliance
with any provision of Section 9.6, 9.7, 9.8 or 9.9 of this Agreement insofar as
such provision relates to accounting matters or, if something has come to their
attention that caused them to believe that the Company was not in compliance
with any such provision, describing such non-compliance in reasonable detail and
(ii) a comparison with the previous Fiscal Year; and (b) consolidating balance
sheets of the Company and its Subsidiaries as of the end of such Fiscal Year and
a consolidating statement of earnings for the Company and its Subsidiaries for
such Fiscal Year.
9.1.2 Interim Reports. Promptly when available and in any event within 45
days after the end of each Fiscal Quarter (except the last Fiscal Quarter of
each Fiscal Year), consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such Fiscal Quarter, together with
consolidated and consolidating statements of earnings and cash flows for such
Fiscal Quarter and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such Fiscal Quarter, together with a
comparison with the corresponding period of the previous Fiscal Year, certified
by the chief financial officer or treasurer of the Company.
9.1.3 Compliance Certificates; Insurance Information. Contemporaneously
with the furnishing of a copy of each annual audit report pursuant to Section
9.1.1 and each set of quarterly statements pursuant to Section 9.1.2: (a) a duly
completed compliance certificate in the form of Exhibit B, with appropriate
insertions, dated the date of such annual report or such quarterly statements
and signed by the chief financial officer or the treasurer of the Company,
containing a computation of each of the financial ratios and restrictions set
forth in Section 9.6 and a statement to the effect that such officer has not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event, describing it and the
steps, if any, being taken to cure it and setting forth all Events of Default
that had occurred but were cured or waived during the period covered by the
related financial statements; and (b) a certificate setting forth in reasonable
detail a description of all insurance maintained in accordance with the
requirements set forth in Section 9.3(b).
9.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or
sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC; copies of all registration
statements of the Company or any Subsidiary filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made to
security holders generally.
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9.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon the
Company obtaining knowledge of any of the following, written notice describing
the same and the steps being taken by the Company or the Subsidiary affected
thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Lenders that has
been instituted or, to the knowledge of the Company, is threatened against
the Company or any Subsidiary or to which any of the properties of any
thereof is subject that might reasonably be expected to have a Material
Adverse Effect;
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure of
any member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a Lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
taking of any action with respect to a Pension Plan that could result in
the requirement that the Company furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan or Multiemployer Pension Plan that could result in the
incurrence by any member of the Controlled Group of any material
liability, fine or penalty (including any claim or demand for withdrawal
liability or partial withdrawal from any Multiemployer Pension Plan), or
any material increase in the contingent liability of the Company with
respect to any post-retirement welfare plan benefit, or any notice that
any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of an excise tax, that any such plan is or has been funded at a
rate less than that required under Section 412 of the Code, that any such
plan is or may be terminated, or that any such plan is or may become
insolvent;
(d) any cancellation (unless contemporaneously replaced with similar
coverage) or material change in any insurance maintained by the Company or
any Subsidiary;
(e) any material violation of law by the Company or any Subsidiary
or any officer or director of the Company or any Subsidiary related to the
business of the Company or such Subsidiary; or
(f) any other event (including any violation of any Environmental
Law or the assertion of any Environmental Claim) that might reasonably be
expected to have a Material Adverse Effect.
9.1.6 Borrowing Base Certificates. Within 45 days of the end of each
Fiscal Quarter, a Borrowing Base Certificate dated as of the end of such Fiscal
Quarter and executed by the chief financial officer or the treasurer of the
Company on behalf of the Company (provided that at any time an Event of Default
exists, the Agent may require the Company to deliver Borrowing Base Certificates
more frequently).
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9.1.7 Management Reports. Promptly upon receipt thereof, copies of all
detailed financial and management reports submitted to the Company by
independent auditors in connection with each audit made by such auditors of the
books of the Company, to the extent such reports identify a material deficiency
in the Company's internal controls.
9.1.8 Subordinated Debt Notices. Promptly from time to time, copies of any
material notices (including notices of default or acceleration) received from
any holder, or any notice from any trustee, of, under or with respect to any
Subordinated Debt.
9.1.9 Manufacturer/Dealer Statements. Upon request of the Agent, copies of
each Manufacturer/Dealer Statement of the Company and each Subsidiary.
9.1.10 Dealer Franchise Agreements. Promptly upon the Company obtaining
knowledge thereof, notice of the termination of any Dealer Franchise Agreement.
9.1.11 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Lender or the
Agent may reasonably request.
9.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Lender or the Agent or
any representative thereof to inspect the properties and operations of the
Company or such Subsidiary; and permit, and cause each Subsidiary to permit, at
any reasonable time and with reasonable notice (or at any time without notice if
an Event of Default exists), any Lender or the Agent or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with any
Lender or the Agent or any representative thereof), and to examine (and, at the
expense of the Company or the applicable Subsidiary, photocopy extracts from)
any of its books or other records; and permit, and cause each Subsidiary to
permit, the Agent and its representatives to inspect the Inventory and other
tangible assets of the Company or such Subsidiary, to perform appraisals of the
Equipment of the Company or such Subsidiary, and to inspect, audit, check and
make copies of and extracts from the books, records, computer data, computer
programs, journals, orders, receipts, correspondence and other data relating to
inventory, accounts receivable and any other collateral. All such inspections,
audits or appraisals by the Agent shall be at the Agent's expense, provided that
if an Event of Default or Unmatured Event of Default exists, such inspections,
audits and appraisals shall be at the Company's expense. Notwithstanding
anything to the contrary herein, neither the Company nor any Subsidiary shall be
required to disclose any information to the Agent or any Lender if (x) in the
opinion of counsel, such disclosure would cause any attorney-client privilege of
the Company or such Subsidiary with respect to such information to be lost and
(y) such loss of privilege would be materially prejudicial to the Company and
its Subsidiaries, taken as a whole.
9.3 Maintenance of Property; Insurance. (a) Keep, and cause each
Subsidiary to keep, all property useful and necessary in the business of the
Company or such Subsidiary in good working order and condition, ordinary wear
and tear excepted.
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(b) Maintain, and cause each Subsidiary to maintain, with responsible
insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated; and, upon request of the
Agent or any Lender, furnish to the Agent or such Lender a certificate setting
forth in reasonable detail the nature and extent of all insurance maintained by
the Company and its Subsidiaries. The Company shall cause each issuer of an
insurance policy to provide the Agent with an endorsement (i) showing loss
payable to the Agent with respect to each policy of property or casualty
insurance and naming the Agent and each Lender as an additional insured with
respect to each policy of insurance for liability for personal injury or
property damage, (ii) providing that 30 days' notice will be given to the Agent
prior to any cancellation of, material reduction or change in coverage provided
by or other material modification to such policy and (iii) reasonably acceptable
in all other respects to the Agent. The Company shall execute and deliver, and
shall cause each Subsidiary to execute and deliver, to the Agent a collateral
assignment, in form and substance reasonably satisfactory to the Agent, of each
business interruption insurance policy maintained by the Company or such
Subsidiary.
