On October 28,
2015, we issued $200.0 million aggregate principal amount of restricted 6.0% Senior Subordinated Notes due 2024 and related guarantees in a private placement exempt from the registration requirements under the Securities Act of 1933 (the
Securities Act). We refer to these notes as the original notes. The original notes were issued as additional notes under the indenture, dated December 4, 2014, pursuant to which we issued $400.0 million aggregate
principal amount of 6.0% senior subordinated notes due 2024 that were subsequently exchanged on January 21, 2015 for notes registered under the Securities Act, which we refer to as the existing notes. The original notes rank equally
and form a single series with the existing notes.
We are offering to exchange a new issue of 6.0% Senior Subordinated Notes due 2024 (the
exchange notes) and related guarantees for outstanding original notes and related guarantees. We sometimes refer to the original notes, the exchange notes and the existing notes in this prospectus together as the notes. The
terms of the exchange notes are substantially identical to the terms of the original notes, except that the exchange notes will be issued in a transaction registered under the Securities Act, and the transfer restrictions and registration rights and
related special interest provisions applicable to the original notes will not apply to the exchange notes. The original notes are, and the exchange notes will be, unconditionally guaranteed, jointly and severally on a senior subordinated basis, by
all of our existing subsidiaries and all of our future domestic restricted subsidiaries, in each case with certain exceptions. The exchange notes will be exchanged for original notes in minimum denominations of $2,000 and integral multiples of
$1,000 in excess thereof. Following the consummation of the exchange offer, the exchange notes and the existing notes will have the same CUSIP number and will be fully fungible with each other. We will not receive any proceeds from the issuance of
exchange notes in the exchange offer.
You may withdraw tenders of original notes at any time prior to the expiration of the exchange
offer.
We do not intend to list the exchange
notes on any national securities exchange or to seek approval through any automated quotation system, and no active public market for the exchange notes is anticipated.
RISK FACTORS
The terms of the exchange notes are identical in all material aspects to those of the original notes, except for the transfer restrictions
and registration rights and related special interest provisions relating to the original notes that will not apply to the exchange notes. This section describes some, but not all, of the risks of acquiring the exchange notes and participating in the
exchange offer. Before making an investment decision, you should carefully consider the risk factors described below, the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2015, which are incorporated by
reference herein, and the risks described in our other filings with the SEC that are incorporated by reference herein.
Our outstanding
indebtedness, ability to incur additional debt and the provisions in the agreements governing our debt, and certain other agreements, could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We have substantial debt service obligations. As of December 31, 2015, we had total debt of $959.7 million, excluding net
floor plan notes payable of $712.2 million. Moreover, we have the ability to incur additional debt from time to time to finance, among other things, acquisitions, working capital and capital expenditures, and new and used vehicle inventory, as well
as to refinance new and used vehicle inventory, subject in each case to the restrictions contained in our debt instruments existing at the time such indebtedness is incurred. The terms of the Restated Credit Agreement that governs our Senior Credit
Facilities, the Real Estate Credit Agreement, the Restated Master Loan Agreement, the indenture governing the notes, the agreements covering our mortgage obligations, and certain other agreements permit and will permit the incurrence of additional
debt, securing existing or future debt, recapitalizing our debt or taking a number of other actions subject to certain conditions, any of which could have the effect of diminishing our ability to make payments on the notes when due. The terms of the
instruments governing our subsidiaries indebtedness may also permit such actions.
Our debt service obligations could have important
consequences to us for the foreseeable future, including the following:
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our ability to obtain additional financing, or to obtain such financing on attractive terms, for acquisitions, capital expenditures, working capital or other general corporate purposes may be impaired;
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a substantial portion of our cash flow from operating activities must be dedicated to the payment of principal and interest on our debt, thereby reducing the funds available to us for our operations and other corporate
purposes;
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some of our borrowings are and will continue to be at variable rates of interest, which exposes us to certain risks of interest rate increases; and
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we may be or become substantially more leveraged than some of our competitors, which may place us at a relative competitive disadvantage and make us more vulnerable to changes in market conditions and governmental
regulations.
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In addition to our ability to incur additional debt in the future, we are subject to operating and financial
restrictions and covenants, such as leverage covenants, in certain of our debt and mortgage agreements, including the Restated Credit Agreement governing our Senior Credit Facilities, the Real Estate Credit Agreement, the Restated Master Loan
Agreement, the indenture governing the notes, the agreements covering our mortgage obligations, as well as certain other agreements to which we are a party that may adversely affect our ability to finance or future operations or capital needs. These
limit, among other things, our ability to incur certain additional debt, create liens or other encumbrances, and make certain payments (including dividends and repurchases of our common stock and for investments). Certain of these agreements may
also require us to maintain compliance with certain financial and other ratios.
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Our failure to comply with any of these covenants in the future would constitute a default under
the relevant agreement, which could, depending on the relevant agreement, (i) entitle the creditors under such agreement to terminate our ability to borrow under the relevant agreement and accelerate our obligations to repay outstanding
borrowings; (ii) require us to apply our available cash to repay these borrowings; (iii) entitle the creditors under such agreement to foreclose on the property securing the relevant indebtedness; and/or (iv) prevent us from making
debt service payments on certain of our other indebtedness, any of which would have a material adverse effect on our business, financial condition or results of operations. In many cases, a default under one of our debt, mortgage, or other
agreements could trigger cross-default provisions in one or more of our other debt or mortgage agreements, including the indenture governing the notes. There can be no assurance that our creditors would agree to an amendment or waiver of our
covenants. In the event we obtain an amendment or waiver, we would likely incur additional fees and higher interest expense.
In addition
to the financial and other covenants contained in our various debt or mortgage agreements, certain of our lease agreements contain covenants that give our landlords the right to terminate the lease, seek significant cash damages, or evict us from
the applicable property if we fail to comply. Similarly, our failure to comply with any financial or other covenants in any of our framework agreements would give the relevant manufacturer certain rights, including the right to reject proposed
acquisitions, and may give it the right to repurchase its franchises from us. Events that give rise to such rights, and our inability to acquire additional dealerships or the requirement that we sell one or more of our dealerships at any time, could
inhibit the growth of our business, and could have a material adverse effect on our business, financial condition, results of operations and cash flows and make it more difficult for us to meet our obligations under the notes. Manufacturers may also
have the right to restrict our ability to provide guarantees of our operating companies, pledges of the capital stock of our subsidiaries and liens on our assets, which could materially adversely impact our ability to obtain financing for our
business and operations on favorable terms or at desired levels, if at all, which in turn could materially adversely affect our ability to operate our business and meet our obligations under the notes.
The occurrence of any one of these events may limit our ability to take strategic actions that would otherwise enable us to manage our
business in a manner in which we otherwise would, absent such limitations, which could materially adversely affect our business, financial condition, results of operations and cash flows and make it more difficult for us to meet our obligations
under the notes.
We are a holding company and as a result are dependent on our operating subsidiaries to generate sufficient cash and distribute
cash to us to service our indebtedness, including the notes, and fund our ongoing operations.
Our ability to make payments on our
indebtedness and fund our ongoing operations depends on our operating subsidiaries ability to generate cash in the future and distribute that cash to us. It is possible that our subsidiaries may not generate cash from operations in an amount
sufficient to enable us to service our indebtedness, including the notes. In addition, many of our subsidiaries are required to comply with the provisions of franchise agreements, dealer agreements, other agreements with manufacturers, mortgages,
and credit facility providers. Many of these agreements contain minimum working capital or net worth requirements, and are subject to change at least annually. Although the requirements contained in these agreements did not restrict our subsidiaries
from distributing cash to us as of December 31, 2015, unexpected changes to our franchise agreements, dealer agreements or other agreements with manufacturers could require us to alter the manner in which we distribute or use cash. If our
operating subsidiaries are unable to generate and distribute sufficient cash to us to service our indebtedness and fund our ongoing operations, our financial condition may be materially adversely affected.
Key covenants of the notes will be suspended if the notes achieve investment grade ratings.
Most of the restrictive covenants in the indenture governing the notes will not apply during any period in which the notes have investment
grade ratings from both Moodys Investors Service, Inc. and Standard & Poors Rating Services. At such time, we may take actions such as incur additional debt or make certain
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dividends or distributions that would otherwise be prohibited under the indenture governing the notes. Such prior actions will be permitted even if we later become subject again to the
restrictive covenants. Ratings are given by these ratings agencies based upon analyses that include many subjective factors. We cannot assure you that the notes will achieve or maintain investment grade ratings, nor can we assure you that investment
grade ratings, if granted, will reflect all of the factors that would be important to holders of the notes.
To service our debt, we will require a
significant amount of cash, which may not be available to us.
Our ability to make payments on, or repay or refinance, our debt,
including the notes, and to fund planned capital expenditures, will depend largely upon our future operating performance. Our future performance, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control. In addition, our ability to borrow funds in the future to make payments on our debt will depend on the satisfaction of the covenants in the Restated Credit Agreement, the Real Estate Credit Agreement,
the Restated Master Loan Agreement and our other debt agreements, including the indenture governing the notes and other agreements we may enter into in the future. In particular, we will need to maintain compliance with certain financial ratios
under our various credit agreements.
We cannot assure you that our business will generate sufficient cash flow from operations or that
future borrowings will be available to us under our Senior Credit Facilities or from other sources in amounts sufficient to enable us to pay our debt, including our obligations under the notes, or to fund our other liquidity needs. We may need to
refinance all or a portion of our indebtedness, including the notes, on or before maturity.
We may not be able to refinance our indebtedness on
terms favorable to us, or at all.
We cannot assure you that we will be able to refinance any of our debt, including debt
outstanding under the Senior Credit Facilities, on commercially reasonable terms or at all. In particular, the Senior Credit Facilities and the Real Estate Credit Agreement will mature prior to the maturity of the notes. If we are unable to make
payments or refinance our debt or obtain new financing upon maturity of such other debt, we may have to consider other options, such as sales of assets, sales of equity securities and/or negotiations with our lenders to restructure the applicable
debt. Our Restated Credit Agreement, Real Estate Credit Agreement, Restated Master Loan Agreement, the indenture governing the notes and our other debt instruments may restrict, or market or business conditions may limit, our ability to do some of
these things. Our inability to do any of the foregoing could make it more difficult to meet our obligations under the notes.
Your right to receive
payments on the notes is and will be junior to our existing and future senior indebtedness and the existing and future senior indebtedness of our guarantors.
The original notes and related guarantees are, and the exchange notes and related guarantees will be, subordinated to the prior payment in
full of our and the guarantors respective current and future senior indebtedness to the extent set forth in the indenture. As of December 31, 2015, we had $959.7 million of total indebtedness (excluding net floor plan notes payable of
$712.2 million). As of such date, except for $9.4 million in letters of credit, no amounts were outstanding under the Revolving Credit Facility component of our Senior Credit Facilities, which provides for aggregate borrowings of up to $175.0
million, subject to a borrowing base. The notes are and will also be subordinated to senior indebtedness under the New Vehicle Floor Plan Facility and the Used Vehicle Floor Plan Facility components of our Senior Credit Facilities, our other floor
plan financing facilities, the Real Estate Credit Agreement and the Restated Master Loan Agreement. Because of the subordination provisions of the notes, in the event of the bankruptcy, liquidation or dissolution of Asbury or any guarantor, our
assets or the assets of such guarantors would be available to pay obligations under the notes and our other senior subordinated obligations only after all payments had been made on our or such guarantors senior indebtedness. Sufficient assets
may not remain after all these payments have been made to make required payments on the notes and any other senior subordinated obligations, including payments of interest when due. As a result, holders of notes may receive less, ratably, than our
other unsecured general creditors if we are the subject of a bankruptcy, liquidation, reorganization or similar proceeding.
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In addition, we will be prohibited from making all payments on the notes and the guarantees in
the event of a payment default on our senior indebtedness (including borrowings under the Restated Credit Agreement, our other floor plan financing facilities, Real Estate Credit Agreement and the Restated Master Loan Agreement) and, for limited
periods, upon the occurrence of other defaults under our Restated Credit Agreement and our floor plan financing facilities. In the event of a non-payment default under our senior indebtedness, we may not have sufficient funds to pay all our
creditors, including the holders of the notes. See Description of the Notes.
Claims of creditors of all of our non-guarantor
subsidiaries will have priority over the assets and earnings of those subsidiaries and over you as a holder of the notes.
The
original notes are, and the exchange notes will be, effectively subordinated to all existing and future liabilities of our subsidiaries that are not guarantors. Subsidiaries we may establish or acquire in the future that are foreign subsidiaries, or
which do not have any indebtedness or guarantees of indebtedness or which we designate as unrestricted subsidiaries in accordance with the indenture, will not be required to guarantee the notes. Claims of creditors of our non-guarantor subsidiaries,
including trade creditors, generally will have priority with respect to the assets and earnings of such subsidiaries over our claims or those of our creditors, including you as a holder of the notes. In the event that any of our non-guarantor
subsidiaries become insolvent, liquidate, reorganize, dissolve or otherwise wind up, the assets and earnings of those subsidiaries will be used first to satisfy the claims of their creditors, trade creditors, banks and other lenders and judgment
creditors.
The notes are and will not be secured.
In addition to being subordinated to all of our and our guarantors existing and future senior indebtedness, the original notes and
related guarantees are not, and the exchange notes and related guarantees will not be, secured by any of our assets or those of our subsidiaries. As of December 31, 2015, we had total debt of $959.7 million, excluding net floor plan notes
payable of $712.2 million, of which $359.7 million was secured by certain of our assets and would have ranked senior in right of payment to the notes. Our obligations under our Senior Credit Facilities are secured by a lien on all of our assets
other than real property, including our new and used vehicle inventory, which secures our obligations under our floor plan financing facilities thereunder. Our obligations under our other floor plan financing facilities are secured by the related
vehicle inventory, and certain of our real property secures our related mortgage obligations. Borrowings under our Real Estate Credit Agreement and the Restated Master Loan Agreement are collateralized by first priority liens, subject to certain
permitted exceptions, on all of the real property financed thereunder. The terms of the notes do not restrict us from granting liens to secure debt that is senior in right of payment to the notes. If we become insolvent or are liquidated, or if
payment under the Restated Credit Agreement, the Real Estate Credit Agreement, the Restated Master Loan Agreement or any other secured senior indebtedness is accelerated, the lenders under the Restated Credit Agreement, the Real Estate Credit
Agreement, the Restated Master Loan Agreement or holders of other secured senior indebtedness will be entitled to exercise the remedies available to a secured lender under applicable law (in addition to any remedies that may be available under
documents pertaining to the Revolving Credit Facility, the Real Estate Credit Facility, the Restated Master Loan Agreement or any of our other senior indebtedness). Any of these actions may materially impair our ability to meet our obligations under
the notes.
Restrictions imposed by the Restated Credit Agreement, the Real Estate Credit Agreement, the Restated Master Loan Agreement, our other
credit facilities and the indenture governing the notes may limit our ability to obtain additional financing and to pursue business opportunities.
The operating and financial restrictions and covenants in our debt instruments, including the Restated Credit Agreement, the Real Estate
Credit Agreement, the Restated Master Loan Agreement, our other credit facilities and the indenture governing the notes, may adversely affect our ability to finance our future operations or capital needs or to pursue certain business activities. In
particular, the Restated Credit Agreement, the Real Estate Credit Agreement, the Restated Master Loan Agreement and other facilities require us to maintain compliance with certain financial ratios. Our ability to comply with these ratios may be
affected by events
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beyond our control. A breach of any of these covenants or our inability to comply with the required financial ratios could result in a default under the applicable facility. In the event of any
default under any such facility, the lenders could elect to declare all borrowings outstanding, together with accrued and unpaid interest and other fees, to be due and payable, to require us to apply all of our available cash to repay these
borrowings or to prevent us from making debt service payments on the notes, any of which would be an event of default under the notes. See Description of Other Indebtedness and Description of the Notes.
