Asbury Automotive Group Annual Report 2018

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-31262 ASBURY AUTOMOTIVE GROUP, INC.(Exact name of Registrant as specified in its charter) Delaware 01-0609375(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)2905 Premiere Parkway, NW, Suite 300Duluth, Georgia 30097(Current address of principal executive offices) (Zip Code)(770) 418-8200(Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, par value $.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files). Yes x No oTable of ContentsIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant'sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large Accelerated Filer x Accelerated filer o Non-Accelerated Filer o Smaller reporting company o Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No xBased on the closing price of the registrant's common stock as of June 30, 2018, the aggregate market value of the common stock held by non-affiliates of the registrant was$1.38 billion (based upon the assumption, solely for purposes of this computation, that all of the officers and directors of the registrant were affiliates of the registrant).Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: The number of shares of common stockoutstanding as of February 27, 2019 was 19,499,144.DOCUMENTS INCORPORATED BY REFERENCEList hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated:Portions of the registrant's definitive Proxy Statement for the 2018 Annual Meeting of Stockholders, to be filed within 120 days after the end of the registrant's fiscal year, areincorporated by reference into Part III, Items 10 through 14 of this Annual Report on Form 10-K. Table of ContentsASBURY AUTOMOTIVE GROUP, INC.ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDEDDECEMBER 31, 2018 PagePART IItem 1.Business6Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments24Item 2.Properties24Item 3.Legal Proceedings24Item 4.Mine Safety Disclosures25 PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities26Item 6.Selected Financial Data28Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations30Item 7A.Quantitative and Qualitative Disclosures About Market Risk57Item 8.Financial Statements and Supplementary Data58Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure95Item 9A.Controls and Procedures95Item 9B.Other Information96 PART III Item 10.Directors, Executive Officers, and Corporate Governance97Item 11.Executive Compensation97Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters97Item 13.Certain Relationships and Related Transactions, and Director Independence97Item 14.Principal Accountant Fees and Services97 PART IV Item 15.Exhibits, Financial Statement Schedules98Item 16.Form 10-K Summary101Table of ContentsPART I.Forward-Looking InformationCertain of the discussions and information included or incorporated by reference in this report may constitute "forward-looking statements" within themeaning of the federal securities laws. Forward-looking statements are statements that are not historical in nature and may include statements relating to ourgoals, plans and projections regarding industry and general economic trends, our expected financial position, results of operations or market position and ourbusiness strategy. Such statements can generally be identified by words such as "may," "target," "could," "would," "will," "should," "believe," "expect,""anticipate," "plan," "intend," "foresee," and other similar words or phrases. Forward-looking statements may also relate to our expectations and assumptionswith respect to, among other things:•our ability to execute our business strategy;•the seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S.;•our ability to further improve our operating cash flows, and the availability of capital and liquidity;•our estimated future capital expenditures;•general economic conditions and its impact on our revenues and expenses;•our parts and service revenue due to, among other things, improvements in vehicle technology;•the variable nature of significant components of our cost structure;•our ability to limit our exposure to regional economic downturns due to our geographic diversity and brand mix;•manufacturers' willingness to continue to use incentive programs to drive demand for their product offerings;•our ability to leverage our common systems, infrastructure and processes in a cost-efficient manner;•our capital allocation strategy, including as it relates to acquisitions and divestitures, stock repurchases, dividends and capital expenditures;•the continued availability of financing, including floor plan financing for inventory;•the ability of consumers to secure vehicle financing at favorable rates;•the growth of the brands that comprise our portfolio over the long-term;•our ability to mitigate any future negative trends in new vehicle sales; and•our ability to increase our cash flow and net income as a result of the foregoing and other factors.Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual future results, performance orachievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Suchfactors include, but are not limited to:•changes in general economic and business conditions, including changes in employment levels, consumer demand, preferences and confidencelevels, the availability and cost of credit in a rising interest rate environment, fuel prices, levels of discretionary personal income and interest rates;•our ability to execute our balanced automotive retailing and service business strategy;•our ability to attract and retain skilled employees;•adverse conditions affecting the vehicle manufacturers whose brands we sell, and their ability to design, manufacture, deliver, and market theirvehicles successfully;•changes in the mix, and total number, of vehicles we are able to sell;•our outstanding indebtedness and our continued ability to comply with applicable covenants in our various financing and lease agreements, or toobtain waivers of these covenants as necessary;4Table of Contents•high levels of competition in our industry, which may create pricing and margin pressures on our products and services;•our relationships with manufacturers of the vehicles we sell and our ability to renew, and enter into new framework and dealer agreements withvehicle manufacturers whose brands we sell, on terms acceptable to us;•the availability of manufacturer incentive programs and our ability to earn these incentives;•failure of our management information systems or any security breaches;•changes in laws and regulations governing the operation of automobile franchises, including consumer protections, accounting standards, taxationrequirements, and environmental laws;•changes in, or the imposition of, new tariffs or trade restrictions on imported vehicles or parts;•adverse results from litigation or other similar proceedings involving us;•our ability to generate sufficient cash flows, maintain our liquidity and obtain any necessary additional funds for working capital, capitalexpenditures, acquisitions, stock repurchases and/or dividends, debt maturity payments, and other corporate purposes;•any disruptions in the financial markets, which may impact our ability to access capital;•our relationships with, and the financial stability of, our lenders and lessors;•significant disruptions in the production and delivery of vehicles and parts for any reason, including natural disasters, product recalls, workstoppages, significant property loss or other occurrences that are outside of our control;•our ability to execute our initiatives and other strategies; and•our ability to leverage gains from our dealership portfolio.Many of these factors are beyond our ability to control or predict, and their ultimate impact could be material. Moreover, the factors set forth under "Item1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" below and other cautionarystatements made in this report should be read and considered as forward-looking statements subject to such uncertainties. We urge you to carefully considerthose factors.Forward-looking statements speak only as of the date of this report. We expressly disclaim any obligation to update any forward-looking statementcontained herein.Additional InformationOur annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to such reports filed pursuant toSection 13(a) or 15(d) of the Securities Exchange Act of 1934, are made available free of charge on our website at http://www.asburyauto.com as soon aspractical after such reports are filed with the U.S. Securities and Exchange Commission (the "Commission"). In addition, the proxy statement that will bedelivered to our stockholders in connection with our 2018 Annual Meeting of Stockholders, when filed, will also be available on our website, and at the URLstated in such proxy statement. We also make available on our website copies of our certificate of incorporation, bylaws, and other materials that outline ourcorporate governance policies and practices, including: •the respective charters of our audit committee, governance and nominating committee, compensation and human resources committee, and capitalallocation and risk management committee; •our criteria for independence of the members of our board of directors, audit committee, and compensation and human resources committee; •our Corporate Governance Guidelines; and •our Code of Business Conduct and Ethics for Directors, Officers, and Employees.We intend to provide any information required by Item 5.05 of Form 8-K (relating to amendments or waivers of our Code of Business Conduct and Ethicsfor Directors, Officers, and Employees) by disclosure on our website.You may also obtain a printed copy of the foregoing materials by sending a written request to: Investor Relations Department, Asbury AutomotiveGroup, Inc., 2905 Premiere Parkway, NW, Suite 300, Duluth, Georgia 30097. In addition, the Commission makes available on its website, free of charge,reports, proxy and information statements, and other information5Table of Contentsregarding issuers, such as us, that file electronically with the Commission. The Commission's website is http://www.sec.gov. Unless otherwise specified,information contained on our website, available by hyperlink from our website or on the Commission's website, is not incorporated into this report or otherdocuments we file with, or furnish to, the Commission.Except as the context otherwise requires, "we," "our," "us," "Asbury," and "the Company" refer to Asbury Automotive Group, Inc. and its subsidiaries.Item 1. BUSINESSAsbury Automotive Group, Inc., a Delaware corporation organized in 2002, is one of the largest automotive retailers in the United States. Our storeoperations are conducted by our subsidiaries.As of December 31, 2018, we owned and operated 97 new vehicle franchises, representing 29 brands of automobiles at 83 dealership locations, and 25collision centers in the United States. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts andservice, including vehicle repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products, includingarranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection ("GAP") insurance,prepaid maintenance, and credit life and disability insurance.Our operations provide a diverse revenue base that we believe mitigates the impact of fluctuations in new vehicle sales volumes and gross profit margins.In addition, our geographic footprint decreases our exposure to regional economic conditions and our brand diversification decreases our exposure tomanufacturer-specific risks, such as brand perception or production disruptions. In 2018, a significant portion of our gross profit was derived from our partsand service business, which historically has been more stable throughout economic cycles.The following charts present the contribution to total revenue and gross profit by each line of business for the year ended December 31, 2018:6Table of ContentsOur new vehicle franchise retail network is made up of dealerships located in 17 metropolitan markets in nine states operating primarily under eightlocally-branded dealership groups. The following chart provides a detailed breakdown of our markets, brand names, and franchises as of December 31, 2018:Dealership Group Market Franchise Brand Name Coggin Automotive Group Fort Pierce, FL Acura, BMW, Honda, Mercedes-Benz Jacksonville, FL Buick, Chevrolet, Ford, GMC, Honda(a), Nissan(a), Toyota Orlando, FL Ford, Honda(a), Hyundai, Lincoln Courtesy Autogroup Tampa, FL Chrysler, Dodge, Honda, Hyundai, Infiniti, Jeep, Kia, Mercedes-Benz, Nissan, smart (c),Sprinter, Toyota Crown Automotive Company Durham, NC Honda Fayetteville, NC Dodge, Ford Greensboro, NC Acura, BMW, Chrysler, Dodge, Honda, Jeep, Nissan, Volvo Greenville, SC Jaguar, Land Rover, Lexus, Nissan, Porsche, Toyota, Volvo Charlottesville, VA BMW Richmond, VA Acura, BMW(a), MINI David McDavid Auto Group Austin, TX Acura Dallas/Fort Worth, TX Acura, Ford, Honda(a), Lincoln Houston, TX Nissan Gray-Daniels Auto Family Jackson, MS Chevrolet, Ford, Lincoln, Nissan(a), Toyota Hare Automotive Group Indianapolis, IN Chevrolet, Honda, Isuzu Nalley Automotive Group Atlanta, GA Acura, Audi, Bentley, BMW, Chevrolet, Ford, Honda, Hyundai, Infiniti(a), Kia,Lexus(a), Nissan(a), Toyota(b), Volkswagen Plaza Motor Company St. Louis, MO Audi, BMW, Infiniti, Jaguar, Land Rover, Lexus, Mercedes-Benz(a), smart (c),Sprinter(a)_____________________________(a)This market has two of these franchises.(b)This market has three of these franchises.(c)Parts and service operations only.7Table of ContentsOperationsNew Vehicle SalesThe following table reflects the number of franchises we owned as of December 31, 2018 and the percentage of new vehicle revenues represented by classand franchise for the year ended December 31, 2018:Class/Franchise Number ofFranchises Owned % of NewVehicle RevenuesLuxury Mercedes-Benz 4 6%Lexus 4 7BMW 7 5Acura 6 4Infiniti 4 3Audi 2 3Lincoln 3 2Volvo 2 1Land Rover 2 2Jaguar 2 *Porsche 1 *Bentley 1 *Total Luxury 38 33%Import Honda 12 19%Toyota 7 12Nissan 10 11Kia 2 2Hyundai 3 2Volkswagen 1 1MINI 1 *smart (a) — *Isuzu 1 *Sprinter 3 *Total Import 40 47%Domestic Ford 6 10%Chevrolet 4 5Dodge 3 3Jeep 2 1GMC 1 1Chrysler 2 *Buick 1 *Total Domestic 19 20%Total Franchises 97 100%(a) Two Franchise agreements pursuant to which we perform parts and service operations.* Franchise accounted for less than 1% of new vehicle revenues for the year ended December 31, 2018.Our new vehicle revenues include new vehicle sales and lease transactions arranged by our dealerships with third-party financial institutions. We believethat leasing provides a number of benefits to our other business lines, including the historical customer loyalty to the leasing dealership for repairs andmaintenance services and the fact that lessors typically give the leasing dealership the first option to purchase the off-lease vehicle.8Table of ContentsUsed Vehicle SalesWe sell used vehicles at all of our franchised dealership locations. Used vehicle sales include the sale of used vehicles to individual retail customers("used retail") and the sale of used vehicles to other dealers at auction ("wholesale") (the terms "used retail" and "wholesale" collectively referred to as "used").Gross profit from the sale of used vehicles depends primarily on our dealerships' ability to obtain a high quality supply of used vehicles and our use oftechnology to manage our inventory. Our new vehicle operations typically provide our used vehicle operations with a large supply of trade-ins and off-leasevehicles, which we believe are good sources of high quality used vehicles. We also purchase a portion of our used vehicle inventory at "open" auctions andauctions restricted to new vehicle dealers. Additionally, our used vehicle sales benefit from our ability to sell certified pre-owned vehicles from ourfranchised dealerships.Parts and ServiceWe provide vehicle repair and maintenance services, sell replacement parts, and recondition used vehicles at all of our dealerships. In addition, weprovide collision repair services at our 25 free-standing collision repair centers that we operate either on the premises of, or in close proximity to, ourdealerships. Historically, parts and service revenues have been more stable than those from vehicle sales. Industry-wide, parts and service revenues haveconsistently increased over time primarily due to the increased cost of maintaining vehicles, the added technical complexity of vehicles, and the increasingnumber of vehicles on the road.The automotive parts and service industry tends to be highly fragmented, with franchised dealerships and independent repair shops competing for thisbusiness. We believe, however, that the increased use of advanced technology in vehicles is making it difficult for independent repair shops to competeeffectively with franchised dealerships as they may not be able to make the investment necessary to perform major or technical repairs. In an effort tomaintain the necessary knowledge to service vehicles and further develop our technician staff, we focus on our internal and manufacturer specific trainingand development programs for new and existing technicians. We believe our parts and service business is also well-positioned to benefit from the servicework potentially generated through the sale of extended service contracts to customers who purchase new and used vehicles from us, as historically thesecustomers tend to have their vehicles serviced at the location where they purchased the extended service contract. In addition, our franchised dealershipsbenefit from manufacturer policies requiring warranty and recall related repairs be performed at a franchised dealership. We believe our collision repaircenters provide us with an attractive opportunity to grow our business due to the high margins provided by collision repair services and the fact we are ableto source original equipment manufacturer parts from our franchised dealerships.Finance and InsuranceWe offer a wide variety of automotive finance and insurance ("F&I") products to our customers. We arrange third-party financing for the sale or lease ofvehicles to our customers in exchange for a fee paid to us by the third-party financial