9.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits; and (b) pay, and cause each Subsidiary to pay, prior to delinquency,
all taxes and other governmental charges against it or any of its property, as
well as claims of any kind that, if unpaid, might become a Lien on any of its
property; provided that the foregoing shall not require the Company or such
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside on
its books adequate reserves with respect thereto in accordance with GAAP.
9.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 9.10) cause each Subsidiary to maintain and preserve, (a) its existence
and (to the extent such concept is applicable) good standing in the jurisdiction
of its organization and (b) its qualification to do business and (to the extent
such concept is applicable) good standing in each other jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect).
9.6 Financial Covenants.
9.6.1 Current Ratio. Not permit the ratio of Consolidated Current Assets
to Consolidated Current Liabilities at any time to be less than 1.2:1.0.
9.6.2 Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage
Ratio for any Computation Period to be less than 1.20:1.0.
9.6.3 Interest Coverage Ratio. Not permit the Interest Coverage Ratio for
any Computation Period to be less than 2.50:1.
9.6.4 Adjusted Leverage Ratio. Not permit the Adjusted Leverage Ratio at
any time to be greater than 2.50:1.
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9.6.5 Working Capital. Cause each Subsidiary to maintain such level of
working capital as is necessary to satisfy the requirements of such Subsidiary's
Dealer Franchise Agreements.
9.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:
(a) obligations under this Agreement and the other Loan Documents;
(b) Debt secured by Liens permitted by Section 9.8(d), and
extensions thereof and Refinancing Debt in respect thereof; provided that
the aggregate amount of all such Debt at any time outstanding shall not
exceed $275,000,000;
(c) Debt of Subsidiaries to the Company or to any Collateral
Subsidiary;
(d) unsecured Debt of the Company to Collateral Subsidiaries;
(e) Debt of an Excluded Subsidiary to any other Excluded Subsidiary;
(f) Subordinated Debt;
(g) Hedging Obligations incurred for bona fide hedging purposes and
not for speculation;
(h) Debt described on Schedule 9.7 and any extension thereof and
Refinancing Debt in respect thereof, so long as, in each case, the
principal amount thereof is not increased and the obligors with respect
thereto are not changed;
(i) Debt with respect to any Floor Plan Financing provided to the
Company or any Collateral Subsidiary by General Motors Acceptance
Corporation, Ford Motor Credit Corporation or Toyota Motor Credit
Corporation, in each case in respect of New Motor Vehicles manufactured by
an Affiliate of such Floor Plan Financing Provider or Auction Motor
Vehicles purchased at a closed dealer-only auction sponsored by such Floor
Plan Financing Provider or its affiliated Manufacturer;
(j) Debt to DCSNA in respect of Floor Plan Financings;
(k) Debt with respect to Floor Plan Financings provided by Persons
other than DCSNA, provided DCSNA has declined to provide the same after
being offered the opportunity to provide such financing as provided in
Section 13.17;
(l) recourse obligations, repurchase obligations and Suretyship
Liabilities of Automobile Dealerships arising in the ordinary course of
business in connection with the sale of retail installment contracts or
retail leases involving Motor Vehicles to financial institutions that are
not Affiliates of the Company;
(m) Debt to be Repaid (so long as such Debt is repaid on the Closing
Date with the proceeds of the initial Loans hereunder);
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(n) unsecured Suretyship Liabilities of the Company in respect of
Operating Leases of Subsidiaries, including leases of real property;
(o) unsecured Suretyship Liabilities of the Company and its
Subsidiaries in respect of Debt incurred by any Excluded Subsidiary, to
the extent such underlying Debt is permitted by clause (b) above; and
(p) other Debt, in addition to the Debt listed above, in an
aggregate amount not at any time exceeding $5,000,000.
9.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it
maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with
surety bonds, bids, performance bonds and similar obligations) for sums
not overdue or being contested in good faith by appropriate proceedings
and not involving any deposits or advances or borrowed money or the
deferred purchase price of property or services and, in each case, for
which it maintains adequate reserves;
(c) Liens described on Schedule 9.8;
(d) subject to the limitation set forth in Section 9.7(b), (i) Liens
arising in connection with Capital Leases (and attaching only to the
property being leased), (ii) Liens on real property (whether in existence
on the date hereof, or for new financing, refinancing or construction
financing incurred after the date hereof), provided that any such Lien
attaches solely to such real property, (iii) Liens on personal property,
other than deposit accounts, of Lithia Real Estate and its Subsidiaries
located on or related to real property securing real estate financing in
connection with which such Liens are granted and (iv) Liens on assets of
Lithia Financial and Lithia Aircraft securing the US Bank Facility;
(e) attachments, appeal bonds, judgments and other similar Liens,
for sums not exceeding $5,000,000 arising in connection with court
proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Company
or any Subsidiary;
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(g) Liens arising under the Loan Documents;
(h) Liens on any asset of an Automobile Dealership securing Debt
permitted by Section 9.7(i), (j) or (k); provided that, to the extent such
Liens attach to any property other than the Inventory financed by such
Debt and proceeds thereof, Accounts and payment intangibles owing by the
relevant Dealer to the Manufacturer with which the relevant Floor Plan
Financing Provider is affiliated (and all other rights to payment in which
any such Floor Plan Financing Provider could exercise a right of setoff or
recoupment) and service loaner or daily rental vehicles manufactured by a
Manufacturer and financed by a Floor Plan Financing Provider permitted
under Section 9.7(i), (j) or (k), such Liens shall be subordinated, in
form and substance satisfactory to the Agent, to the security interest of
the Agent; and
(i) Liens for the purpose of securing Debt referred to in Section
9.7(l) in chattel paper, vehicles leased to retail customers, vehicles
leased under such leases, returns and repossessions of such vehicles and
proceeds of such collateral.
9.9 Restricted Payments. Not, and not permit any Subsidiary to, (a) make
any distribution to any of its shareholders, (b) purchase or redeem any of its
capital stock or other equity interests or any warrants, options or other rights
in respect thereof, (c) pay any management fees or similar fees to any of its
shareholders or any Affiliate thereof, (d) make any redemption, prepayment,
defeasance or repurchase of any Subordinated Debt or (e) set aside funds for any
of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may pay
dividends or make other distributions to the Company or to a Wholly-Owned
Subsidiary that is a Collateral Subsidiary, (ii) any Excluded Subsidiary may pay
dividends or make other distributions to a Wholly-Owned Subsidiary that is an
Excluded Subsidiary and (iii) so long as no Event of Default or Unmatured Event
of Default exists or would result therefrom, the Company may pay dividends or
repurchase shares of its capital stock in an aggregate amount, for all such
dividends and repurchases, not to exceed $18,000,000 during the term of this
Agreement.