It may not be possible for us to repurchase notes on the occurrence of a change in control.
Under the indenture governing the notes, upon the occurrence of specific change of control events, we are required to offer to repurchase all
of the notes at 101% of the principal amount of the notes plus accrued and unpaid interest to the date of purchase. The source of funds for any such purchase of notes would be our available cash or cash generated from our operations or other
sources, which may include borrowings, sales of assets or sales of equity or debt securities. We may not be able to repurchase the notes upon a change of control because we may not have sufficient financial resources to purchase all of the notes
that are tendered upon a change of control. Further, we are contractually restricted under the terms of the Restated Credit Agreement, the Real Estate Credit Agreement and the Restated Master Loan Agreement from repurchasing the notes tendered by
holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to offer to repurchase the notes unless we are able to refinance or obtain waivers under any applicable credit facility. Our failure to purchase any
tendered notes would constitute a default under the indenture governing the notes, which, in turn, would constitute a default under our other debt instruments, including the Restated Credit Agreement, Real Estate Credit Agreement and the Restated
Master Loan Agreement. Any of our future debt agreements may contain similar provisions. See Description of the NotesRepurchase at the Option of HoldersChange of Control.
Some significant transactions may not constitute a change of control, in which case we would not be obligated to offer to repurchase the notes.
Under the indenture governing the notes, upon the occurrence of a change of control, holders of notes have the right to require
us to repurchase their notes. However, the change of control provisions do not afford protection to holders of notes in the event of certain other transactions that could adversely affect the notes. For example, transactions such as certain
leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a change of control requiring us to offer to repurchase the notes. In addition, a proxy contest resulting in the election of new directors
to our board without the approval of our then existing board members would not constitute a change of control requiring us to offer to repurchase the notes if none of the change of control provisions are otherwise triggered. In the event of any such
transaction, the holders would not have the right to require us to repurchase the notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings,
thereby adversely affecting the holders of notes.
Federal and state statutes allow courts, under specific circumstances, to avoid guarantees and
require note- holders to return payments received from guarantors.
Under U.S. bankruptcy law and comparable provisions of state
fraudulent transfer laws, a subsidiary guarantee generally can be avoided if, among other things, the subsidiary guarantor, at the time it incurred the indebtedness evidenced by its guarantee:
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intended to hinder, delay or defraud any present or future creditor; or received less than reasonably equivalent value or fair consideration for the issuance of the guarantee; and
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the subsidiary guarantor:
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was insolvent or rendered insolvent by reason of issuing the guarantee;
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was engaged or about to engage in a business or transaction for which the subsidiary guarantors remaining assets constituted unreasonably small capital to carry on its business; or
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intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they become due.
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In addition, any payment by that subsidiary guarantor under a guarantee could be avoided and required to be returned to the subsidiary
guarantor or to a fund for the benefit of the creditors of the subsidiary guarantor under such circumstances.
The measures of insolvency
for purposes of fraudulent transfer laws will vary depending upon the governing law. Generally, a guarantor may be considered insolvent if:
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the sum of its debts, including the value of contingent liabilities, was greater than the fair salable value of all of its assets; or
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it could not pay its debts as they became due.
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In the event the guarantee of the notes by a
subsidiary guarantor is avoided as a fraudulent conveyance, holders of the notes effectively would lose the ability to pursue their claims against the guarantor or would be subordinated to all indebtedness and other liabilities of that guarantor.
We cannot assure you that an active trading market will develop for the exchange notes.
Prior to this exchange offer, there has been no public market for the exchange notes, and there is only a limited trading market for the
existing notes. We do not intend to apply for listing of the exchange notes on any securities exchange. The initial purchasers of the original notes currently make a market for the original notes, and we have been advised by the initial purchasers
that they presently intend to make a market in the original notes, together with the exchange notes, after this exchange offer is completed. However, they are not obligated to and the initial purchasers of the original notes may cease their
market-making activities at any time. In addition, the liquidity of any trading market for the notes and the market price quoted for the notes may be adversely affected by changes in the overall market for high yield securities and by changes in our
financial performance or prospects or in the financial performance or prospects of companies in the automotive industry. If an active market does not develop or is not maintained, the market price of the notes may decline and you may not be able to
resell the notes.
Our credit ratings may not reflect the risks of investing in the notes and any downgrade of our credit ratings generally may
cause the trading price of the notes to fall.
The original notes are, and the exchange notes will be, rated by at least one
nationally recognized statistical rating organization. The ratings of the notes will primarily reflect such organizations assessment of our financial strength and may change in accordance with changes in such assessment of our financial
strength. Any rating is not a recommendation to purchase, sell or hold any particular security, including the notes. These ratings do not comment as to market price or suitability for a particular investor. In addition, ratings at any time may be
lowered or withdrawn in their entirety. The ratings of the notes may not reflect the potential impact of all risks related to structure and other factors on any trading market for, or trading value of, the notes. If one or more rating agencies that
rates the notes reduces their rating in the future, or announces their intention to put the notes on credit watch, the market price of the notes could be harmed. Future downgrades of our credit ratings in general could also cause the trading price
of the notes to decrease which could lead to increased corporate borrowing costs for us.
If you fail to exchange your original notes, they will
continue to be restricted securities and may become less liquid.
Original notes that you do not tender or we do not accept will,
following the exchange offer, continue to be restricted securities, and you may not offer to sell them except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We will issue
exchange notes in
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exchange for the original notes pursuant to the exchange offer only following the satisfaction of the procedures and conditions set forth in The Exchange OfferProcedures for Tendering
Original Notes and The Exchange OfferConditions to the Exchange Offer.
Because we anticipate that all or
substantially all holders of original notes will elect to exchange their original notes in this exchange offer, we expect that the market for any original notes remaining after the completion of the exchange offer will be substantially limited. Any
original notes tendered and exchanged in the exchange offer will reduce the aggregate principal amount of the original notes outstanding. Following the exchange offer, if you do not tender your original notes, you generally will not have any further
registration rights, and your original notes will continue to be subject to certain transfer restrictions. Accordingly, the liquidity of the market for the original notes will likely be adversely affected.
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DESCRIPTION OF THE NOTES
You can find the definitions of certain terms used in this description under the subheading Certain Definitions. In this
description, Asbury, we, our, and us refer only to Asbury Automotive Group, Inc. and not to any of its Subsidiaries.
We are offering to exchange up to $200,000,000 aggregate principal amount of our registered 6.0% Senior Subordinated Notes due 2024 (the
exchange notes) and related guarantees for an equal principal amount of our outstanding restricted 6.0% Senior Subordinated Notes due 2024 (the original notes) and related guarantees that were issued in October 2015. The
original notes were issued as additional notes under the indenture, dated December 4, 2014 (as supplemented by supplemental indentures providing for, among other things, the issuance of the original notes, the indenture), pursuant
to which we issued $400.0 million aggregate principal amount of 6.0% Senior Subordinated Notes due 2024 that were subsequently exchanged on January 21, 2015 for notes registered under the Securities Act, which we refer to as the existing
notes. The original notes rank equally and form a single series with the existing notes. We sometimes refer to the original notes, the exchange notes and the existing notes in this prospectus together as the notes.
The terms of the exchange notes are identical in all material respects to those of the original notes, except that the exchange notes will be
issued in a transaction registered under the Securities Act, and the transfer restrictions, registration rights and related special interest provisions relating to the original notes will not apply to the exchange notes. Following the consummation
of the exchange offer, the exchange notes and the existing notes will have the same CUSIP number and will be fully fungible with each other. Holders of original notes do not have any appraisal or dissenters rights in connection with the
exchange offer.
References in this Description of the Notes to the Issue Date mean December 4, 2014, the
date on which the existing notes were originally issued under the indenture. The indenture allows for Asbury to issue an unlimited principal amount of additional notes having substantially identical terms as the notes (the additional
notes), subject to compliance with the covenant described under the subheading Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock. The existing notes, the original notes, the exchange notes, and
any additional notes subsequently issued under the indenture will rank equally and will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, offers to purchase, redemptions and
consents. Unless the context otherwise requires, for all purposes of the indenture and this Description of the Notes, references to the notes include the existing notes, the original notes, the exchange notes and any other
additional notes subsequently issued.
The following description is a summary of the material provisions of the notes and the indenture.
It does not restate those agreements in their entirety. We urge you to read the indenture because it, and not this description, defines your rights as holders of the notes.
Copies of the indenture are available as set forth under Additional Information. Certain defined terms used in this description
but not defined below under Certain Definitions have the meanings assigned to them in the indenture.
The registered
Holder of a note is treated as the owner of that note for all purposes. Only registered Holders have rights under the indenture.
Brief Description of
the Original Notes, the Exchange Notes and the Guarantees
The Original Notes and the Exchange Notes
The original notes and the exchange notes:
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are or will be general unsecured senior subordinated obligations of Asbury;
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are or will be subordinated in right of payment to all existing and future Senior Debt of Asbury, including borrowings under the Restated Credit Agreement and Floor Plan Facilities;
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rank or will rank pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of Asbury, including the existing notes;
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are or will be effectively junior to all existing and future liabilities, including trade payables, of Asburys non-guarantor Subsidiaries;
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are or will be unconditionally guaranteed on a senior subordinated basis by the Guarantors;
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are limited to an aggregate principal amount of $200,000,000, except as set forth below under Principal, Maturity and Interest;
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mature on December 15, 2024 (the maturity date), unless earlier redeemed;
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have been or will be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof;
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are or will be issued as part of the same series as the existing notes;
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following the consummation of the exchange offer, the exchange notes will be fully fungible with the existing notes; and
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are or will be represented by one or more registered notes in global form, but in certain limited circumstances may be represented by notes in definitive form.
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The Guarantees
The notes are guaranteed
by all of Asburys current Restricted Subsidiaries, with certain exceptions.
Each guarantee of the notes:
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is a general unsecured senior subordinated obligation of the Guarantor;
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is subordinated in right of payment to all existing and future Senior Debt of that Guarantor; and
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ranks
pari passu
in right of payment with such Guarantors Guarantee of the existing notes and all existing and future Senior Subordinated Indebtedness of that Guarantor.
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As of December 31, 2015, Asbury had, including the original notes (and related guarantees):
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$1,071.9 million of Senior Debt, including borrowings under the Credit Agreement and Floor Plan Facilities; and
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$600.0 million of subordinated indebtedness consisting of the existing notes and the original notes;
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and on
the same basis, the Guarantors had:
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$1,071.9 million of Senior Debt; and
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$600.0 million of subordinated indebtedness consisting of guarantees of the existing notes and the original notes.
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As indicated above and as described below under the caption Subordination, payments on the notes and under the guarantees
are and will be subordinated to the payment of Senior Debt. The indenture permits both Asbury and its Restricted Subsidiaries, subject to certain restrictions, to incur additional debt, including Senior Debt.
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As of the date of this prospectus, all of Asburys Restricted Subsidiaries will guarantee
the notes, with certain exceptions. All of our future Subsidiaries may not be obligated to guarantee the notes and existing Guarantors may be released from their guarantee obligations. In the event of a bankruptcy, liquidation or reorganization of
any of these non-guarantor Subsidiaries, the non-guarantor Subsidiaries will be required to pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us.
As of the date of this prospectus, all of Asburys Subsidiaries are Restricted Subsidiaries. However, under the circumstances
described below under the subheading Certain CovenantsDesignation of Restricted and Unrestricted Subsidiaries, we are permitted to designate certain of our Subsidiaries, including those currently designated as Restricted
Subsidiaries, as Unrestricted Subsidiaries. Our Unrestricted Subsidiaries will not be subject to the restrictive covenants in the indenture and will not guarantee the notes. See Risk FactorsClaims of creditors of all of our
non-guarantor subsidiaries will have priority over the assets and earnings of those subsidiaries over you as a holder of the notes.
Asbury Automotive Group, Inc. is a holding company with no independent assets or operations. For all financial statement periods incorporated
by reference herein, the notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries. Any subsidiaries which have not guaranteed such Notes are minor (as defined in Rule
3-10(h) of Regulation S-X). As of September 30, 2015, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or to our guarantor subsidiaries.
Principal, Maturity and Interest
As of
the date of this prospectus, there is issued and outstanding a total principal amount of $600.0 million of notes, of which $400.0 million are the existing notes and $200.0 million are the original notes. Asbury may issue additional notes under the
indenture from time to time. Any issuance of additional notes will be subject to the covenant described below under the caption Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock. The notes and any
additional notes subsequently issued under the indenture will rank equally and will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Asbury
issued notes in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The notes will mature on December 15, 2024.
Interest on the notes accrues at the rate of 6.0% per annum and is payable semiannually in arrears on June 15 and December 15
of each year. Asbury will make each semi-annual interest payment to the Holders of record on the immediately preceding June 1 and December 1.
Interest on the original notes accrues, and interest on the exchange notes will accrue, from December 15, 2015, the date interest was
most recently paid on the existing notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Methods of
Receiving Payments on the Notes
Asbury will pay the principal of, and interest on, notes in global form registered in the name of or
held by The Depository Trust Company (DTC) or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such global notes. In the event certificated notes are issued, payments on
notes will be made at the office or agency of the paying agent and registrar (which will initially be the corporate trust office of the trustee) unless Asbury elects to make interest payments by check mailed to the Holders at their address set forth
in the register of Holders. If a Holder of certificated notes has given wire transfer instructions to Asbury, Asbury will pay all principal, interest and premium, if any, on that Holders notes in accordance with those instructions.
Paying Agent and Registrar for the Notes
The trustee under the indenture acts as paying agent and registrar for the notes. Asbury may change the paying agent or registrar without
prior notice to the Holders of the notes, and Asbury or any of its Subsidiaries may act as paying agent or registrar.
36
Transfer and Exchange
A Holder may transfer or exchange notes in accordance with the indenture. The registrar and the trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. No service charge will be imposed by Asbury, the trustee or the registrar for any registration of transfer or exchange of notes, but Asbury
may require a holder to pay a sum sufficient to cover any transfer tax or other similar governmental charge required by law or permitted by the indenture. Asbury is not required to transfer or exchange any note selected for redemption. Also, Asbury
is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.
Subsidiary Guarantees
The notes are and will be guaranteed by each of Asburys Restricted Subsidiaries, with certain exceptions. In addition, the notes are and
will be guaranteed by (1) each of Asburys wholly owned Domestic Subsidiaries (with assets in excess of $1.0 million) which incurs, has outstanding or guarantees any Indebtedness and (2) each of Asburys non-wholly owned Domestic
Subsidiaries (with assets in excess of $1.0 million) which incurs, has outstanding or guarantees any capital markets debt securities. Subject to the conditions described below, the Guarantors have and will, jointly and severally, unconditionally
guarantee on an unsecured and senior subordinated basis the performance and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of Asbury under the indenture and the notes, whether for principal of
or premium, if any, or interest on the notes or otherwise. The Guarantors will also pay, on an unsecured and senior subordinated basis and in addition to the amount stated above, any and all expenses (including counsel fees and expenses) incurred by
the trustee under the indenture in enforcing any rights under a Subsidiary Guarantee with respect to a Guarantor. Each Subsidiary Guarantee is or will be subordinated to the prior payment in full of all Senior Debt of that Guarantor on the same
basis as the notes are subordinated to the Senior Debt of Asbury. The obligations of each Guarantor under its Subsidiary Guarantee is or will be limited as necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance
under applicable law. See Risk FactorsFederal and state statutes allow courts, under specific circumstances, to avoid guarantees and require note holders to return payments received from guarantors. Except as described below under
Repurchase at the Option of HoldersAsset Sales and Certain CovenantsMerger, Consolidation or Sale of Assets, the indenture does not restrict Asbury from selling or otherwise disposing of its direct or
indirect Equity Interests in the Guarantors.
