EXHIBIT
10.15.4


 


FOURTH
AMENDMENT


 


THIS FOURTH AMENDMENT dated as of October 31,
2004 (this “Amendment”) is to the Credit Agreement (as heretofore
amended, the “Credit Agreement”) dated as of February 25, 2003
among LITHIA MOTORS, INC. (the “Company”), various financial
institutions (the “Lenders”) and DAIMLERCHRYSLER SERVICES NORTH AMERICA
LLC, as agent for the Lenders (the “Agent”).  Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as defined in the Credit
Agreement.


 


WHEREAS, the parties hereto desire to amend the Credit
Agreement in certain respects;


 


NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties hereto agree as follows:


 


SECTION 1  AMENDMENTS.  Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date (as defined below):


 


1.1                               (a)                                  Section 1.1 of
the Credit Agreement shall be amended by adding the following definitions thereto,
each in its appropriate alphabetical position:


 


Current
Assets Commitment Amount means, with respect to any Current
Assets Election, the least of (A) an amount equal to the Maximum
Availability at the time of such election, (B) the Unused Revolving
Commitment Amount at the time of such election and (C) the Specified
Current Assets Commitment Amount.


 


Current Assets
Election – see the definition of “Consolidated
Current Assets”.  A Current Assets
Election shall become effective on the date on which the compliance certificate
electing the same is delivered to the Agent in accordance with Section 9.1.3
and shall remain in effect until the next compliance certificate is due under Section 9.1.3.


 


Fourth
Amendment Effective Date means the “Fourth Amendment
Effective Date” under and as defined in the Fourth Amendment hereto dated as of
October 31, 2004.


 


Maximum
Availability means, at any time, the (a) Borrowing Base
at such time, plus (b) $50,000,000, minus (c) the Revolving
Outstandings at such time.


 


Specified
Current Assets Commitment Amount means, with respect
to any Current Assets Election, the amount specified by the Company as the “Specified
Current Assets Commitment Amount” in such Current Assets Election.


 


(b)                                 The
following definitions in Section 1.1 of the Credit Agreement shall be
amended and restated in their entireties to read as follows:


 


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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; provided
that, at the election of the Company delivered by completing the appropriate
sections of a compliance certificate delivered to the Agent in accordance with Section 9.1.3
(a “Current Assets Election”), Consolidated Current Assets at any time
while such Current Assets Election remains in effect shall be deemed to include
the Current Assets Commitment Amount at such time.


 


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; provided
that if at any time within one year prior to the Termination Date a Current
Assets Election shall be in effect, Consolidated Current Liabilities shall be
deemed to include the Current Assets Commitment Amount at such time.


 


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 any other Subsidiary or to grant Liens
on the stock or other ownership interests of a Subsidiary: (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 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 Dealer Franchise Agreement; or (v) imposed by
applicable law.


 


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; provided that, for purposes of this
definition, if the Company has made a Current Assets Election, the Total
Liabilities of the Company and its Subsidiaries at any time while such Current
Assets Election remains in effect shall be deemed to include the Current Assets
Commitment Amount at such time.


 


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1.2                               The third sentence of Section 2.3.5
of the Credit Agreement shall be replaced in its entirety with the following:


 


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 on
which such Lender receives notice from the Agent of such payment or
disbursement (it being understood that any such notice received after noon,
Detroit time, on any Business Day shall be deemed to have been received on the
next following Business Day), (a) the Agent shall be entitled to retain (for
the benefit of the Issuing Lender) all interest payments paid by the Company
allocable to such Lender’s Pro Rata Share of the unpaid reimbursement
obligations for the period from the time such Lender was required to make such
amount available to the Agent until such Lender actually makes such amount
available or such amount is indefeasibly paid to the Agent by the Company and (b) such
Lender agrees to pay to the Issuing Lender forthwith upon demand the greater of
(x) the actual costs incurred by the Issuing Lender as a result of such failure
and (y) interest on such amount for the Issuing Lender’s account, 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 the Federal Funds Rate from
time to time in effect.