9.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary
to, be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any stock of any class of, or any
membership or partnership or joint venture interest in, any other Person, or,
except in the ordinary course of business, sell, transfer, convey or lease all
or any substantial part of its assets, or sell or assign with or without
recourse any receivables, except for: (a) any such merger, consolidation, sale,
transfer, conveyance, lease or assignment of or by any Wholly-Owned Subsidiary
into the Company (provided that in the case of a merger or consolidation, the
Company is the survivor) or into, with or to any other Wholly-Owned Subsidiary
that is a Collateral Subsidiary (provided, that in the case of any merger or
consolidation involving a Collateral Subsidiary, a Collateral Subsidiary must be
the survivor) ; (b) any such purchase or other acquisition by the Company or any
Wholly-Owned Subsidiary that is a Collateral Subsidiary of the assets or stock
of any Wholly-Owned Subsidiary; (c) any Acquisition by the Company or any
Wholly-Owned Subsidiary that is a Collateral Subsidiary if (1) immediately
before and after giving effect to such Acquisition, no Event of Default or
Unmatured Event of Default shall exist, (2) immediately after giving effect to
such Acquisition,
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the Company is in pro forma compliance with all the financial ratios and
restrictions set forth in Section 9.6, (3) in the case of the Acquisition of any
Person, the Board of Directors of such Person has approved such Acquisition and
all Manufacturers doing business with such Person have consented to such
Acquisition, (4) in the case of an Acquisition of equity interests of an entity,
such Acquisition shall be of 100% of the equity interests of such entity except
that in the case of a Majority Acquisition, such Acquisition shall be of at
least 80% of the equity interests of such entity, (5) the Company shall have
obtained either (i) a written approval for a new Dealer Franchise Agreement
between the entity to be acquired in such Acquisition and the Manufacturer on
substantially the same terms as the Dealer Franchise Agreement entered into
between the Manufacturer and the entity to be acquired in such Acquisition or
(ii) any consent required from a Manufacturer for the continued enforceability
and validity of such Dealer Franchise Agreement after the completion of a
Acquisition shall have been obtained, (6) prior to and after such Acquisition,
the Chief Financial Officer of the Company shall have delivered a certificate to
the Agent confirming that the conditions set forth in clauses (1) - (5) above
will be (in the case of a certificate delivered prior to such Acquisition) or
have been (in the case of a certificate delivered after such Acquisition) met;
(d) sales of Equipment to Lithia Financial, and sales of real estate to Lithia
Real Estate, in each case in the ordinary course of business in connection with
an Acquisition permitted hereunder by the Subsidiary acquired in such
Acquisition (or, in the case of an acquisition of assets, by the Subsidiary
acquiring such assets) for at least fair market value (as determined in good
faith by the Board of Directors of the Company) and where all the consideration
is cash; and (e) sales and dispositions of assets (including the stock of
Subsidiaries) for at least fair market value (as determined in good faith by the
Board of Directors of the Company) so long as the net book value of all assets
sold or otherwise disposed of in any Fiscal Year does not exceed 10% of the net
book value of the consolidated assets of the Company and its Subsidiaries as of
the last day of the preceding Fiscal Year.
9.11 Modification of Organizational Documents. Not permit the Certificate
or Articles of Incorporation, By-Laws or other organizational documents of the
Company or any Subsidiary to be amended or modified in any way that might
reasonably be expected to adversely affect the interests of the Lenders.
9.12 Use of Proceeds. Use the proceeds of the Loans and Letters of Credit
for Acquisitions permitted by Section 9.10(c), for working capital of the
Company and its Collateral Subsidiaries and for other general corporate purposes
of the Company and its Collateral Subsidiaries; and not use or permit any
proceeds of any Loan to be used, either directly or indirectly, for any other
purpose, including for the purpose, whether immediate, incidental or ultimate,
of "purchasing or carrying" any Margin Stock.
9.13 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as the Agent or the Required Lenders may reasonably
request from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, the filing or recording of any of the foregoing,
and the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that (a) the obligations
of the Company hereunder and under the other Loan Documents (i) are secured by
substantially all of the assets of the Company, other than property in which the
Company is prohibited from granting a
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security interest, pledge or assignment pursuant to a Permitted Restriction, and
(ii) guaranteed by all of its Subsidiaries (including, promptly upon the
acquisition or creation thereof, any Subsidiary acquired or created after the
date hereof) by execution of a counterpart of the Guaranty, (b) the obligations
of each Subsidiary (other than Excluded Subsidiaries) under the Guaranty are
secured by substantially all of the assets of such Subsidiary (other than
property in which such Subsidiary is prohibited from granting a security
interest, pledge or assignment pursuant to a Permitted Restriction and other
than stock of Excluded Subsidiaries) and (c) the obligations of Lithia Real
Estate and its Subsidiaries under the Guaranty are secured by all deposit
accounts of Lithia Real Estate, provided that a pledge of the stock of a
Subsidiary shall not be required if and to the extent that such pledge would
violate a Permitted Restriction in favor of a Manufacturer. Without limiting the
foregoing, the Company shall cause any minority holder holding an equity
interest in a Subsidiary (other than an Excluded Subsidiary) acquired pursuant
to a Majority Acquisition to pledge its equity interest to the Agent in
connection with said Acquisition.
9.14 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates that is on terms that are less
favorable than are obtainable from any Person which is not one of its
Affiliates; except that the foregoing shall not apply to (i) any transaction,
arrangement or contract between the Company and any Collateral Subsidiary or
between Collateral Subsidiaries or (ii) any transaction, arrangement or contract
between Excluded Subsidiaries.
9.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
9.16 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of the Company or any Subsidiary, the Company shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. Without limiting the generality of the
foregoing, the Company shall, and shall cause each Subsidiary to, comply with
any valid Federal or state judicial or administrative order requiring the
performance at any real property of the Company or any Subsidiary of activities
in response to the Release or threatened Release of a Hazardous Substance.
(b) To the extent that the transportation of "hazardous waste" as defined
by RCRA is permitted by this Agreement, the Company shall, and shall cause its
Subsidiaries to, dispose of such hazardous waste only at licensed disposal
facilities operating in compliance with Environmental Laws.
9.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that
payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.