institution. We do not directly finance our customers' vehicle purchasesor leases, therefore our exposure to losses in connection with those third-party financing arrangements is limited generally to the fees we receive. The fees wereceive are subject to chargeback, or repayment, to the finance company if a customer defaults or prepays the retail installment contract typically during somelimited time period at the beginning of the contract term. We have negotiated agreements with certain lenders pursuant to which we receive additional feesupon reaching a certain volume of business.We offer our customers a variety of vehicle protection products in connection with the purchase of vehicles. These products are underwritten andadministered by independent third-parties. Under our arrangements with the providers of these products, we primarily sell the products on a straightcommission basis. We are subject to chargebacks for insurance contracts as a result of early termination, default, or prepayment of the contract. In addition,we participate in future profits associated with the performance of the third-party held underlying portfolio for certain products pursuant to retrospectivecommission arrangements. The following is a brief description of some of the vehicle protection products we offer to our customers:•Extended service contracts – covers certain repair work after the expiration of the manufacturer warranty;•GAP debt cancellation – covers the customer after a total loss for the difference between the value of the vehicle and the outstanding loan or leaseobligation after insurance proceeds;•Prepaid maintenance – covers certain routine maintenance work, such as oil changes, cleaning and adjusting of brakes, multi-point vehicleinspections, and tire rotations; and•Credit life and disability – covers the remaining amounts due on an auto loan or a lease in the event of death or disability.9Table of ContentsRecent DevelopmentsNone.Business StrategyWe seek to create long-term value for our stockholders by striving to drive operational excellence and deploy capital to its highest risk adjusted returns.To achieve these objectives, we employ the strategies described below.Drive Operational ExcellenceAttract and retain the best talentWe believe that local management of dealership operations enables our retail network to provide market specific responses to sales, customer service, andinventory requirements. The general manager of each of our dealerships is responsible for the operations, personnel, and financial performance of thatdealership as well as other day-to-day operations. We believe our general managers' familiarity with their respective markets enables them to effectively runday-to-day operations, market to customers, and recruit new employees. The general manager of each dealership is supported, in most cases, by a new vehiclesales manager, a used vehicle sales manager, an F&I manager, a parts manager, and a service manager. Our dealership management teams typically have manyyears of experience in the automotive retail industry. This management structure is complemented by support from our market-based management teams andthe corporate office, which we refer to as the Dealership Support Center ("DSC"), through our advanced technology solutions, centralized processes,marketing support, and financial oversight.Implement best practices and improve productivityWhile new vehicle sales are critical to drawing customers to our dealerships, used vehicles, parts and service, and F&I sales generally provide higherprofit margins and account for the majority of our gross profit. In order to maximize the growth of these higher margin businesses, we have discipline-specificexecutives who focus on increasing the penetration of current services and expanding the breadth of our offerings to customers through the implementationof best practices and continuous training on our technology solutions throughout our dealership network. In addition, we have marketing initiativesdesigned to attract customers to our online channels and mobile applications.In order to mitigate the impact of significant fluctuations in vehicle sales, we tie management and employee compensation at various operational levelsto performance through incentive-based pay systems based on various metrics. We compensate our general managers, department managers, and sales andother dealership personnel with incentive-based pay, using metrics such as dealership profitability, departmental profitability, customer satisfaction andindividual performance, as appropriate. In addition, a portion of management's compensation is variable-based in nature, including an annual cash bonusbased on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets and a component of equity compensation tied toour financial performance in comparison to our peer group.Provide an exceptional customer experienceWe are focused on providing a high level of customer service and have designed our dealerships' services to meet the needs of an increasinglysophisticated and demanding automotive consumer. We endeavor to establish relationships which we believe will result in both repeat business andadditional business through customer referrals. Furthermore, we provide our dealership managers with appropriate incentives to employ efficient sellingapproaches, engage in extensive follow-up to develop long-term relationships with customers, and extensively train our sales staff to meet customer needs.We continually evaluate opportunities, and implement appropriate new technologies, to improve the buying experience for our customers, and believe thatour ability to share best practices across our multi-jurisdictional platform gives us an advantage over independent dealerships. For example, we haveimplemented a common customer relations management tool in all of our dealerships to facilitate communications with customers before, during, and afterthe sale. We continue to invest in technologies designed to improve our sales process and employee productivity, all with the goal of improving the customerexperience. In addition, our higher margin parts and service operations are an integral part of our overall approach to customer service, providing anopportunity to foster ongoing relationships and improve customer loyalty. We continue to train our technicians and service advisors on processes andtechnologies to both educate our customers on their service needs and ensure that our customers continue to receive excellent service. We believe our partsand service business provides us with an opportunity for future growth due to improved customer retention, the added technical complexity of vehicles andthe increasing number of vehicles on the road.10Table of ContentsCentralize, streamline, and automate processesOur DSC management is responsible for our capital expenditures and determining our operating strategy, while the implementation of our operatingstrategy rests with our market-based management teams and each dealership management team based on the policies and procedures established by DSCmanagement. DSC management and our market-based management teams continually evaluate the financial and operating results of our dealerships, as wellas each dealership's geographical location, and from time to time, make decisions to evaluate new technologies and/or processes to further enhance ouroperational performance. As part of our investment in our information technology ("IT") systems, we have deployed a common dealer management system("DMS"). We believe a single DMS provides the foundation for future efficiencies and creates a more efficient retail operation. We consolidate financial,accounting, and operational data received from our dealerships through customized financial products. Our IT approach enables us to efficiently integrateand aggregate information from our dealerships. Through the combination of a common DMS and our corporate IT products, management has access to thefinancial, accounting, and operational data at various levels of the organization. In addition, we are in the process of centralizing business processesthroughout our organization which we expect will deliver future cost synergies and enhanced performance.Leverage our scale and cost structure to improve our operating efficienciesWe are positioned to leverage our significant scale so that we are able to achieve competitive operating margins by centralizing and streamlining variousback-office functions. We are able to improve financial controls and lower servicing costs by maintaining key store-level accounting and administrativeactivities in our shared service centers, and we leverage our scale to reduce costs related to purchasing certain equipment, supplies, and services throughnational vendor relationships.Deploy Capital to Highest Risk Adjusted ReturnsOur capital allocation decisions are made within the context of maintaining sufficient liquidity and a prudent capital structure. We believe our cashposition and borrowing capacity, combined with our current and expected future cash generation capability, provides us with financial flexibility to enhanceshareholder value through capital deployment.Seek opportunities to further invest in our business; acquire real estate currently being operated under lease agreementsWe continually evaluate our existing dealership network and seek to make strategic investments which will increase the capacity of our dealerships andimprove the customer experience. In addition, we continue to execute on our strategy of selectively acquiring our leased properties where financing ratesmake it attractive to be an owner.Evaluate opportunities to refine our dealership portfolio, including acquiring value added operating assets and dealershipsWe evaluate dealership acquisition opportunities based on market position and geography, brand representation and availability, key personnel, andother factors. We believe our financial position, IT systems, management structure, and experience, position us to efficiently and opportunistically complete,integrate, and benefit from dealership acquisitions. We also evaluate the financial and operating results of our owned dealerships, as well as each dealership'sgeographical location, and based on various financial and strategic rationales, may make decisions to dispose of dealerships to refine our dealershipportfolio.Return capital to stockholders through share repurchase programs and/or dividendsOur share repurchase decisions are based on many factors, including a comparison of the market price of our common stock versus our view of its intrinsicvalue.CompetitionThe automotive retail and service industry is highly competitive with respect to price, service, location, and selection. For new vehicle sales, ourdealerships compete with other franchised dealerships, primarily in their regions. Our new vehicle store competitors also have franchise agreements with thevarious vehicle manufacturers, and as such, generally obtain new vehicle inventory from vehicle manufacturers on the same terms as us. The franchiseagreements grant the franchised dealership a non-exclusive right to sell the manufacturer's (or distributor's) brand of vehicles and offer related parts andservice within a specified market area. State automotive franchise laws restrict competitors from relocating their stores or establishing new stores of aparticular vehicle brand within a specified area that is served by our dealership of the same vehicle brand. We rely on our advertising and merchandising,sales expertise, service reputation, strong local branding, and location of our dealerships to assist in the sale of new vehicles.Our used vehicle operations compete with other franchised dealerships, non-franchised automotive dealerships, regional and national vehicle rentalcompanies, and internet-based vehicle brokers for the supply and resale of used vehicles.11Table of ContentsWe compete with other franchised dealerships to perform warranty and recall-related repairs and with other franchised dealerships and independentservice centers for non-warranty repair and maintenance services. We compete with other automobile dealers, service stores, and auto parts retailers in ourparts operations. We believe that we have a competitive advantage in parts and service sales due to our ability to use factory-approved replacement parts, ourcompetitive prices, our familiarity with manufacturer brands and models, and the quality of our customer service.We compete with a broad range of financial institutions in arranging financing for our customers vehicle purchases. In addition, many financialinstitutions are now offering F&I products through the internet, which has increased competition and may reduce our profits on certain of these items. Webelieve the principal competitive factors in providing financing are convenience, interest rates, and flexibility in contract length.SeasonalityThe automobile industry has historically been subject to seasonal variations. Demand for new vehicles is generally highest during the second, third, andfourth quarters of each year and, accordingly, we expect our revenues and operating results to generally be higher during these periods. In addition, wetypically experience higher sales of luxury vehicles in the fourth quarter, which have higher average selling prices and gross profit per vehicle retailed.Revenues and operating results may be impacted significantly from quarter to quarter by changing economic conditions, vehicle manufacturer incentiveprograms, or adverse weather events.Dealer and Framework AgreementsEach of our dealerships operate pursuant to a dealer agreement between the dealership and the manufacturer (or in some cases the distributor) of eachbrand of new vehicles sold and/or serviced at the dealership. The dealer agreements grant the franchised dealership a non-exclusive right to sell themanufacturer's (or distributor's) brand of vehicles and offer related parts and service within a specified market area. Each dealer agreement also grants ourdealerships the right to use the manufacturer's trademarks and service marks in connection with the dealerships operations and they also impose numerousoperational requirements related to, among other things, the following:•inventories of new vehicles and manufacturer replacement parts; •maintenance of minimum net working capital requirements, and in some cases, minimum net worth requirements; •achievement of certain sales and customer satisfaction targets; •advertising and marketing practices; •facilities and signs; •products offered to customers; •dealership management; •personnel training; •information systems;•geographic market, including but not limited to requirements to meet sales and service targets within an assigned market area, geographiclimitations on where the dealership may locate or advertise, and restrictions on the export of vehicles; and •dealership monthly and annual financial reporting.Our dealer agreements are for various terms, ranging from one year to indefinite. We expect that we will be able to renew expiring agreements in theordinary course of business. However, typical dealer agreements give the manufacturer the right to terminate or the option of non-renewal of the dealeragreement under certain circumstances, subject to applicable state franchise laws, including:•insolvency or bankruptcy of the dealership;•failure to adequately operate the dealership or to maintain required capitalization levels;•impairment of the reputation or financial condition of the dealership;12Table of Contents•change of ownership or management of the dealership without manufacturer consent;•certain extraordinary corporate transactions such as a merger or sale of all or substantially all of our assets without manufacturer consent;•failure to complete facility upgrades required by the manufacturer or agreed to by the dealer;•failure to maintain any license, permits or authorization required to conduct the dealership's business;•conviction of a dealer/manager or owner for certain crimes; or•material breach of other provisions of a dealer agreement.Notwithstanding the terms of any dealer agreement, the states in which we operate have automotive dealership franchise laws that provide that it isunlawful for a manufacturer to terminate or not renew a franchise unless "good cause" exists.In addition to requirements under dealer agreements, we are subject to provisions contained in supplemental agreements, framework agreements, dealeraddenda and manufacturers' policies, collectively referred to as "framework agreements." Framework agreements impose requirements on us in addition tothose described above. Such agreements also define other standards and limitations, including:•company-wide performance criteria;•capitalization requirements;•limitations on changes in our ownership or management;•limitations on the number of a particular manufacturer's franchises owned by us;•restrictions or prohibitions on our ability to pledge the stock of certain of our subsidiaries; and•conditions for consent to proposed acquisitions, including sales and customer satisfaction criteria, as well as limitations on the total local, regional,and national market share percentage that would be represented by a particular manufacturer's franchises owned by us after giving effect to aproposed acquisition.Some dealer agreements and framework agreements grant the manufacturer the right to terminate or not renew our dealer and framework agreements, or tocompel us to divest our dealerships, for a number of reasons, including default under the agreement, any unapproved change of control (which specificchanges vary from manufacturer to manufacturer, but which include material changes in the composition of our Board of Directors during a specified timeperiod, the acquisition of 5% or more of our voting stock by another vehicle manufacturer or distributor, the acquisition of 20% or more of our voting stockby third parties, and the acquisition of an ownership interest sufficient to direct or influence management and policies), or certain other unapproved events(including certain extraordinary corporate transactions such as a merger or sale of all or substantially all of our assets). Triggers