A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to,
or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than Asbury or another Guarantor, unless:
|
(1)
|
immediately after giving effect to that transaction, no Default exists; and
|
|
(a)
|
the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under the indenture, its Subsidiary
Guarantee and the registration rights agreement (if such Guarantors registration obligations have not been completed) pursuant to a supplemental indenture and completes all other required documentation; or
|
|
(b)
|
such transaction does not violate the provisions of Repurchase at the Option of Holders Asset Sales and the Net Proceeds of such sale or disposition to the extent required are applied in
accordance with the applicable provisions thereof.
|
The Subsidiary Guarantee of a Guarantor will be released and the
Guarantor will be released of all obligations under its Guarantee:
|
(1)
|
in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to
such transaction) either Asbury or a Guarantor; or
|
37
|
(2)
|
in connection with any sale of all or a majority of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) either Asbury or a Guarantor; or
|
|
(3)
|
if such Guarantor does not, or ceases to, guarantee other Indebtedness of Asbury or another Guarantor and otherwise has no outstanding Indebtedness; or
|
|
(4)
|
upon the Legal Defeasance or Covenant Defeasance of the notes in accordance with the terms of the indenture; or
|
|
(5)
|
if Asbury designates such Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; or
|
|
(6)
|
upon the liquidation, winding up or dissolution of such Guarantor following the transfer of all or substantially all of its assets to Asbury or another Guarantor.
|
See Repurchase at the Option of HoldersAsset Sales, Legal Defeasance and Covenant Defeasance and
Certain CovenantsDesignation of Restricted and Unrestricted Subsidiaries.
Any (x) wholly owned Domestic
Subsidiary of Asbury (with assets in excess of $1.0 million) which incurs, has outstanding or guarantees any Indebtedness and (y) non-wholly owned Domestic Subsidiary of Asbury (with assets in excess of $1.0 million) which incurs, has
outstanding or guarantees any capital markets debt securities will, within 30 days of such incurrence or guarantee (or, if the Domestic Subsidiary has outstanding or guarantees Indebtedness or capital markets debt securities, as the case may be, at
the time of its creation or acquisition, within 30 days of such creation or acquisition), become a Guarantor and execute and deliver to the trustee a supplemental indenture pursuant to which such Subsidiary will agree to guarantee Asburys
obligations under the notes.
Subordination
Senior Debt versus Notes
The payment of
principal or interest and premium, if any, on the notes is subordinated to the prior payment in full of all Senior Debt of Asbury, including Senior Debt incurred after the date of this prospectus.
The holders of Senior Debt will be entitled to receive payment in full of all Obligations due in respect of Senior Debt (including interest
after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt) before the Holders of notes will be entitled to receive any payment with respect to the notes (except that Holders of notes may receive and
retain Permitted Junior Securities and payments made from the trust, if any, as described under Legal Defeasance and Covenant Defeasance to the extent permitted thereby), in the event of any distribution to creditors of Asbury:
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(1)
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in a liquidation or dissolution of Asbury;
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(2)
|
in a bankruptcy reorganization, insolvency, receivership or similar proceeding relating to Asbury or its property;
|
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(3)
|
in an assignment for the benefit of creditors; or
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|
(4)
|
in any marshaling of Asburys assets and liabilities.
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Liabilities of Subsidiaries versus Notes
As of the date of this prospectus, all of Asburys Subsidiaries guarantee the notes, with certain exceptions. Not all of
Asburys future Subsidiaries will be obligated to guarantee the notes and existing Guarantors may be released from their guarantee obligations. Claims of creditors of such non-guarantor Subsidiaries, including trade creditors holding
indebtedness or guarantees issued by such non-guarantor Subsidiaries, generally will effectively have priority with respect to the assets and earnings of such non-guarantor Subsidiaries over the claims of Asburys creditors, including holders
of the notes, even if such claims do not constitute Senior Debt.
38
Accordingly, the notes will be effectively subordinated to the claims of creditors (including
trade creditors) and preferred stockholders, if any, of such non-guarantor Subsidiaries. See Risk FactorsClaims of creditors of all of our non-guarantor subsidiaries will have priority over the assets and earnings of those subsidiaries
over you as a holder of the notes. Moreover, the indenture does not impose any limitation on the incurrence by Subsidiaries of liabilities that are not considered Indebtedness or preferred stock under the indenture. See Certain
CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock.
Other Senior Subordinated Indebtedness versus Notes
Only Indebtedness of Asbury or any of its Subsidiaries that is Senior Debt of such Person will rank senior to the notes or the relevant
Subsidiary Guarantee, as the case may be, in accordance with the provisions of the indenture. The notes and each Subsidiary Guarantee in all respects rank pari passu with all other Senior Subordinated Indebtedness of Asbury and the relevant
Subsidiary, respectively.
Asbury and the Guarantors have agreed in the indenture that Asbury and such Guarantors will not incur, directly
or indirectly, any Indebtedness that is contractually subordinate or junior in right of payment to Asburys Senior Debt, or the Senior Debt of such Guarantors, unless such Indebtedness is Senior Subordinated Indebtedness of such Person or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness of such Person. The indenture provides that unsecured Indebtedness is not subordinated or junior to Secured Indebtedness merely because it is unsecured.
Asbury also may not make any payment in respect of the notes (except in the form of Permitted Junior Securities or from the trust described
under Legal Defeasance and Covenant Defeasance when permitted thereby) if:
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(1)
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a payment default on Designated Senior Debt occurs and is continuing beyond any applicable grace period; or
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(2)
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any other default occurs and is continuing on any series of Designated Senior Debt that permits holders of that series of Designated Senior Debt to accelerate its maturity, and the trustee receives a notice of such
default (a Payment Blockage Notice) from Asbury or the requisite holders of such series of Designated Senior Debt.
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Payments on the notes will be resumed at the first to occur of the following:
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(1)
|
in the case of a payment default, upon the date on which such default is cured or waived; and
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(2)
|
in the case of a nonpayment default, upon the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received unless the
maturity of any Designated Senior Debt has been accelerated.
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No new Payment Blockage Notice may be delivered unless and
until:
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(1)
|
360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and
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(2)
|
all scheduled payments of principal, interest and premium, if any, on the notes that have come due have been paid in full in cash.
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The failure to make any payment on the notes by reason of the subordination provisions of the indenture will not be construed as preventing
the occurrence of an Event of Default with respect to the notes by reason of the failure to make a required payment. Upon termination of any period of payment blockage, Asbury will be required to resume making any and all required payments under the
notes, including any missed payments. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the trustee will be, or be made, the basis for a subsequent Payment Blockage Notice.
39
If the trustee or any Holder of the notes receives a payment in respect of the notes (except in
Permitted Junior Securities or from the trust described under Legal Defeasance and Covenant Defeasance) when:
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(1)
|
the payment is prohibited by these subordination provisions; and
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(2)
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the trustee or the Holder has actual knowledge that the payment is prohibited;
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the trustee or the Holder, as
the case may be, will hold the payment in trust for the benefit of the holders of Senior Debt. Upon the proper written request of the holders of Senior Debt, the trustee or the Holder, as the case may be, will deliver the amounts in trust to the
holders of Senior Debt or their proper representative.
Asbury must promptly notify holders of Senior Debt if payment of the notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of a bankruptcy,
liquidation or reorganization of Asbury, Holders of notes may recover less ratably than creditors of Asbury who are holders of Senior Debt. See Risk FactorsYour right to receive payments on the notes is junior to our existing and future
senior indebtedness and the existing and future senior indebtedness of our guarantors.
Designated Senior Debt
means
:
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(1)
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any Senior Debt outstanding under the Credit Agreement or any Floor Plan Facilities;
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(2)
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any Mortgage Loans that have been designated by Asbury as Designated Senior Debt; and
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(3)
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any other Senior Debt permitted under the indenture, the principal amount of which is $25.0 million or more and that has been designated by Asbury as Designated Senior Debt.
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Permitted Junior Securities
means
:
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(1)
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Equity Interests in Asbury or any Guarantor; or
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(2)
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debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the notes and the Subsidiary
Guarantees are subordinated to Senior Debt under the indenture.
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Senior Debt
means
:
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(1)
|
all Indebtedness of Asbury or any Guarantor outstanding under Credit Facilities, and all Hedging Obligations with respect thereto, and under Floor Plan Facilities;
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(2)
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any other Indebtedness of Asbury or any Guarantor permitted to be incurred under the terms of the indenture; and
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(3)
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all Obligations with respect to the items listed in the preceding clauses (1) and (2),
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unless, in the case of clauses (1) and (2), the instrument under which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the notes or any Subsidiary Guarantee, as the case may be.
Notwithstanding anything to
the contrary in the preceding, Senior Debt will not include:
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(1)
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any liability for federal, state, local or other taxes owed or owing by Asbury;
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(2)
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any intercompany Indebtedness of Asbury or any of its Subsidiaries to Asbury or any of its Affiliates;
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(3)
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any trade payables; or
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40
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(4)
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the portion of any Indebtedness that is incurred in violation of the indenture.
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Optional Redemption
At any time prior to December 15, 2017, Asbury may at its option on any one or more occasions redeem notes (which includes
additional notes, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of notes (which includes additional notes, if any) issued under the indenture at a redemption price of 106.0% of the principal amount,
plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from one or more Equity Issuances; provided that:
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(1)
|
at least 65% of the aggregate principal amount of notes (which includes additional notes, if any) issued under the indenture remains outstanding immediately after the redemption (excluding any notes held by Asbury or
any of its Subsidiaries or Affiliates); and
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|
(2)
|
the redemption occurs within 120 days of the date of the closing of such Equity Issuance.
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At
any time prior to December 15, 2019, Asbury will be entitled at its option to redeem all or a portion of the notes, upon not less than 30 nor more than 60 days prior notice, at a redemption price equal to 100% of the principal amount of the
notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the date of redemption (the Redemption Date).
Applicable Premium
means, with respect to a note at any Redemption Date, the greater of (i) 1.0% of the principal
amount of such note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such note at December 15, 2019 (such redemption price as described in the table below) plus (2) all required
interest payments due on such note through December 15, 2019 (excluding accrued but unpaid interest to such Redemption Date) computed, in both cases, using a discount rate equal to the Treasury Rate plus 50 basis points, over, (B) the
principal amount of such note.
Treasury Rate
means the yield to maturity at a time of computation of United States
Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the Redemption Date (or, if such
Statistical Release is no longer published, any publicly available source similar market data)) most nearly equal to the period from the Redemption Date to December 15, 2019;
provided
,
however
, that if the period from the
Redemption Date to December 15, 2019 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to December 15, 2019 is less than one year, the weekly average yield
on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.
On and after
December 15, 2019, Asbury will be entitled at its option to redeem all or a portion of the notes upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest, if any, on the notes redeemed, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed
during the twelve-month period beginning on December 15 of the years indicated below:
|
|
|
|
|
Year
|
|
Percentage
|
|
2019
|
|
|
103.000%
|
|
2020
|
|
|
102.000%
|
|
2021
|
|
|
101.000%
|
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2022 and thereafter
|
|
|
100.000%
|
|
41
Selection and Notice
If less than all of the notes are to be redeemed in connection with any redemption, the trustee will select notes (or portions of notes) for
redemption as follows:
|
(1)
|
if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or
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|
(2)
|
if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate.
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No notes of $2,000 or less can be redeemed in part. Notices of redemption will be delivered at least 30 but not more than 60 days before the
redemption date to each Holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a
satisfaction and discharge of the indenture. Notice of any redemption may, at Asburys discretion, be subject to one or more conditions precedent, including, but not limited to, completion of an Equity Issuance, other offering or other
corporate transaction or event.
If any note is to be redeemed in part only, the notice of redemption that relates to that note will state
the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder of notes upon cancellation of the original note.
Notes called for redemption become due on the date fixed for redemption, unless such redemption is conditioned on the happening of a future event and all such conditions have not been satisfied. On and after the redemption date, interest will cease
to accrue on notes or portions of them called for redemption.
No Mandatory Redemption or Sinking Fund
Asbury is not required to make mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances,
Asbury may be required to offer to purchase notes as described under the captions Repurchase at the Option of HoldersAsset Sales and Change of Control. The indenture does not prohibit Asbury from purchasing
notes in the open market or otherwise at any time and from time to time.
Repurchase at the Option of Holders
Change of Control
If a Change of
Control occurs, each Holder of notes will have the right to require Asbury to repurchase all or any part (equal to an integral multiple of $1,000) of that Holders notes validly tendered pursuant to the offer described below (the Change
of Control Offer);
provided
that the unrepurchased portion of the notes of any Holder must be equal to $2,000 in principal amount or integral multiples of $1,000 in excess thereof. The offer price in any Change of Control Offer will be
payable in cash and will be equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest, if any, on the notes repurchased, to the date of purchase (the Change of Control Payment). Within 30 days
following any Change of Control, Asbury will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the date specified in the notice (the Change of
Control Payment Date), which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. Asbury will comply with the
requirements of Section 14(e) of and Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result
of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the indenture relating to the Change of Control, Asbury will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under the indenture by virtue of such conflict.
On the Change of Control Payment
Date, Asbury will, to the extent lawful:
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(1)
|
accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
|
42
|
(2)
|
deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
|
|
(3)
|
deliver or cause to be delivered to the trustee the notes properly accepted together with an officers certificate stating the aggregate principal amount of notes or portions of notes being purchased by Asbury.
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The paying agent will promptly mail to each Holder of notes properly tendered the Change of Control Payment for such notes,
and the trustee will promptly authenticate and deliver (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in
a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.
Prior to complying with any of the provisions of this
Change of Control covenant, but in any event within 90 days following a Change of Control, Asbury will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of notes required by this covenant. Asbury will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require Asbury to make a Change of Control Offer following a Change of Control are applicable whether or
not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the Holders of the notes to require that Asbury repurchase or redeem the
notes in the event of a takeover, recapitalization or other similar transaction.
Asbury will not be required to make a Change of Control
Offer upon a Change of Control if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by
Asbury and purchases all notes properly tendered and not withdrawn under the Change of Control Offer or (ii) a notice of redemption has been thereafter given pursuant to the indenture as described above under the caption Optional
Redemption and the notes are redeemed in accordance with the terms of such notice. Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change
of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.
The Change
of Control purchase feature of the notes may in certain circumstances make more difficult or discourage a sale or takeover of Asbury and, thus, the removal of incumbent management. The Change of Control purchase feature is a result of negotiations
between Asbury and the initial purchasers of the original notes. We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we would decide to do so in the future. Subject to the limitations
discussed below, we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the indenture, but that could increase the amount of
Indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on Asburys ability to incur additional Indebtedness are contained in the covenant described under Certain
CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock. Such restrictions can only be waived with the consent of the Holders of a majority in principal amount of the notes then outstanding. Except for the limitations
contained in such covenant, however, the indenture does not contain any covenants or provisions that may afford Holders of the notes protection in the event of a highly leveraged transaction.