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9.18 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document, (b) except for Permitted Restrictions (provided that such
restrictions do not apply to property described in Section 9.13(c)), prohibit
the Company or any Subsidiary from granting to the Agent, for the benefit of the
Lenders, a Lien on any of its assets or (c) except for Permitted Restrictions,
create or permit to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary to (i) pay dividends or make other distributions
to the Company or any other applicable Subsidiary, or pay any Debt owed to the
Company or any other Subsidiary, (ii) make loans or advances to the Company or
(iii) transfer any of its assets or properties to the Company.
9.19 Business Activities. Not, and not permit any Subsidiary to, engage in
any line of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto.
9.20 Investments. Not, and not permit any Subsidiary to, make or permit to
exist any Investment in any other Person, except (without duplication) the
following:
(a) contributions by the Company to the capital of any of its
Collateral Subsidiaries, or by any such Collateral Subsidiary to the
capital of any of its Collateral Subsidiaries;
(b) in the ordinary course of business, Investments by the Company
in any Collateral Subsidiary or by any Subsidiary in the Company, or by
any Subsidiary in any Collateral Subsidiary, by way of intercompany loans,
advances or guaranties, all to the extent permitted by Section 9.7;
(c) Suretyship Liabilities permitted by Section 9.7;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business;
(f) Investments in securities of account debtors received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy
or insolvency of such account debtors;
(g) Investments to consummate Acquisitions permitted by Section
9.10;
(h) Investments by Lithia Financial in an aggregate amount not to
exceed $10,000,000 in equity securities of publicly traded companies not
Affiliates of the Company (provided, that in the case of any such
Investment in equity securities, such Investment shall not exceed 4.9% of
the outstanding equity of any one issuer);
(i) Investments listed on Schedule 9.20;
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(j) extensions of credit to customers made in the ordinary course of
business and in connection with the sale of Inventory in the ordinary
course of business; and
(k) such other Investments consented to by the Required Lenders in
their sole discretion;
provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (a),
(b), (c), (g) or (h) shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default or Unmatured Event of Default
exists; and (z) the Company shall not, and shall not permit any Subsidiary to,
create or acquire, or make any Investment in, any Foreign Subsidiary.
9.21 Fiscal Year. Not change its Fiscal Year.
9.22 Hedging Agreements. The Company shall not and shall not permit any of
its Subsidiaries to enter into any Hedging Agreement, other than non-speculative
Hedging Agreements entered into by the Company or a Subsidiary pursuant to which
the Company or such Subsidiary has hedged its actual interest rate, foreign
currency or commodity exposure.
9.23 Negative Pledge. With respect to any Subsidiary operating under a
Dealer Franchise Agreement with Toyota Motor Sales in USA, Inc., American Honda
Motor Corporation, or Nissan in USA, Inc., the Company hereby agrees that it
shall not pledge or otherwise transfer its capital stock in such Subsidiary to
any Person.
SECTION 10. EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Lender to make its Loans and of the Issuing Lender
to issue Letters of Credit is subject to the following conditions precedent:
10.1 Initial Credit Extension. The obligation of the Lenders to make the
initial Loans and the obligation of the Issuing Lender to issue the initial
Letter of Credit (whichever first occurs) is, in addition to the conditions
precedent specified in Section 10.2, subject to the conditions precedent that
(1) all Debt to be Repaid has been (or concurrently with the initial borrowing
will be) paid in full, and that all agreements and instruments governing the
Debt to be Repaid and that all Liens securing such Debt to be Repaid have been
(or concurrently with the initial borrowing will be) terminated and (2) the
Agent shall have received all of the following, each duly executed and dated the
Closing Date (or such earlier date as shall be satisfactory to the Agent), in
form and substance satisfactory to the Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Agent and
the Required Lenders is called the "Closing Date"):
10.1.1 Notes. A Note executed by the Company in favor of each Lender.
10.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing the execution, delivery and performance by
the Company of this
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Agreement, the Notes and the other Loan Documents to which the Company is a
party; and certified copies of resolutions of the Board of Directors of each
other Loan Party authorizing the execution, delivery and performance by such
Loan Party of each Loan Document to which such entity is a party.
10.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate or partnership action, consents and governmental approvals
(if any) required for the execution, delivery and performance by the Company and
each other Loan Party of the documents referred to in this Section 10.
10.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate representative) of
each Loan Party certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that the Agent and each Lender may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein).
10.1.5 Guaranty. A counterpart of the Guaranty executed by each Subsidiary
of the Company.
10.1.6 Security Agreement. A counterpart of the Security Agreement
executed by the Company and each Collateral Subsidiary.
10.1.7 Pledge Agreements. (a) The Pledge Agreement executed by the Company
and each Subsidiary that owns an equity interest in a Subsidiary hereby required
to be pledged to the Agent, together with all items required to be delivered in
connection therewith and (b) a deposit account pledge agreement for each deposit
account of Lithia Real Estate.
10.1.8 Control Agreements. Control Agreements with respect to each deposit
account and securities account of the Company and each Collateral Subsidiary and
Control Agreements in form and substance satisfactory to the Agent with respect
to each deposit account of Lithia Real Estate.
10.1.9 Opinion of Counsel. The opinion of ▇▇▇▇▇▇ Pepper Tooze LLP,
substantially in the form of Exhibit J.
10.1.10 Insurance. Evidence satisfactory to the Agent of the existence of
insurance required to be maintained pursuant to Section 9.3(b), together with
evidence that the Agent has been named as a lender's loss payee and an
additional insured on all related insurance policies, together with a collateral
assignment of all business interruption insurance policies maintained by the
Company or any Subsidiary.
10.1.11 Payment of Fees. Evidence of payment by the Company of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with all Attorney Costs of the Agent to the extent
invoiced prior to the Closing Date, plus such additional amounts of Attorney
Costs as shall constitute the Agent's reasonable estimate of Attorney Costs
incurred or to be incurred by the Agent through the closing proceedings
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(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and the Agent).
10.1.12 Search Results; Lien Terminations. Certified copies of Uniform
Commercial Code Requests for Information or Copies, or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably near to
the Closing Date, listing all effective financing statements that name the
Company and each Subsidiary (under their present names and any previous names)
as debtors and that are filed in the jurisdictions in which filings are to be
made pursuant to the Collateral Documents (as well as in all jurisdictions in
which, in the Agent's opinion, filings could have been made against the Company
and its Collateral Subsidiaries under any version of the Uniform Commercial Code
in effect prior to July 1, 2001), together with (i) copies of such financing
statements and (ii) authorized copies of proper Uniform Commercial Code Form
UCC-3 termination statements (or, in lieu thereof, written authorization
sufficient under Section 9-509(d)(1) of the UCC from each secured party of
record authorizing the Agent to file such termination statements), if any,
necessary to release all Liens and other rights of any Person in any collateral
described in the Collateral Documents previously granted by any Person, other
than Liens permitted by Section 9.8.