of the clauses are often basedupon actions by our stockholders and are generally outside of our control. Some of our dealer agreements and framework agreements also give themanufacturer a right of first refusal if we propose to sell any dealership representing the manufacturer's brands to a third-party. These agreements may alsoattempt to limit the protections available under applicable state laws and require us to resolve disputes through binding arbitration. For additionalinformation, please refer to the risk factor captioned "We are dependent upon our relationships with the manufacturers of vehicles that we sell and are subjectto restrictions imposed by, and significant influence from, these vehicle manufacturers. Any of these restrictions or any changes or deterioration of theserelationships could have a material adverse effect on our business, financial condition, results of operations, and cash flows."Our framework agreements with certain manufacturers contain provisions that, among other things, attempt to limit the protections available to dealersunder these laws. If these laws are repealed in the states in which we operate, manufacturers may be able to terminate our franchises without providingadvance notice, an opportunity to cure or a showing of good cause. Without the protection of these laws, it may also be more difficult for us to renew ourdealer agreements upon expiration.Changes in laws that provide manufacturers the ability to terminate our dealer agreements could materially adversely affect our business, financialcondition and results of operations. Furthermore, if a manufacturer seeks protection from creditors in bankruptcy, courts have held that the federal bankruptcylaws may supersede these laws, resulting in either the termination, non-renewal or rejection of franchises by such manufacturers, which, in turn, couldmaterially adversely affect our business, financial condition, and results of operations. For additional information, please refer to the risk factor captioned "Ifstate laws that protect automotive retailers are repealed, weakened, or superseded by our framework agreements with manufacturers, our13Table of Contentsdealerships will be more susceptible to termination, non-renewal or renegotiation of their dealer agreements which could have a materially adverse effect onour business, financial condition, and results of operations."RegulationsWe operate in a highly regulated industry. In every state in which we operate, we must obtain one or more licenses issued by state regulatory authoritiesin order to operate our business. In addition, we are subject to numerous complex federal, state, and local laws regulating the conduct of our business,including those relating to our sales, operations, finance and insurance, advertising, and employment practices. These laws and regulations include statefranchise laws and regulations, consumer protection laws, privacy laws, anti-money laundering laws, and other extensive laws and regulations applicable tonew and used motor vehicle dealers. These laws also include federal and state wage and hour, anti-discrimination, and other laws governing employmentpractices.Our financing activities with customers are subject to federal truth-in-lending, consumer leasing, and equal credit opportunity laws and regulations, aswell as state and local motor vehicle finance laws, leasing laws, installment finance laws, usury laws, and other installment state and leasing laws andregulations. Some U.S. states regulate fees and charges that may be paid as a result of vehicle sales. Claims arising out of actual or alleged violations of lawmay be asserted against us or our stores by individuals or governmental entities and may expose us to significant damages, fines or other penalties, includingrevocation or suspension of our license to conduct store operations.The Consumer Financial Protection Bureau ("CFPB") has broad regulatory powers under the Dodd-Frank Wall Street Reform and Consumer ProtectionAct. Although automotive dealers are generally excluded from the CFPB's regulatory authority, the CFPB has announced its intention to regulate automotivefinancing activities through its regulation of automotive finance companies and other financial institutions that service the automotive industry. In addition,the CFPB has announced its intention to regulate the sale of finance and insurance products. The Federal Trade Commission has certain regulatory authorityover automotive dealers and has implemented an enforcement initiative relating to the advertising practices of automotive dealers. For additionalinformation, please refer to the risk factor captioned "Our operations are subject to extensive governmental laws and regulations. If we are found to be inpurported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect ouroperations, our business, our reputation, financial condition, results of operations, and prospects could suffer."Environmental, Health and Safety Laws and RegulationsWe are subject to a wide range of environmental laws and regulations, including those governing discharges into water, air emissions, storage ofpetroleum substances and chemicals, handling and disposal of solid and hazardous wastes, remediation of various types of contamination, and otherwiserelating to health, safety and protection of the environment. For example and without creating an exhaustive list: as with automobile dealerships generally,and service and parts and collision repair center operations in particular, our business involves the generation, use, handling, and disposal of hazardous ortoxic substances and wastes and the use of above ground and underground storage tanks (ASTs and USTs). Operations involving the management of wastesand the use of ASTs and USTs are subject to requirements of the Resource Conservation and Recovery Act, analogous state statutes, and their implementingregulations. Pursuant to these laws, federal and state environmental agencies have established approved methods for handling, storing, treating, transporting,and disposing of regulated substances and wastes with which we must comply. We also are subject to laws and regulations governing responses to anyreleases of contamination at or from our facilities or at facilities that receive our hazardous wastes for treatment or disposal. The ComprehensiveEnvironmental Response, Compensation and Liability Act ("CERCLA") and similar state statutes, can impose strict and joint and several liability for cleanupcosts on those that are considered to have contributed to the release of a "hazardous substance." We also are subject to the Clean Water Act, analogous statestatutes, and their implementing regulations which, among other things, prohibit discharges of pollutants into regulated waters without permits, requirecontainment of potential discharges of oil or hazardous substances, and require preparation of spill contingency plans. Currently, we are not aware of anynon-compliance with these or any other environmental requirements applicable to our operations, nor are we aware of any material remedial liabilities towhich we are subject.We have incurred, and will continue to incur, costs and capital expenditures to comply with these laws and regulations and to obtain and maintain allnecessary environmental permits. We believe that our operations currently are being conducted in substantial compliance with all applicable environmentallaws. From time to time, we may experience incidents and encounter conditions that are not in compliance with environmental laws and regulations. Weoccasionally receive notices from environmental agencies regarding potential violations of environmental laws or regulations. In such cases, we work withthe agencies to address any issues and to implement appropriate corrective action when necessary. However, none of our dealerships have been subject to anymaterial environmental liabilities in the past, nor do we know of any fact or condition that would result in any material environmental liabilities beingincurred in the future.14Table of ContentsEmployeesAs of December 31, 2018, we employed approximately 8,200 full-time and part-time employees, none of whom were covered by collective bargainingagreements. We believe we have good relations with our employees.InsuranceDue to the inherent risk in the automotive retail industry, our operations expose us to a variety of liabilities. These risks generally require significantlevels of insurance covering liabilities such as claims from employees, customers, or other third parties, for personal injury and property related lossesoccurring in the course of our operations. We may be subject to fines and civil and criminal penalties in connection with alleged violations of federal andstate laws or regulatory environments. Further, the automobile retail industry is subject to substantial risk of real and personal property loss, due to thesignificant concentration of property values located at the various dealership locations.Our insurance programs include multiple umbrella and excess policies with a total per occurrence and aggregate limit of $100.0 million. We are self-insured for certain employee medical claims and maintain stop loss insurance for individual claims. We have large deductible insurance programs in place forworkers compensation, property, and general liability claims.Provisions for retained losses and deductibles are made by charges to expense based upon periodic evaluations of the estimated ultimate liabilities onreported and unreported claims. The insurance companies that underwrite our insurance require we secure certain of our obligations for deductiblereimbursements with collateral. Our collateral requirements are set by the insurance companies and, to date, have been satisfied by posting surety bonds,letters of credit, and/or cash deposits. Our collateral requirements may change from time to time based on, among other things, our claims experience.Item 1A. Risk FactorsIn addition to the other information contained, referred to or incorporated by reference into this report, you should consider carefully the following factorswhen evaluating our business and before making an investment decision. Our business, operations, ability to implement our strategy, reputation, results ofoperations, financial condition, cash flows, and prospects may be materially adversely affected by the risks described below. In addition, other risks oruncertainties not presently known to us or that we currently do not deem material could arise, any of which could also materially adversely affect us.The automotive retail industry is sensitive to unfavorable changes in general economic conditions and various other factors that could affect demandfor our products and services, which could have a material adverse effect on our business, our ability to implement our strategy, and our results ofoperations.Our future performance will be impacted by general economic conditions including: changes in employment levels; consumer demand, preferences andconfidence levels; the availability and cost of credit; fuel prices; levels of discretionary personal income; and interest rates. We also are subject to economic,competitive, and other conditions prevailing in the various markets in which we operate, even if those conditions are not prominent nationally.Retail vehicle sales are cyclical and historically have experienced periodic downturns characterized by oversupply and weak demand, which could resultin a need for us to lower the prices at which we sell vehicles, which would reduce our revenue per vehicle sold and our margins. Additionally, a shift inconsumer's vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenues, margins and results ofoperations.Changes in general economic conditions may make it difficult for us to execute our business strategy. In such an event, we may be required to enter intocertain transactions in order to generate additional cash, which may include, but not be limited to, selling certain of our dealerships or other assets orincreasing borrowings under our existing, or any future, credit facilities. There can be no assurance that, if necessary, we would be able to enter into any suchtransactions in a timely manner or on reasonable terms, if at all. Furthermore, in the event we were required to sell dealership assets, the sale of any materialportion of such assets could have a material adverse effect on our revenue and profitability.Adverse conditions affecting one or more of the vehicle manufacturers with which we hold franchises or their inability to deliver a desirable mix ofvehicles that our consumers demand, could have a material adverse effect on our business, results of operations, financial condition, and cash flows.Historically, we have generated most of our revenue through new vehicle sales, and new vehicle sales also tend to lead to sales of higher-margin productsand services, such as finance and insurance products and vehicle-related parts and service. As a result, our profitability is dependent to a great extent onvarious aspects of vehicle manufacturers' operations, many of which are outside of our control. Our ability to sell new vehicles is dependent on manufacturers'ability to design and produce, and willingness to allocate and deliver to our dealerships, a desirable mix of popular new vehicles that consumers demand.Popular15Table of Contentsvehicles may often be difficult to obtain from manufacturers for a number of reasons, including the fact that manufacturers generally allocate their vehicles todealerships based on sales history and capital expenditures associated with such dealerships. Further, if a manufacturer fails to produce desirable vehicles ordevelops a reputation for producing undesirable vehicles or produces vehicles that do not comply with applicable laws or government regulations, and weown dealerships which sell that manufacturer's vehicles, our revenues from those dealerships could be adversely affected as consumers shift their vehiclepurchases away from that brand.Although we seek to limit our dependence on any one vehicle manufacturer, there can be no assurance the brand mix allocated and delivered to ourdealerships by the manufacturers will be appropriate or sufficiently diverse, to protect us from a significant decline in the desirability of vehiclesmanufactured by a particular manufacturer or disruptions in a manufacturer's ability to produce vehicles. For the year ended December 31, 2018,manufacturers representing 5% or more of our revenues from new vehicle sales were as follows:Manufacturer (Vehicle Brands): % of TotalNew VehicleRevenuesAmerican Honda Motor Co., Inc. (Honda and Acura) 23.7%Toyota Motor Sales, U.S.A., Inc. (Toyota and Lexus) 18.4%Nissan North America, Inc. (Nissan and Infiniti) 14.4%Ford Motor Company (Ford and Lincoln) 11.1%Mercedes-Benz USA, LLC (Mercedes-Benz, smart and Sprinter) 6.5%BMW of North America, LLC (BMW and Mini) 5.6%Similar to automotive retailers, vehicle manufacturers may be affected by the long-term U.S. and international economic climate. In addition, we remainvulnerable to other matters that may impact the manufacturers of the vehicles we sell, many of which are outside of our control, including: (i) changes in theirrespective financial condition; (ii) changes in their respective marketing efforts; (iii) changes in their respective reputation; (iv) manufacturer and otherproduct defects, including recalls; (v) changes in their respective management; (vi) disruptions in the production and delivery of vehicles and parts due tonatural disasters or other reasons; and (vii) issues with respect to labor relations. Our business is highly dependent on consumer demand and brandpreferences for our manufacturers products. Manufacturer recall campaigns are a common occurrence that have accelerated in frequency and scope over thelast several years. Manufacturer recall campaigns could adversely affect our new and used vehicle sales or customer residual trade-in valuations, could causeus to temporarily remove vehicles from our inventory, could force us to incur increased costs, and could expose us to litigation and adverse publicity relatedto the sale of recalled vehicles, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. Vehiclemanufacturers that produce vehicles outside of the U.S. are subject to additional risks including changes in quotas, tariffs or duties, fluctuations in foreigncurrency exchange rates, regulations governing imports and the costs related thereto, and foreign governmental regulations.Adverse conditions that materially affect a vehicle manufacturer and its ability to profitably design, market, produce or distribute desirable new vehiclescould in turn materially adversely affect our ability to (i) sell vehicles produced by that manufacturer, (ii) obtain or finance our new vehicle inventories, (iii)access or benefit from manufacturer financial assistance programs, (iv) collect in full or on a timely basis any amounts due therefrom, and/or (v) obtain othergoods and services provided by the impacted manufacturer. In addition, we depend on manufacturers' ability to design, produce, and supply parts to us andany failure to do so could have a material adverse effect on our parts and services business. Our business, results of operations, financial condition, and cashflows could be materially adversely affected as a result of any event that has an adverse effect on any vehicle manufacturer.In addition, if a vehicle manufacturer's financial condition worsens and it seeks protection from creditors in bankruptcy or similar proceedings, orotherwise under the laws of its jurisdiction of organization, (i) the manufacturer could seek to terminate or reject all or certain of our franchises, (ii) if themanufacturer is successful in terminating all or certain of our franchises, we may not receive adequate compensation for those franchises, (iii) our cost toobtain financing for our new vehicle inventory may increase or no longer be available from such manufacturer's captive finance subsidiary, (iv) consumerdemand for such manufacturer's products could be materially adversely affected, especially if costs related to improving such manufacturer's financialcondition