The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other
disposition of all or substantially all of the properties or assets of Asbury and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase
43
substantially all, there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of notes to require Asbury to repurchase its
notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Asbury and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
Asbury will not, and will
not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
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(1)
|
Asbury (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the fair market value of the assets disposed of or the Equity Interests of the Restricted
Subsidiary issued or sold or otherwise disposed of (determined by Asburys Board of Directors if such fair market value exceeds $10.0 million); and
|
|
(2)
|
at least 75% of the consideration received in the Asset Sale by Asbury or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be
cash:
|
|
(a)
|
any liabilities, as shown on Asburys or such Restricted Subsidiarys most recent balance sheet (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any
Subsidiary Guarantee) that are assumed by the transferee of any such assets or terminated by the holder of such liability and Asbury or such Restricted Subsidiary is released from further liability;
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|
(b)
|
any securities, notes or other obligations received by Asbury or any such Restricted Subsidiary from such transferee that are converted by Asbury or such Restricted Subsidiary into cash or Cash Equivalents within 90
days after receipt, to the extent of the cash or Cash Equivalents received in that conversion;
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|
(c)
|
any Designated Non-cash Consideration received by Asbury or any such Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration
received pursuant to this clause (c) that at that time has not been converted to cash, not to exceed $35.0 million at the time of receipt of such Designated Non-cash Consideration, with the fair market value of each item of Designated Non-cash
Consideration being measured at the time received and without giving effect to subsequent changes in value; and
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Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Asbury or the Restricted Subsidiary, as the case may be, may apply an amount equal to such Net Proceeds at its option:
|
(1)
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to repay any Senior Debt of Asbury or any of its Restricted Subsidiaries and if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or
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(2)
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(a) to acquire all or substantially all of, or a majority of the Voting Stock of, another Permitted Business, (b) to make a capital expenditure or (c) to acquire long-term assets that are used for or useful in
a Permitted Business or, in each case of (a), (b) and (c), enter into a binding commitment for any such acquisition, investment or expenditure;
provided
that such binding commitment shall be treated as a permitted application of the Net
Proceeds from the date of such commitment unless earlier completed, only until the 180th day following the expiration of the aforementioned 365-day period;
provided further
that, if the acquisition, investment or expenditure contemplated by
such binding commitment is not consummated on or before the 180th day following the expiration of the aforementioned 365-day period, such commitment shall be deemed not to have been a permitted application of Net Proceeds.
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44
In addition to the foregoing, any investment, expenditure or capital expenditure of the type
described in the foregoing clauses (a), (b) and (c) of the foregoing clause (2), in each case made within 60 days prior to an Asset Sale, shall be deemed to satisfy the previous paragraph with respect to the application of the Net Proceeds
from such Asset Sale.
Pending the final application of any Net Proceeds, Asbury may temporarily reduce revolving credit borrowings or
invest the Net Proceeds in any manner that is not otherwise prohibited by the indenture.
If any portion of the Net Proceeds from Asset
Sales is not applied or invested as provided in the preceding paragraph or Asbury otherwise determines not to apply such Net Proceeds as so provided, such amount will constitute Excess Proceeds. When the aggregate amount of Excess
Proceeds exceeds $40.0 million (or such lesser amount as Asbury determines), Asbury will (and at any time Asbury may) make an offer to holders of the notes (and to holders of other Senior Subordinated Indebtedness of Asbury designated by Asbury) to
purchase notes (and such other Senior Subordinated Indebtedness of Asbury) pursuant to and subject to the conditions contained in the indenture (the Asset Sale Offer). Asbury will purchase notes tendered pursuant to the Asset Sale Offer
at a purchase price of 100% of their principal amount (or, in the event such other Senior Subordinated Indebtedness of Asbury was issued with significant original issue discount, 100% of the accreted value thereof) without premium, plus accrued but
unpaid interest (or, in respect of such other Senior Subordinated Indebtedness of Asbury, such lesser price, if any, as may be provided for by the terms of such Senior Subordinated Indebtedness) in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the indenture (the Asset Sale Offer Price). Asbury will be required to complete the Asset Sale Offer no earlier than 30 days and no later than 60 days after notice of the Asset Sale Offer is
provided to the Holders, or such later date as may be required by applicable law. If the aggregate purchase price of the securities tendered exceeds the Net Proceeds allotted to their purchase, Asbury will select the securities to be purchased on a
pro rata basis but in round denominations, which in the case of the notes will be denominations of integral multiples of $1,000;
provided
that the unpurchased portion of the notes of any Holder must be equal to $2,000 in principal amount or
integral multiples of $1,000 in excess thereof. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Asbury may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.
Asbury will comply with the requirements of Section 14(e) of and
Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of the indenture relating to an Asset Sale Offer, Asbury will comply with the applicable securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indenture by virtue of such conflict.
The agreements governing Asburys
outstanding and future Senior Debt could prohibit Asbury from purchasing any notes, and also provide that certain change of control or asset sale events with respect to Asbury would constitute a default under these agreements. In the event a Change
of Control or Asset Sale occurs at a time when Asbury is prohibited from purchasing notes, Asbury could seek the consent of its senior lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If
Asbury does not obtain such a consent or repay such borrowings, Asbury will remain prohibited from purchasing notes. In such case, Asburys failure to purchase tendered notes would constitute an Event of Default under the indenture, which
would, in turn, likely constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the indenture would likely restrict payments to the Holders of notes. See Risk FactorsYour right to receive
payments on the notes is junior to our existing and future senior indebtedness and the existing and future senior indebtedness of our guarantors.
The provisions under the indenture relating to Asburys obligation to make an offer to repurchase the notes as a result of a Change of
Control or an Asset Sale may be waived or modified (prior to or after the occurrence thereof) with the written consent of the Holders of a majority in principal amount of the notes then outstanding.
45
Suspension of Certain Covenants
If on any date following the Issue Date:
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(1)
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the notes are rated Baa3 or better by Moodys Investors Service, Inc. and BBB- or better by Standard & Poors Ratings Services (or, if either such entity ceases to rate the notes for reasons outside
of the control of Asbury, the equivalent investment grade credit rating from any other nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange Act selected by Asbury as a
replacement agency); and
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(2)
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no Default or Event of Default shall have occurred and be continuing,
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then, beginning on that day and subject
to the provisions of the following paragraph, the covenants specifically listed under the following captions in this prospectus will be suspended:
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(1)
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Repurchase at the Option of HoldersAsset Sales;
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(2)
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Certain CovenantsRestricted Payments;
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(3)
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Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock;
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(4)
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Certain CovenantsAnti-Layering;
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(5)
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Certain CovenantsDividend and Other Payment Restrictions Affecting Restricted Subsidiaries;
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(6)
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clause (4) of Certain CovenantsMerger, Consolidation or Sale of Assets;
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(7)
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Certain CovenantsTransactions with Affiliates; and
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(8)
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Certain CovenantsAdditional Subsidiary Guarantees.
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During any period
that the foregoing covenants have been suspended, the board of directors of Asbury may not designate any of Asburys Subsidiaries as Unrestricted Subsidiaries. Notwithstanding the foregoing, if the rating assigned by either such rating agency
should subsequently decline to below Baa3 or BBB-, respectively, the foregoing covenants will be reinstated as of and from the date of such rating decline. Any Indebtedness incurred during the period when the covenants are suspended will be
classified as having been incurred pursuant to the first paragraph of Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock. To the extent such Indebtedness would not be so permitted to be incurred, such
Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (2) of the second paragraph under Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred
Stock. Calculations under the reinstated Restricted Payments covenant will be made as if the Restricted Payments covenant had been in effect since December 4, 2014. However, no Default or Event of Default will be
deemed to have occurred as a result of any actions taken by Asbury or its Restricted Subsidiaries during the period when the covenants are suspended.
Promptly following the occurrence of any suspension or reinstatement of the covenants as described above, Asbury will provide an
officers certificate to the Trustee regarding such occurrence. The Trustee shall have no obligation to independently determine or verify if a suspension or reinstatement has occurred or notify the Holders of any suspension or reinstatement.
The Trustee may provide a copy of such officers certificate to any Holder of the notes upon request. There can be no assurance that the notes will ever achieve an investment grade rating or, if such ratings are achieved, that they will be
maintained.
Certain Covenants
Restricted
Payments
Asbury will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
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(1)
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declare or pay any dividend on, or make any other payment or distribution on account of, Asburys or any of its Restricted Subsidiaries
Equity Interests (including, without limitation, any payment in
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46
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connection with any merger or consolidation involving Asbury or any of its Restricted Subsidiaries) or to the direct or indirect holders of Asburys or any of its Restricted
Subsidiaries Equity Interests in their capacity as such (other than dividends or distributions payable (i) in Equity Interests (other than Disqualified Stock) of Asbury or (ii) to Asbury or a Restricted Subsidiary);
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(2)
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purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Asbury) any Equity Interests of Asbury or any direct or indirect parent
of Asbury (other than any such Equity Interests owned by Asbury or any of its Restricted Subsidiaries);
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(3)
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make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Indebtedness that is
subordinated to the notes or the Subsidiary Guarantees, except the payment, purchase, redemption, defeasance or other acquisition or retirement purchased in anticipation of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of such payment, purchase, redemption, defeasance or other acquisition or retirement for value; or
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(4)
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make any Restricted Investment;
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(all such payments and other actions set forth in the clauses
(1) through (4) above being collectively referred to as Restricted Payments),
unless, at the time of and after
giving effect to such Restricted Payment:
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(1)
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no Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;
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(2)
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Asbury would, after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption Incurrence of Indebtedness and Issuance of Preferred Stock; and
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(3)
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such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Asbury and its Restricted Subsidiaries beginning on October 1, 2014 (excluding Restricted Payments permitted by
clauses (2), (3), (4), (5), (6), (7), (9) and (10) of the next succeeding paragraph), is less than the sum, without duplication, of:
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(a)
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50% of the Consolidated Net Income of Asbury for the period (taken as one accounting period) beginning on October 1, 2014 up to the end of Asburys most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus
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(b)
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100% of the aggregate net cash proceeds (including the fair market value of property other than cash) received by Asbury on or after October 1, 2014 as a contribution to its common equity capital or from the issue
or sale of Equity Interests of Asbury (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Asbury that have been converted into or exchanged for
such Equity Interests (other than Equity Interests, Disqualified Stock or debt securities sold to a Subsidiary of Asbury), plus
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(c)
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the amount by which Indebtedness or Disqualified Stock incurred or issued subsequent to the Issue Date is reduced on Asburys consolidated
balance sheet upon the conversion or exchange (other than by a Subsidiary of Asbury) into Equity Interests of Asbury (other than Disqualified Stock) (less the amount of any cash, or the fair market value of any other asset, distributed by
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47
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Asbury or any Restricted Subsidiary upon such conversion or exchange); provided that such amount shall not exceed the aggregate net proceeds received by Asbury or any Restricted Subsidiary after
the Issue Date from the issuance and sale (other than to a Subsidiary of Asbury) of such Indebtedness or Disqualified Stock, plus
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(d)
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to the extent that any Restricted Investment that was made on or after October 1, 2014 has been or is sold for cash or otherwise liquidated or repaid, purchased or redeemed for cash, the lesser of
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(i)
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such cash (less the cost of disposition, if any) and (ii) the amount of such Restricted Investment, plus
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(e)
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to the extent not otherwise included in the calculation of Consolidated Net Income of Asbury for such period, 100% of the net reduction in Investments (other than Permitted Investments) in any Person other than Asbury
or a Restricted Subsidiary resulting from dividends, repayment of loans or advances or other transfers of assets, in each case to Asbury or any Restricted Subsidiary, plus
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(f)
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to the extent not otherwise included in the calculation of Consolidated Net Income of Asbury for such period, 100% of any dividends or interest payments received by Asbury or a Restricted Subsidiary on and after the
Issue Date from an Unrestricted Subsidiary or other Investment (other than a Permitted Investment), plus
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(g)
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to the extent that any Unrestricted Subsidiary of Asbury has been or is redesignated as a Restricted Subsidiary on or after October 1, 2014, the lesser of (i) the fair market value of Asburys Investment
in such Subsidiary as of the date of such redesignation and (ii) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary.
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As of December 31, 2015, pursuant to clause (3) above, Asbury would have been able to make approximately $93.4 million in Restricted
Payments.
So long as no Default has occurred and is continuing or would be caused thereby (except in the case of clause (1) below),
the preceding provisions will not prohibit:
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(1)
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the payment of any dividend or distribution on, or redemption of, Equity Interests, within 60 days after the date of declaration of the dividend or the giving of notice thereof, if, at the date of such declaration or
the giving of such notice the payment would have complied with the provisions of the indenture;
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(2)
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the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of Asbury or any Guarantor or of any Equity Interests of Asbury, or the making of any Investment, in exchange for,
or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of Asbury) of, or capital contribution in respect of, Equity Interests of Asbury (other than Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition or any such Investment will be excluded from clause (3)(b) of the second preceding paragraph;
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(3)
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the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of Asbury or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
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(4)
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the payment of any dividend or other payment or distribution by a Restricted Subsidiary of Asbury to the holders of its Equity Interests on a pro rata basis;
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(5)
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repurchases of Equity Interests deemed to occur upon exercise of stock options if those Equity Interests represent all or a portion of the exercise price of those options;
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48
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(6)
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the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Asbury or any Restricted Subsidiary of Asbury (in the event such Equity Interests are not owned by Asbury or any of its
Restricted Subsidiaries) in an amount not to exceed $20.0 million in any fiscal year;
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(7)
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the purchase by Asbury of fractional shares arising out of stock dividends, splits or combinations or business combinations;
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(8)
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the declaration and payment of dividends to holders of any class or series of preferred stock of Asbury issued or incurred in compliance with the covenant described above under Incurrence of Indebtedness and
Issuance of Preferred Stock to the extent such dividends are included in the definition of Fixed Charges;
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(9)
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Restricted Payments not to exceed $150.0 million under this clause (9) in the aggregate, plus, to the extent Restricted Payments made pursuant to this clause (9) are Investments made by Asbury or any of its
Restricted Subsidiaries in any Person and such Investment is sold for cash or otherwise liquidated or repaid, purchased or redeemed for cash, an amount equal to the lesser of (i) such cash (less the cost of disposition, if any) and
(ii) the amount of such Restricted Payment;
provided
that the amount of such cash will be excluded from clause (3)(d) of the immediately preceding paragraph; or
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(10)
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other Restricted Payments, so long as the Consolidated Total Leverage Ratio of Asbury and its Restricted Subsidiaries on a consolidated basis is no greater than 3.0 to 1.0 determined on a pro forma basis for the most
recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such Restricted Payment.
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The amount of all Restricted Payments (other than cash) will be the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Asbury or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant will
be determined by Asbury (or if such fair market value exceeds $10.0 million, by Asburys Board of Directors).