 


1.3                               Section 9.1.3 of
the Credit Agreement shall be amended and restated in its entirety to read as
follows:


 


9.1.3.                     Compliance
Certificates.  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
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) a computation of each of the financial
ratios and covenants set forth in Section 9.6, (b) the Current
Assets Commitment Amount, if any, to be included in the financial ratios
specified hereunder for the period until the next compliance certificate is
due, (c) a list of all new deposit accounts opened by the Company or any
Collateral Subsidiary since the date of the last compliance certificate and (d) 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.


 


1.4                               Sections 12.10 and 12.11
of the Credit Agreement shall be amended and restated in their entirety to read
as follows:


 


12.10.                  Collateral
Matters.  (a)  The Lenders
irrevocably authorize the Agent, at its option and in its discretion, (i) to
release any Lien granted to or held


 


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by the Agent under any Collateral Document (x) 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, (y) constituting property sold or to be sold or disposed of
as part of or in connection with any disposition permitted hereunder or (z)
subject to Section 13.1, if approved, authorized or ratified in
writing by the Required Lenders; and (ii) to subordinate its interest in
any collateral to any holder of a Lien on such collateral which 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.


 


(b)                                 Any
and all proceeds of disposition or other realization on the collateral granted
under the Collateral Documents (the “Collateral”) or from any
realization on the Collateral received by the Agent in connection with any
enforcement, sale, collection (including judicial or non-judicial foreclosure)
or similar proceedings with respect to the Collateral or a demand or other
enforcement or collection with respect to the Collateral shall be applied by
the Agent, as follows:


 


FIRST:  To the payment of the costs and expenses of
such disposition, collection or other realization, including Attorney Costs,
and all costs and expenses made or incurred by the Agent in connection
therewith;


 


SECOND:  To the payment of the Liabilities (as defined
in the Security Agreement) then due and owing, in such order as shall be
directed by the Required Lenders; and


 


THIRD:  After payment in full of all Liabilities, any
surplus then remaining from such proceeds shall be paid to the Company or to
whomsoever may be lawfully entitled to receive the same or paid as a court of
competent jurisdiction may direct. Until such proceeds are so applied, the
Agent shall hold such proceeds in its custody in accordance with its regular
procedures for handling deposited funds.


 


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:  (i) the
Company agrees to repay such amount to the Agent forthwith on demand, together
with interest thereon at the interest rate applicable to Loans comprising such
borrowing, (ii) the Agent shall be entitled to retain all interest
payments paid by the Company allocable to such Lender’s Pro Rata Share of such
borrowing for the period from the time such Lender was required to make such
amount available to the Agent


 


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until such Lender actually makes such amount available
or such amount is indefeasibly paid to the Agent by the Company and (iii) such
Lender agrees to pay to the Agent forthwith upon demand the greater of (x) the
actual costs incurred by the Agent as a result of such failure and (y) interest
on such amount for the Agent’s account, 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 the Federal Funds Rate from time to time in
effect.  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 which received a share of such
payment shall repay such share (or the relevant portion thereof) to the Agent
forthwith on demand.  If and to the
extent such Lender does not so repay the Agent on demand, (i) the Agent
shall be entitled to retain all interest payments paid by the Company allocable
to such Lender’s Pro Rata Share of such payment for the period from the time
such Lender was required to so repay the Agent until such Lender actually pays
the Agent such amount or the amount of such repayment is indefeasibly paid to
the Agent by the Company and (ii) such Lender agrees to pay to the Agent
forthwith upon demand the greater of (x) the actual costs incurred by the Agent
as a result of such failure to repay and (y) interest on such amount for the
Agent’s account, 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 the Federal Funds Rate from time to time in effect.  Nothing set forth in this clause (b) shall
relieve the Company of any obligation it may have to make any payment
hereunder.