are factored into the price of its products, (v) there may be a significant disruption in the availability of consumer credit to purchase or lease thatmanufacturer's vehicles or negative changes in the terms of such financing, which may negatively impact our sales, or (vi) there may be a reduction in thevalue of receivables and inventory associated with that manufacturer, among other things. The occurrence of any one or more of these events could have amaterial adverse effect on our business, results of operations, financial condition, and cash flows.16Table of ContentsOur 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.As of December 31, 2018, we had total debt of $910.1 million, which excludes total floor plan notes payable of $966.1 million. We have the ability toincur substantial additional debt in the future to finance, among other things, acquisitions, working capital and capital expenditures, subject in each case tothe restrictions contained in our debt instruments and other agreements existing at the time such indebtedness is incurred.Our debt service obligations could have important consequences to us for the foreseeable future, including the following: (i) our ability to obtainadditional financing for acquisitions, capital expenditures, working capital or other general corporate purposes may be impaired; (ii) a substantial portion ofour 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 forour operations and other corporate purposes; (iii) some of our borrowings are and will continue to be at variable rates of interest, which exposes us to risks ofinterest rate increases; and (iv) we may be or become substantially more leveraged than some of our competitors, which may place us at a relative competitivedisadvantage and make us more vulnerable to changes in market conditions and governmental regulations.In addition to our ability to incur additional debt in the future, there are operating and financial restrictions and covenants, such as leverage covenants, incertain of our debt and mortgage agreements, including the agreement governing our senior credit facility, the indenture governing our senior notes and ourmortgage agreements and related mortgage guarantees, as well as certain other agreements to which we are a party that may adversely affect our ability tofinance our future operations or capital needs or to pursue certain business activities. These limit, among other things, our ability to incur certain additionaldebt, create certain liens or other encumbrances, and make certain payments (including dividends and repurchases of our common stock and for investments).Certain of these agreements also require us to maintain compliance with certain financial ratios.Our failure to comply with any of these covenants in the future could constitute a default under the relevant agreement, which could, depending on therelevant agreement, (i) entitle the creditors under such agreement to terminate our ability to borrow under the relevant agreement and accelerate ourobligations to repay outstanding borrowings; (ii) require us to repay those borrowings; (iii) entitle the creditors under such agreement to foreclose on theproperty securing the relevant indebtedness; or (iv) prevent us from making debt service payments on certain of our other indebtedness, any of which wouldhave a material adverse effect on our business, financial condition, results of operations or cash flows. 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. There can be no assurance thatour 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 feesand 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 covenantsthat 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 ourinability 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. Manufacturers may also have the right torestrict our ability to provide guarantees of our operating companies, pledges of the capital stock of our subsidiaries and liens on our assets, which couldmaterially adversely effect our ability to obtain financing for our business and operations on favorable terms or at desired levels, if at all.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 amanner in which we otherwise would, absent such limitations, which could materially adversely affect our business, financial condition, results of operationsand cash flows.Our business, financial condition, and results of operations may be materially adversely affected by increases in interest rates.We generally finance our purchases of new vehicle inventory, have the ability to finance the purchases of used vehicle inventory, and have theavailability to borrow funds for working capital under our senior secured credit facilities that charge interest at variable rates. Therefore, our interest expensefrom variable rate debt will rise with increases in interest rates. In addition, a significant rise in interest rates may also have the effect of depressing demand inthe interest rate sensitive aspects of our business, particularly new and used vehicle sales and the related profit margins and F&I revenue per vehicle, becausemost of our customers finance their vehicle purchases. As a result, rising interest rates may have the effect of simultaneously increasing our capital costs andreducing our revenues. Given our variable interest rate debt and floor plan notes payable17Table of Contentsoutstanding as of December 31, 2018, each one percent increase in market interest rates would increase our total annual interest expense by as much as $10.0million. When considered in connection with reduced expected sales as and if interest rates increase, any such increase could materially adversely affect ourbusiness, financial condition and results of operations.Our vehicle sales, financial condition, and results of operations may be materially adversely affected by changes in costs or availability of consumerfinancing.The majority of vehicles purchased by our customers are financed. Reductions in the availability of credit to consumers have contributed to declines inour vehicle sales in past periods. Reductions in available consumer credit or increased costs of that credit, could result in a decline in our vehicle sales, whichwould have a material adverse effect on our financial condition and results of operations.Lenders that have historically provided financing to those buyers who, for various reasons, do not have access to traditional financing, including thosebuyers who have a poor credit history or lack the down payment necessary to purchase a vehicle, are often referred to as subprime lenders. If marketconditions cause subprime lenders to tighten credit standards, or if interest rates increase, the ability to obtain financing from subprime lenders for theseconsumers to purchase vehicles could become limited, resulting in a decline in our vehicle sales, which in turn, could have a material adverse effect on ourfinancial condition and results of operations.Substantial competition in automobile sales and services may have a material adverse effect on our results of operations.The automotive retail and service industry is highly competitive with respect to price, service, location, and selection. Our competition includes: (i)franchised automobile dealerships in our markets that sell the same or similar new and used vehicles; (ii) privately negotiated sales of used vehicles; (iii)other used vehicle retailers, including regional and national vehicle rental companies; (iv) internet-based used vehicle brokers that sell used vehicles toconsumers; (v) service center and parts supply chain stores; and (vi) independent service and repair shops.We do not have any cost advantage over other retailers in purchasing new vehicles from manufacturers. We typically rely on our advertising,merchandising, sales expertise, service reputation, strong local branding, and dealership location to sell new vehicles. Because our dealer agreements onlygrant us a non-exclusive right to sell a manufacturer's product within a specified market area, our revenues, gross profit and overall profitability may bematerially adversely affected if competing dealerships expand their market share. Further, our vehicle manufacturers may decide to award additionalfranchises in our markets in ways that negatively impact our sales.The internet has become a significant part of the advertising and sales process in our industry. Customers are using the internet to shop, and compareprices, for new and used vehicles, automotive repair and maintenance services, finance and insurance products, and other automotive products. If we areunable to effectively use the internet to attract customers to our own on-line channels and mobile applications, and, in turn, to our stores, our business,financial condition, results of operations, and cash flows could be materially adversely affected. Additionally, the growing use of social media by consumersincreases the speed and extent that information and opinions can be shared, and negative posts or comments on social media about us or any of our stores,could damage our reputation and brand names, which could have a material adverse effect on our business, financial condition, results of operations, and cashflows.Additionally, if one or more companies are permitted to circumvent the state franchise laws of several states in the United States thereby permitting themto sell their new vehicles without the requirements of establishing a dealer-network, they may be able to have a competitive advantage over the traditionaldealers, which could have a material adverse effect on our sales in those states.We are dependent upon our relationships with the manufacturers of vehicles that we sell and are subject to restrictions imposed by, and significantinfluence from, these vehicle manufacturers. Any of these restrictions or any changes or deterioration of these relationships could have a materialadverse effect on our business, financial condition, results of operations, and cash flows.We are dependent on our relationships with the manufacturers of the vehicles we sell, which have the ability to exercise a great deal of control andinfluence over our day-to-day operations, as a result of the terms of our dealer, framework, and related agreements. We may obtain new vehicles frommanufacturers, service vehicles, sell new vehicles, and display vehicle manufacturers' trademarks only to the extent permitted under these agreements. Theterms of these agreements may conflict with our interests and objectives and may impose limitations on key aspects of our operations, including acquisitionstrategy and capital spending.For example, manufacturers can set performance standards with respect to sales volume, sales effectiveness and customer satisfaction, and require us toobtain manufacturer consent before we can acquire dealerships selling a manufacturer's18Table of Contentsautomobiles. From time to time, we may be precluded under agreements with certain manufacturers from acquiring additional franchises, or subject to otheradverse actions, to the extent we are not meeting certain performance criteria at our existing stores (with respect to matters such as sales volume, customersatisfaction and sales effectiveness) until our performance improves in accordance with the agreements, subject to applicable state franchise laws. In addition,many vehicle manufacturers place limits on the total number of franchises that any group of affiliated dealerships may own and certain manufacturers placelimits on the number of franchises or share of total brand vehicle sales that may be maintained by an affiliated dealership group on a national, regional orlocal basis, as well as limits on store ownership in contiguous markets. If we reach any of these limits, we may be prevented from making further acquisitions,which could adversely affect our future growth. We cannot provide assurance that manufacturers will approve future acquisitions timely, if at all, which couldsignificantly impair the execution of our acquisition strategy.In addition, certain manufacturers use a dealership's manufacturer-determined customer satisfaction index ("CSI") score as a factor governing participationin incentive programs. To the extent we do not meet minimum score requirements, our future payments may be materially reduced or we may be precludedfrom receiving certain incentives, which could materially adversely affect our business, financial condition, results of operations and cash flows.Manufacturers also typically establish facilities and minimum capital requirements for dealerships on a case-by-case basis. In certain circumstances,including as a condition to obtaining consent to a proposed acquisition, a manufacturer may require us to remodel, upgrade or move our facilities, andcapitalize the subject dealership at levels we would not otherwise choose to fund, causing us to divert our financial resources away from uses thatmanagement believes may be of higher long-term value to us. Delays in obtaining, or failing to obtain, manufacturer consent, would impede our ability toexecute acquisitions that we believe would integrate well with our overall strategy and limit our ability to expand our business.Manufacturers can also establish new franchises or relocate existing franchises, subject to applicable state franchise laws. The establishment or relocationof franchises in our markets could have a material adverse effect on the business, financial condition and results of operations of our dealerships in the marketin which the action is taken.Manufacturers may also limit our ability to divest one or more of our dealerships in a timely manner or at all. Most of our dealer agreements provide themanufacturer with a right of first refusal to purchase any of the manufacturer's franchises we seek to sell. Divestitures may also require manufacturer consentand failure to obtain consent would require us to find another potential buyer or wait until the buyer is able to meet the requirements of the manufacturer. Adelay in the sale of a dealership could have a negative impact on our business, financial condition, results of operations, and cash flows.Manufacturers may terminate or may not renew our dealer and framework agreements, or may compel us to divest our dealerships, for a number of reasons,including default under the agreement, any unapproved change of control (which specific changes vary from manufacturer to manufacturer, but whichinclude material changes in the composition of our Board of Directors during a specified time period, the acquisition of 5% or more of our voting stock byanother vehicle manufacturer or distributor, the acquisition of 20% or more of our voting stock by third parties, and the acquisition of an ownership interestsufficient to direct or influence management and policies), or certain other unapproved events (including certain extraordinary corporate transactions such asa merger or sale of all or substantially all of our assets). Triggers of these clauses are often based upon actions by our stockholders and are generally outside ofour control. Restrictions on any unapproved changes of ownership or management may adversely impact our value, as they may prevent or deter prospectiveacquirers from gaining control of us. In addition, actions taken by a manufacturer to exploit its bargaining position in negotiating the terms of renewals offranchise agreements or otherwise, could also have a material adverse effect on our revenues and profitability.There can be no assurances that we will be able to renew our dealer and framework agreements on a timely basis, on acceptable terms, or at all. Ourbusiness, financial condition, and results of operations may be materially adversely affected to the extent that our rights become compromised or ouroperations are restricted due to the terms of our dealer or framework agreements or if we lose franchises representing a significant percentage of our revenuesdue to termination or failure to renew such agreements.If vehicle manufacturers reduce or discontinue sales incentive, warranty or other promotional programs, our financial condition, results of operations,and cash flows may be materially adversely affected.We benefit from certain sales incentive, warranty, and other promotional programs of vehicle manufacturers that are intended to promote and support theirrespective new vehicle sales. Key incentive programs include: (i) customer rebates on new vehicles; (ii) dealer incentives on new vehicles; (iii) specialfinancing or leasing terms; (iv) warranties on new and used vehicles; and (v) sponsorship of used vehicle sales by authorized new vehicle dealers.19Table of ContentsVehicle manufacturers often make many changes to their incentive programs. Any reduction or discontinuation of manufacturers' incentive programs forany reason, including a supply and demand imbalance, may reduce our sales volume which, in turn, could have a material adverse effect on our results ofoperations, cash flows, and financial condition.If state laws that protect automotive retailers are repealed, weakened, or superseded by our framework agreements with manufacturers, ourdealerships will be more susceptible to termination, non-renewal, or renegotiation of their dealer agreements, which could have a material adverseeffect our business, financial condition, and results of operations.Applicable state laws generally provide that an automobile manufacturer may not terminate or refuse to renew a dealer agreement unless it has firstprovided the dealer with written notice setting forth "good cause" and stating the grounds for termination or non-renewal. Some state laws allow dealers tofile protests or petitions or allow them to attempt to comply with the manufacturer's criteria within a notice period to avoid the termination or non-renewal.Our framework agreements with certain manufacturers contain provisions that, among other things, attempt to limit the protections available to dealers underthese laws, and, though unsuccessful to date, manufacturers' ongoing lobbying efforts may lead to the repeal or revision of these laws. If these laws arerepealed in the states in which we operate, manufacturers may be able to terminate our franchises without providing advance notice, an