EXHIBIT 10.17.2
SUBORDINATION AGREEMENT
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$400,000.00 09-09-1996 RVA 5311162 16245
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References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
loan or item.
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Borrower: Lithia Motors, Inc. Lender: United States National Bank
360 ▇. ▇▇▇▇▇▇▇ of Oregon
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Dealer Finance Division
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Creditor: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS SUBORDINATION AGREEMENT IS ENTERED INTO AMONG LITHIA MOTORS, INC.
("BORROWER"), WHOSE ADDRESS IS ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; UNITED STATES
NATIONAL BANK OF OREGON ("LENDER"), WHOSE ADDRESS IS ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
975O1; AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("CREDITOR"), WHOSE ADDRESS IS ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. As of this date, September 9, 1996, Borrower is indebted to
Creditor in the AGGREGATE AMOUNT OF FIVE HUNDRED THOUSAND & 00/100 DOLLARS
($500,000.00). This amount is the total indebtedness of every kind from Borrower
to Creditor. Borrower and Creditor each want Lender to provide financial
accommodations to Borrower in the form of (a) new credit or loan advances, (b)
an extension of time to pay or other compromises regarding all or part of
Borrower's present indebtedness to Lender, or (c) other benefits to Borrower.
Borrower and Creditor each represent and acknowledge to Lender that Creditor
will benefit as a result of these financial accommodations from Lender to
Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. BASED ON THE REPRESENTATIONS AND ACKNOWLEDGMENTS
CONTAINED IN THIS AGREEMENT, CREDITOR AND BORROWER AGREE WITH LENDER AS FOLLOWS:
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Subordination Agreement, as
this Subordination Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Subordination
Agreement from time to time.
BORROWER. The word "Borrower" means Lithia Motors, Inc.
CREDITOR. The word "Creditor" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
LENDER. The word "Lender" means United States National Bank of Oregon, its
successors and assigns.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" mean and
include without limitation all present and future indebtedness,
obligations, liabilities, claims, rights, and demands of any kind which may
be now or hereafter owing from BORROWER TO CREDITOR. The term
"Subordinated Indebtedness" is
used in its broadest sense and includes without limitation all principal,
all interest, all costs and attorneys' fees, all sums paid for the purpose
of protecting the rights of a holder of security (such as a secured party
paying for insurance on collateral if the owner fails to do so), all
contingent obligations of Borrower (such as a guaranty), and all other
obligations, secured or unsecured, of any nature whatsoever.
SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" mean and include
without limitation all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from BORROWER TO LENDER. The term "Superior Indebtedness"
is used in its broadest sense and includes without limitation all
principal, all interest, all costs and attorneys' fees, all sums paid for
the purpose of protecting Lender's rights in security (such as paying for
insurance on collateral if the owner fails to do so), all contingent
obligations of Borrower (such as a guaranty), all obligations arising by
reason of Borrower's accounts with Lender (such as an overdraft on a
checking account), and all other obligations of Borrower to Lender, secured
or unsecured, of any nature whatsoever.
SUBORDINATION. ALL SUBORDINATED INDEBTEDNESS OF BORROWER TO CREDITOR IS AND
SHALL BE SUBORDINATED IN ALL RESPECTS TO ALL SUPERIOR INDEBTEDNESS OF BORROWER
TO LENDER. If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired, in any of Borrower's real property or personal
property, Creditor also subordinates all its Security Interests to all Security
Interests held by Lender, whether the Lender's Security Interest or Interests
exist now or are acquired later.
PAYMENTS TO CREDITOR. Borrower will not make and Creditor will not accept, at
any time while any Superior Indebtedness is owing to Lender, (a) any payment
upon any Subordinated Indebtedness, (b) any advance, transfer, or assignment of
assets to Creditor in any form whatsoever that would reduce at any time or in
any way the amount of Subordinated Indebtedness, or (c) any transfer of any
assets as security for the Subordinated Indebtedness, except upon Lender's prior
written consent.
In the event of any distribution, division, or application, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrower's assets, in whatever
form, to creditors of Borrower or upon any Indebtedness of Borrower, whether by
reason of the liquidation, dissolution or other winding-up of Borrower, or by
reason of any execution sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (a) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (b) all payments and
distributions, of any kind or character and whether in cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shall be paid or delivered directly to Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.