 


1.5                               Section 13.1 of the
Credit Agreement shall be amended and restated in its entirety to read as
follows:


 


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
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, the
Lenders authorize the Agent to


 


5





















 


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 60 days).  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, any
reimbursement obligation with respect to any Letter of Credit or any fees
payable hereunder, (iii) reduce the principal amount of any Loan, the rate
of interest thereon, any reimbursement obligation with respect to any Letter of
Credit or any fees payable hereunder, (iv) release all or a substantial
number of the guarantors from the Guaranty or all or any substantial part of
the collateral granted under the Collateral Documents, (v) amend or modify
Section 9.6.1,  9.6.2 or 9.6.3 so as to reduce the
minimum financial ratio set forth therein, (vi) amend or modify Section 9.6.4
so as to increase the maximum financial ratios set forth therein, (vii) amend
or modify Section 9.6.5, (viii) amend, modify or waive Section 6.3
or (ix) reduce the aggregate Pro Rata Share required to effect an
amendment, modification, waiver or consent without, in each case, the consent
of all Lenders.  The Agent shall not
execute any material amendment, modification or waiver of, or material consent
with respect to, any provision of the Guaranty or any Collateral Document
unless the same shall be approved in writing 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.  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.


 


1.6                               Exhibit B to the
Credit Agreement is replaced in its entirety with Exhibit B to this
Amendment.


 


SECTION 2  REPRESENTATIONS
AND WARRANTIES. The Company represents and warrants to
the Agent and the Lenders that:  (a) the
representations and warranties made in Section 8 of the Credit Agreement
are true and correct on and as of the Fourth Amendment Effective Date (as
defined below) with the same effect as if made on and as of the Fourth Amendment
Effective Date (except to the extent relating solely to an earlier date, in
which case they were true and correct as of such earlier date); (b) no
Event of Default or Unmatured Event of Default exists or will result from the
execution of this Amendment; (c) no event or circumstance has occurred
since the Closing Date that has resulted, or would reasonably be expected to
result, in a Material Adverse Effect; (d) the execution and delivery by
the Company of this Amendment and the performance by the Company of its
obligations under the Credit Agreement as amended hereby (as so amended, the “Amended
Credit Agreement”) (i) are within the corporate powers of the Company,
(ii) have been duly authorized by all necessary corporate action, (iii) have
received all necessary approval from any governmental authority and (iv) do
not and will not contravene or conflict with any provision of any law, rule or
regulation or any


 


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order, decree, judgment
or award which is binding on the Company or any of its Subsidiaries or of any
provision of the certificate of incorporation or bylaws or other organizational
documents of the Company or of any agreement, indenture, instrument or other
document which is binding on the Company or any of its Subsidiaries; and (e) the
Amended Credit Agreement is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability.


 


SECTION 3  EFFECTIVENESS.  The amendments set forth in Section 1
above shall become effective as of October 31, 2004 (the “Fourth
Amendment Effective Date”); provided that the Agent shall have received (a) a
counterpart of this Amendment executed by the Company and the Lenders (or, in
the case of any party other than the Company from which the Agent has not
received a counterpart hereof, facsimile confirmation of the execution of a
counterpart hereof by such party) and (b) each of the following documents,
each in form and substance satisfactory to the Agent:


 


3.1                               Reaffirmation.  A counterpart of the Reaffirmation of Loan Documents,
substantially in the form of Exhibit A, executed by each Loan Party
other than the Company.


 


3.2                               Other Documents.  Such other documents as the Agent or any
Lender may reasonably request.


 


SECTION 4  MISCELLANEOUS.


 


4.1                               Continuing
Effectiveness, etc.  As hereby
amended, the Credit Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects. 
As of the Fourth Amendment Effective Date, all references in the Credit
Agreement, the Notes, each other Loan Document and any similar document to the “Credit
Agreement” or similar terms shall refer to the Amended Credit Agreement.