10.1.13 Solvency Certificate. A solvency certificate, substantially in the
form of Exhibit F, executed by the Chief Financial Officer of the Company.
10.1.14 Closing Certificate. A certificate signed by a Vice President of
the Company dated as of the Closing Date, affirming the matters set forth in
Section 10.2.1 as of the Closing Date.
10.1.15 Filings, Registrations and Recordings. The Agent shall have
received each document (including Uniform Commercial Code financing statements)
required by the Collateral Documents or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create in favor of the
Agent, for the benefit of the Banks, a perfected Lien on the collateral
described therein, in proper form for filing, registration or recording.
10.1.16 Borrowing Base Certificate. A Borrowing Base Certificate dated as
of the Closing Date.
10.1.17 Documents. Copies, certified by the Secretary of the Company, of
the Toyota Facility and the US Bank Facility, and all amendments to each
thereof.
10.1.18 Good Standing Certificates. Certificates for the Company and each
Loan Party from the Secretary of State of their respective states of
incorporation as to the good standing or valid existence of each such entity in
such state, such certificates to be dated within a reasonable period prior to
the Closing Date.
10.1.19 Certified Articles. Copies of the articles of incorporation of the
Company and each Loan Party, in each case certified by the Secretary of State of
the applicable state of incorporation.
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10.1.20 Other. Such other documents as the Agent or any Lender may
reasonably request.
10.2 Conditions. The obligation of each Lender to make each Loan and of
the Issuing Lender to issue each Letter of Credit is subject to the following
further conditions precedent that:
10.2.1 Compliance with Warranties, No Default, etc. Both before and after
giving effect to the making of any Loan or the issuance of any Letter of Credit,
the following statements shall be true and correct:
(a) the representations and warranties of the Company and each other
Loan Party set forth in this Agreement and the other Loan Documents shall
be true and correct in all material respects with the same effect as if
then made (except to the extent stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date);
(b) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing.
10.2.2 Confirmatory Certificate. If requested by the Agent or any Lender,
the Agent shall have received (in sufficient counterparts to provide one to each
Lender) a certificate dated the date of such requested Loan or Letter of Credit
and signed by a duly authorized representative of the Company as to the matters
set out in Section 10.2.1 (it being understood that each request by the Company
for the making of a Loan or for the issuance of a Letter of Credit shall be
deemed to constitute a warranty by the Company that the conditions precedent set
forth in Section 10.2.1 will be satisfied at the time of the making of such Loan
or the issuance of such Letter of Credit), together with such other documents as
the Agent or any Lender may reasonably request in support thereof.
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT.
11.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
11.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
the principal of any Loan or any reimbursement obligation payable by the Company
hereunder; or default, and continuance thereof for three days, in the payment
when due of any interest, fee or other amount payable by the Company hereunder
or under any other Loan Document.
11.1.2 Non-Payment of Other Debt. Any default shall occur under the terms
applicable to any Debt of the Company or any Subsidiary in an aggregate amount
(for all such Debt so affected) exceeding $5,000,000 and such default shall (a)
consist of the failure to pay such Debt when due, whether by acceleration or
otherwise, or (b) accelerate the maturity of such Debt or permit the holder or
holders thereof, or any trustee or agent for such holder or holders, to cause
such Debt to become due and payable prior to its expressed maturity; or any such
Debt shall be required to be prepaid or redeemed (other than by a regularly
scheduled prepayment or redemption), purchased or defeased or an offer to
prepay, redeem, purchase or defease such Debt
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shall be required to be made, in each case prior to the stated maturity thereof;
or any default shall occur under any Floor Plan Financing provided by any Lender
or any Affiliate of a Lender to the Company or any Subsidiary.
11.1.3 Other Material Obligations. Default in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services, or any agreement with a Manufacturer,
where such default, singly or in the aggregate with all other such defaults,
might reasonably be expected to have a Material Adverse Effect; or default in
the performance or observance by the Company or any Subsidiary of any of its
obligations under any Dealer Franchise Agreement where such default might
reasonably be expected to have a Material Adverse Effect.
11.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary becomes
insolvent or generally fails to pay, or admits in writing its inability or
refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any
Subsidiary, and if such case or proceeding is not commenced by the Company or
such Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 30 days undismissed; or the Company or any Subsidiary
takes any action to authorize, or in furtherance of, any of the foregoing.
11.1.5 Non-compliance with Loan Documents. (a) Failure by the Company to
comply with or to perform any covenant set forth in Sections 9.1.5(a), 9.5
through 9.14, 9.19 through 9.21 and 9.23; or (b) failure by the Company or any
other Loan Party to comply with or to perform any other provision of this
Agreement or any other Loan Document (and not constituting an Event of Default
under any other provision of this Section 11) and continuance of such failure
uncured for 30 days.
11.1.6 Warranties. Any warranty made by the Company or any other Loan
Party herein or any other Loan Document is breached or is false or misleading in
any material respect, or any schedule, certificate, financial statement, report,
notice or other writing furnished by the Company or any other Loan Party to the
Agent or any Lender in connection herewith is false or misleading in any
material respect on the date as of which the facts therein set forth are stated
or certified.
11.1.7 Pension Plans. (i) Institution of any steps by the Company or any
other Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in excess of $5,000,000;
(ii) a contribution failure occurs with respect to any Pension Plan sufficient
to give rise to a Lien under Section 302(f) of ERISA; or (iii) there shall
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occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan and
the withdrawal liability (without unaccrued interest) to Multiemployer Pension
Plans as a result of such withdrawal (including any outstanding withdrawal
liability that the Company and the Controlled Group have incurred on the date of
such withdrawal) exceeds $5,000,000.
11.1.8 Judgments. Final judgments that exceed an aggregate of $5,000,000
shall be rendered against the Company or any Subsidiary and shall not have been
paid, discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.
11.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in full
force and effect with respect to any Subsidiary; or any Subsidiary (or any
Person by, through or on behalf of such Subsidiary) shall contest in any manner
the validity, binding nature or enforceability of the Guaranty with respect to
such Subsidiary.
11.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document
shall cease to be in full force and effect; or the Company or any Subsidiary (or
any Person by, through or on behalf of the Company or any Subsidiary) shall
contest in any manner the validity, binding nature or enforceability of any
Collateral Document.
11.1.11 Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Subsidiary of any Subordinated
Debt, shall cease to be in full force and effect, or the Company or any other
Person (including the holder of any applicable Subordinated Debt) shall contest
in any manner the validity, binding nature or enforceability of any such
provision.