In order that Lender may establish its right to prove claims and recover for its
own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments, or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments, or other disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of the Superior Indebtedness.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor where necessary) for application on or to secure the Superior
Indebtedness, whether it is due or not due, and until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.
09-09-1996 SUBORDINATION AGREEMENT
Loan No (Continued)
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CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's
request, all notes of Borrower to Creditor, or other evidence of the
Subordinated Indebtedness, now held or hereafter acquired by Creditor,
while this Agreement remains in effect. At Lender's request, Borrower also
will execute and deliver to Creditor a promissory note evidencing any book
account or claim now or hereafter owed by Borrower to Creditor, which note
also shall be delivered by Creditor to Lender. Creditor agrees not to
sell, assign, pledge or otherwise transfer any of such notes except subject
to all the terms and conditions of this Agreement.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and
warrants to Lender that: (a) no representations or agreements of any kind
have been made to Creditor which would limit or qualify in any way the
terms of this Agreement; (b) this Agreement is executed at Borrower's
request and not at the request of Lender; (c) Lender has made no
representation to Creditor as to the creditworthiness of Borrower; and (d)
Creditor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Creditor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Creditor's risks
under this Agreement, and Creditor further agrees that Lender shall have no
obligation to disclose to Creditor information or material acquired by
Lender in the course of its relationship with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (a) to
make, extend, renew, or modify any loan to Borrower or to grant any other
financial accommodations to Borrower whatsoever; (b) to make any
presentment, protest, demand, or notice of any kind, including notice of
any nonpayment of the Superior Indebtedness or of any nonpayment related to
any Security Interests, or notice of any action or nonaction on the part of
Borrower, Lender, any surety, endorser, or other guarantor in connection
with the Superior Indebtedness, or in connection with the creation of new
or additional Superior Indebtedness; (c) to resort for payment or to
proceed directly or at once against any person, including Borrower; (d) to
proceed directly against or exhaust any Security Interests held by Lender
from Borrower, any other guarantor, or any other person; (e) to give notice
of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any
other remedy within Lender's power; or (g) to commit any act or omission of
any kind, at any time, with respect to any matter whatsoever.
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect
to the Superior Indebtedness or any Security Interests for the Superior
Indebtedness without affecting whatsoever any of Lender's rights under this
Agreement. In particular, without limitation, Lender may, without notice
of any kind to Creditor, (a) make one or more additional secured or
unsecured loans to Borrower; (b) repeatedly alter, compromise, renew,
extend, accelerate, or otherwise change the time for payment or other terms
of the Superior Indebtedness or any part thereof, including increases and
decreases of the rate of interest on the Superior Indebtedness; extensions
may be repeated and may be for longer than the original loan term; (c) take
and hold Security Interests for the payment of the Superior Indebtedness,
and exchange, enforce, waive, and release any such Security Interests, with
or without the substitution of new collateral; (d) release, substitute,
agree not to ▇▇▇, or deal with any one or more of Borrower's sureties,
endorsers, or guarantors on any terms or manner Lender chooses; (e)
determine how, when and what application of payments and credits, shall be
made on the Superior Indebtedness; (f) apply such security and direct the
order or manner of sale thereof, as Lender in its discretion may determine;
and (g) assign this Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this
Agreement shall remain in full force and effect. In the event of a
corporate reorganization or corporate arrangement of Borrower under the
provisions of the Bankruptcy Code, as amended, this Agreement shall remain
in full force and effect and the court having jurisdiction over the
reorganization or arrangement is hereby authorized to preserve such
priority and subordination in approving any such plan of reorganization or
arrangement. Any default by Borrower under the terms of the Subordinated
Indebtedness also shall be a default under the terms of the Superior
Indebtedness to Lender.