Incurrence of Indebtedness and
Issuance of Preferred Stock
Asbury will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, incur) any Indebtedness (including Acquired Debt), and Asbury will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided
,
however
, that Asbury may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and
Asburys Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case, if the Fixed Charge Coverage Ratio for Asburys most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this covenant will not, prohibit the incurrence of any of the following items of Indebtedness (collectively,
Permitted Debt):
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(1)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities, in an aggregate principal amount at any one time outstanding under this clause (with letters
of credit being deemed to have a principal amount equal to the maximum potential liability of Asbury and its Restricted Subsidiaries thereunder) not to exceed the greater of:
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(a)
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$550.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by Asbury or any of its Restricted Subsidiaries since
December 4, 2014 to repay term Indebtedness under a
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49
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Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, in satisfaction of the covenant described above under the
caption Repurchase at the Option of HoldersAsset Sales; and
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(b)
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30% of Asburys Consolidated Net Tangible Assets as of the date of such incurrence;
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(2)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Existing Indebtedness;
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(3)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Indebtedness represented by the notes and the related Subsidiary Guarantees to be issued on December 4, 2014 and the Exchange Notes and the related
Subsidiary Guarantees to be issued pursuant to the registration rights agreement (and any exchange notes in respect of additional notes or other debt properly incurred under the indenture, where the terms of such exchange notes are substantially
identical to such other debt);
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(4)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Indebtedness under Floor Plan Facilities;
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(5)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of Asbury or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted
Refinancing Indebtedness incurred to refund or refinance any Indebtedness incurred pursuant to this clause (5), not to exceed, at any time outstanding, the greater of $50.0 million and 3.0% of Consolidated Total Assets;
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(6)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3) or (6) of this paragraph;
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(7)
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the incurrence by Asbury or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Asbury and its Restricted Subsidiaries; provided, that:
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(a)
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if Asbury or any Guarantor is the obligor on such Indebtedness owing to a Restricted Subsidiary, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to
the notes, in the case of Asbury, or the Subsidiary Guarantee, in the case of a Guarantor; and
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(b)
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(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Asbury or a Restricted Subsidiary of Asbury and (ii) any sale or other transfer of
any such Indebtedness to a Person that is not either Asbury or a Restricted Subsidiary of Asbury will be deemed, in each case, to constitute an incurrence of such Indebtedness by Asbury or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (7);
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(8)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes;
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(9)
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the guarantee by Asbury or any of its Restricted Subsidiaries of Indebtedness of Asbury or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant;
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(10)
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Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business,
provided
that such
Indebtedness is extinguished within five Business Days of its incurrence;
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50
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(11)
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Obligations in respect of (A) performance, bid and surety bonds and completion guarantees provided by Asbury or any of its Restricted Subsidiaries in the ordinary course of business and (B) agreements
providing for indemnification, adjustment of purchase price, earn-outs or similar obligations incurred in connection with the acquisition or disposition of any business, assets or subsidiary;
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(12)
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Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
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(13)
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Indebtedness consisting of the financing of insurance premiums;
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(14)
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Indebtedness consisting of Guarantees incurred in the ordinary course of business under repurchase agreements or similar agreements in connection with the financing of sales of goods in the ordinary course of business;
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(15)
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the incurrence by Asbury or any of its Restricted Subsidiaries of Indebtedness under Mortgage Loans in an amount incurred pursuant to this clause (15) not to exceed $200.0 million at any time outstanding; and
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(16)
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the incurrence by Asbury or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) which, when taken together with all other Indebtedness of
Asbury and its Restricted Subsidiaries outstanding on the date of such incurrence and incurred pursuant to this clause (16), does not exceed the greater of $125.0 million and 6.0% of Consolidated Total Assets.
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For purposes of determining compliance with this Incurrence of Indebtedness and Issuance of Preferred Stock covenant, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, and may also be entitled to be incurred in whole or in part pursuant to the first
paragraph of this covenant, Asbury will be permitted to divide and classify such item of Indebtedness on the date of its incurrence and later divide and reclassify all or a portion of such item of Indebtedness, in any manner that complies with this
covenant. Indebtedness that was outstanding on December 4, 2014 under Credit Facilities is deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt and unless repaid
may not be reclassified.
Accrual of interest and dividends, accretion or amortization of original issue discount, the payment of interest
on any Indebtedness in the form of additional Indebtedness with the same terms, changes to amounts outstanding in respect of Hedging Obligations solely as a result of fluctuations in interest rates, the assumption or guarantee of Indebtedness of a
Restricted Subsidiary by Asbury or another Restricted Subsidiary and the payment of dividends on Disqualified Stock or preferred stock of Restricted Subsidiaries in the form of additional shares of the same class of Disqualified Stock or preferred
stock of Restricted Subsidiaries is not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock of Restricted Subsidiaries for purpose of this covenant.
Anti-Layering
Asbury will not incur,
create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of Asbury and senior in any respect in right of payment to the notes. No Guarantor will incur,
create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor and senior in any respect in right of payment to such Guarantors Subsidiary
Guarantee. No Indebtedness will be considered to be senior to other Indebtedness by virtue of being secured.
Liens
Asbury will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist
any Lien of any kind securing Indebtedness or Attributable Debt on any asset now owned or hereafter acquired, except Permitted Liens.
51
Any Lien granted pursuant to clause (2) of the definition of Permitted Liens shall be
automatically released if the Liens securing such Indebtedness which gave rise to such Lien shall have been discharged, other than in connection with the exercise of remedies related to such Lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
Asbury will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any of its Restricted Subsidiaries to:
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(1)
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pay dividends or make any other distributions on its Capital Stock to Asbury or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to Asbury or any of its Restricted Subsidiaries;
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(2)
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make loans or advances to Asbury or any of its Restricted Subsidiaries; or
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(3)
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transfer any of its properties or assets to Asbury or any of its Restricted Subsidiaries.
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However, the preceding restrictions do not apply to encumbrances or restrictions existing under or by reason of:
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(1)
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any agreement in effect or entered into on December 4, 2014, including agreements governing Existing Indebtedness, Credit Facilities and Floor Plan Facilities as in effect on December 4, 2014 and any
amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements;
provided
that the amendments, modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings of such instrument are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such agreement on December 4, 2014;
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(2)
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the indenture, the notes and the Subsidiary Guarantees;
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(3)
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applicable law and any applicable rule, regulation or order;
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(4)
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any instrument governing Indebtedness or Capital Stock of a Person acquired by Asbury or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital
Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the
Person, so acquired;
provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;
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(5)
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any encumbrance or restriction pursuant to an agreement effecting a permitted renewal, refunding, replacement, refinancing or extension of Indebtedness issued pursuant to an agreement containing any encumbrance or
restriction referred to in the foregoing clauses (2) and (4), so long as the encumbrances and restrictions contained in any such renewal, refunding, replacement, refinancing or extension agreement are no less favorable in any material respect
to the Holders than the encumbrances and restrictions contained in the agreements governing the Indebtedness being renewed, refunded, replaced, refinanced or extended in the good faith judgment of Asbury;
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(6)
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customary non-assignment provisions in leases entered into in the ordinary course of business;
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(7)
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purchase money obligations for property acquired that impose restrictions on the transfer of that property of the nature described in clause (3) of the preceding paragraph;
provided
that any such encumbrance
or restriction is released to the extent the underlying Lien is released or the related Indebtedness is repaid;
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52
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(8)
|
any agreement for the sale or other disposition of assets, including, without limitation, customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of substantially all of the Capital Stock or substantially all of the assets of that Subsidiary;
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(9)
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Permitted Refinancing Indebtedness,
provided
that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
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(10)
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Liens that limit the right of the debtor to dispose of the assets subject to such Liens;
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(11)
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covenants in a franchise or other agreement entered into in the ordinary course of business with a Manufacturer customary for franchise agreements in the vehicle retailing industry;
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(12)
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customary provisions in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business;
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(13)
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customary provisions restricting subletting or assignment of any lease, contract or license of Asbury or any Restricted Subsidiary or provisions in agreements that restrict the assignment of such agreement or any rights
thereunder;
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(14)
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restrictions on cash or other deposits or net worth, total assets, liquidity and similar financial responsibility covenants imposed by customers under contracts entered into in the ordinary course of business; and
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(15)
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covenants in Floor Plan Facilities customary for inventory and floor plan financing in the automobile retailing industry.
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Merger, Consolidation or Sale of Assets
Asbury may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Asbury is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Asbury and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person;
unless:
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(1)
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either: (a) Asbury is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Asbury) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia (any such Person, the Successor Company);
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(2)
|
any Successor Company assumes all the obligations of Asbury under the notes and the indenture;
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(3)
|
immediately after such transaction no Default exists; and
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(4)(A)Asbury or the Successor Company will, on the date of such transaction after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable four- quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described above under the caption Incurrence of Indebtedness and Issuance of Preferred Stock, or (B) the Fixed Charge Coverage Ratio for Asbury or the Successor Company would be equal to or greater than such ratio
for Asbury immediately prior to such transaction.
53
The foregoing clause (4) will not prohibit (a) a merger between Asbury and any of its
Restricted Subsidiaries or (b) a merger between Asbury and an Affiliate with no liabilities (other than de minimis liabilities); provided that the Affiliate is incorporated and the merger undertaken solely for the purpose of reincorporating
Asbury in another state of the United States, so long as the amount of Indebtedness of Asbury and its Restricted Subsidiaries is not increased thereby.
In addition, Asbury may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related
transactions, to any other Person. The Merger, Consolidation or Sale of Assets covenant will not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among Asbury and any of the Guarantors.
The Successor Company, if any, will be the successor to Asbury and shall succeed to, and be substituted for, and may exercise every right and
power of, Asbury under the indenture, and the predecessor company, in the case of a merger, consolidation or sale of all of Asburys assets, shall be released from its obligations with respect to the notes, including with respect to its
obligation to pay the principal of and interest, if any, on the notes.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary of Asbury to be an Unrestricted Subsidiary if no Default has occurred and is
continuing at the time of the designation and if that designation would not cause a Default. If a Restricted Subsidiary of Asbury is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by
Asbury and its Restricted Subsidiaries in the Subsidiary properly designated will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the first or third paragraphs
of the covenant described above under the caption Restricted Payments or Permitted Investments, as determined by Asbury. That designation will only be permitted if the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. In addition, no such designation may be made unless the proposed Unrestricted Subsidiary does not own any Capital Stock in any Restricted Subsidiary that is not
simultaneously subject to designation as an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.
Transactions with Affiliates
Asbury
will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend
any transaction, contract, agreement, understanding, loan, advance or guarantee involving aggregate consideration in excess of $5.0 million with, or for the benefit of, any Affiliate (each, an Affiliate Transaction), unless:
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(1)
|
the Affiliate Transaction is on terms that are not materially less favorable to Asbury or the relevant Restricted Subsidiary than those that could have been obtained in a comparable transaction by Asbury or such
Restricted Subsidiary with an unrelated Person; and
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(2)
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Asbury delivers to the trustee:
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(a)
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with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an officers
certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and
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(b)
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with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.
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54
Notwithstanding the foregoing, the following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
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(1)
|
any employment agreement (or amendment thereto) entered into by Asbury or any of its Restricted Subsidiaries in the ordinary course of business of Asbury or such Restricted Subsidiary, including the payment of
indemnities provided for the benefit of employees party to such employment agreements;
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(2)
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transactions between or among Asbury and/or its Restricted Subsidiaries;
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(3)
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transactions with a Person that is an Affiliate of Asbury solely because Asbury owns an Equity Interest in, or controls, such Person;
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(4)
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payment of directors fees and indemnities provided for the benefit of directors;
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(5)
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issuances or sales of Equity Interests (other than Disqualified Stock) of Asbury;
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(6)
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the pledge of Equity Interests of Unrestricted Subsidiaries to support the Indebtedness thereof; and
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(7)
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Permitted Investments and Restricted Payments that are permitted by the provisions of the indenture described above under the caption Restricted Payments.
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Additional Subsidiary Guarantees
Any
(x) wholly owned Domestic Subsidiary of Asbury (with assets in excess of $1.0 million) which incurs, has outstanding or guarantees any Indebtedness and (y) non-wholly owned Domestic Subsidiary of Asbury (with assets in excess of $1.0
million) which incurs, has outstanding or guarantees any capital markets debt securities will, within 30 days of such incurrence or guarantee (or, if the Domestic Subsidiary has outstanding or guarantees Indebtedness or capital markets debt
securities, as the case may be, at the time of its creation or acquisition, within 30 days of such creation or acquisition), become a Guarantor and execute and deliver to the trustee a supplemental indenture pursuant to which such Subsidiary will
agree to guarantee Asburys obligations under the notes; provided, however, that all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with the indenture for so long as they continue to constitute
Unrestricted Subsidiaries will not have to comply with the requirements of this covenant.
Payments for Consent
Asbury will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration
to or for the benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and/or is paid to all Holders of
the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Reports
Whether or not required by the
SEC, so long as any notes are outstanding, Asbury will furnish to the Holders of notes, within 15 days after the date by which Asbury would have been required by the SECs rules and regulations to file such documents:
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(1)
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all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if Asbury were required to file such Forms, including a Managements
Discussion and Analysis of Financial Condition and Results of Operations and, with respect to the annual information only, a report on the annual financial statements by Asburys certified independent accountants; and
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55
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(2)
|
all current reports that would be required to be filed with the SEC on Form 8-K if Asbury were required to file such reports.
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In addition, whether or not required by the SEC, Asbury will file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the SEC for public availability within 15 days after the date by which Asbury would have been required by the SECs rules and regulations to file such documents (unless the SEC will not accept such a filing). In
addition, Asbury and the Guarantors have agreed that, for so long as any notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act. Asbury will be deemed to have furnished the reports referred to in clauses (1) and (2) above and the preceding sentence if Asbury has filed such reports with the SEC (and such reports
are publicly available).
Events of Default and Remedies
Each of the following is an Event of Default:
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(1)
|
default for 30 days in the payment when due of interest on the notes whether or not prohibited by the subordination provisions of the indenture;
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(2)
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default in payment when due of the principal of, or premium, if any, on the notes, whether or not prohibited by the subordination provisions of the indenture;
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(3)
|
failure by Asbury to comply with the provisions described under the caption Certain Covenants Merger, Consolidation or Sale of Assets;
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(4)
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failure by Asbury or any of its Restricted Subsidiaries to comply for 30 days after receipt of notice with the provisions described under the captions Repurchase at the Option of HoldersChange of
Control, Repurchase at the Option of HoldersAsset Sales, Certain CovenantsRestricted Payments, or Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred
Stock;
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(5)
|
failure by Asbury or any of its Restricted Subsidiaries to comply for 60 days after receipt of notice with any of the other agreements in the indenture;
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(6)
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default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Asbury or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by Asbury or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee existed as of December 4, 2014 or is or was created thereafter, if that default:
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|
(a)
|
is caused by a failure to pay principal at its stated maturity after giving effect to any applicable grace period provided in such Indebtedness (a Payment Default); or
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(b)
|
results in the acceleration of such Indebtedness prior to its express maturity
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and, in each case, the
principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $40.0 million or more and such
Indebtedness has not been discharged or such acceleration has not been rescinded or annulled within 30 days;
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(7)
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failure by Asbury or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $40.0 million (exclusive of any portion of any such payment covered by insurance or bonded, treating any
deductible, self-insurance or retention as not so covered), which judgments are not paid, discharged or stayed for a period of 60 days;
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56
|
(8)
|
except as permitted by the indenture, any Subsidiary Guarantee of a Guarantor that is a Significant Subsidiary or of any group of Guarantors that, taken together, would constitute a Significant Subsidiary, shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant
Subsidiary, or any Person acting on behalf of any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and
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(9)
|
certain events of bankruptcy or insolvency described in the indenture with respect to Asbury or a Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a
Significant Subsidiary.
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However, a default under clauses (4) or (5) will not constitute an Event of Default until
the trustee or the holders of 25% in aggregate principal amount of the outstanding notes notify Asbury of the default and Asbury does not cure such default within the time specified after receipt of such notice. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to Asbury, any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, all outstanding notes will
become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding notes may declare all the
notes to be due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except as provided in the
indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from Holders of the notes notice of any
continuing Default if it determines that withholding notice is in their interest, except a Default relating to the payment of principal or interest.
The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may on behalf of the Holders of
all of the notes waive any existing Default and its consequences under the indenture except a continuing Default in the payment of interest on, or the principal of, the notes (other than the non-payment of principal of or interest, if any, on the
notes that became due solely because of the acceleration of the notes).
A Default under the notes, unless cured or waived, could trigger
manufacturer rights to acquire certain of our dealerships.