 


4.2                               Counterparts.  This Amendment may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.


 


4.3                               Expenses.  The Company agrees to pay the reasonable
costs and expenses of the Agent (including Attorney Costs) in connection with
the preparation, execution and delivery of this Amendment.


 


4.4                               Governing Law.  This Amendment shall be a contract made under
and governed by the laws of the State of Michigan applicable to contracts made
and to be wholly performed within the State of Michigan.


 


4.5                               Successors and
Assigns.  This Amendment shall be
binding upon the Company, the Lenders and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Lenders and the Agent and the successors and assigns of the Lenders and the
Agent.


 


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Delivered as of the day
and year first above written.


 


 


	
   

  	
  LITHIA
  MOTORS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey
  B. DeBoer

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DAIMLERCHRYSLER
  SERVICES NORTH

  AMERICA LLC, as the Agent, as the Issuing

  Lender and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janet
  Toronski

  	
   

  
	
   

  	
  Title:

  	
  V.P. National Accounts

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TOYOTA
  MOTOR CREDIT CORPORATION,

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Reid Boozer

  	
   

  
	
   

  	
  Title:

  	
  National Accounts Development Manager

  	
   

  
								



 





















 


EXHIBIT A


 


FORM OF REAFFIRMATION


 


October 31, 2004


 


DaimlerChrysler Services North


America LLC, as the Agent


and the Lenders
party


to the Credit
Agreement


referred to below


27777 Inkster Road


Farmington Hills, Michigan 48334


Attn: Michele Nowak


 


Re: 
Reaffirmation of Loan Documents


 


Ladies and Gentlemen:


 


Please refer to:


 


(a)                                  The Security
Agreement dated as of February 25, 2003 (the “Security Agreement”)
among Lithia Motors, Inc. (the “Company”), its subsidiaries and DaimlerChrysler
Services North America LLC in its capacity as Agent (in such capacity, the “Agent”);


 


(b)                                 The Guaranty dated as
of February 25, 2003 (the “Guaranty”) executed in favor of the
Agent and various other parties by all subsidiaries of the Company; and


 


(c)                                  The Pledge Agreement
dated as of February 25, 2003 (the “Pledge Agreement”) executed by
the Company and certain of its subsidiaries.


 


Each of the undersigned acknowledges that the
Company, the Lenders and the Agent have executed the Fourth Amendment (the “Fourth
Amendment”) to the Credit Agreement dated as of February 25, 2003 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  Capitalized terms not
otherwise defined herein have the meanings given in the Credit Agreement.


 


Each of the undersigned hereby confirms that
the Security Agreement, the Guaranty, the Pledge Agreement and each other Loan
Document to which such undersigned is a party remains in full force and effect
after giving effect to the effectiveness of the Fourth Amendment and that, upon
such effectiveness, all references in each Loan Document to the “Credit
Agreement” shall be references to the Credit Agreement, as amended by the
Fourth Amendment.


 


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This letter agreement may be signed in
counterparts and by the various parties on separate counterparts.  This letter agreement shall be governed by
the laws of the State of Michigan applicable to contracts made and to be
performed entirely within such State.


 


 


	
   

  	
  HUTCHINS EUGENE NISSAN, INC.

  
	
   

  	
  HUTCHINS IMPORTED MOTORS, INC.

  
	
   

  	
  LGPAC, INC.

  
	
   

  	
  LITHIA AUTO SERVICES, INC.

  
	
   

  	
  LITHIA BNM, INC.

  
	
   

  	
  LITHIA DE, INC.

  
	
   

  	
  LITHIA DM, INC.

  
	
   

  	
  LITHIA HPI, INC.

  
	
   

  	
  LITHIA KLAMATH, INC.

  
	
   

  	
  LITHIA LAC, INC.

  
	
   

  	
  LITHIA MEDFORD HON, INC.

  
	
   

  	
  LITHIA MOTORS SUPPORT SERVICES, INC.