09-09-1996 SUBORDINATION AGREEMENT
Loan No (Continued)
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DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall
notify Lender in writing at the address shown above to the contrary. Any
such notice shall not affect the Superior Indebtedness owed Lender by
Borrower at the time of such notice, nor shall such notice affect Superior
Indebtedness thereafter granted in compliance with a commitment made by
Lender to Borrower prior to receipt of such notice, nor shall such notice
affect any renewals of or substitutions for any of the foregoing. Such
notice shall affect only indebtedness of Borrower to Lender arising after
receipt of such notice and not arising from financial assistance granted by
Lender to Borrower in compliance with Lender's obligations under a
commitment. Any notes lodged with Lender pursuant to the section titled
"Creditor's Notes" above need not be returned until this Agreement has no
further force or effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:
APPLICABLE LAW. This Agreement has been delivered to Lender and
accepted by Lender in the State of Oregon. If there is a lawsuit,
Creditor and Borrower agree upon Lender's request to submit to the
jurisdiction of the courts of ▇▇▇▇▇▇▇ County, State of Oregon.
Subject to the provisions on arbitration, this Agreement shall be
governed by and construed in accordance with the laws of the State of
Oregon. No provision contained in this Agreement shall be construed
(a) as requiring Lender to grant to Borrower or to Creditor any
financial assistance or other accommodations, or (b) as limiting or
precluding Lender from the exercise of Lender's own judgment and
discretion about amounts and times of payment in making loans or
extending accommodations to Borrower.
AMENDMENTS. This Agreement constitutes the entire understanding and
agreement of the parties as to the matters set forth in this
Agreement. No alteration of or amendment to this Agreement shall be
effective unless made in writing and signed by Lender, Borrower, and
Creditor.
ARBITRATION. LENDER AND CREDITOR AND BORROWER AGREE THAT ALL
DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL,
JOINT, OR CLASS IN NATURE, ARISING FROM THIS AGREEMENT OR OTHERWISE,
INCLUDING WITHOUT LIMITATION CONTRACT AND TORT DISPUTES, SHALL BE
ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or dispose
of any Collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a
temporary restraining order; foreclosing by notice and sale under any
deed of trust or mortgage, obtaining a writ of attachment or
imposition of a receiver, or exercising any rights relating to
personal property, including taking or disposing of such property with
or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning
the lawfulness or reasonableness of any act, or exercise of any right,
concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also
be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of
competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in
an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
ATTORNEYS' FEES; EXPENSES. Creditor and Borrower agree to pay upon
demand all of Lender's costs and expenses, including attorneys' fees
and Lender's legal expenses incurred in connection with the
enforcement of this Agreement. Lender may pay someone else to help
enforce this Agreement, and Creditor and Borrower shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal
09-09-1996 SUBORDINATION AGREEMENT
Loan No (Continued)
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expenses for bankruptcy proceedings (and including efforts to modify
or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Creditor and
Borrower also shall pay all court costs and such additional fees as
may be directed by the court.
SUCCESSORS. This Agreement shall extend to and bind the respective
heirs, personal representatives, successors and assigns of the parties
to this Agreement, and the covenants of Borrower and Creditor
respecting subordination of the Subordinated Indebtedness in favor of
Lender shall extend to, include, and be enforceable by any transferee
or endorsee to whom Lender may transfer any or all of the Superior
Indebtedness.
WAIVER. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Creditor, shall constitute a waiver of any of
Lender's rights or of any of Creditor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted
or withheld in the sole discretion of Lender.
BORROWER AND CREDITOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR AGREE TO ITS TERMS.
THIS AGREEMENT IS DATED AS OF SEPTEMBER 9, 1996.
BORROWER:
LITHIA MOTORS, INC.
BY:
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LITHIA MOTORS, INC.,
BY: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, PRESIDENT
BY:
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LITHIA'S GRANTS PASS AUTO CENTER, L.L.C.,
BY: LITHIA MOTORS, INC. MANAGING MEMBER
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇, PRESIDENT
BY:
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LITHIA DODGE L.L.C.,
BY: LITHIA MOTORS, INC.
MANAGING MEMBER
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇, PRESIDENT
BY:
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LITHIA TLM L.L.C.,
BY: LITHIA MOTORS, INC.
MANAGING MEMBER
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇, PRESIDENT
09-09-1996 SUBORDINATION AGREEMENT
Loan No (Continued)
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CREDITOR:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BY:
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LENDER:
UNITED STATES NATIONAL BANK OF OREGON
BY:
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AUTHORIZED OFFICER