opportunity to cure ora showing of good cause. Without the protection of these state laws, it may also be more difficult for us to renew our dealer agreements upon expiration.Changes in laws that provide manufacturers the ability to terminate our dealer agreements could materially adversely affect our business, financial condition,and results of operations. Furthermore, if a manufacturer seeks protection from creditors in bankruptcy, courts have held that the federal bankruptcy laws maysupersede the state laws that protect automotive retailers resulting in either the termination, non-renewal or rejection of franchises by such manufacturers,which, in turn, could materially adversely affect our business, financial condition, and results of operations.A failure of any of our information systems or those of our third-party service providers, or a data security breach with regard to personallyidentifiable information ("PII") about our customers or employees, could have a material adverse effect on our business, financial condition, results ofoperations, and cash flows.We depend on the efficient operation of our information systems and those of our third-party service providers. We rely on information systems at ourdealerships in all aspects of our sales and service efforts, as well in the preparation of our consolidated financial and operating data. All of our dealershipscurrently operate on a common DMS. Our business could be significantly disrupted if (i) the DMS fails to integrate with other third-party informationsystems, customer relations management tools or other software, or to the extent any of these systems become unavailable to us or fail to perform as designedfor an extended period of time, or (ii) our relationship with our DMS provider or any other third-party provider deteriorates. Additionally, any disruption toaccess and connectivity of our information systems due to natural disasters, power loss or other reasons could disrupt our business operations, impact salesand results of operations, expose us to customer or third-party claims, or result in adverse publicity.Additionally, in the ordinary course of business, we and our partners receive significant PII about our customers in order to complete the sale or service ofa vehicle and related products. We also receive PII from our employees. The regulatory environment surrounding information security and privacy isincreasingly demanding, with numerous state and federal regulations, as well as payment card industry and other vendor standards, governing the collectionand maintenance of PII from consumers and other individuals. We believe the automotive dealership industry is a particular target of identity thieves, as thereare numerous opportunities for a data security breach, including cyber-security breaches, burglary, lost or misplaced data, scams, or misappropriation of databy employees, vendors or unaffiliated third parties. Because of the increasing number and sophistication of cyber-attacks, and despite the security measureswe have in place and any additional measures we may implement or adopt in the future, our facilities and systems, and those of our third-party serviceproviders, could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts ofvandalism, and/or other events. Alleged or actual data security breaches can increase costs of doing business, negatively affect customer satisfaction andloyalty, expose us to negative publicity, individual claims or consumer class actions, administrative, civil or criminal investigations or actions, and infringeon proprietary information, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilitiesunder any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, our reputation,financial condition, results of operations, and prospects could suffer.The automotive retail industry, including our facilities and operations, is subject to a wide range of federal, state, and local laws and regulations, such asthose relating to motor vehicle sales, retail installment sales, leasing, finance and insurance, marketing, licensing, consumer protection, consumer privacy,escheatment, anti-money laundering, environmental, vehicle emissions and fuel economy, and health and safety. In addition, with respect to employmentpractices, we are subject to various20Table of Contentslaws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws. The violation of the laws or regulations towhich we are subject could result in administrative, civil, or criminal sanctions against us, which may include a cease and desist order against the subjectoperations or even revocation or suspension of our license to operate the subject business, as well as significant fines and penalties. Violation of certain lawsand regulations to which we are subject may also subject us to consumer class action or other lawsuits or governmental investigations and adverse publicity.We currently devote significant resources to comply with applicable federal, state, and local regulation of health, safety, environmental, zoning, and land useregulations, and we may need to spend additional time, effort, and money to keep our operations and existing or acquired facilities in compliance therewith.In addition, there is a risk that our employees could engage in misconduct that violates the laws or regulations to which we are subject. It is not alwayspossible to detect or deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in all cases. If any of ouremployees were to engage in misconduct or were to be accused of such misconduct, our business and reputation could be adversely affected.The Dodd-Frank Act, which was signed into law on July 21, 2010, established the CFPB, an independent federal agency funded by the United StatesFederal Reserve with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded,the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insuranceproducts, through its regulation of automotive finance companies and other financial institutions. In addition, the CFPB possesses supervisory authority withrespect to certain non-bank lenders, including automotive finance companies, participating in automotive financing. The Dodd-Frank Act also provided theFTC with new and expanded authority regarding automotive dealers. Since then, the FTC has been gathering information on consumer protection issuesthrough roundtables, public comments and consumer surveys. The FTC may exercise its additional rule-making authority to expand consumer protectionregulations relating to the sale, financing and leasing of motor vehicles. In 2014, the FTC implemented an enforcement initiative relating to the advertisingpractices of automotive dealers. In connection therewith, in May 2016, we signed a consent order with the FTC to settle allegations that in certaininstances our advertisements did not adequately disclose information about used vehicles with open safety recalls. Under the consent order, we did not agreeto make any payments or admit wrong-doing, but we did agree to make certain disclosures in marketing materials and at the point of sale and comply withcertain record-keeping obligations.Continued pressure from the CFPB, FTC, and other federal agencies could lead to significant changes in the manner that dealers are compensated forarranging customer financing, and while it is difficult to predict how any such changes might impact us, any adverse changes could have a material adverseimpact on our finance and insurance business and results of operations. Furthermore, we expect that new laws and regulations, particularly at the federal level,in other areas may be enacted, which could also materially adversely impact our business.Environmental laws and regulations govern, among other things, discharges into the air and water, storage of petroleum substances and chemicals, thehandling and disposal of solid and hazardous wastes, investigation and remediation of contamination, and otherwise protective of health, safety and theenvironment. Similar to many of our competitors, we have incurred and expect to continue to incur capital and operating expenditures and other costs tocomply with such federal and state statutes. In addition, we may become subject to broad liabilities arising out of contamination at our currently and formerlyowned or operated facilities, at locations to which hazardous substances were transported from such facilities, and at such locations related to entitiesformerly affiliated with us. For such potential liabilities, we believe we are entitled to indemnification from other entities. However, we cannot provideassurance that such entities will view their obligations as we do or will be able or willing to satisfy them. Failure to comply with applicable laws andregulations, or significant additional expenditures required to maintain compliance therewith, could have a material adverse effect on our business, results ofoperations, financial condition, or cash flows.A significant judgment against us or the imposition of a significant fine could have a material adverse effect on our business, financial condition andfuture prospects. We further expect that, from time to time, new laws and regulations, particularly in the environmental area will be enacted, and compliancewith such laws, or penalties for failure to comply, could significantly increase our costs. For example, vehicle manufacturers are subject to government-mandated fuel economy and greenhouse gas emission standards, which continue to change and become more stringent over time. Specifically, vehiclemanufacturers are subject to corporate average fuel economy standards ("CAFE") for passenger cars and light trucks. Failure of a manufacturer to developpassenger vehicles and light trucks that meet CAFE and/or greenhouse gas emission standards could subject the manufacturer to substantial penalties,increase the cost of vehicles sold to us, and adversely affect our ability to market and sell vehicles to meet consumer needs and desires, which could have amaterial adverse effect on our business, results of operations, financial condition, or cash flows.21Table of ContentsWe are subject to risks related to the provision of employee health care benefits, which could have a material adverse effect on our business, financialcondition, results of operations, and cash flows.We use a combination of insurance and self-insurance for health care plans. We record expenses under those plans based on estimates of the costs ofexpected claims, administrative costs, stop-loss insurance premiums, and expected health care trends. Actual costs under these plans are subject to variabilitythat is dependent upon participant enrollment, demographics, and the actual costs of claims made. Negative trends in any of these areas could cause us toincur additional unplanned health care costs, which could adversely impact our business, financial condition, results of operations, and cash flows. Inaddition, if enrollment in our health care plans increases significantly, the additional costs that we will incur may be significant enough to materially affectour business, financial condition, results of operations, and cash flows.We are, and expect to continue to be, subject to legal and administrative proceedings, which, if the outcomes are adverse to us, could have a materialadverse effect on our business, financial condition, results of operations, and cash flows.We are involved and expect to continue to be involved in numerous legal proceedings arising out of the conduct of our business, including litigationwith customers, employment-related lawsuits, class actions, purported class actions, and actions brought by governmental authorities. We do not believe thatthe ultimate resolution of any known matters will have a material adverse effect on our business, financial condition, results of operations, or cash flows.However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a materialadverse effect on our business, financial condition, results of operations and cash flows.Property loss or other uninsured liabilities could have a material adverse impact on our results of operations.We are subject to substantial risk of property loss due to the significant concentration of property at dealership locations, including vehicles and parts.We have historically experienced business interruptions from time to time at several of our dealerships, due to actual or threatened adverse weatherconditions or natural disasters, such as hurricanes, tornadoes, floods, and hail storms, or other extraordinary events. Concentration of property at dealershiplocations also makes the automotive retail business particularly vulnerable to theft, fraud, and misappropriation of assets. Illegal or unethical conduct byemployees, customers, vendors, and unaffiliated third parties can result in loss of assets, disrupt operations, impact brand reputation, jeopardize manufacturerand other relationships, result in the imposition of fines or penalties, and subject us to governmental investigations or lawsuits. While we maintain insuranceto protect against a number of losses, this insurance coverage often contains significant deductibles. In addition, we "self-insure" a portion of our potentialliabilities, meaning we do not carry insurance from a third-party for such liabilities, and are wholly responsible for any related losses including for certainpotential liabilities that some states prohibit the maintenance of insurance to protect against. In certain instances, our insurance may not fully cover a lossdepending on the applicable deductible or the magnitude and nature of the claim. Additionally, changes in the cost or availability of insurance in the futurecould substantially increase our costs to maintain our current level of coverage or could cause us to reduce our insurance coverage and increase our self-insured risks. To the extent we incur significant additional costs for insurance, suffer losses that are not covered by in-force insurance or suffer losses forwhich we are self-insured, our financial condition, results of operations, or cash flows could be materially adversely impacted.A decline in our credit rating or a general disruption in the credit markets could negatively impact our liquidity and ability to conduct our operations.A deterioration of our credit rating, or a general disruption in the credit markets, could limit our ability to obtain credit on terms acceptable to us, or at all.In addition, uncertain economic conditions or the re-pricing of certain credit risks may make it more difficult for us to obtain one or more types of funding inthe amounts, or at rates considered acceptable to us, at any given time. Our inability to access necessary or desirable funding, or to enter into certain relatedtransactions, at times and at costs deemed appropriate by us, could have a negative impact on our liquidity and our ability to conduct our operations. Any ofthese developments could also reduce the ability or willingness of the financial institutions that have extended credit commitments to us, or that haveentered into hedge or similar transactions with us, to fulfill their obligations to us, which also could have a material adverse effect on our liquidity and ourability to conduct our operations.We are subject to risks associated with imported product restrictions or limitations, foreign trade and currency valuations.Our business involves the sale of vehicles, parts or vehicles composed of parts that are manufactured outside the United States. As a result, our operationsare subject to risks of doing business outside of the United States and importing merchandise, including import duties, exchange rates, trade restrictions, workstoppages, natural or man-made disasters, and general political and socio-economic conditions in other countries. The United States or the countries fromwhich our products are imported may, from time to time, impose new quotas, duties, tariffs or other restrictions or limitations, or adjust presently prevailingquotas, duties, or tariffs. The Trump Administration is considering imposing up to 25% tariffs on imported vehicles or parts.22Table of ContentsThe imposition of new, or adjustments to prevailing, quotas, duties, tariffs or other restrictions or limitations could have a material adverse effect on ourbusiness, financial condition, results of operations and cash flows. Relative weakness of the U.S. dollar against foreign currencies in the future may result inan increase in costs to us and in the retail price of such vehicles or parts, which could discourage consumers from purchasing such vehicles and adverselyimpact our revenues and profitability.If we are unable to acquire and successfully integrate additional dealerships into our business, our revenue and earnings growth may be adverselyaffected.We believe that the automotive retailing industry is a mature industry whose sales are significantly impacted by the prevailing economic climate, bothnationally and in local markets. Accordingly, we believe that our future growth depends in part on our ability to manage expansion, control costs in ouroperations and acquire and effectively integrate acquired dealerships into our organization. When seeking to acquire other dealerships, we often competewith several other national, regional and local dealership groups, and other strategic and financial buyers, some of which may have greater financial resourcesthan us. Competition for attractive acquisition targets may result in fewer acquisition opportunities for us and we may have to forgo acquisition opportunitiesto the extent we cannot negotiate such acquisitions on acceptable terms.We also face additional risks commonly encountered with growth through acquisitions. These risks include, but are not limited to: (i) failing to obtainmanufacturers' consents to acquisitions of additional franchises; (ii) incurring significant transaction-related costs for both completed and failed acquisitions;(iii) incurring significantly higher capital expenditures and operating expenses; (iv) failing to integrate the operations and personnel of the acquireddealerships and impairing relationships with employees; (v) incorrectly valuing entities to be acquired or incurring undisclosed liabilities at acquireddealerships; (vi) disrupting our ongoing business and diverting our management resources to newly acquired dealerships; (vii) failing to achieve expectedperformance levels; and (viii) impairing relationships with manufacturers and customers as a result of changes in management.We may not adequately anticipate all the demands that our growth will impose on our personnel, procedures and structures, including our financial andreporting control systems, data processing systems, and management structure. Moreover, our failure to retain qualified management personnel at anyacquired dealership may increase the risks associated with integrating the acquired dealership. If we cannot adequately anticipate and respond to thesedemands, we may fail to realize acquisition synergies and our resources will be focused on incorporating new operations into our structure rather than onareas that may be more profitable.