  
	
   

  	
  LITHIA MTLM, INC.

  
	
   

  	
  LITHIA OF ROSEBURG, INC.

  
	
   

  	
  LITHIA RENTALS, INC.

  
	
   

  	
  LITHIA ROSE-FT, INC.

  
	
   

  	
  LITHIA SOC, INC.

  
	
   

  	
  SATURN OF SOUTHWEST OREGON, INC.

  
	
   

  	
  LITHIA CHRYSLER JEEP OF ANCHORAGE, INC.

  
	
   

  	
  LITHIA IMPORTS OF ANCHORAGE, INC.

  
	
   

  	
  LITHIA CIMR, INC.

  
	
   

  	
  LITHIA CJDB, INC.

  
	
   

  	
  LITHIA DC, INC.

  
	
   

  	
  LITHIA FMF, INC.

  
	
   

  	
  LITHIA FN, INC.

  
	
   

  	
  LITHIA FVHC, INC.

  
	
   

  	
  LITHIA JEF, INC.

  
	
   

  	
  LITHIA MMF, INC.

  
	
   

  	
  LITHIA NF, INC.

  
	
   

  	
  LITHIA OF ANCHORAGE, INC.

  
	
   

  	
  LITHIA TKV, INC.

  
	
   

  	
  LITHIA TR, INC.

  
	
   

  	
  LITHIA VWC, INC.

  
	
   

  	
  LITHIA CENTENNIAL CHRYSLER PLYMOUTH JEEP,
  INC.

  



 


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  LITHIA CHERRY CREEK DODGE, INC.

  
	
   

  	
  LITHIA COLORADO JEEP, INC.

  
	
   

  	
  LITHIA COLORADO SPRINGS JEEP CHRYSLER
  PLYMOUTH, INC.

  
	
   

  	
  LITHIA FOOTHILLS CHRYSLER, INC.

  
	
   

  	
  LITHIA OF THORNTON, INC.

  
	
   

  	
  LITHIA CB, INC.

  
	
   

  	
  LITHIA DB, INC.

  
	
   

  	
  LITHIA IB, INC.

  
	
   

  	
  LITHIA LMB, INC.

  
	
   

  	
  LITHIA FORD OF BOISE, INC.

  
	
   

  	
  LITHIA OF CALDWELL, INC.

  
	
   

  	
  LITHIA OF POCATELLO, INC.

  
	
   

  	
  LITHIA POCA-HON, INC.

  
	
   

  	
  LITHIA CD, INC.

  
	
   

  	
  LITHIA OF OMAHA, INC.

  
	
   

  	
  LITHIA MBO, INC.

  
	
   

  	
  LITHIA RENO SUB-HYUN, INC.

  
	
   

  	
  LITHIA SALMIR, INC.

  
	
   

  	
  LITHIA AUTOMOTIVE, INC.

  
	
   

  	
  LITHIA OF SIOUX FALLS, INC.

  
	
   

  	
  CAMP AUTOMOTIVE, INC.

  
	
   

  	
  LITHIA BC, INC.

  
	
   

  	
  LITHIA DC OF RENTON, INC.

  
	
   

  	
  LITHIA DODGE OF TRI-CITIES, INC.

  
	
   

  	
  LITHIA FTC, INC.

  
	
   

  	
  LITHIA IC, INC.

  
	
   

  	
  LITHIA OF SEATTLE, INC.

  
	
   

  	
  TC HON, INC.

  
	
   

  	
  LITHIA HYR, INC.

  
	
   

  	
  LITHIA CS, INC.

  
	
   

  	
  LITHIA OF FAIRFIELD, INC.

  
	
   

  	
  LITHIA OF SANTA ROSA, INC.

  
	
   

  	
  LITHIA OF VACAVILLE, INC.

  
	
   

  	
  LITHIA CCTF, INC.