11.1.12 Change in Control. A Change in Control shall occur.
11.2 Effect of Event of Default. If any Event of Default described in
Section 11.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Agent (upon written request of the
Required Lenders) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Loans and all other obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Loans and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to Cash Collateralize all Letters of
Credit, all without presentment, demand, protest or notice of any kind. The
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
11.1.1 or Section 11.1.4 may be waived by the written concurrence of all of the
Lenders, and the effect as an Event of Default of any other event described in
this Section 11 may be waived by the written concurrence of the Required Lenders
(except as provided in Section 13.1). Any cash collateral delivered hereunder
shall be held by
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the Agent (without liability for interest thereon) and applied to reimbursement
obligations under the Letters of Credit. After the expiration or termination of
the Letters of Credit, such cash collateral shall be applied by the Agent to any
remaining obligations hereunder and any excess shall be delivered to the Company
or as a court of competent jurisdiction may direct.
SECTION 12. THE AGENT.
12.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 12.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duty or
responsibility except those expressly set forth herein, nor shall the Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Agent.
(b) The Issuing Lender shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith. The
Issuing Lender shall have all of the benefits and immunities (i) provided to the
Agent in this Section 12 with respect to any acts taken or omissions suffered by
the Issuing Lender in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 12, included the Issuing Lender with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Lender.
12.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
12.3 Liability of Agent. None of the Agent nor any of its directors,
officers, employees or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Lenders for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or
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conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts reasonably selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, confirmation from the Lenders of their
obligation to indemnify the Agent against any and all liability and expense that
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 other Loan Document in accordance with a
request or consent of the Required Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders.
12.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Unmatured Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Event of Default or Unmatured Event of
Default and stating that such notice is a "notice of default". The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
may be requested by the Required Lenders in accordance with Section 11; provided
that unless and until the Agent has received any such request, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default or Unmatured Event of Default as
it shall deem advisable or in the best interest of the Lenders.
12.6 Credit Decision. Each Lender acknowledges that the Agent has not made
any representation or warranty to it, and that no act by the Agent hereafter
taken, including any review of the affairs of the Company and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and made its own decision
to enter into this Agreement and to extend credit to the Company hereunder. Each
Lender also represents that it will, independently and without reliance upon the
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders
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by the Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of the
Company that may come into the possession of the Agent.
12.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided
that no Lender shall be liable for any payment to any such Person of any portion
of the Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, termination of the
Commitments, cancellation of the Notes, expiration or termination of the Letters
of Credit, any foreclosure under, or modification, release or discharge of, any
or all of the Collateral Documents, termination of this Agreement and the
resignation or replacement of the Agent.
12.8 Agent in Individual Capacity. DCSNA and its Affiliates may make loans
to, issue letters of credit for the account of, acquire equity interests in and
generally engage in any kind of business with the Company and its Subsidiaries
and Affiliates as though DCSNA were not the Agent hereunder and without notice
to or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, DCSNA or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Affiliate) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to their Loans (if any), DCSNA and its
Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though DCSNA were not the Agent, and
the terms "Lender" and "Lenders" include DCSNA and its Affiliates, to the extent
applicable, in their individual capacities.
12.9 Successor Agent. The Agent may resign as Agent upon 30 days' notice
to the Lenders. If the Agent resigns under this Agreement, the Required Lenders
shall, with (so long as no Event of Default exists) the consent of the Company
(which shall not be unreasonably withheld or delayed), appoint from among the
Lenders a successor agent for the Lenders. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent, and the retiring Agent's appointment, powers and
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duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 and Sections 13.6 and
13.13 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date that is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
12.10 Collateral Matters. The Lenders irrevocably authorize the Agent, at
its option and in its discretion, (a) to release any Lien granted to or held by
the Agent under any Collateral Document (i) upon termination of the Commitments
and payment in full of all Loans and all other obligations of the Company
hereunder and the expiration or termination of all Letters of Credit; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
13.1, if approved, authorized or ratified in writing by the Required Lenders; or
(b) to subordinate its interest in any collateral to any holder of a Lien on
such collateral that is permitted by clause (d) or (h) of Section 9.8. Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release, or subordinate its interest in, particular types
or items of collateral pursuant to this Section 12.10.
12.11 Funding Reliance. (a) Unless the Agent receives notice from a Lender
by noon, Detroit time, on the day of a proposed borrowing that such Lender will
not make available to the Agent an amount equal to its Pro Rata Share of such
borrowing, the Agent may assume that such Lender has made such amount available
to the Agent and, in reliance upon such assumption, make a corresponding amount
available to the Company. If and to the extent such Lender has not made such
amount available to the Agent, such Lender and the Company jointly and severally
agree to repay such amount to the Agent forthwith on demand, together with
interest thereon at the interest rate applicable to Loans comprising such
borrowing or, in the case of any Lender that repays such amount within three
Business Days, the Federal Funds Rate. Nothing set forth in this clause (a)
shall relieve any Lender of any obligation it may have to make any Loan
hereunder.
(b) Unless the Agent receives notice from the Company prior to the due
date for any payment hereunder that the Company does not intend to make such
payment, the Agent may assume that the Company has made such payment and, in
reliance upon such assumption, make available to each Lender its share of such
payment. If and to the extent that the Company has not made any such payment to
the Agent, each Lender that received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Prime Rate (or, in the case of any Lender
that repays such amount within three Business Days, the Federal Funds Rate).
Nothing set forth in this clause (b) shall relieve the Company of any obligation
it may have to make any payment hereunder.
SECTION 13. GENERAL.
13.1 Waiver; Amendments. No delay on the part of the Agent or any Lender
in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or
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partial exercise by any of them of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Notes shall in any event be effective unless
the same shall be in writing and signed and delivered by Lenders having an
aggregate Pro Rata Share of not less than the aggregate Pro Rata Share expressly
designated herein with respect thereto or, in the absence of such designation as
to any provision of this Agreement or the Notes, by the Required Lenders, and
then any such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
(i) the Lenders authorize the Agent to act within its discretion (and without
notice to or the consent of any Lender) to waive or forbear on behalf of all
Lenders any noncompliance by the Company (other than a waiver of, or forbearance
with respect to, any Event of Default under Section 11.1.4) with this Agreement
(provided that no such waiver shall be for a period in excess of 90 days) and
(ii) Section 13.17 may be amended, modified or waived with the consent of DCSNA
(and not with the consent of any other Lender). No amendment, modification,
waiver or consent shall change the Pro Rata Share of any Lender without the
consent of such Lender. No amendment, modification, waiver or consent shall (i)
increase the Revolving Commitment Amount, (ii) extend the date for payment of
any principal of or interest on the Loans or any fees payable hereunder, (iii)
reduce the principal amount of any Loan, the rate of interest thereon or any
fees payable hereunder, (iv) release the Guaranty or all or substantially all of
the collateral granted under the Collateral Documents or (v) reduce the
aggregate Pro Rata Share required to effect an amendment, modification, waiver
or consent without, in each case, the consent of all Lenders. No provision of
Section 12 or other provision of this Agreement affecting the Agent in its
capacity as such shall be amended, modified or waived without the consent of the
Agent. No provision of this Agreement relating to the rights or duties of the
Issuing Lender in its capacity as such shall be amended, modified or waived
without the consent of the Issuing Lender.