Asbury is required to deliver to the trustee within 90 days after the end of
each fiscal year a statement regarding compliance with the indenture during such fiscal year. Within 10 business days of becoming aware of any Default or Event of Default that has not been cured, Asbury is required to deliver to the trustee a
statement specifying such Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of Asbury or any Guarantor, as such, will have any liability for any obligations
of Asbury or the Guarantors under the notes, the indenture, the Subsidiary Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such waiver is against public
policy.
57
Legal Defeasance and Covenant Defeasance
Asbury may, at its option and at any time, elect to terminate all of the obligations of itself and the Guarantors with respect to the notes
and the indenture (Legal Defeasance) except for:
|
(1)
|
the rights of Holders to receive payments in respect of the principal of, or interest or premium, if any, on such notes when such payments are due from amounts deposited in trust (as described below);
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|
(2)
|
Asburys obligations to issue temporary notes, register the transfer or exchange of notes, to replace mutilated, destroyed, lost or stolen notes and to maintain a registrar and paying agent in respect of the notes;
|
|
(3)
|
the rights, powers, trusts, duties and immunities of the trustee, and the related obligations of Asbury and the Guarantors; and
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|
(4)
|
the Legal Defeasance provisions of the indenture.
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In addition, Asbury may, at its option and
at any time, elect to have the obligations of Asbury and the Guarantors released with respect to the covenants that are described above under Repurchase at the Option of HoldersChange of Control and Asset
Sales, Certain CovenantsRestricted Payments, Incurrence of Indebtedness and Issuance of Preferred Stock, Anti-Layering, Liens, Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries, clause (4) of Merger, Consolidation or Sale of Assets, Designation of Restricted and Unrestricted Subsidiaries, Transactions with
Affiliates, Additional Subsidiary Guarantees, Payments for Consent, Reports and the covenant in the indenture with respect to the payment of taxes and other claims (Covenant
Defeasance). Thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment and bankruptcy
events with respect to Asbury) described under Events of Default and Remedies will no longer constitute an Event of Default with respect to the notes.
If Asbury exercises its Legal Defeasance or Covenant Defeasance option, each Guarantor will be released from all of its obligations with
respect to its Guarantee.
In order to exercise either Legal Defeasance or Covenant Defeasance:
|
(1)
|
Asbury must irrevocably deposit with the trustee, in trust, for the benefit of the Holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium, if any, on the outstanding notes on the stated
maturity or on the applicable redemption date, as the case may be, and Asbury must specify whether the notes are being defeased to maturity or to a particular redemption date;
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|
(2)
|
in the case of Legal Defeasance only, Asbury must deliver to the trustee an opinion of counsel confirming that (a) Asbury has received from, or there has been published by, the Internal Revenue Service a ruling or
(b) since December 4, 2014, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the Holders and beneficial owners of the
outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
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|
(3)
|
in the case of Covenant Defeasance only, Asbury must deliver to the trustee an opinion of counsel confirming that the Holders and beneficial owners of
the outstanding notes will not recognize income,
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58
|
gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
|
|
(4)
|
no Default has occurred and is continuing on the date of such deposit (other than a Default resulting from any borrowing of funds to be applied to such deposit);
|
|
(5)
|
such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which Asbury or any of its
Restricted Subsidiaries is a party or by which Asbury or any of its Restricted Subsidiaries is bound;
|
|
(6)
|
Asbury must deliver to the trustee an officers certificate stating that the deposit was not made by Asbury with the intent of preferring the Holders of notes over the other creditors of Asbury with the intent of
defeating, hindering, delaying or defrauding creditors of Asbury or others; and
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|
(7)
|
Asbury must deliver to the trustee an officers certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
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Amendment, Supplement and Waiver
Except as provided in the next three succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes).
Without the consent of each Holder affected, an amendment, supplement or waiver may
not (with respect to any notes held by a non-consenting Holder):
|
(1)
|
reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;
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|
(2)
|
reduce the principal of or change the fixed maturity of any note or reduce any amount payable on any redemption of the notes (other than provisions relating to the covenants described above under the caption
Repurchase at the Option of Holders);
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|
(3)
|
reduce the rate of or change the time for payment of interest on any note;
|
|
(4)
|
waive a Default or Event of Default in the payment of principal of, or interest or premium, if any, on the notes (except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate
principal amount of the notes and a waiver of the payment default that resulted from such acceleration);
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(5)
|
make any note payable in money other than that stated in the notes;
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|
(6)
|
make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium, if any, on the notes;
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|
(7)
|
waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption Repurchase at the Option of Holders);
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|
(8)
|
release any Guarantor from any of its obligations under its Subsidiary Guarantee or the indenture,
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59
|
except in accordance with the terms of the indenture; or
|
|
(9)
|
make any change in the preceding amendment and waiver provisions.
|
In addition, any amendment
to, or waiver of, the provisions of the indenture relating to subordination that adversely affects the rights of the Holders of the notes requires the consent of the Holders of at least 75% in aggregate principal amount of notes then outstanding.
Notwithstanding the foregoing, without the consent of any Holder of notes, Asbury, the Guarantors and the trustee may amend or supplement
the indenture or the notes:
|
(1)
|
to cure any ambiguity, defect or inconsistency or to make a modification of a formal, minor or technical nature or to correct a manifest error;
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|
(2)
|
to provide for uncertificated notes in addition to or in place of certificated notes;
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|
(3)
|
to provide for the assumption of Asburys or any Guarantors obligations to Holders of notes in the case of a merger or consolidation or sale of all or substantially all of Asburys assets;
|
|
(4)
|
to add Guarantees with respect to the notes or to secure the notes (which supplemental indenture need not to be executed by existing Guarantors);
|
|
(5)
|
to add to the covenants of Asbury or any Guarantor for the benefit of the Holders of the notes or surrender any right or power conferred upon Asbury or any Guarantor;
|
|
(6)
|
to make any change that would provide any additional rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the indenture of any such Holder;
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|
(7)
|
to comply with requirements of the SEC in connection with the qualification of the indenture under the Trust Indenture Act;
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|
(8)
|
to evidence and provide for the acceptance and appointment under the indenture of a successor trustee pursuant to the requirements thereof;
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|
(9)
|
to conform the text of the indenture, the notes or the Guarantees of the notes to any provision of this Description of the Notes to the extent that such provision in this Description of the Notes
was intended to be a substantially verbatim recitation of a provision of the indenture, the notes or the Guarantees of the notes;
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|
(10)
|
to provide for the issuance of exchange notes; or
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|
(11)
|
to provide for the issuance of additional notes in accordance with the indenture.
|
However, no
amendment may be made to (A) the subordination provisions of the indenture or (B) the conditions precedent to Legal Defeasance and Covenant Defeasance described in clause (5) under the caption Legal Defeasance and Covenant
Defeasance, in each case, that adversely affects the rights of any holder of Senior Debt of Asbury or a Guarantor then outstanding unless the holders of such Senior Debt (or their representative) consents to such change.
The consent of the Holders is not necessary under the indenture to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, we are required
to deliver to holders of the notes a notice briefly describing such amendment. However, the failure to give such notice to all holders of the notes, or any defect therein, will not impair or affect the validity of the amendment.
60
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect as to all notes (and guarantees) issued thereunder, when:
|
(a)
|
all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to Asbury, have been
delivered to the trustee for cancellation; or
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|
(b)
|
all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and
Asbury or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, pursuant to arrangements satisfactory to the trustee, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes
not delivered to the trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
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|
(2)
|
no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default
under, any other material instrument to which Asbury or any Guarantor is a party or by which Asbury or any Guarantor is bound;
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|
(3)
|
Asbury or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and
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|
(4)
|
Asbury has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be.
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In addition, Asbury must deliver an officers certificate and an opinion of counsel to the trustee stating that all conditions precedent
to satisfaction and discharge have been satisfied.
Concerning the Trustee
If the trustee becomes a creditor of Asbury or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or
to realize on certain property received in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue or resign. If the trustee fails to either eliminate the conflicting interest, obtain permission or resign within 10 days of the expiration of the 90-day period, the trustee is required to notify the
Holders to this effect and any Holder that has been a bona fide holder for at least six months may petition a court to remove the trustee and appoint a successor trustee.
The Holders of a majority in principal amount of the then outstanding notes have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any Holder of notes, unless such
Holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.
Governing Law
The indenture, the notes and the Subsidiary Guarantees are governed by and construed in accordance with the laws of the State of New York.
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Additional Information
Anyone who receives this prospectus may obtain a copy of the indenture without charge by writing to Asbury Automotive Group, Inc., 2905
Premiere Parkway NW, Suite 300, Duluth, Georgia 30097, Attention: Chief Financial Officer.
Book-Entry, Delivery and Form
We issued the original notes in the form of global securities registered in the name of a nominee of DTC. The exchange notes will be initially
issued in the form of global securities registered in the name of DTC or its nominee.
Upon the issuance of a global security, DTC or its
nominee will credit the accounts of persons holding through it with the respective principal amounts of the applicable exchange notes represented by such global security exchanged by such persons in the exchange offer. The term global
security means the outstanding global securities or the exchange global securities, as the context may require. Ownership of beneficial interests in a global security will be limited to persons that have accounts with DTC, which we refer to as
participants, or persons that may hold interests through participants. Ownership of beneficial interests in a global security will be shown on, and the transfer of that ownership interest will be effected only through, records maintained by DTC
(with respect to participants interests) and such participants (with respect to the owners of beneficial interests in such global security other than participants). The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. These limits and laws may impair the ability to transfer beneficial interests in a global security. Because DTC can act only on behalf of participants, which in turn act on behalf of
indirect participants, the ability of a person having beneficial interests in a global security to pledge its interests to persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by
the lack of a physical certificate evidencing those interests.
Payment of principal of and interest on any exchange notes represented by
a global security will be made in immediately available funds to DTC or its nominee, as the case may be, as the sole registered owner and the sole holder of the exchange notes represented thereby for all purposes under the indentures. The Company
has been advised by DTC that upon receipt of any payment of principal of or interest on any global security, DTC will immediately credit, on its book-entry registration and transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal or face amount of such global security as shown on the records of DTC. Payments by participants to owners of beneficial interests in a global security held through such
participants will be governed by standing instructions and customary practices as is now the case with securities held for customer accounts registered in street name and will be the sole responsibility of such participants.
A global security may not be transferred except as a whole by DTC or a nominee of DTC to a nominee of DTC or to DTC. A global security is
exchangeable for certificated exchange notes only if:
(a) DTC notifies the
Company that it is unwilling or unable to continue as a depositary for such global security or if at any time DTC ceases to be a clearing agency registered under the Exchange Act and, in either case, the Company fails to appoint a successor
depository;
(b) the Company, in its discretion, at any time determines not to
have all the exchange notes represented by such global security; or
(c) there
shall have occurred and be continuing a Default or an Event of Default with respect to the exchange notes of the series represented by such global security.
Any global security that is exchangeable for certificated exchange notes pursuant to the preceding sentence will be exchanged for certificated
exchange notes in authorized denominations and registered in such names as DTC or any successor depositary holding such global security may direct. Subject to the foregoing, a global security is not exchangeable, except for a global security of like
denomination to be registered in the name of DTC or any successor depositary or its nominee. In the event that a global security becomes exchangeable for certificated exchange notes,
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(a) certificated exchange notes will
be issued only in fully registered form in denominations of $2,000 or integral multiples of $1,000 in excess thereof;
(b) payment of principal of, and premium, if any, and interest on, the certificated
exchange notes will be payable, and the transfer of the certificated exchange notes will be registrable, at the office or agency of the Company maintained for such purposes; and
(c) no service charge will be made for any registration of transfer or exchange of
the certificated exchange notes, although the Company may require payment of a sum sufficient to cover any tax or governmental charge imposed in connection therewith.
Certificated exchange notes may not be exchanged for beneficial interests in any global security unless the transferor first delivers to the
trustee a written certificate, in the form provided in the indenture.
The Company will make payments in respect of the exchange notes
represented by the global securities, including principal and interest, by wire transfer of immediately available funds to the accounts specified by the DTC or its nominee. The Company will make all payments of principal and interest with respect to
certificated exchange notes by wire transfer of immediately available funds to the accounts specified by the holders of the certificated exchange notes or, if no such account is specified, by mailing a check to each such holders registered
address.
So long as DTC or any successor depositary for a global security, or any nominee, is the registered owner of such global
security, DTC or such successor depositary or nominee, as the case may be, will be considered the sole owner or holder of the exchange notes represented by such global security for all purposes under the indenture and the exchange notes. Except as
set forth above, owners of beneficial interests in a global security will not be entitled to have the exchange notes represented by such global security registered in their names, will not receive or be entitled to receive physical delivery of
certificated exchange notes in definitive form and will not be considered to be the owners or holders of any exchange notes under such global security. Accordingly, each person owning a beneficial interest in a global security must rely on the
procedures of DTC or any successor depositary, and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the indenture under which such
exchange notes were issued. The Company understands that under existing industry practices, in the event that the Company requests any action of holders or that an owner of a beneficial interest in a global security desires to give or take any
action which a holder is entitled to give or take under the indenture, DTC or any successor depositary would authorize the participants holding the relevant beneficial interest to give or take such action and such participants would authorize
beneficial owners owning through such participants to give or take such action or would otherwise act upon the instructions of beneficial owners owning through them.
Consequently, neither the Company, the trustee nor any agent of the Company or the trustee has or will have any responsibility or liability
for:
(a) any aspect of DTCs records or any participants or
indirect participants records relating to or payments made on account of beneficial ownership interest in the global securities or for maintaining, supervising or reviewing any of DTCs records or any participants or indirect
participants records relating to the beneficial ownership interests in the global securities; or
(b) any other matter relating to the actions and practices of DTC or any of its
participants or indirect participants.
DTC has advised Asbury as follows:
DTC is
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a limited purpose trust company organized under the laws of the State of New York,
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a banking organization within the meaning of New York Banking law,
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a member of the Federal Reserve System,
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a clearing corporation within the meaning of the Uniform Commercial Code, as amended, and
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a Clearing Agency registered pursuant to the provisions of Section 17A of the Exchange Act.
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DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. DTC is partially owned by some of these participants or their representatives. Indirect access to the DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (indirect participants).
Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in global securities among participants of
DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of Asbury, the trustee, the exchange agent nor any of their respective agents will have any responsibility
for the performance by DTC, its participants or indirect participants of their respective obligations under the rules and procedures governing its operations.
Same Day Settlement and Payment
Asbury
will make payments in respect of the notes represented by global notes (including principal, premium, if any, interest, if any) by wire transfer of immediately available funds to the accounts specified by the global note Holder. Asbury will make all
payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes or, if no such account is specified, by
mailing a check to each such Holders registered address. The notes represented by global notes are expected to trade in DTCs Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will,
therefore, be required by DTC to be settled in immediately available funds. Asbury expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.
Certain Definitions
Set forth below are
certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.
Acquired Debt
means, with respect to any specified Person:
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(1)
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Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and
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(2)
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Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
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Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms controlling, controlled by and under common control
with have correlative meanings.
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Asset Sale
means:
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(1)
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the sale, lease, conveyance or other disposition of any assets; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Asbury and its Restricted Subsidiaries taken as a
whole will be governed by the provisions of the indenture described above under the caption Repurchase at the Option of HoldersChange of Control and/or the provisions described above under the caption Certain
CovenantsMerger, Consolidation or Sale of Assets and not by the provisions of the Asset Sale covenant; and
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(2)
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the issuance of Equity Interests by any of Asburys Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries.