  
	
   

  	
  LITHIA OF TWIN FALLS, INC.

  
	
   

  	
  LITHIA LMM, INC.

  
	
   

  	
  LITHIA OF MISSOULA, INC.

  
	
   

  	
  LITHIA OF OKLAHOMA, INC.

  
	
   

  	
  LITHIA OF BILLINGS, INC.

  
	
   

  	
  LITHIA OF SPOKANE, INC.

  
	
   

  	
  LITHIA OF FAIRBANKS, INC.

  
	
   

  	
  LITHIA OF MEDFORD LM, INC.

  
	
   

  	
  LITHIA OF HELENA, INC.

  
	
   

  	
  LITHIA OF SOUTH CENTRAL AK, INC.

  



 


3





















 


	
   

  	
  LITHIA NA, INC.

  
	
   

  	
  LITHIA OF CLOVIS, INC.

  
	
   

  	
  LITHIA OF RENO, INC.

  
	
   

  	
  LITHIA OPF GREAT FALLS, INC.

  
	
   

  	
  LITHIA OF HGF, INC.

  
	
   

  	
  LITHIA OF SANTA FE, INC.

  
	
   

  	
  LITHIA CJDSF, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LITHIA LP OF TEXAS, LLC

  
	
   

  	
  LITHIA GP OF TEXAS, LLC

  
	
   

  	
    By: Lithia Motors, Inc., Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOE, LLC

  
	
   

  	
    By: Lithia SH, LLC, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LITHIA VS, LLC

  
	
   

  	
    By:
  Camp Automotive, Inc., Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LITHIA CJDO, L.P.

  
	
   

  	
  LITHIA CJDSA. L.P.

  
	
   

  	
  LITHIA CM, L.P.

  
	
   

  	
  LITHIA CO, L.P.

  
	
   

  	
  LITHIA CSA, L.P.

  
	
   

  	
  LITHIA DMID, L.P.

  
	
   

  	
  LITHIA HMID, L.P.

  
	
   

  	
  LITHIA NSA, L.P.

  
	
   

  	
  LITHIA OF GRAPEVINE, L.P.

  
					



 


4





















 


	
   

  	
  LITHIA TO, L.P.

  
	
   

  	
   
  By:  Lithia GP of Texas, LLC,
  General Partner

  
	
   

  	
   
  By:  Lithia Motors, Inc.,
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


 


ACKNOWLEDGED AND AGREED


as of the date
first written above


 


DAIMLERCHRYSLER SERVICES NORTH


AMERICA, LLC, as the Agent


 


 


	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				



 


5





















 


EXHIBIT B


 


Form of
Compliance Certificate


 


I,                                                             ,
the duly elected, qualified and acting [Chief Financial
Officer/Treasurer] of Lithia Motors, Inc., an Oregon
corporation (the “Company”), DO HEREBY CERTIFY, pursuant to Section 9.1.3
of the Credit Agreement dated February 24, 2003 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”;
capitalized terms used herein without definition have the meanings assigned
thereto in, and Section references are to, the Credit Agreement) among the
Company, various financial institutions named therein and DaimlerChrysler
Services North America LLC, as Agent for the Lenders, as follows:


 


Enclosed herewith is a copy of the [annual
audited/quarterly] report of the Company as of                                                      
(the “Computation Date”), which report fairly presents in all material respects
the financial condition and results of operations of the Company as of the
Computation Date and has been prepared in accordance with GAAP consistently
applied.


 


A review of the activities of the Company
during the Fiscal [Year/Quarter] ended has been made under my supervision and
the Company has observed, performed and fulfilled each and every obligation and
covenant contained in the Credit Agreement and no Event of Default or Unmatured
Event of Default exists.


 


The Company
and its Collateral Subsidiaries have not obtained any deposit accounts (as
defined in the Uniform Commercial Code) since the date of the last compliance
certificate delivered to the Agent pursuant to Section 9.1.3, other than
as set forth on Schedule I hereto.


