Document:

EXHIBIT
10.8

 

SUMMARY

2006
DISCRETIONARY SUPPORT SERVICES BONUS PROGRAM

 

The annual bonuses paid
to Lithia’s executives and managers are determined based on certain pre-established
performance objectives and specific targets under the 2006 Discretionary Support
Services Bonus Program (the “Bonus Plan”), subject to shareholder approval of
the Bonus Plan. The Bonus Plan replaces the 2005 Discretionary Executive Bonus
Plan. The Board of Directors annually determines the participants, the
performance objectives, the specific targets for each of the performance objectives
and the percentage of the bonus determined based on that target. The Bonus Plan
is not a contract guarantying a bonus. The payment of any bonuses is in the negative
discretion of the Board of Directors. Performance achievement of each objective
is determined in the sole judgment of the Compensation Committee. In making
such judgment, the Compensation Committee disregards the impact (whether
positive or negative) resulting from a changes in accounting rules. Further,
with respect to managers, the Compensation Committee may disregard the impacts
resulting from a material change from the current core business model, a major
acquisition or series of acquisitions, or a disposition of a major portion of
our business.

 

To be eligible to
participate in the Bonus Plan, the executive or manager must be employed with the
Company full time for the entire service year in an eligible position and be
employed as of February 28 of the following year.

 

Under the Bonus Plan,
each participant will have a Maximum Bonus Potential based on a percentage of
that participant’s annual salary. The participant’s bonus received under the Bonus
Plan will be a percentage of the participant’s Maximum Bonus Potential,
determined based on the accomplishment of the shared company objectives
measured as of December year-end. Approximately 57 employees are eligible to
participate under the Bonus Plan at Maximum Bonus Potential percentages ranging
from 5% to 150%. The six senior executive officers Maximum Bonus Potential
percentage is 150%.

 

The following are the
general performance objectives for the Bonus Plan and the maximum percentage of
the participant’s Maximum Bonus Potential that may be achieved under each such
performance objective for 2006. For each year, the Board of Directors may
change which of these performance objectives will be considered, the specific
targets, and the applicable percentages for each of the performance objectives.
Such changes must be made before March 31 of each year.

 

	
  Objectives

  	
   

  	
  Maximum
  Percentage of 

  Maximum Bonus Potential 

  (2006)

  	
   

  
	
  Financial Performance:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.
  Pre-Tax Net Profit 

  (per share)

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2.
  Return on Average Equity

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  3.
  Pre-Tax Net Margin Retention 

  (Pre-Tax Net Profit/Total Revenue)

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  4.
  Overall Company Growth 

  (based on revenue growth and net profit growth)

  	
   

  	
  5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  5.
  Used Vehicle Department Growth 

  (based on revenue growth and net profit growth)

  	
   

  	
  3

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  6.
  Fixed Departments Growth 

  (based on revenue growth and net profit growth)

  	
   

  	
  3

  	
  %

  

 

1

 

	
  Non-Financial Performance:

  	
   

  	
   

  	
   

  
	
  7.
  Approved to Purchase Stores 

  (satisfy specific manufacturer criteria to purchase stores)

  	
   

  	
  10

  	
  %

  
	
  8.
  Minimum Sales Requirement 

  (at or above threshold set by specified manufacturers)

  	
   

  	
  5

  	
  %

  
	
  9.
  Sales Satisfaction Scores 

  (% of stores equaling or exceeding manufacturers’ criteria)

  	
   

  	
  3

  	
  %

  
	
  10.
  Service Satisfaction Scores 

  (% of stores equaling or exceeding manufacturers’ criteria)

  	
   

  	
  3

  	
  %

  
	
  Project Related Objectives:
  Implementation of the following programs:

  	
   

  	
   

  	
   

  
	
  11.
  Human Resources Development 

  (external and internal recruiting, Multi-store Manager Development Plan,
  training, core competencies review program)

  	
   

  	
  10

  	
  %

  
	
  12.
  Used Vehicle Inventory Management 

  (hiring and training goals and management system)

  	
   

  	
  5

  	
  %

  
	
  13.
  Office Automation 

  (automation of specific certain systems and related studies)

  	
   

  	
  4

  	
  %

  
	
  14.
  Internet Sales Process 

  (implementation of identified aspects of internet sales plan)

  	
   

  	
  3

  	
  %

  
	
  15.
  Service Department Follow-Up Systems 

  (implementation of system)

  	
   

  	
  2

  	
  %

  
	
  16.
  Departmental Action Plans and Tracking Systems 

  (development of action plans and tracking systems)

  	
   

  	
  2

  	
  %

  
	
  17.
  Car Deal Process Improvement 

  (implementation of specific improvements)

  	
   

  	
  2

  	
  %

  
	
  18.
  New Business Development 

  (achievement of specific new business development objectives)

  	
   

  	
  4

  	
  %

  
	
   

  	
   

  	
  100

  	
  %

  

 

2EXHIBIT 10.15.5

 

DAIMLERCHRYSLER

 

February
15, 2006

 

Lithia
Motors, Inc.