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Notwithstanding the preceding, the following items will not be deemed to be Asset Sales:
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(1)
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for purposes of the covenant described above under the caption Repurchase at the Option of the HoldersAsset Sales only, any single transaction or series of related transactions that involves
assets having a fair market value of less than $10.0 million;
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(2)
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a transfer of assets between or among Asbury and/or its Restricted Subsidiaries;
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(3)
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an issuance of Equity Interests by a Subsidiary to Asbury or to a Restricted Subsidiary of Asbury;
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(4)
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the sale or lease of inventory or accounts receivable in the ordinary course of business;
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(5)
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the sale of obsolete or damaged assets in the ordinary course of business;
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(6)
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the sale or other disposition of cash or Cash Equivalents;
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(7)
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the making of a Restricted Payment or Permitted Investment that is permitted by the indenture;
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(8)
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any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
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(9)
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the creation of Liens;
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(10)
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licensing or sublicensing of intellectual property or other general intangibles in accordance with industry practice in the ordinary course of business;
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(11)
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foreclosures on assets;
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(12)
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the lease or sublease of any real or personal property in the ordinary course of business; and
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(13)
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any transfer constituting a taking, condemnation or other eminent domain proceeding for which no proceeds are received.
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Asset Sale Offer
has the meaning set forth above under the caption Repurchase at the Option of
HoldersAsset Sales.
Attributable Debt
in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at
the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.
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Beneficial Owner
has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular person (as that term is used in Section 13(d) (3) of the Exchange Act), such person will be deemed to have
beneficial ownership of all securities that such person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms Beneficially Owns and Beneficially Owned have a corresponding meaning.
Board of
Directors
means:
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(1)
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with respect to a corporation, the board of directors of the corporation;
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(2)
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with respect to a partnership, the board of directors of the general partner of the partnership; and
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(3)
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with respect to any other Person, the board or committee of such Person serving a similar function.
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Capital Lease Obligation
means, at the time any determination is to be made, the amount of the liability in respect of a
capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lease without payment of a penalty.
Capital Stock
means:
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(1)
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in the case of a corporation, corporate stock;
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(2)
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in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
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(3)
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in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
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(4)
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any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
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Cash Equivalents
means:
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(1)
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United States dollars;
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(2)
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securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United
States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition;
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(3)
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time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized and existing under the laws of
the United States, or any state thereof, and which bank or trust company has capital and surplus aggregating in excess of $500.0 million and has outstanding debt which is rated A (or such similar equivalent rating) or higher by at least
one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;
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(4)
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repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications
specified in clause (3) above;
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(5)
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commercial paper having the highest rating obtainable from Moodys Investors Service, Inc. or Standard & Poors Ratings Services (or carrying an equivalent rating by another nationally recognized
rating agency if both of such two rating agencies cease publishing ratings of investments) and maturing not more than 180 days after the date of acquisition;
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(6)
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money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; and (7) in the case of any Subsidiary organized or
having its principal place of business outside the United States, investments denominated in the currency of the jurisdiction in which that Subsidiary is organized or has its principal place of business which are similar to the items specified in
clauses (1) through (6) above, including, without limitation, any deposit with a bank that is a lender to any Restricted Subsidiary of Asbury.
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Change of Control
means the occurrence of any of the following:
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(1)
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the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets
of Asbury and its Restricted Subsidiaries, taken as a whole, to any person (as that term is used in Section 13(d)(3) of the Exchange Act);
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(2)
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the adoption of a plan relating to the liquidation or dissolution of Asbury;
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(3)
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the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person (as defined above) becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of Asbury, measured by voting power rather than number of shares; or
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(4)
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Asbury consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Asbury, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of
Asbury or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of Asbury outstanding immediately prior to such transaction is converted into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance).
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Consolidated Cash Flow
means, with respect to any specified Person for any period, the Consolidated Net
Income of such Person for such period plus, without duplication:
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(1)
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provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus
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(2)
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consolidated interest expense of such Person and its Restricted Subsidiaries for such period whether or not capitalized ((i) including, without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or bankers acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations and (ii) excluding interest expense
attributable to Indebtedness incurred under Floor Plan Facilities), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus
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(3)
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dividends on preferred stock to the extent included in the calculation of Fixed Charges for the relevant period; plus
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(4)
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depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus
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(5)
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any expenses or charges related to the incurrence of Indebtedness permitted to be made under the indenture, including a repayment or refinancing thereof and any amendment or modification to the terms of any such
Indebtedness (whether or not successful), or related to the offering of the notes; plus
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(6)
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other non-cash charges reducing such Consolidated Net Income for such period (excluding any such non-cash expense to the extent that it represents an accrual of, or reserve, for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period); minus
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(7)
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non-cash items increasing such Consolidated Net Income for such period (without giving effect to any exclusions contained in the proviso included in the definition of Consolidated Net Income), other than the accrual of
revenue in the ordinary course of business;
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in each case, on a consolidated basis and determined in accordance with GAAP.
Consolidated Net Income
means, with respect to any specified Person for any period, the aggregate of the Net Income of such
Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP;
provided
that:
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(1)
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the Net Income (or loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will not be included, except that such Net Income will be included to the extent of
the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;
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(2)
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solely for the purposes of determining the amount available for Restricted Payments under clause 3(a) of the second paragraph Certain CovenantsRestricted Payments, the Net Income of any Restricted
Subsidiary will be excluded, to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders;
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(3)
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any gain or loss realized as a result of the cumulative effect of a change in accounting principles will be excluded;
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(4)
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any non-cash asset impairment charge or goodwill impairment charge will be excluded;
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(5)
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any non-cash compensation charge arising from the grant of or issuance of stock, stock options or other equity based awards will be excluded;
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(6)
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any non-recurring or unusual gains or losses (including, but not limited to, any expenses relating to severance charges or costs relating to satisfying or settling legal, governmental or administrative matters) will be
excluded;
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(7)
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any gain or loss resulting from the disposal, abandonment, transfer or closure of discontinued operations or fixed assets (including, without limitation, any gain or loss on the sale or other disposition of dealerships)
will be excluded; and
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(8)
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any gain or loss from the early retirement or extinguishment of indebtedness (less all fees and expenses or charges related thereto) or from early lease termination will be excluded.
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Consolidated Net Tangible Assets
of any Person means, as of any date, the amount which, in accordance with GAAP, would be
set forth under the caption Total Assets (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries as of the end of the most recently ended fiscal quarter for which internal financial statements
are available, less all intangible assets, including, without limitation, goodwill, organization costs, patents, trademarks, copyrights, franchises and research and development costs.
Consolidated Total Assets
of any Person means, as of any date, the amount which, in accordance with GAAP, would be set
forth under the caption Total Assets (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries, as of the end of the most recently ended fiscal quarter for which internal financial statements
are available.
Consolidated Total Debt
of any Person means, as of any date, the sum of (1) the aggregate amount
of all outstanding Indebtedness of such Person and its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Capital Lease Obligations, Attributable Debt and debt obligations evidenced by bonds, notes,
debentures or similar instruments or letters of credit (but excluding any Indebtedness under Floor Plan Facilities) plus (2) the aggregate amount of all outstanding Disqualified Stock of such Person and all preferred stock of its Restricted
Subsidiaries, with the amount of such Disqualified Stock and preferred stock equal to the greater of their respective voluntary or involuntary liquidation preferences and their Maximum Fixed Repurchase Prices, in each case, determined on a
consolidated basis in accordance with GAAP, minus (3) the aggregate amount of cash and Cash Equivalents held in (x) accounts on the consolidated balance sheet of such Person and its Restricted Subsidiaries as of such date to the extent the
use thereof for application to payment of Indebtedness is not prohibited by law or any contract to which any such Person is a party and (y) accounts established as an offset to floor plan notes payable on the consolidated balance sheet of such
Person and its Restricted Subsidiaries as of such date;
provided
that the aggregate amount of cash and Cash Equivalents under this clause (3) shall in no event exceed $50.0 million.
For purposes hereof, the Maximum Fixed Repurchase Price of any Disqualified Stock or preferred stock means the price at which such
Disqualified Stock or preferred stock could be redeemed or repurchased by the issuer thereof in accordance with its terms or, if such Disqualified Stock or preferred stock cannot be so redeemed or repurchased, the fair market value of such
Disqualified Stock or preferred stock (determined reasonably and in good faith by the board of directors of the issuer thereof), in each case, determined on any date on which Consolidated Total Debt shall be required to be determined.
Consolidated Total Leverage Ratio
means with respect to any specified Person for any four-quarter reference period, the
ratio of the Consolidated Total Debt of such Person and its Restricted Subsidiaries as of the end of such period to Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period, in each case with such pro forma adjustments
to Consolidated Total Debt and Consolidated Cash Flow as are appropriate and consistent with the pro forma calculation provisions set forth in the definition of Fixed Charge Coverage Ratio.
Covenant Defeasance
has the meaning set forth above under the caption Legal Defeasance and Covenant Defeasance.
Credit Agreement
means collectively, (i) the Credit Agreement, dated as of September 20, 2013, by and among
Asbury Automotive Group, Inc., certain of its subsidiaries, and Bank of America, N.A., as Lender and (ii) the Amended and Restated Credit Agreement, dated as of August 8, 2013, by and among Asbury
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Automotive Group, Inc., as Borrower, certain of its subsidiaries, as Vehicle Borrowers, Bank of America, N.A., as Administrative Agent, Revolving Swing Line Lender, New Vehicle Floorplan Swing
Line Lender, Used Vehicle Floorplan Swingline Lender and an L/C Issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as Co-Syndication Agents, Mercedes-Benz Financial Services USA LLC and Toyota Motor
Credit Corporation, as Co-Documentation Agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Sole Lead Arranger and Sole Book Manager; in each case as further amended, modified, renewed, refunded, replaced or refinanced or
otherwise restructured in whole or in part from time to time, whether by the same or any other agent, lender or group of lenders (
provided
that the borrowings under the instrument reflecting such amendment, modification, renewal, refunding,
replacement, refinancing or restructuring constitute Senior Debt).
Credit Facility
or
Credit
Facilities
means, one or more debt facilities (including, without limitation, the Credit Agreement), indentures, debt instruments, security documents and other related agreements or commercial paper facilities, in each case with banks or
other institutional lenders providing for revolving credit loans, term loans, or letters of credit, in each case, as amended, extended, renewed, restated, supplemented, Refinanced, replaced or otherwise modified (in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other provisions, or lenders or holders) from time to time.
Default
means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
Designated Non-cash Consideration
means the fair market value of non-cash consideration received by Asbury or any
Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non- cash Consideration pursuant to an Officers Certificate, setting forth the basis for such valuation, executed by the principal financial officer of
Asbury, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on or distribution relating to such Designated Non-cash Consideration.
Designated Senior Debt
has the meaning set forth above under the caption Subordination.
Disqualified Stock
means any Capital Stock that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event (other than any event solely within the control of the issuer thereof), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding
the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Asbury to repurchase such Capital Stock upon the occurrence of a change of control or an
asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Asbury may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant
described above under the caption Certain CovenantsRestricted Payments.
Domestic Subsidiary
means any Restricted Subsidiary of Asbury that was formed under the laws of the United States or any state of the United States or the District of Columbia.
Equity Interests
means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital Stock).
Equity Issuance
means any primary
issuance of common stock of Asbury, other than issuances to a Subsidiary of Asbury.
Excess Proceeds
has the meaning
set forth above under the caption Repurchase at the Option of HoldersAsset Sales.
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Existing Indebtedness
means the Indebtedness of Asbury and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement and under Floor Plan Facilities) in existence on December 4, 2014, until such amounts are repaid.
Fixed Charges
means, with respect to any specified Person and its Restricted Subsidiaries for any period, the sum, without
duplication, of:
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(1)
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the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations (but excluding interest expense attributable to Indebtedness incurred
under Floor Plan Facilities); plus
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(2)
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the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
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(3)
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any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether
or not such Guarantee or Lien is called upon to the extent such expense is reflected as an expense on the balance sheet of such Person in accordance with GAAP; plus
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(4)
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the product of (a) all dividends whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity
Interests of Asbury (other than Disqualified Stock) or the applicable Restricted Subsidiary to Asbury or a Restricted Subsidiary of Asbury times (b) a fraction, the numerator of which is one and the denominator of which is one minus the
effective combined federal, state and local tax rate of such Person for such period as specified by the chief financial officer of such Person in good faith, expressed as a decimal,
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in each case, on a consolidated basis and in accordance with GAAP.
Fixed Charge Coverage Ratio
means with respect to any specified Person for any four-quarter reference period, the ratio of
the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such four-quarter reference period. In the event that the specified Person or any of
its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the Calculation Date), then the Fixed Charge Coverage
Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as
if the same had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the
Fixed Charge Coverage Ratio:
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(1)
|
acquisitions and dispositions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period will be calculated on a pro forma basis, including giving effect to any Pro Forma Cost Savings;
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(2)
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the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; and
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(3)
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the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date.
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For purposes of this definition, whenever pro forma effect is to be given to an acquisition or disposition of assets, the amount of income or
earnings relating thereto and the amount of Fixed Charges associated with any Indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by the Chief Financial Officer of Asbury. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into
account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months; provided that any Hedging Obligation with a remaining term of less than 12 months shall be taken into account
solely for the number of months remaining).
Floor Plan Facility
means an agreement with any lending institution
affiliated with a Manufacturer or any bank or asset-based lender under which Asbury or its Restricted Subsidiaries incur Indebtedness, all of the net proceeds of which are used to purchase, finance or refinance vehicles and/or vehicle parts and
supplies to be sold in the ordinary course of the business of Asbury and its Restricted Subsidiaries and which may not be secured except by a Lien that does not extend to or cover any property other than property of the dealership(s) which use the
proceeds of the Floor Plan Facility or other dealerships who have incurred Indebtedness from the same lender.
GAAP
means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect as of the Issue Date.
Guarantee
means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of
business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.
Guarantors
means:
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(1)
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each of Asburys Subsidiaries as of December 4, 2014; and
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(2)
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any other subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the indenture;
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and their respective successors and assigns.
Hedging Obligations
means, with respect to any specified Person, the obligations of such Person under:
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(1)
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interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and
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(2)
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other agreements or arrangements of a similar character designed to protect such Person against fluctuations in interest rates.
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Holder
means the Person in whose name a note is registered on the registrars books.
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Indebtedness
means, with respect to any specified Person, any indebtedness of
such Person, whether or not contingent:
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(1)
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in respect of borrowed money;
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(2)
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evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);
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(3)
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in respect of bankers acceptances;
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(4)
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representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;
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(5)
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representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or
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(6)
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representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term Indebtedness includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the
specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.
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The amount of any Indebtedness outstanding as of any date will be:
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(1)
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the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; or
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(2)
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the principal amount of the Indebtedness.
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The amount of any Indebtedness represented by a
Hedging Obligation as of any date will be equal to:
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(1)
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zero if such Hedging Obligation has been incurred pursuant to clause (8) of the definition of Permitted Debt; or
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(2)
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the notional amount of such Hedging Obligation if not incurred pursuant to such clause.
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In
addition, for the purpose of avoiding duplication in calculating the outstanding principal amount of Indebtedness for purposes of the covenant described under the caption Certain CovenantsIncurrence of Indebtedness and Issuance of
Preferred Stock, Indebtedness arising solely by reason of the existence of a Lien to secure other Indebtedness permitted to be incurred under the covenant described under the caption Certain CovenantsIncurrence of
Indebtedness and Issuance of Preferred Stock will not be considered incremental Indebtedness.