 


Set forth below are true, correct and
complete computations, in reasonable detail, as of the Computation Date, of the
financial ratios and covenants set forth in Section 9.6 of the
Credit Agreement.


 


The Company herby elects [not]
to include a Current Assets Commitment Amount [of $                      ]
in the applicable financial ratios and covenants set forth below.


 


I.                                         Current
Asset Commitment Amount


 


	
  A.

  	
   

  	
  Maximum Availability (Borrowing Base, plus
  $50,000,000, Minus the Revolving Outstandings)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Specified Current Assets Commitment Amount

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Unused Revolving Commitment Amount

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Current Assets Commitment Amount (least of
  A, B and C)

  	
   

  	
   

  	
   

  	
   

  



 


II.                                     Current
Ratio (Section 9.6.1)


 


	
  A.

  	
   

  	
  Consolidated Current Assets (including any
  Current Assets Commitment Amount specified above):

  	
   

  	
   

  	
   

  	
   

  



 


6





















 


	
  B.

  	
   

  	
  Consolidated Current Liabilities (if the
  Termination Date is within one year, including any Current Assets Commitment
  Amount specified above):

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Permitted Ratio of A to B:
  Not less than 1.2:1.0.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RATIO:

  	
   

  	
   

  	
   

  	
   

  



 


III.                                 Fixed
Charge Coverage Ratio (Section 9.6.2)


 


	
  A.

  	
   

  	
  EBITDAR:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  EBITDA:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

  	
  Consolidated Net Income:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  b.

  	
  PLUS Interest
  Expense:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c.

  	
  PLUS foreign,
  federal, state and local income taxes:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  d.

  	
  PLUS depreciation
  expense:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  e.

  	
  PLUS amortization:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  f.

  	
  PLUS other
  non-cash charges classified as long-term deferrals by GAAP:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  g.

  	
  MINUS all
  extraordinary gains

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  h.

  	
  PLUS pro forma
  Permitted Acquisitions EBITDA under Section 9.10:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  i.

  	
  TOTAL (EBITDA)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  PLUS Rental
  Expense:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  TOTAL (EBITDAR):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  MINUS Capital
  Expenditures (other than Financed Capital Expenditures):

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL (EBITDAR) Minus Capital Expenditures

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  SUM of:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Interest Expense:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Rental Expense:

  	
   

  	
   

  	
   

  	
   

  
											



 


7





















 


	
   

  	
   

  	
  3.

  	
  Foreign, federal, state and local income
  taxes paid in cash:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Scheduled payments of principal of Debt:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Permitted Ratio of B to C:
  Not less than 1.20:1.0.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RATIO:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  Interest Coverage Ratio (Section 9.6.3)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  EBITDA (II.A.1.i):

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  Interest Expense:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  Permitted Ratio of A to B:
  Not less than 2.50:1.0.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  RATIO:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Adjusted Leverage Ratio (Section 9.6.4)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  Total Liabilities (including any Current
  Assets Commitment Amount specified above)::

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  EBITDA (II.A.1.i):

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  Permitted Ratio of A to B: Not greater than
  2.50:1.0.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  RATIO:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  Working Capital (Section 9.6.5).Each
  dealership Subsidiary has such level of working capital as is necessary to
  satisfy the requirements of such Subsidiary’s Dealer Franchise Agreements.

  	
   

  	
   

  	
  [Yes/No]

  	
   

  
										



 


 


IN WITNESS WHEREOF, I have signed this
certificate this          day
of                     ,             .


 


	
   

  	
  LITHIA MOTORS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  



 


8





















 


SCHEDULE I TO COMPLIANCE
CERTIFICATE


 


List of New
Deposit Accounts Since Last Compliance Certificate


 


	
  Name of Account

  Holder

  	
   

  	
  DBA (if any)

  	
   

  	
  Depository

  Institution

  	
   

  	
  Account Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


9