13.2 Confirmations. The Company and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
13.3 Notices. Except as otherwise provided in Section 2.2, all notices
hereunder shall be in writing (including facsimile transmission) and shall be
sent to the applicable party at its address shown on Schedule 13.3 or at such
other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent and
mechanical confirmation of successful transmission has been received; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Section 2.2, the Agent shall be entitled to
rely on telephonic instructions from any person that the Agent in good faith
believes is an authorized officer or employee of the Company, and the Company
shall hold the Agent and each other Lender harmless from any loss, cost or
expense resulting from any such reliance.
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13.4 Computations. Where the character or amount of any asset or liability
or item of income or expense is required to be determined, or any consolidation
or other accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement, be made in accordance with
GAAP, consistently applied; provided that if the Company notifies the Agent that
the Company wishes to amend any covenant in Section 9 to eliminate or to take
into account the effect of any change in GAAP on the operation of such covenant
(or if the Agent notifies the Company that the Required Lenders wish to amend
Section 9 for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Company and the
Required Lenders.
13.5 Regulation U. Each Lender represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
13.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
out-of-pocket costs and expenses of the Agent (including Attorney Costs) in
connection with the preparation, execution, syndication, delivery and
administration of this Agreement, the other Loan Documents and all other
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith (including any amendment, supplement or waiver to any Loan
Document), and all out-of-pocket costs and expenses (including Attorney Costs)
incurred by the Agent and each Lender after an Event of Default in connection
with the enforcement of this Agreement, the other Loan Documents or any such
other documents. In addition, the Company agrees to pay, and to save the Agent
and the Lenders harmless from all liability for, (a) any stamp or other taxes
(excluding income taxes and franchise taxes based on net income) that may be
payable in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes or the execution and delivery of
any other Loan Document or any other document provided for herein or delivered
or to be delivered hereunder or in connection herewith and (b) any fees of the
Company's auditors in connection with any reasonable exercise by the Agent and
the Lenders of their rights pursuant to Section 9.2. All obligations provided
for in this Section 13.6 shall survive repayment of the Loans, cancellation of
the Notes, expiration or termination of the Letters of Credit and termination of
this Agreement.
13.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.
13.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
13.9 Assignments; Participations.
13.9.1 Assignments. Any Lender may, with the prior written consents of the
Issuing Lender and the Agent and (so long as no Event of Default exists) the
Company (which consents shall not be unreasonably delayed or withheld and, in
any event, shall not be required for an
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assignment by a Lender to one of its Affiliates or to any other Lender), at any
time assign and delegate to one or more commercial banks or other Persons (any
Person to whom such an assignment and delegation is to be made being herein
called an "Assignee") all or any fraction of such Lender's Loans and Commitment
(which assignment and delegation shall be of a constant, and not a varying,
percentage of all the assigning Lender's Loans and Commitment) in a minimum
aggregate amount equal to the lesser of (i) the amount of the assigning Lender's
Pro Rata Share of the Revolving Commitment Amount and (ii) $10,000,000; provided
that (a) no assignment and delegation may be made to any Person if, at the time
of such assignment and delegation, the Company would be obligated to pay any
greater amount under Section 7.6 to the Assignee than the Company is then
obligated to pay to the assigning Lender under such Section (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (b) the Company and the Agent shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the Agent
and the assigning Lender shall agree) shall have passed after written
notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Company and the Agent by such
assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have executed and
delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent, and
(z) except in the case of an assignment by a Lender to one of its
Affiliates, the assigning Lender or the Assignee shall have paid the Agent
a processing fee of $3,500.
From and after the date on which the conditions described above have been met,
(A) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (B) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the Assignee) a new Note (unless the Assignee was already a
holder of a Note immediately prior to such effectiveness). Each such Note shall
be dated the effective date of such assignment. Accrued interest on that part of
the predecessor Note being assigned shall be paid as provided in the Assignment
Agreement. Accrued interest and fees on that part of the predecessor Note not
being assigned shall be paid to the assigning Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Note and in this Agreement. Any attempted assignment and delegation not made in
accordance with this Section 13.9.1 shall be null and void.
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Notwithstanding the foregoing provisions of this Section 13.9.1 or any
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations hereunder).
13.9.2 Participations. Any Lender may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Lender, the Note held by such Lender, the Commitment of such Lender or any
other interest of such Lender hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event of a
sale by a Lender of a participating interest to a Participant, (x) such Lender
shall remain the holder of its Note for all purposes of this Agreement, (y) the
Company and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations hereunder and (z)
all amounts payable by the Company shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the fourth sentence of Section
13.1. Each Lender agrees to incorporate the requirements of the preceding
sentence into each participation agreement that such Lender enters into with any
Participant. The Company agrees that if amounts outstanding under this Agreement
and the Notes are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or such Note; provided that such right of
setoff shall be subject to the obligation of each Participant to share with the
Lenders, and the Lenders agree to share with each Participant, as provided in
Section 7.5. The Company also agrees that each Participant shall be entitled to
the benefits of Section 7.6 as if it were a Lender (provided that no Participant
shall receive any greater compensation pursuant to Section 7.6 than would have
been paid to the participating Lender if no participation had been sold).
13.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and the
Lenders expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
13.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit
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of the Company, the Lenders and the Agent and the successors and assigns of the
Lenders and the Agent.
13.13 Indemnification by the Company. In consideration of the execution
and delivery of this Agreement by the Agent and the Lenders and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, each Lender and each of the officers,
directors, employees, Affiliates and agents of the Agent and each Lender (each a
"Lender Party") free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the "Indemnified Liabilities"), incurred by the Lender
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Company or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Company or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Company or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (v) the execution, delivery, performance or enforcement of this
Agreement or any other Loan Document by any of the Lender Parties, except for
any such Indemnified Liabilities arising on account of the applicable Lender
Party's gross negligence or willful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section 13.13 shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the Letters of
Credit, any foreclosure under, or any modification, release or discharge of, any
or all of the Collateral Documents and termination of this Agreement.