360 E. Jackson Street

Medford, Oregon 97501

Attention:  Jeffrey B. DeBoer

 

Gentlemen:

 

We refer to the Credit
Agreement, dated as of February 25, 2003 (as amended, the “Credit Agreement”),
among Lithia Motors, Inc., an Oregon corporation (the “Company”), various
lenders and DaimlerChrysler Services North America LLC, as agent (“Agent”). Capitalized
terms used herein without definition have the meanings assigned thereto in the
Credit Agreement.

 

The Company has informed
Agent and the Lenders that it intends to pay a dividend that will exceed the
$18,000,000 aggregate amount that is allowed under clause (ii) of Section 9.9
of the Credit Agreement.

 

The Company has requested
that Agent and the Lenders consent to dividends and/or the repurchase of shares
of the Company’s capital stock up to an aggregate amount not to exceed
$25,000,000 under clause (ii) of Section 9.9 of the Credit Agreement

 

Agent and the Lenders hereby
consent to increasing the aggregate amount that is allowed to be used by the
Company to pay dividends and repurchase its capital stock under clause (ii) of
Section 9.9 of the Credit Agreement from $18,000,000 to $25,000,000, subject to
the other requirements for the use of such funds that are set forth in clause
(ii) of Section 9.9 of the Credit Agreement. This consent is expressly limited
to the payments allowed under clause (ii) of Section 9.9 of the Credit
Agreement and does not:  (a) waive any
other or future Events of Default or Unmatured Events of Default; or (b)
consent to any other transactions that are prohibited under the Credit
Agreement.

 

Except as expressly stated
herein, nothing in this consent shall limit the rights of Agent or the Lenders
as set forth in the Credit Agreement from time to time and all of the terms and
provisions of the Credit Agreement shall remain in full force and effect.

 

This waiver and consent
shall be governed by the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State.

 

 

Please acknowledge your
agreement with the terms of this consent by executing in the space below and
delivering a copy of this consent to Agent.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  DAIMLERCHRYSLER FINANCIAL SERVICES

  AMERICAS LLC (f/k/a DaimlerChrysler Services North

  America LLC)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michelle Nowak

  	
   

  
	
   

  	
  Name:

  	
  Michelle Nowak

  	
   

  
	
   

  	
  Its:

  	
  Credit Director, National Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TOYOTA MOTOR CREDIT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Reid Boozer

  	
   

  
	
   

  	
  Name:

  	
  Reid Boozer

  	
   

  
	
   

  	
  Its:

  	
  National Accounts Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LITHIA MOTORS, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Jeffrey B. DeBoer

  	
   

  
	
  Name:

  	
  Jeffrey B. DeBoer

  	
   

  
	
  Its:

  	
  Chief Financial Officer

  	
   

  
							

 

2EXHIBIT 10.15.6

 

DAIMLERCHRYSLER

 

DaimlerChrysler Services

 

	
  April 26, 2005

  
	
   

  
	
  Lithia Motors, Inc.

  
	
  360 E. Jackson Street

  
	
  Medford, Oregon 97501

  
	
  Attention:

  	
  Jeffrey B. DeBoer

  
	
   

  	
  Larissa McAlister

  

 

Re:          Credit
Agreement, dated as of February 25, 2003 (as amended, the “Credit Agreement”),
among Lithia Motors, Inc. an Oregon corporation, various lenders and
DaimlerChrysler Services North America LLC, as Agent.

 

This letter serves as notice pursuant to Section 2.6 of the Credit
Agreement that the Termination Date is hereby extended for an additional one
year period. The new Termination Date shall be May 1, 2008. All capitalized
terms used herein without definition have the meanings assigned thereto in the
Credit Agreement.

 

Very truly yours,

 

DAIMLERCHRYSLER SERVIES NORTH AMERICA LLC, as Agent and as a Lender

 

	
  By:

  	
  /s/ Michele Nowak

  	
   

  
	
  Its: Credit Director National Accounts

  

 

 

CONCUR:

TOYOTA MOTOR CREDIT CORPORATION, as a Lender

 

	
  By:

  	
  /s/ Reed Boozer

  	
   

  
	
  Its: National Dealer Credit Manager

  

 

 

	
   

  	
   

  	
  DaimlerChrysler
  Services

  
	
   

  	
   

  	
  North
  America LLC

  
	
   

  	
   

  	
  27777
  Inkster Road

  
	
   

  	
   

  	
  CIMS
  405-23-05

  
	
  A
  Company of the DaimlerChrysler Group

  	
   

  	
  Farmington
  Hills, MI 48334

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