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 serviceour indebtedness 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 thefuture 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 serviceour indebtedness. In addition, many of our subsidiaries are required to comply with the provisions of franchise agreements, dealer agreements, otheragreements with manufacturers, mortgages, and credit facility providers. Many of these agreements contain minimum working capital or net worthrequirements, and are subject to change at least annually. Although the requirements contained in these agreements did not restrict our subsidiaries fromdistributing cash to us as of December 31, 2018, unexpected changes to our franchise agreements, dealer agreements, or other agreements with manufacturerscould 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 usto service our indebtedness and fund our ongoing operations, our financial condition may be materially adversely affected.Goodwill and manufacturer franchise rights comprise a significant portion of our total assets. We must test our goodwill and manufacturer franchiserights for impairment at least annually, which could result in a material, non-cash write-down of goodwill or manufacturer franchise rights and couldhave a material adverse effect on our results of operations and stockholders' equity.Our principal intangible assets are goodwill and our rights under our franchise agreements with vehicle manufacturers. Goodwill and indefinite-livedintangible assets, including manufacturer franchise rights, are subject to impairment assessments at least annually (or more frequently when events or changesin circumstances indicate that an impairment may have occurred), by applying a qualitative or quantitative assessment. A decrease in our marketcapitalization or profitability increases the risk of goodwill impairment. The fair value of our manufacturer franchise rights is determined by discounting asub-set of the projected cash flows at a dealership that we attribute to the value of the franchise. Changes to the business mix or declining cash flows in adealership increase the risk of impairment. An impairment loss could have a material adverse effect on our results of operations and stockholders' equity.During the years ended December 31, 2018 and 2017 , we recognized $3.7 million and $5.1 million, respectively, in pre-tax non-cash impairment chargesassociated with manufacturer franchise rights23Table of Contentsrecorded at certain dealerships. See Note 9 "Goodwill and Intangible Franchise Rights" of the Notes to Consolidated Financial Statements for moreinformation.Technological advances, including increases in ride sharing applications, electric vehicles and autonomous vehicles in the long-term could have amaterial adverse effect on our business.The automotive industry is predicted to experience change over the long-term. Shared vehicle services such as Uber and Lyft provide consumers withincreased choice in their personal mobility options. The effect of these and similar mobility options on the retail automotive industry is uncertain, and mayinclude lower levels of new vehicles sales. In addition, technological advances are facilitating the development of driverless vehicles. The eventual timing ofwidespread availability of driverless vehicles is uncertain due to regulatory requirements, additional technological requirements, and uncertain consumeracceptance of these vehicles. The effect of driverless vehicles on the automotive retail industry is uncertain and could include changes in the level of newand used vehicles sales, the price of new vehicles, and the role of franchised dealers, any of which could materially adversely affect our business, financialcondition and results of operations. The widespread adoption of electric and battery powered vehicles also could have a material adverse effect on theprofitability of our parts and service business.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe lease our corporate headquarters, which is located at 2905 Premiere Parkway, NW, Suite 300, Duluth, Georgia 30097. As of December 31, 2018, ouroperations encompassed 83 franchised dealership locations throughout nine states, and 25 collision repair centers as follows: Dealerships Collision Repair CentersDealership Group: Owned Leased Owned LeasedCoggin Automotive Group 12 4(a) 5 2Courtesy Autogroup 5 3 2 —Crown Automotive Company 13 5(b) 3 —David McDavid Auto Group 7 — 4 1Gray-Daniels Auto Family — 5(b) — 1Hare Automotive Group 3 — — 1Nalley Automotive Group 18 1 4 1Plaza Motor Company 6 1(b) — 1 Total 64 19 18 7________________________________________(a)Includes one dealership that leases a new vehicle facility and operates a separate used vehicle facility that is owned.(b)Includes one dealership location where we lease the underlying land but own the building facilities on that land.Item 3. Legal ProceedingsFrom time to time, we and our dealerships are involved and will continue to be involved in various claims relating to, and arising out of, our businessand our operations. These claims may involve, but are not limited to, financial and other audits by vehicle manufacturers or lenders, and certain federal, state,and local government authorities, which relate primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations ofviolations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants and (iii) payments made to government authorities relatingto federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, government proceedings,and other dispute resolution processes. Such claims, including class actions, can relate to, but are not limited to, the practice of charging administrative fees,employment-related matters, truth-in-lending practices, contractual disputes, actions brought by governmental authorities, and other matters. We evaluatepending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.We do not believe that the ultimate resolution of the claims we are involved in will have a material adverse effect on our business, results of operations,financial condition, cash flow and prospects.24Table of ContentsItem 4. Mine Safety DisclosuresNot applicable.25Table of ContentsPART IIItem 5.Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity SecuritiesOur common stock is traded on the New York Stock Exchange (the "NYSE") under the symbol "ABG." Quarterly information concerning our high and lowclosing sales price per share of our common stock as reported by the NYSE is as follows: High LowFiscal Year Ended December 31, 2017 First Quarter$69.45 $60.10Second Quarter63.65 52.25Third Quarter61.60 50.15Fourth Quarter$67.75 $55.05Fiscal Year Ended December 31, 2018 First Quarter$75.85 $63.25Second Quarter75.80 63.65Third Quarter77.40 67.35Fourth Quarter$71.51 $59.04We did not pay any dividends during any of these periods. On February 27, 2019, the last reported sale price of our common stock on the NYSE was$71.57 per share, and there were approximately 195 record holders of our common stock.Our credit agreement with Bank of America, N.A. ("Bank of America"), as administrative agent, and the other agents and lenders party thereto (the "2016Senior Credit Facility") and the Indenture governing our 6.0% Notes (the "Indenture") currently allow for us to make certain restricted payments, includingpayments to repurchase shares of our common stock, among other things, subject to our continued compliance with certain covenants. For additionalinformation, see the "Covenants and Defaults" section within "Liquidity and Capital Resources."Issuer Purchases of Equity SecuritiesThe following table sets forth information regarding common stock repurchases by the Company on a monthly basis during the three months endedDecember 31, 2018.Period Total Number ofSharesPurchased(1) Average PricePaid per Share Total Number of SharesPurchased as Part ofPublicly Announced Plansor Programs Approximate Dollar Value ofShares that May Yet bePurchased Under the Plans orProgram (in millions)(1)10/1/2018 - 10/31/2018 621,553 $63.48 621,201 $90.411/1/2018 - 11/30/2018 56,546 $67.12 56,482 $86.612/1/2018 - 12/31/2018 79,169 $64.76 79,169 $81.5(1) On January 30, 2014, our Board of Directors authorized our current share repurchase program (the "Repurchase Program"). We began 2018 with $53.3million in remaining share repurchase authorization. On both January 24, 2018 and October 19, 2018, our Board of Directors reset the authorization underour Repurchase Program to $100.0 million in the aggregate, for the repurchase of our common stock in open market transactions or privately negotiatedtransactions, from time to time. During the year ended December 31, 2018, we repurchased 1,580,910 shares of our common stock under the Repurchase Program for a total of $105.4million and an additional 71,434 shares of our common stock for $4.8 million from employees in connection with a net share settlement feature of employeeequity-based awards. As of December 31, 2018, we had remaining authorization to repurchase up to an additional $81.5 million of our common stock. Anyrepurchases will be subject to applicable limitations in our debt or other financing agreements that may be in existence from time to time.26Table of ContentsPERFORMANCE GRAPHThe following graph furnished by us shows the value as of December 31, 2018, of a $100 investment in our common stock made on December 31, 2012,as compared with similar investments based on (i) the value of the S&P 500 Index (with dividends reinvested) and (ii) the value of a market-weighted PeerGroup Index composed of the common stock of AutoNation, Inc.; Sonic Automotive, Inc.; Group 1 Automotive, Inc.; Penske Automotive Group, Inc.; andLithia Motors, Inc., in each case on a "total return" basis assuming the reinvestment of any dividends. The market-weighted Peer Group Index values werecalculated from the beginning of the performance period. The historical stock performance shown below is not necessarily indicative of future expectedperformance.The forgoing graph is not, and shall not be deemed to be, filed as part of our annual report on Form 10-K. Such graph is not, and will not be deemed, filedor incorporated by reference into any filing by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent specificallyincorporated by reference therein by us.27Table of ContentsItem 6. Selected Financial DataThe following table sets forth selected consolidated financial data as of and for the years ended December 31, 2018, 2017, 2016, 2015, and 2014. Certainreclassifications of amounts previously reported have been made to the accompanying income statement data and balance sheet data in order to conform tocurrent presentation. The following information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition andResults of Operations" and our Consolidated Financial Statements and the Notes thereto, included elsewhere in this annual report on Form 10-K. For the Years Ended December 31,Income Statement Data: 2018 2017 2016 2015 2014 (in millions, except per share data)REVENUE: New vehicle $3,788.7 $3,561.1 $3,611.9 $3,652.5 $3,230.6Used vehicle 1,972.4 1,834.1 1,876.4 1,931.7 1,741.5Parts and service 821.0 786.1 778.5 740.7 666.6Finance and insurance, net 292.3 275.2 261.0 263.4 229.0TOTAL REVENUE 6,874.4 6,456.5 6,527.8 6,588.3 5,867.7COST OF SALES 5,771.4 5,400.6 5,469.1 5,527.5 4,900.5GROSS PROFIT 1,103.0 1,055.9 1,058.7 1,060.8 967.2OPERATING EXPENSES: Selling, general, and administrative expenses 755.8 729.7 732.5 729.9 671.6Depreciation and amortization 33.7 32.1 30.7 29.5 26.4Franchise rights impairment 3.7 5.1 — — —Other operating expense (income), net (1.1) 1.3 (2.3) (0.2) 1.0INCOME FROM OPERATIONS 310.9 287.7 297.8 301.6 268.2OTHER EXPENSES (INCOME): Floor plan interest expense 32.5 22.7 19.3 16.1 12.4Other interest expense, net 53.1 53.9 53.1 44.0 38.9Swap interest expense 0.5 2.0 3.1 3.0 2.0Loss on extinguishment of long-term debt, net — — — — 31.9Gain on divestitures — — (45.5) (34.9) —Total other expenses, net 86.1 78.6 30.0 28.2 85.2INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX 224.8 209.1 267.8 273.4 183.0Income tax expense 56.8 70.0 100.6 104.0 71.0INCOME FROM CONTINUING OPERATIONS 168.0 139.1 167.2 169.4 112.0Discontinued operations, net of tax — — — (0.2) (0.4)NET INCOME $168.0 $139.1 $167.2 $169.2 $111.6Income from continuing operations per common share: Basic $8.36 $6.69 $7.43 $6.44 $3.75Diluted $8.28 $6.62 $7.40 $6.42 $3.7228Table of Contents As of December 31,Balance Sheet Data: 2018 2017 2016 2015 2014 (in millions)Working capital $249.7 $243.9 $227.5 $323.4 $225.4Inventories 1,067.6 826.0 894.9 917.2 886.0Total assets 2,695.4 2,356.7 2,336.1 2,294.1 2,178.0Floor plan notes payable 966.1 732.1 781.8 712.2 766.8Total debt 905.3 875.5 926.7 954.3 697.4Total shareholders' equity $473.2 $394.2 $279.7 $314.5 $444.929Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsOVERVIEWWe are one of the largest automotive retailers in the United States. As of December 31, 2018 we owned and operated 97 new vehicle franchises (83dealership locations), representing 29 brands of automobiles, and 25 collision centers, in 17 metropolitan markets, within nine states. Our stores offer anextensive range of automotive products and services, including new and used vehicles; parts and service, which include repair and maintenance services,replacement parts, and collision repair service; and finance and insurance products. As of December 31, 2018, our new vehicle revenue brand mix consistedof 47% imports, 33% luxury, and 20% domestic brands.Our revenues are derived primarily from: (i) the sale of new vehicles; (ii) the sale of used vehicles to individual retail customers ("used retail") and to otherdealers at auction ("wholesale") (the terms "used retail" and "wholesale" collectively referred to as "used"); (iii) repair and maintenance services, includingcollision repair, the sale of automotive replacement parts, and the reconditioning of used vehicles (collectively referred to as "parts and service"); and (iv) thearrangement of third-party vehicle financing and the sale of a number of vehicle protection products (defined below and collectively referred to as "F&I"). Weevaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle sold, our parts and service operations based onaggregate gross profit, and our F&I business based on F&I gross profit per vehicle sold.Our continued organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy, the continued strengthof our brand mix, and the production and allocation of desirable vehicles from the automobile manufacturers whose brands we sell. Our vehicle sales havehistorically fluctuated with product availability as well as local and national economic conditions, including consumer confidence, availability of consumercredit, fuel prices, and employment levels. Additionally, our ability to sell certain new and used vehicles can be negatively impacted by a number of factors,some of which are outside of our control and may include manufacturer imposed stop-sales or open safety recalls, primarily due to, but not limited to, vehiclesafety concerns or a vehicle's failure to meet environmental related requirements. Further, governmental actions, such as changes in, or the imposition of,tariffs or trade restrictions on imported goods, may adversely affect vehicle sales and depress demand. However, we believe that the impact on our business ofany future negative trends in new vehicle sales would be partially mitigated by (i) the expected relative stability of our parts and service operations over thelong-term, (ii) the variable nature of significant components of our cost structure, and (iii) our diversified brand and geographic mix.The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during 2018 was 17.3 million compared to 17.2 million in 2017. Theautomotive retail business continues to benefit from the availability of credit to consumers, strong consumer confidence and historically low unemploymentlevels. Demand for new vehicles is generally highest during the second, third, and fourth quarters of each year and, accordingly, we expect our revenues togenerally be higher during these periods. We typically experience higher sales of luxury vehicles in the fourth quarter, which have higher average sellingprices and gross profit per vehicle retailed. Revenues and operating results may be impacted significantly from quarter-to-quarter by changing economicconditions, vehicle manufacturer incentive programs, adverse weather events, or other developments outside our control.Our gross profit margin varies with our revenue mix. Sales of new vehicles generally result in a lower gross profit margin than used vehicle sales, sales ofparts and service, and sales of F&I products. As a result, when used vehicle, parts and service, and F&I revenue increase as a percentage of total revenue, weexpect our overall gross profit margin to increase.Selling, general, and administrative ("SG&A") expenses consist primarily of fixed and incentive-based compensation, advertising, rent, insurance,utilities, and other customary operating expenses. A significant portion of our cost structure is variable (such as sales commissions), or controllable (such asadvertising), which we believe allows us to adapt to changes in the retail environment over the long-term. We evaluate commissions paid to salespeople as apercentage of retail vehicle gross profit, advertising expense on a per vehicle retailed ("PVR") basis, and all other SG&A expenses in the aggregate as apercentage of total gross profit.We had total available liquidity of $356.1 million as of December 31, 2018, which consisted of cash and cash equivalents of $8.3 million, $32.2 millionof funds in our floor plan offset accounts, $190.0 million of availability under our new vehicle floor plan facility that is able to be re-designated to ourrevolving credit facility, $47.0 million of availability under our revolving credit facility, and $78.6 million of availability under our used vehicle revolvingfloor plan facility. For further discussion of our liquidity, please refer to "Liquidity and Capital Resources" below.30Table of ContentsCRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATESPreparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management tomake estimates and assumptions, that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities, as of the date of thefinancial statements, and reported amounts of revenues and expenses during the periods presented. On an ongoing basis, management evaluates theirestimates and assumptions and the effects of any such revisions are reflected in the financial statements, in the period in which they are determined to benecessary. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Consolidated FinancialStatements. Set forth below are the policies and estimates that we have identified as critical to our business operations and understanding our results ofoperations, based on the high degree of judgment or complexity in their application.Goodwill and Manufacturer Franchise Rights—Goodwill represents the excess cost of an acquired business over the fair market value of its identifiable assets and liabilities. We have determined that,based on how we integrate acquisitions into our business, how the components of our business share resources and interact with one another, and how wereview the results of our operations, that we have several geographic market-based operating segments. We have determined that the dealerships in each ofour operating segments are components that are aggregated into several geographic market-based reporting units for the purpose of testing goodwill forimpairment, as they (i) have similar economic characteristics, (ii) offer similar products and services (all of our franchised dealerships offer new and usedvehicles, parts and service, and arrange for third-party vehicle financing and the sale of insurance products), (iii) have similar customers, (iv) have similardistribution and marketing practices (all of our dealerships distribute products and services through dealership facilities that market to customers in similarways) and (v) operate under similar regulatory environments.Our only significant identifiable intangible assets, other than goodwill, are our rights under franchise agreements with manufacturers, which are recordedat an individual franchise level. The fair value of our manufacturer franchise rights are determined at the acquisition date, by discounting the projected cashflows specific to each franchise. We have determined that manufacturer franchise rights have an indefinite life as there are no economic, contractual or otherfactors that limit their useful lives, and they are expected to generate cash flows indefinitely due to the historically long lives of the manufacturers' brandnames. Furthermore, to the extent that any agreements evidencing our manufacturer franchise rights would expire, we expect that we would be able to renewthose agreements in the ordinary course of business. We performed quantitative franchise rights impairment tests as of October 1, 2018, and identified threedealerships with franchise rights carrying values that exceeded their fair values, and as a result, recorded non-cash impairment charges of $3.7 million.We do not amortize goodwill and other intangible assets that are deemed to have indefinite lives. We review goodwill and manufacturer franchise rightsfor impairment annually as of October 1st, or more often if events or circumstances indicate that any impairment may have occurred. We are subject tofinancial statement risk to the extent that goodwill becomes impaired due to decreases in the fair value of our automotive retail business or manufacturerfranchise rights become impaired due to decreases in the fair value of our individual franchises.F&I Chargeback ReservesWe receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle servicecontracts, guaranteed auto protection (known as "GAP") insurance, and other insurance to customers (collectively "F&I"). F&I commissions are recorded atthe time the associated vehicle is sold.We may be charged back for F&I commissions in the event a contract is prepaid, defaulted upon, or terminated ("chargebacks"). F&I commissions, net ofestimated future chargebacks, are included in Finance and Insurance, net in the accompanying Consolidated Statements of Income. We reserve forchargebacks on finance, insurance, or vehicle service contract commissions received. The reserve is established based on historical operating results and thetermination provisions of the applicable contracts and is evaluated on a product-by-product basis.Our F&I cash chargebacks for the years ended December 31, 2018, 2017, and 2016 were $37.5 million, $34.0 million, and $34.9 million, respectively.Our chargeback reserves were $44.2 million and $43.7 million as of December 31, 2018 and December 31, 2017, respectively. Total chargebacks as apercentage of F&I commissions for the years ended December 31, 2018, 2017, and 2016, were 13%, 12%, and 14%, respectively. A 100 basis point change inour estimated reserve rate for future chargebacks, would change our finance and insurance chargeback reserve by approximately $3.1 million as ofDecember 31, 2018.31Table of ContentsInsurance Reserves—We are self-insured for employee medical claims and maintain stop loss insurance for large-dollar individual claims. We have large deductible insuranceprograms for workers compensation, property and general liability claims. We maintain and review our claim and loss history to assist in assessing ourexpected future liability for these claims. We also use professional service providers, such as account administrators and actuaries, to help us accumulate andassess this information. Provisions for retained losses and deductibles are made by charges to expense based upon periodic evaluations of the estimatedultimate liabilities on reported and unreported claims.We had $16.5 million and $15.7 million of insurance reserves for incurred and expected employee medical, workers compensation, property, and generalliability claims, net of anticipated insurance recoveries, as of December 31, 2018 and December 31, 2017, respectively. Expenses associated with employeemedical, workers compensation, property, and general liability claims, including premiums for insurance coverage, for the years ended December 31, 2018,2017, and 2016, totaled $29.9 million, $27.9 million, and $30.9 million, respectively.32Table of ContentsRESULTS OF OPERATIONSThe Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017 For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 (Dollars in millions, except per share data)REVENUE: New vehicle$3,788.7 $3,561.1 $227.6 6 %Used vehicle1,972.4 1,834.1 138.3 8 %Parts and service821.0 786.1 34.9 4 %Finance and insurance, net292.3 275.2 17.1 6 %TOTAL REVENUE6,874.4 6,456.5 417.9 6 %GROSS PROFIT: New vehicle165.2 169.0 (3.8) (2)%Used vehicle129.7 121.9 7.8 6 %Parts and service515.8 489.8 26.0 5 %Finance and insurance, net292.3 275.2 17.1 6 %TOTAL GROSS PROFIT1,103.0 1,055.9 47.1 4 %OPERATING EXPENSES: Selling, general, and administrative755.8 729.7 26.1 4 %Depreciation and amortization33.7 32.1 1.6 5 %Franchise rights impairment3.7 5.1 (1.4) (27)%Other operating (income) expenses, net(1.1) 1.3 (2.4) (185)%INCOME FROM OPERATIONS310.9 287.7 23.2 8 %OTHER EXPENSES: Floor plan interest expense32.5 22.7 9.8 43 %Other interest expense, net53.1 53.9 (0.8) (1)%Swap interest expense0.5 2.0 (1.5) (75)%Total other expenses, net86.1 78.6 7.5 10 %INCOME BEFORE INCOME TAXES224.8 209.1 15.7 8 %Income tax expense56.8 70.0 (13.2) (19)%NET INCOME$168.0 $139.1 $28.9 21 %Net income per common share—Diluted$8.28 $6.62 $1.66 25 %33Table of Contents For the Year Ended December 31, 2018 2017REVENUE MIX PERCENTAGES: New vehicles55.1% 55.2%Used retail vehicles25.9% 25.2%Used vehicle wholesale2.8% 3.1%Parts and service11.9% 12.2%Finance and insurance, net4.3% 4.3%Total revenue100.0% 100.0%GROSS PROFIT MIX PERCENTAGES: New vehicles15.0% 16.0%Used retail vehicles11.5% 11.4%Used vehicle wholesale0.2% 0.1%Parts and service46.8% 46.4%Finance and insurance, net26.5% 26.1%Total gross profit100.0% 100.0%GROSS PROFIT MARGIN16.0% 16.4%SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT68.5% 69.1%Total revenue during 2018 increased by $417.9 million (6%) compared to 2017, due to a $227.6 million (6%) increase in new vehicle revenue, a $138.3million (8%) increase in used vehicle revenue, a $34.9 million (4%) increase in parts and service revenue and a $17.1 million (6%) increase in F&I revenue.The $47.1 million (4%) increase in gross profit during 2018 was the result of a $7.8 million (6%) increase in used vehicle gross profit, a $17.1 million (6%)increase in F&I revenue and a $26.0 million (5%) increase in parts and service gross profit, partially offset by a $3.8 million (2%) decrease in new vehiclegross profit. Our total gross profit margin decreased 40 basis points from 16.4% in 2017 to 16.0% in 2018, primarily due to margin pressure in our newvehicle and used vehicle business lines.Income from operations during 2018 increased by $23.2 million (8%) compared to 2017, primarily due to a $47.1 million increase in gross profit and a$2.4 million decrease in other operating (income) expense, net, partially offset by a $26.1 million increase in selling, general and administrative expensesand a $1.6 million (5%) increase in depreciation and amortization expenses.Total other expenses, net increased by $7.5 million in 2018, primarily due to a $9.8 million increase in floor plan interest expense in 2018, partially offsetby a $1.5 million decrease in swap interest expense and a $0.8 million decrease in other interest expense, net. As a result, income before income taxesincreased by $15.7 million (8%) to $224.8 million in 2018. The $13.2 million (19%) decrease in income tax expense was primarily attributable tothe decrease in our effective tax rate from 33.5% in 2017 to 25.3% for 2018. Overall, net income increased by $28.9 million (21%) from $139.1 million in2017 to $168.0 million in 2018.On January 1, 2018, we adopted ASC 606 using the modified retrospective method for all contracts not completed as of that date and recognized acumulative effect adjustment to retained earnings. Our prior period comparative information has not been adjusted and continues to be reported underaccounting standards in effect for those periods. The net impact of adopting ASC 606 for the year ended December 31, 2018 was a decrease to net incomeof $0.1 million. For additional information related to the adoption effects of this new revenue recognition standard, please refer to Note 2 "RevenueRecognition" within the accompanying Condensed Consolidated Financial Statements.We assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents animportant indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion,same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned thedealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.34Table of ContentsNew Vehicle— For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 (Dollars in millions, except for per vehicle data)As Reported: Revenue: Luxury$1,235.3 $1,200.2 $35.1 3 %Import1,790.2 1,637.4 152.8 9 %Domestic763.2 723.5 39.7 5 %Total new vehicle revenue$3,788.7 $3,561.1 $227.6 6 %Gross profit: Luxury$80.0 $78.9 $1.1 1 %Import52.6 56.8 (4.2) (7)%Domestic32.6 33.3 (0.7) (2)%Total new vehicle gross profit$165.2 $169.0 $(3.8) (2)%New vehicle units: Luxury22,979 22,525 454 2 %Import62,939 58,685 4,254 7 %Domestic19,357 18,765 592 3 %Total new vehicle units105,275 99,975 5,300 5 % Same Store: Revenue: Luxury$1,235.3 $1,200.2 $35.1 3 %Import1,706.7 1,636.2 70.5 4 %Domestic740.3 722.2 18.1 3 %Total new vehicle revenue$3,682.3 $3,558.6 $123.7 3 %Gross profit: Luxury$80.0 $78.9 $1.1 1 %Import49.7 56.7 (7.0) (12)%Domestic31.7 33.2 (1.5) (5)%Total new vehicle gross profit$161.4 $168.8 $(7.4) (4)%New vehicle units: Luxury22,979 22,525 454 2 %Import60,010 58,648 1,362 2 %Domestic18,676 18,727 (51) — %Total new vehicle units101,665 99,900 1,765 2 %35Table of ContentsNew Vehicle Metrics— For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 As Reported: Revenue per new vehicle sold$35,989 $35,620 $369 1 %Gross profit per new vehicle sold$1,569 $1,690 $(121) (7)%New vehicle gross margin4.4% 4.7% (0.3)% Luxury: Gross profit per new vehicle sold3,481 3,503 (22) (1)%New vehicle gross margin6.5% 6.6% (0.1)% Import: Gross profit per new vehicle sold$836 $968 $(132) (14)%New vehicle gross margin2.9% 3.5% (0.6)% Domestic: Gross profit per new vehicle sold$1,684 $1,775 $(91) (5)%New vehicle gross margin4.3% 4.6% (0.3)% Same Store: Revenue per new vehicle sold$36,220 $35,622 $598 2 %Gross profit per new vehicle sold$1,588 $1,690 $(102) (6)%New vehicle gross margin4.4% 4.7% (0.3)% Luxury: Gross profit per new vehicle sold$3,481 $3,503 $(22) (1)%New vehicle gross margin6.5% 6.6% (0.1)% Import: Gross profit per new vehicle sold$828 $967 $(139) (14)%New vehicle gross margin2.9% 3.5% (0.6)% Domestic: Gross profit per new vehicle sold$1,697 $1,773 $(76) (4)%New vehicle gross margin4.3% 4.6% (0.3)% New vehicle revenue increased by $227.6 million (6%), primarily as a result of a 5% increase in new vehicle units sold and a 1% increase in revenue pernew vehicle sold. Same store new vehicle revenue increased by $123.7 million (3%) as a result of increases in new vehicle units and revenue per new vehiclesold.The 2% increase in same store unit sales volume was driven by a 2% increase in both luxury and import units. The 2% increase in same store unit salesslightly exceeded 2018 U.S. new vehicle sales, which increased 1% from 17.2 million in 2017 to 17.3 million in 2018.Same store new vehicle gross profit in 2018 decreased by $7.4 million (4%), as a result of a 6% decrease in gross profit per new vehicle sold, partiallyoffset by a 2% increase in unit volumes. The 30 basis point decrease in same store new vehicle gross margin from 4.7% in 2017 to 4.4% in 2018, wasprimarily attributable to a higher mix of revenue in our import brands, which have traditionally had lower margins than our luxury and domestic brands. Inaddition, we attribute some of the decrease in gross profit to increased competition created by price transparency and comparability as a result of internetbased research and car buying services.36Table of ContentsUsed Vehicle— For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 (Dollars in millions, except for per vehicle data)As Reported: Revenue: Used vehicle retail revenues$1,783.3 $1,635.3 $148.0 9 %Used vehicle wholesale revenues189.1 198.8 (9.7) (5)%Used vehicle revenue$1,972.4 $1,834.1 $138.3 8 %Gross profit: Used vehicle retail gross profit$127.8 $121.1 $6.7 6 %Used vehicle wholesale gross profit1.9 0.8 1.1 138 %Used vehicle gross profit$129.7 $121.9 $7.8 6 %Used vehicle retail units: Used vehicle retail units82,377 76,929 5,448 7 % Same Store: Revenue: Used vehicle retail revenues$1,737.2 $1,625.0 $112.2 7 %Used vehicle wholesale revenues185.8 197.7 (11.9) (6)%Used vehicle revenue$1,923.0 $1,822.7 $100.3 6 %Gross profit: Used vehicle retail gross profit$124.5 $120.4 $4.1 3 %Used vehicle wholesale gross profit2.1 1.2 0.9 75 %Used vehicle gross profit$126.6 $121.6 $5.0 4 %Used vehicle retail units: Used vehicle retail units79,789 76,285 3,504 5 %Used Vehicle Metrics— For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 As Reported: Revenue per used vehicle retailed$21,648 $21,257 $391 2 %Gross profit per used vehicle retailed$1,551 $1,574 $(23) (1)%Used vehicle retail gross margin7.2% 7.4% (0.2)% Same Store: Revenue per used vehicle retailed$21,772 $21,302 $470 2 %Gross profit per used vehicle retailed$1,560 $1,578 $(18) (1)%Used vehicle retail gross margin7.2% 7.4% (0.2)% Used vehicle revenue increased by $138.3 million (8%), as a result of a 7% increase in used vehicle retail units sold, and a 2% increase in revenue perused vehicle retailed.In 2018, same store used vehicle retail gross profit increased by $4.1 million (3%). Overall, our gross margin percent decreased from 7.4% in 2017 to 7.2%in 2018. We primarily attribute the 20 basis point decrease in same store used vehicle retail gross margin to increased competition and price transparencywithin the used vehicle marketplace.We believe that our used vehicle inventory continues to be well-aligned with current consumer demand, with approximately 34 days of supply as ofDecember 31, 2018.37Table of ContentsParts and Service— For the Year EndedDecember 31, Increase(Decrease) %Change 2018 2017 (Dollars in millions)As Reported: Parts and service revenue$821.0 $786.1 $34.9 4 %Parts and service gross profit: Customer pay$292.0 $272.3 $19.7 7 %Warranty76.8 81.7 (4.9) (6)%Wholesale parts22.8 21.2 1.6 8 %Parts and service gross profit, excluding reconditioning and preparation$391.6 $375.2 $16.4 4 %Parts and service gross margin, excluding reconditioning and preparation47.7% 47.7% —% Reconditioning and preparation124.2 114.6 9.6 8 %Total parts and service gross profit515.8 489.8 26.0 5 %Total parts and service gross margin62.8% 62.3% 0.5% Same Store: Parts and service revenue$804.1 $785.6 $18.5 2 %Parts and service gross profit: Customer pay$286.2 $272.1 $14.1 5 %Warranty75.5 81.7 (6.2) (8)%Wholesale parts22.3 21.1 1.2 6 %Parts and service gross profit, excluding reconditioning and preparation$384.0 $374.9 $9.1 2 %Parts and service gross margin, excluding reconditioning and preparation47.8% 47.7% 0.1% Reconditioning and preparation121.1 114.3 6.8 6 %Total parts and service gross profit505.1 489.2 15.9 