13.14 Nonliability of Lenders. The relationship between the Company on the
one hand and the Lenders and the Agent on the other hand shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have any fiduciary
responsibility to the Company. Neither the Agent nor any Lender undertakes any
responsibility to the Company to review or inform the Company of any matter in
connection with any phase of the Company's business or operations. The Company
agrees that neither the Agent nor any Lender shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Agent
nor any Lender shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to ▇▇▇ for, any special, indirect or
consequential damages suffered by the Company in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
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13.15 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF MICHIGAN OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF MICHIGAN AND OF THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF MICHIGAN. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
13.16 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH LENDER
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
13.17 DCSNA Right of First Refusal on Floor Plan Financing. No Automobile
Dealership shall obtain any Floor Plan Financing from any Person other than
DCSNA (other than Floor Plan Financings permitted under Section 9.7(i)) unless
and until it shall have requested in writing that DCSNA provide such Floor Plan
Financing on terms consistent with the terms of the Floor Plan Financing at the
time provided by DCSNA to the Company and the other Automobile Dealerships and
provided a reasonable opportunity to DCSNA to provide such financing and DCSNA
shall have declined to provide the same. For purposes hereof, DCSNA will be
deemed to have declined to provide any Floor Plan Financing requested by an
Automobile Dealership in writing if it shall have failed to respond to such
Automobile Dealership within ten Business Days of receiving such written
request. If DCSNA declines to provide any such requested Floor Plan Financing,
the Automobile Dealership that requested the same may then obtain such requested
Floor Plan Financing from another Person.
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13.18 Confidentiality. Each Lender agrees to take, and to cause its
Affiliates to take, normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by the
Company or any Subsidiary, or by the Agent on the Company's or any Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither such Lender
nor any of its Affiliates shall 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 the Company or any Subsidiary, except to the extent such information was or
becomes generally available to the public other than as a result of disclosure
by such Lender or was or becomes available on a non-confidential basis from a
source other than the Company (provided that such source is not bound by a
confidentiality agreement with the Company or any Subsidiary known to such
Lender); provided, however, that any Lender may disclose such information (A) at
the request or pursuant to any requirement of any governmental authority to
which such Lender is subject or in connection with an examination of such Lender
by any such authority, (B) pursuant to subpoena or other court process, when
required to do so in accordance with the provisions of any applicable
requirement of law, (C) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent or any Lender or any of their
respective Affiliates may be party, (D) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document, (E) to such Lender's independent auditors and other professional
advisors, (F) to any participant or assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Lenders hereunder, (G) as to any Lender or its Affiliate,
as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any Subsidiary is party or is
deemed party with such Lender or such Affiliate, (H) to its Affiliates and (I)
any nationally recognized rating agency that requires access to information
about such Lender's investment portfolio in connection with ratings issued to
such Lender.
Delivered at Detroit, Michigan as of the day and year first above written.
LITHIA MOTORS, INC.
By____________________________________________
Title_________________________________________
DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC, as Agent, Issuing Lender and as a
Lender
By____________________________________________
Title_________________________________________
SCHEDULE 2.1
LENDERS AND PRO RATA SHARES
Pro Rata Share
of Revolving
Lender Commitment Amount Pro Rata Share
------ ----------------- --------------
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC $200,000,000 100%
TOTALS $200,000,000 100%
SCHEDULE 13.3
ADDRESSES FOR NOTICES
LITHIA MOTORS, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone No.:
Facsimile No.:
Copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Lithia Motors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, as Agent and a Lender
Notices of Borrowing and Requests for Letter of Credit Issuance
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
CIMS ▇▇▇-▇▇-▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All Other Notices
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
CIMS ▇▇▇-▇▇-▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
FORM OF
NOTE
_______, 200_
Detroit, Michigan
The undersigned, for value received, promises to pay to the order of
______________ (the "Lender"), at the principal office of DAIMLERCHRYSLER
SERVICES NORTH AMERICA LLC (the "Agent") in Farmington Hills, Michigan, the
aggregate unpaid amount of all Loans made to the undersigned by the Lender
pursuant to the Credit Agreement referred to below (as shown on the schedule
attached hereto (and any continuation thereof) or in the records of the Lender),
such principal amount to be payable on the dates set forth in the Credit
Agreement.
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such Loan is paid in full,
payable at the rate(s) and at the time(s) set forth in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of the
United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of February __, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement";
capitalized terms not otherwise defined herein are used herein as defined in the
Credit Agreement), among the undersigned, certain financial institutions
(including the Lender) and the Agent, to which Credit Agreement reference is
hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or its due date accelerated.
This Note is made under and governed by the laws of the State of Michigan
applicable to contracts made and to be performed entirely within such State.
LITHIA MOTORS, INC.
By:________________________________
Title:____________________________
Schedule attached to Note dated ___________, 200__ of LITHIA MOTORS, INC.
payable to the order of _____________
Date and Date and Unpaid
Amount of Amount of Maturity Principal Notation
Loan Repayment Date Balance Made by
---- --------- ---- ------- -------
EXHIBIT I
FORM OF
L/C APPLICATION
TO: DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
CIMS ▇▇▇-▇▇-▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We hereby request DaimlerChrysler Services North America LLC, as Issuing
Lender under the Credit Agreement referred to below, to establish a Letter of
Credit (the "Credit") for our account as follows:
BENEFICIARY:
APPLICANT:
AMOUNT:
EXPIRY DATE:
AVAILABLE BY SIGHT DRAFTS TO BE ACCOMPANIED BY:
SPECIAL INSTRUCTIONS:
PURPOSE OF CREDIT:
The Credit is subject to the terms and provisions of the Credit Agreement,
dated as of February __, 2003 (as amended or otherwise modified from time to
time, the "Credit Agreement"; capitalized terms not otherwise defined herein are
used herein as defined in the Credit Agreement), among the undersigned, certain
financial institutions and the Issuing Lender, to which Credit Agreement
reference is hereby made for a statement of the terms and provisions regarding
the issuance of Letters of Credit and the reimbursement obligations arising in
connection therewith.
The undersigned hereby confirms that, both before and after giving effect
to the issuance of the Credit, (a) the representations and warranties of the
undersigned and each Subsidiary set forth in the Credit Agreement and the other
Loan Documents are true and correct in all material respects with the same
effect as if made on the date hereof (except to the extent such representations
and warranties relate to a specific earlier date) and (b) no Event of Default or
Unmatured Event of Default has occurred or is continuing.
Dated this ____ day of ___________, 200__. LITHIA MOTORS, INC.
By:________________________
Its:_______________________