Lithia Motors (LAD)

6.1 Taxes.

6.1.1 No Deductions. All payments (including fees) in respect of the Loans and Letters of Credit shall be made free and clear of and without any deduction for or on account of any present and future income, excise, stamp or franchise taxes and other taxes, fees, duties, levies, withholdings or other charges imposed by any Governmental Body, excluding franchise taxes or net income taxes imposed on Agent or any Lender (all such non-excluded items are collectively “Taxes”). If any Taxes are imposed and required by law to be paid or withheld from any amount payable to any Lender, then Borrower shall (a) increase the amount of such payment so that such Lender will receive a net amount (after deduction of all Taxes) equal to the amount due hereunder, (b) pay such Taxes to the appropriate taxing authority for the account of such Lender in a timely manner, and (c) as promptly as possible thereafter, send Agent evidence showing payment thereof, together with such additional documentary evidence as Agent may from time to time require. If Borrower fails to perform its obligations under (a) or (b) above, Borrower shall indemnify Agent and the Lenders for any incremental taxes, interest or penalties that may become payable as a result of any such failure.

Page 28

6.1.2 Non-U.S. Lenders. Each Lender (including any Assignee) which is not incorporated under the laws of the United States of America or a state thereof shall, on the Closing Date or before becoming a Lender, as applicable, and from time to time when requested by Agent, deliver to Borrower and Agent two duly completed copies of United States Internal Revenue Service Form W8BEN or W8ECI (or other applicable form), as the case may be, certifying in each case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, together with such other documentation as Agent may from time to time require. Borrower shall not be required to pay additional amounts to any Lender pursuant to Section 6.1 to the extent that the obligation to pay such additional amounts would not have arisen if the Lender had complied with the requirements of this Section 6.1.2.

6.2 Increased Costs. If at any time after the date hereof (a) any revision in or adoption of any Applicable Law, rule, or regulation or in the interpretation or administration thereof (i) shall subject any Lender or its Eurodollar lending office to any tax, duty, or other charge, or change the basis of taxation of payments to any Lender with respect to any Loans or Obligations bearing interest based on the LIBOR Rate, or (ii) shall impose, modify or deem applicable any Reserve Requirements or other reserve, insurance, special deposit, or similar requirements against assets of, deposits with or for the account of, credit extended by any Lender or its Eurodollar lending office (other than any Reserve Requirement reflected in the LIBOR Rate), or impose on Lender or its Eurodollar lending office any other condition affecting any Loans or Letters of Credit, and (b) the result of any of the foregoing is (i) to increase the cost to any Lender of making or maintaining any Loans or Letters of Credit, or (ii) to reduce the amount of any sum receivable by any Lender or its Eurodollar lending office, Borrower shall pay to Agent for the account of the affected Lender within 15 days after demand by Agent such additional amount as will compensate such Lender for such increased cost or reduction. The determination hereunder by Agent or any Lender of such additional amount shall be conclusive in the absence of manifest error.

6.3 Unavailability or Illegality. If at any time Agent determines that the LIBOR Rate is unascertainable or unavailable or if, because of the introduction of or any change in, or because of any judicial, administrative or other governmental interpretation of, any law or regulation, it becomes unlawful for any Lender to make, fund or maintain Loans based on the LIBOR Rate, then the Lenders’ obligation to make, fund or maintain any such loans at the Revolving Loan Borrowing Rate or Swingline Borrowing Rate shall terminate and the Loans shall, on the earlier of the date specified by Agent in a notice to Borrower or on date the making, funding or maintaining of such Loans becomes unlawful, be converted to Loans bearing interest at a variable rate equal to the Prime Rate.

6.4 Capital Adequacy. If after the date hereof, any revision in or adoption of any Applicable Law, rule or regulation or in the interpretation or administration thereof (whether or not having the force of law) imposes, modifies or deems applicable any capital adequacy, capital maintenance or similar requirement or has the effect thereof (including a request or requirement which affects the manner in which any Lender (or its parent holding company) allocates capital resources to any of its loans or commitments, including its Loans, Letters of Credit, and Commitments hereunder, and as a result thereof, in the opinion of any Lender in its sole and absolute discretion, the rate of return on such Lender’s (or its parent holding company’s) capital as a consequence of its Loans, Letters of Credit, or Commitments hereunder is reduced to a level

Page 29

below that which such Lender (or its parent holding company) could have achieved but for such circumstances (taking into consideration the Lender’s (or its parent holding company’s) policies with respect to capital adequacy and capital maintenance) by an amount deemed by such Lender to be material, then and in each such case within fifteen days after receipt of notice from time to time by Borrower from Agent, Borrower shall pay to the applicable Lender such additional amount or amounts as shall compensate such Lender for such reduction in rate of return. A statement of any Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on Borrower. In determining such amount, each Lender may use any method of averaging and attribution as it in its reasonable discretion shall deem applicable.

6.5 Request for Compensation. Failure or delay on the part of any Lender to demand compensation for any amounts payable under this Article shall not constitute a waiver of such Lender’s right to demand such compensation; provided, that no Lender shall be entitled to compensation for any increased costs or reductions incurred or suffered with respect to any date unless such Lender or the Issuing Lender, as the case may be, shall have notified the Borrower not more than 120 days after the later of (a) such date and (b) the date on which such Lender and shall have become aware of such costs or reductions.

6.1 Taxes.