Indebtedness shall not include
(w) the obligations of any Person (A) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business and (B) under stand-by letters of credit to the extent collateralized by cash or Cash
Equivalents, (x) Indebtedness that has been defeased or satisfied and discharged in accordance with the terms of the documents governing such Indebtedness, (y) any operating leases as such an instrument would be determined in accordance
with GAAP on the Issue Date, and (z) in connection with the purchase by Asbury or any Restricted Subsidiary of any business, (1) customary indemnification obligations or (2) post-closing payment adjustments to which the seller may
become entitled to the extent such payment is determined by a final closing balance sheet or such payment is otherwise contingent; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent
such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter. The payment of fees and premiums and additional payments with respect to Indebtedness and the realization of any Permitted Lien will not be deemed to
be an incurrence of Indebtedness for purposes of the indenture.
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Investments
means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made
in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If Asbury or any Restricted Subsidiary of Asbury sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Asbury such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of Asbury, Asbury will be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above under the caption Certain CovenantsRestricted Payments. The acquisition by Asbury or any Restricted Subsidiary of Asbury of a Person that holds an
Investment in a third Person will be deemed to be an Investment by Asbury or such Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person in an amount determined
as provided in the final paragraph of the covenant described above under the caption Certain Covenants Restricted Payments.
Except as otherwise provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without
giving effect to subsequent changes in value.
Legal Defeasance
has the meaning set forth above under the caption
Legal Defeasance and Covenant Defeasance.
Lien
means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
Manufacturer
means a vehicle manufacturer which is party to a dealership or national framework franchise agreement with
Asbury or a Restricted Subsidiary of Asbury.
Mortgage Loans
mean (i) Indebtedness of Asbury or any Guarantor
secured solely by Liens on real property used by Asbury or any Guarantor for the operation of a vehicle dealership, collision repair business or business ancillary thereto, together with related real property rights, improvements, fixtures (other
than trade fixtures), insurance payments, leases and rents related thereto and proceeds thereof and (ii) revolving real estate acquisition and construction lines of credit and related mortgage refinancing facilities of Asbury or any Guarantor,
in each case, as amended, extended, renewed, restated, supplemented, Refinanced, replaced, or otherwise modified from time to time.
Net Income
means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of preferred stock dividends, excluding, however:
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(1)
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any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries;
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(2)
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non-cash impairment charges or non-cash asset write-offs or write-downs; and
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(3)
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any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss).
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74
Net Proceeds
means the aggregate cash proceeds received by Asbury or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale, but only as and when received), in each case net
of:
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(1)
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the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, recording fees, title transfer fees, appraiser fees and any relocation
expenses incurred as a result of the Asset Sale;
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(2)
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taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements;
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(3)
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amounts required to be applied to the permanent repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale;
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(4)
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all pro rata distributions and other pro rata payments required to be made to minority interest holders in Restricted Subsidiaries of Asbury or joint ventures as a result of such Asset Sale; and
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(5)
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any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.
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Non-Recourse Debt
means Indebtedness:
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(1)
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as to which neither Asbury nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; and
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(2)
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no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any
holder of any other Indebtedness of Asbury or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity.
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Obligations
means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
Payment Default
has the meaning set forth above under the
caption Events of Default and Remedies.
Permitted Business
means any business that derives a majority of its revenues from the businesses engaged in by Asbury and its Restricted Subsidiaries on December 4,
2014 and/or activities that are reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which Asbury and its Restricted Subsidiaries are engaged on the date of
original issuance of the notes.
Permitted Investments
means:
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(1)
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any Investment in Asbury or in a Restricted Subsidiary of Asbury;
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(2)
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any Investment in cash or Cash Equivalents;
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(3)
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any Investment by Asbury or any Restricted Subsidiary of Asbury in a Person, if as a result of such Investment:
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(a)
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such Person becomes a Restricted Subsidiary of Asbury; or
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75
|
(b)
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such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Asbury or a Restricted Subsidiary of Asbury;
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(4)
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any Investment made as a result of the receipt of non-cash consideration from an Asset Sale (or sales or other dispositions of assets not constituting an Asset Sale) that was made pursuant to and in compliance with the
covenant described above under the caption Repurchase at the Option of HoldersAsset Sales;
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(5)
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any Investment to the extent made in exchange for or net cash proceeds from the issuance of Equity Interests (other than Disqualified Stock) of Asbury;
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(7)
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Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and other similar deposits;
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(8)
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transactions with officers, directors and employees of Asbury or any of its Restricted Subsidiaries entered into in the ordinary course of business (including compensation, employee benefit or indemnity arrangements
with any such officer, director or employee) and consistent with past business practices;
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(9)
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any Investment consisting of a guarantee permitted under Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock above;
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(10)
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Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with dispositions of assets permitted pursuant to the indenture;
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(11)
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advances, loans or extensions of credit to suppliers in the ordinary course of business by Asbury or any of its Restricted Subsidiaries;
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(12)
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Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
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(13)
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loans and advances to employees made in the ordinary course of business not to exceed $2.5 million in the aggregate at any one time outstanding;
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(14)
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payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
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(15)
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Investments in any Person to the extent such Investment existed on December 4, 2014 and any Investment that replaces, refinances or refunds such an Investment, provided that the new Investment is in an amount that
does not exceed that amount replaced, refinanced or refunded and is made in the same Person as the Investment replaced, refinanced or refunded;
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(16)
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trade receivables and prepaid expenses, in each case arising in the ordinary course of business;
provided
that such receivables and prepaid expenses would be recorded as assets in accordance with GAAP; and
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(17)
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other Investments in any Person having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (17) since December 4, 2014, not to exceed the greater of
$75.0 million and 4.0% of Consolidated Total Assets, plus, to the extent such other Investments pursuant to this clause (17) are made by Asbury or any of its Restricted Subsidiaries in any Person and such Investment is sold for cash or
otherwise liquidated or repaid, purchased or redeemed for cash, an amount equal to the lesser of (i) such cash (less the cost of disposition, if any) and (ii) the amount of such Investment.
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Permitted Junior Securities
has the meaning set forth above under the caption
Subordination.
Permitted Liens
means:
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(1)
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Liens of Asbury or any of its Restricted Subsidiaries securing Senior Debt that was permitted by the terms of the indenture to be incurred;
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(2)
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Liens upon any property or assets of Asbury or any of its Restricted Subsidiaries, owned on December 4, 2014 or thereafter acquired or that may be acquired, which secures any Indebtedness that ranks
pari passu
with or subordinate to the notes;
provided
that:
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(a)
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if such Lien secures Indebtedness which is
pari passu
with the notes, the notes are secured on an equal and ratable basis with the Indebtedness so secured until such time as such Indebtedness is no longer secured
by a Lien, or
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(b)
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if such Lien secures Indebtedness which is subordinated to the notes, any such Lien shall be subordinated to a Lien granted to the holders of the notes in the same collateral as that securing such Lien to the same
extent as such subordinated Indebtedness is subordinated to the notes;
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(3)
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Liens in favor of Asbury or any of its Restricted Subsidiaries;
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(4)
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Liens on property or shares of stock of a Person existing at the time such Person is merged with or into or consolidated with Asbury or any Subsidiary of Asbury;
provided
that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with Asbury or the Subsidiary;
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(5)
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Liens on property existing at the time of acquisition of the property by Asbury or any Subsidiary of Asbury,
provided
that such Liens were in existence prior to the contemplation of such acquisition;
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(6)
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Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;
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(7)
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Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clauses (5) or (15) of the second paragraph of the covenant entitled Certain CovenantsIncurrence of
Indebtedness and Issuance of Preferred Stock covering only the assets acquired with such Indebtedness;
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(8)
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Liens existing on December 4, 2014;
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(9)
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Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded,
provided
that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;
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(10)
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Liens incurred by Asbury or any Restricted Subsidiary of Asbury with respect to obligations that do not exceed $25.0 million at any one time outstanding;
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(11)
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zoning restrictions, easements, rights-of-way, restrictions on the use of real property, other similar encumbrances or real property incurred in the ordinary course of business and minor irregularities of title to real
property that do not (a) secure Indebtedness or (b) individually or in the aggregate materially impair the value of the real property affected thereby or the occupation, use and enjoyment in the ordinary course of business of Asbury and
the Restricted Subsidiaries at such real property;
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(12)
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Liens created by or resulting from any litigation or other proceedings or resulting from operation of law with respect to any judgments, awards or orders to the extent that such litigation, other proceedings, judgments,
awards or orders do not cause or constitute an Event of Default;
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(13)
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bankers Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by Asbury or any Restricted Subsidiary in accordance
with the provisions of the indenture in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating
account arrangements;
provided
that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;
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(14)
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Liens securing Hedging Obligations of the type permitted by clause (8) of the definition of Permitted Debt;
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(15)
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Liens securing Indebtedness of a Restricted Subsidiary owed to and held by Asbury or a Restricted Subsidiary; and
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(16)
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Liens in the form of licenses, leases or subleases on any asset incurred by Asbury or any Restricted Subsidiary, which licenses, leases or subleases do not interfere, individually or in the aggregate, in any material
respect with the business of Asbury or such Restricted Subsidiary and is incurred in the ordinary course of business.
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Permitted Refinancing Indebtedness
means any Indebtedness of Asbury or any of its Restricted Subsidiaries issued to
Refinance other Indebtedness of Asbury or any of its Restricted Subsidiaries (other than intercompany Indebtedness);
provided
that:
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(1)
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the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness being Refinanced (plus all
accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith);
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(2)
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such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being Refinanced;
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(3)
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if the Indebtedness being Refinanced is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in
right of payment to, the notes on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness Refinanced; and
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(4)
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such Indebtedness is incurred either by Asbury or by the Restricted Subsidiary who is the obligor on the Indebtedness being Refinanced.
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Person
means any individual, corporation, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, limited liability company or government or other entity.
Pro Forma Cost Savings
means,
with respect to any period, the amount of run rate cost savings, synergies and operating expense reductions projected in good faith by the Chief Financial Officer of Asbury to result from actions taken, committed to be taken or with
respect to which substantial steps have been taken or are expected in good faith to be taken no later than twelve months after the end of such period (calculated on a pro forma basis as though such cost savings, operating expense reductions and
synergies had been realized on the first day of such period for which Consolidated Cash Flow is being determined and if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the
amount of actual benefits realized during such period from such actions, in each case during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date;
provided
that such cost savings,
operating expense reductions and synergies are reasonably identifiable and factually supportable in the good faith judgment of the Chief Financial Officer of Asbury (it is understood and agreed that run-rate means
78
the full recurring benefit for a period that is associated with any action taken, committed to be taken or with respect to which substantial steps have been taken or are expected to be taken);
provided
,
further
, that such cost savings, operating expense reductions and synergies during any four-quarter reference period shall not exceed 15% of Consolidated Cash Flow for such period prior to giving effect to any such cost savings,
operating expense reductions or synergies.
Refinance
means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. Refinanced and Refinancing shall have correlative meanings.
Replacement Assets
means (x) properties and assets (other than cash or any Capital Stock or other security) that will
be used in a Permitted Business of Asbury and its Restricted Subsidiaries or (y) Capital Stock of any Person that will become on the date of acquisition thereof a Restricted Subsidiary as a result of such Acquisition and that is involved
principally in Permitted Businesses.
Restricted Investment
means an Investment other than a Permitted Investment.
Restricted Subsidiary of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary.
Senior Debt
has the meaning set forth above under the caption Subordination.
Senior Subordinated Indebtedness
means, with respect to any Person, the notes (in the case of Asbury), the Subsidiary
Guarantees (in the case of a Guarantor) and any other Indebtedness of such Person that specifically provides that such Indebtedness is to rank
pari passu
with the notes or such Subsidiary Guarantee, as the case may be, in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or other obligation of such Person which is not Senior Debt of such Person.
Significant Subsidiary
means any Subsidiary that would be a significant subsidiary as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such Regulation is in effect on December 4, 2014.
Stated Maturity
means, with respect to any installment of interest or principal on any series of Indebtedness, the date on
which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
Subsidiary
means, with respect to any specified Person:
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(1)
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any corporation, limited liability company, association or other business entity whether now existing or hereafter formed or acquired of which more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person (or a combination thereof); and
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(2)
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any partnership whether now existing or hereafter formed or acquired (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).
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Subsidiary Guarantee
means a Guarantee by a Guarantor of Asburys obligations with respect to the notes.
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Unrestricted Subsidiary
means any Subsidiary of Asbury that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution and any Subsidiary of an Unrestricted Subsidiary, but only to the extent that such Subsidiary:
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(1)
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has no Indebtedness other than Non-Recourse Debt;
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(2)
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is not party to any agreement, contract, arrangement or understanding with Asbury or any Restricted Subsidiary of Asbury unless the terms of any such agreement, contract, arrangement or understanding are not materially
less favorable to Asbury or such Restricted Subsidiary than those that could have been obtained at the time from Persons who are not Affiliates of Asbury;
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(3)
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is a Person with respect to which neither Asbury nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve
such Persons financial condition or to cause such Person to achieve any specified levels of operating results; and
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(4)
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has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Asbury or any of its Restricted Subsidiaries.
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Any designation of a Subsidiary of Asbury as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a
certified copy of the Board Resolution giving effect to such designation and an officers certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption
Certain CovenantsRestricted Payments. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for
purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Asbury as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock, Asbury will be in default of such covenant. The Board of Directors of Asbury may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary;
provided
that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Asbury of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption Certain CovenantsIncurrence of Indebtedness and Issuance of Preferred Stock, calculated on a pro
forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.
Voting Stock
of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in
the election of the Board of Directors of such Person.
Weighted Average Life to Maturity
means, when applied to
any Indebtedness at any date, the number of years obtained by dividing:
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(1)
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the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to the nearest one- twelfth) that will elapse between such date and the making of such payment; by
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(2)
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the then outstanding principal amount of such Indebtedness.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of material U.S. federal income tax consequences relating to the exchange of unregistered original notes for
registered exchange notes pursuant to the exchange offer, but does not purport to be a complete analysis of all the potential tax considerations relating to the exchange offer. This summary is based upon the provisions of the Internal Revenue Code
of 1986, as amended (the Code), Treasury Regulations promulgated thereunder, administrative rulings and pronouncements, and judicial decisions, all as in effect on the date of this prospectus and all of which are subject to change,
possibly with retroactive effect, or different interpretations.
This summary is for general information only and does not address all of
the U.S. federal income tax consequences that may be relevant to a holder in light of such holders particular circumstances or to holders subject to special rules, such as banks or other financial institutions, partnerships or other
pass-through entities or investors therein, regulated investment companies, real estate investment trusts, former citizens or permanent residents of the United States, insurance companies, brokers, dealers in securities or currencies, traders in
securities that elect to use a mark-to-market method of accounting for their securities holdings, U.S. holders whose functional currency is not the U.S. dollar, holders subject to alternative minimum tax, tax-exempt entities, controlled foreign
corporations, passive foreign investment companies and persons holding the notes as part of a straddle, hedge, conversion transaction or other integrated transaction. In addition, this discussion is limited to
persons that hold the notes as capital assets (generally, property held for investment) within the meaning of Section 1221 of the Code. This discussion does not address the Medicare tax on net investment income or the effect of any
applicable state, local, foreign or other tax laws, including gift and estate tax laws. You are urged to consult your own tax advisor regarding the U.S. federal, state, local and foreign tax consequences of exchanging the original notes for exchange
notes and of holding and disposing of the exchange notes given your particular situation.
The exchange of an original note for an
exchange note pursuant to the exchange offer will not constitute a taxable exchange for U.S. federal income tax purposes. Rather, the exchange note you receive will be treated as a continuation of your investment in the corresponding original note
surrendered in the exchange. Consequently, you will not recognize any taxable income, gain or loss upon the receipt of an exchange note pursuant to the exchange offer. The holding period for an exchange note will include the holding period of the
original note exchanged pursuant to the exchange offer, and the tax basis in an exchange note will be the same as the adjusted tax basis in the original note immediately before such exchange.
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