3 %Total parts and service gross margin62.8% 62.3% 0.5% The $34.9 million (4%) increase in parts and service revenue was primarily due to a $30.7 million (6%) increase in customer pay revenue and a $14.4million (13%) increase in wholesale parts revenue, partially offset by a $10.2 million (7%) decrease in warranty revenue. Same store parts and service revenueincreased $18.5 million (2%) from $785.6 million in 2017 to $804.1 million in 2018. The increase in same store parts and service revenue was due to a $20.2million (4%) increase in customer pay revenue and a $11.1 million (10%) increase in wholesale parts revenue, partially offset by a $12.8 million (8%)decrease in warranty revenue.Parts and service gross profit, excluding reconditioning and preparation, increased by $16.4 million (4%) to $391.6 million and same store gross profit,excluding reconditioning and preparation, increased by $9.1 million (2%) to $384.0 million. The $9.1 million increase in same store gross profit is primarilydue to a $14.1 million (5%) increase in customer pay gross profit partially offset by a $6.2 million (8%) decrease in warranty gross profit. We attribute theincrease in same store gross profit to our continued focus on customer retention and the recent trend of increasing new vehicle sales over the past few years.We continue to focus on increasing our parts and service revenue, specifically our customer pay business, over the long-term by upgrading equipment,improving the customer experience and capitalizing on our dealership training programs. Further, we have recently enhanced our technicians benefit packagewith the goal of improving retention and attracting new technicians in order to maximize our fixed capacity.38Table of ContentsFinance and Insurance, net— For the Year Ended December 31, Increase(Decrease) %Change 2018 2017 (Dollars in millions, except for per vehicle data)As Reported: Finance and insurance, net$292.3 $275.2 $17.1 6%Finance and insurance, net per vehicle sold$1,558 $1,556 $2 —% Same Store: Finance and insurance, net$284.9 $274.3 $10.6 4%Finance and insurance, net per vehicle sold$1,570 $1,557 $13 1%F&I revenue, net increased by $17.1 million (6%) in 2018 when compared to 2017 primarily as a result of a 6% increase in new and used retail unit sales.On a same store basis F&I revenue, net increased by $10.6 million (4%) in 2018 when compared to 2017 primarily as a result of a 3% increase in samestore new and used retail unit sales and a 1% increase in F&I per vehicle retailed.We continued to benefit from a favorable consumer lending environment, which allowed more of our customers to take advantage of a broader array ofF&I products and our continued focus on improving the F&I results at our lower-performing stores through our F&I training programs. 39Table of ContentsSelling, General, and Administrative Expense— For the Year Ended December 31, Increase(Decrease) % of GrossProfit Increase(Decrease) 2018 % of GrossProfit 2017 % of GrossProfit (Dollars in millions)As Reported: Personnel costs$362.6 32.9% $348.7 33.0% $13.9 (0.1)%Sales compensation115.6 10.5% 111.1 10.5% 4.5 — %Share-based compensation10.5 1.0% 13.6 1.3% (3.1) (0.3)%Outside services83.0 7.5% 80.8 7.7% 2.2 (0.2)%Advertising30.6 2.8% 30.3 2.9% 0.3 (0.1)%Rent25.6 2.3% 26.7 2.5% (1.1) (0.2)%Utilities16.2 1.5% 15.4 1.5% 0.8 — %Insurance14.7 1.3% 13.4 1.3% 1.3 — %Other97.0 8.7% 89.7 8.4% 7.3 0.3 %Selling, general, and administrative expense$755.8 68.5% $729.7 69.1% $26.1 (0.6)%Gross profit$1,103.0 $1,055.9 Same Store: Personnel costs$353.9 32.8% $347.4 33.0% $6.5 (0.2)%Sales compensation112.3 10.4% 110.7 10.5% 1.6 (0.1)%Share-based compensation10.5 1.0% 13.6 1.3% (3.1) (0.3)%Outside services81.1 7.5% 80.2 7.6% 0.9 (0.1)%Advertising29.1 2.7% 30.0 2.8% (0.9) (0.1)%Rent25.5 2.4% 26.7 2.5% (1.2) (0.1)%Utilities15.7 1.5% 15.3 1.5% 0.4 — %Insurance14.2 1.3% 13.3 1.3% 0.9 — %Other95.4 8.8% 89.3 8.4% 6.1 0.4 %Selling, general, and administrative expense$737.7 68.4% $726.5 68.9% $11.2 (0.5)%Gross profit$1,078.0 $1,053.9 SG&A expense as a percentage of gross profit decreased 60 basis points from 69.1% in 2017 to 68.5% in 2018. Same store SG&A expense as a percentageof gross profit decreased by 50 basis points, from 68.9% in 2017 to 68.4% in 2018. The Company benefited from decreases in rent and share-basedcompensation expense on both a total company and same store basis. These decreases were partially offset by increases in other expenses includinginvestments in our omni-channel initiatives intended to improve the customer experience and generate long-term operational efficiencies.Depreciation and Amortization Expense —The $1.6 million (5%) increase in depreciation and amortization expense during 2018 compared to 2017, was primarily the result of depreciationassociated with the three dealership acquisitions made in 2018, additional assets placed into service during 2017 and 2018, as well as depreciation expenseassociated with the purchase of previously leased properties.Franchise rights impairment —We assessed our manufacturer franchise rights for impairment by comparing the present value of cash flows attributable to each franchise right to itscarrying value. As a result of our impairment testing, we recognized a $3.7 million pretax non-cash charge related to three of our franchises.40Table of ContentsOther Operating (Income) Expenses, net —Other operating (income) expenses, net includes gains and losses from the sale of property and equipment, income derived from lease arrangements, andother non-core operating items. The $1.1 million in other operating income, net for 2018, is primarily due a $0.7 million gain resulting from legal settlementsand $0.4 million of other non-core operating income.The $1.3 million in Other operating expenses, net for 2017, is primarily due to recognized expenses associated with lease terminations of $3.1 million,partially offset by $0.9 million of other income, and a $0.9 million gain recognized for legal settlements.Floor Plan Interest Expense —The $9.8 million (43%) increase in floor plan interest expense during 2018 compared to 2017, was primarily the result of higher interest rates throughout2018 compared with 2017 and, to a lesser extent, higher new vehicle inventory levels.Income Tax Expense —The $13.2 million (19%) decrease in income tax expense was the result of a lower effective tax rate due to the December 2017 enactment of the Tax Cutsand Jobs Act (the "Tax Act") which reduced the U.S. federal corporate income tax rate from 35% to 21%. The decrease in income tax expense was partiallyoffset by a $15.7 million (8%) increase in income before income taxes. Our effective tax rate was 25.3% in 2018 compared to 33.5% in 2017. We expect oureffective tax rate to be between 25% and 26% for 2019.During the third quarter of 2018, the IRS released Notice 2018-68, which clarified a number of changes made to Section 162(m) of the Code by the TaxAct. After considering the additional guidance issued by the U.S. Treasury Department, state tax authorities and other standard-setting bodies we havecompleted our accounting for the Tax Act.Refer to Note 15 "Income Taxes" for additional information regarding income taxes. 41Table of ContentsRESULTS OF OPERATIONSThe Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016 For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 (Dollars in millions, except per share data)REVENUE: New vehicle$3,561.1 $3,611.9 $(50.8) (1)%Used vehicle1,834.1 1,876.4 (42.3) (2)%Parts and service786.1 778.5 7.6 1 %Finance and insurance, net275.2 261.0 14.2 5 %TOTAL REVENUE6,456.5 6,527.8 (71.3) (1)%GROSS PROFIT: New vehicle169.0 187.1 (18.1) (10)%Used vehicle121.9 127.3 (5.4) (4)%Parts and service489.8 483.3 6.5 1 %Finance and insurance, net275.2 261.0 14.2 5 %TOTAL GROSS PROFIT1,055.9 1,058.7 (2.8) — %OPERATING EXPENSES: Selling, general, and administrative729.7 732.5 (2.8) — %Depreciation and amortization32.1 30.7 1.4 5 %Franchise rights impairment5.1 — 5.1 — %Other operating expenses (income), net1.3 (2.3) 3.6 NMINCOME FROM OPERATIONS287.7 297.8 (10.1) (3)%OTHER EXPENSES (INCOME): Floor plan interest expense22.7 19.3 3.4 18 %Other interest expense, net53.9 53.1 0.8 2 %Swap interest expense2.0 3.1 (1.1) (35)%Gain on divestitures— (45.5) 45.5 (100)%Total other expenses, net78.6 30.0 48.6 162 %INCOME BEFORE INCOME TAXES209.1 267.8 (58.7) (22)%Income tax expense70.0 100.6 (30.6) (30)%NET INCOME$139.1 $167.2 $(28.1) (17)%Net income per common share—Diluted$6.62 $7.40 $(0.78) (11)%______________________________NM—Not Meaningful42Table of Contents For the Year Ended December 31, 2017 2016REVENUE MIX PERCENTAGES: New vehicles55.2% 55.3 %Used retail vehicles25.2% 25.7 %Used vehicle wholesale3.1% 3.1 %Parts and service12.2% 11.9 %Finance and insurance, net4.3% 4.0 %Total revenue100.0% 100.0 %GROSS PROFIT MIX PERCENTAGES: New vehicles16.0% 17.7 %Used retail vehicles11.4% 12.3 %Used vehicle wholesale0.1% (0.3)%Parts and service46.4% 45.6 %Finance and insurance, net26.1% 24.7 %Total gross profit100.0% 100.0 %GROSS PROFIT MARGIN16.4% 16.2 %SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT69.1% 69.2 %Total revenue during 2017 decreased by $71.3 million (1%) compared to 2016, due to a $42.3 million (2%) decrease in used vehicle revenue, and a $50.8million (1%) decrease in new vehicle revenue, partially offset by a $14.2 million (5%) increase in F&I revenue and a $7.6 million (1%) increase in parts andservice revenue. The $2.8 million decrease in gross profit during 2017 was a result of an $18.1 million (10%) decrease in new vehicle gross profit, and a $5.4million (4%) decrease in used vehicle gross profit, partially offset by a $14.2 million (5%) increase in F&I gross profit, and a $6.5 million (1%) increase inparts and service gross profit. Our total gross profit margin improved 20 basis points to 16.4%, primarily due to our F&I and parts and service businesses,which had higher margins than new and used vehicle sales and represented a larger percentage of our total revenue for 2017 compared to 2016.Income from operations during 2017 decreased by $10.1 million (3%) compared to 2016, primarily due to a $5.1 million impairment charge in 2017, a$3.6 million increase in other operating expense (income), net , and a $1.4 million (5%) increase in depreciation and amortization expenses, partially offsetby a $2.8 million decrease in selling, general and administrative expenses. Total other expenses, net increased in 2017 by $48.6 million, primarily due to a$45.5 million gain on divestitures in 2016, a $3.4 million increase in floor plan interest expense in 2017, and a $0.8 million increase in other interestexpense, net, partially offset by a $1.1 million decrease in swap interest expense. As a result, income before income taxes decreased by $58.7 million (22%) to$209.1 million in 2017 resulting in a decrease in income tax expense of $30.6 million (30%). Net income decreased by $28.1 million (17%) from $167.2million in 2016 to $139.1 million in 2017.We assess the organic growth of our revenue and gross profit on a same store basis. As such, for the following discussion, same store amounts consist ofinformation from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally,amounts related to divested dealerships are excluded from each comparative period.43Table of ContentsNew Vehicle— For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 (Dollars in millions, except for per vehicle data)As Reported: Revenue: Luxury$1,200.2 $1,251.3 $(51.1) (4)%Import1,637.4 1,617.8 19.6 1 %Domestic723.5 742.8 (19.3) (3)%Total new vehicle revenue$3,561.1 $3,611.9 $(50.8) (1)%Gross profit: Luxury$78.9 $84.4 $(5.5) (7)%Import56.8 68.9 (12.1) (18)%Domestic33.3 33.8 (0.5) (1)%Total new vehicle gross profit$169.0 $187.1 $(18.1) (10)%New vehicle units: Luxury22,525 23,875 (1,350) (6)%Import58,685 58,466 219 — %Domestic18,765 20,019 (1,254) (6)%Total new vehicle units99,975 102,360 (2,385) (2)% Same Store: Revenue: Luxury$1,200.2 $1,226.5 $(26.3) (2)%Import1,610.3 1,557.8 52.5 3 %Domestic652.2 698.4 (46.2) (7)%Total new vehicle revenue$3,462.7 $3,482.7 $(20.0) (1)%Gross profit: Luxury$79.0 $82.4 $(3.4) (4)%Import56.3 67.0 (10.7) (16)%Domestic28.7 31.9 (3.2) (10)%Total new vehicle gross profit$164.0 $181.3 $(17.3) (10)%New vehicle units: Luxury22,525 23,424 (899) (4)%Import57,813 56,430 1,383 2 %Domestic16,731 18,716 (1,985) (11)%Total new vehicle units97,069 98,570 (1,501) (2)%44Table of ContentsNew Vehicle Metrics— For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 As Reported: Revenue per new vehicle sold$35,620 $35,286 $334 1 %Gross profit per new vehicle sold$1,690 $1,828 $(138) (8)%New vehicle gross margin4.7% 5.2% (0.5)% Luxury: Gross profit per new vehicle sold$3,503 $3,535 $(32) (1)%New vehicle gross margin6.6% 6.7% (0.1)% Import: Gross profit per new vehicle sold$968 $1,178 $(210) (18)%New vehicle gross margin3.5% 4.3% (0.8)% Domestic: Gross profit per new vehicle sold$1,775 $1,688 $87 5 %New vehicle gross margin4.6% 4.6% — % Same Store: Revenue per new vehicle sold$35,673 $35,332 $341 1 %Gross profit per new vehicle sold$1,690 $1,839 $(149) (8)%New vehicle gross margin4.7% 5.2% (0.5)% Luxury: Gross profit per new vehicle sold$3,507 $3,518 $(11) — %New vehicle gross margin6.6% 6.7% (0.1)% Import: Gross profit per new vehicle sold$974 $1,187 $(213) (18)%New vehicle gross margin3.5% 4.3% (0.8)% Domestic: Gross profit per new vehicle sold$1,715 $1,704 $11 1 %New vehicle gross margin4.4% 4.6% (0.2)% New vehicle revenue decreased by $50.8 million (1%), primarily as a result of a 2% decrease in new vehicle units sold, partially offset by a 1% increase inrevenue per new vehicle sold. Same store new vehicle revenue decreased by $20.0 million (1%) as a result of a 2% decrease in new vehicle units sold partiallyoffset by a 1% increase in revenue per new vehicle sold.Same store unit volume decreased by 2% due to a 4% decrease in luxury units, and an 11% decrease in domestic units, partially offset by a 2% increase inimport units. The 2% decrease in unit sales was in line with the overall decrease in 2017 U.S. new vehicle sales, which decrease 2% from 17.6 million in 2016to 17.2 million in 2017Same store new vehicle gross profit in 2017 decreased by $17.3 million (10%), as a result of the 2% decrease in unit volumes and an 8% decrease in grossprofit per new vehicle sold. The 50 basis point decrease in same store new vehicle gross margin from 5.2% in 2016 to 4.7% in 2017, was primarilyattributable to a higher mix of revenue and unit sales in our import brands, which have traditionally had lower margin than our luxury and domestic brandsand experienced margin pressure during 2017. 45Table of ContentsUsed Vehicle— For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 (Dollars in millions, except for per vehicle data)As Reported: Revenue: Used vehicle retail revenues$1,635.3 $1,675.0 $(39.7) (2)%Used vehicle wholesale revenues198.8 201.4 (2.6) (1)%Used vehicle revenue$1,834.1 $1,876.4 $(42.3) (2)%Gross profit: Used vehicle retail gross profit$121.1 $131.0 $(9.9) (8)%Used vehicle wholesale gross profit0.8 (3.7) 4.5 (122)%Used vehicle gross profit$121.9 $127.3 $(5.4) (4)%Used vehicle retail units: Used vehicle retail units76,929 79,259 (2,330) (3)% Same Store: Revenue: Used vehicle retail revenues$1,577.3 $1,571.4 $5.9 — %Used vehicle wholesale revenues190.5 192.3 (1.8) (1)%Used vehicle revenue$1,767.8 $1,763.7 $4.1 — %Gross profit: Used vehicle retail gross profit$115.4 $123.0 $(7.6) (6)%Used vehicle wholesale gross profit1.1 (2.9) 4.0 (138)%Used vehicle gross profit$116.5 $120.1 $(3.6) (3)%Used vehicle retail units: Used vehicle retail units73,772 73,490 282 — %Used Vehicle Metrics— For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 As Reported: Revenue per used vehicle retailed$21,257 $21,133 $124 1 %Gross profit per used vehicle retailed$1,574 $1,653 $(79) (5)%Used vehicle retail gross margin7.4% 7.8% (0.4)% Same Store: Revenue per used vehicle retailed$21,381 $21,383 $(2) — %Gross profit per used vehicle retailed$1,564 $1,674 $(110) (7)%Used vehicle retail gross margin7.3% 7.8% (0.5)% Used vehicle revenue decreased by $42.3 million (2%), as a result of a 3% decrease in used vehicle retail units sold, partially offset by a 1% increase inrevenue per used vehicle retailed.In 2017, same store used vehicle retail gross profit decreased by $7.6 million (6%), resulting in a slight decrease in gross margin from 7.8% in 2016 to7.3% in 2017. We primarily attribute the 50 basis point decrease in same store used vehicle retail gross margin to increased competition and pricetransparency within the used vehicle marketplace.46Table of ContentsParts and Service— For the Year EndedDecember 31, Increase(Decrease) %Change 2017 2016 (Dollars in millions)As Reported: Parts and service revenue$786.1 $778.5 $7.6 1 %Parts and service gross profit: Customer pay$272.3 $268.2 $4.1 2 %Warranty81.7 73.7 8.0 11 %Wholesale parts21.2 20.7 0.5 2 %Parts and service gross profit, excluding reconditioning and preparation$375.2 $362.6 $12.6 3 %Parts and service gross margin, excluding reconditioning and preparation47.7% 46.6% 1.1% Reconditioning and preparation114.6 120.7 (6.1) (5)%Total parts and service gross profit$489.8 $483.3 $6.5 1 %Total parts and service gross margin62.3% 62.1% 0.2% Same Store: Parts and service revenue$772.7 $743.8 $28.9 4 %Parts and service gross profit: Customer pay$267.2 $257.3 $9.9 4 %Warranty80.5 71.4 9.1 13 %Wholesale parts21.0 19.4 1.6 8 %Parts and service gross profit, excluding reconditioning and preparation$368.7 $348.1 $20.6 6 %Parts and service gross margin, excluding reconditioning and preparation47.7% 46.8% 0.9% Reconditioning and preparation112.0 114.7 (2.7) (2)%Total parts and service gross profit$480.7 $462.8 $17.9 4 %Total parts and service gross margin62.2% 62.2% —% The $7.6 million (1%) increase in parts and service revenue is primarily due to $13.2 million (9%) increase in warranty revenue, partially offset by a $5.6million (1%) decrease in customer pay revenue. Same store parts and service revenue increased $28.9 million (4%) from $743.8 million in 2016 to $772.7million in 2017. The increase in same store parts and service revenue was primarily due to a $15.4 million (11%) increases in warranty revenue, $6.9 million(1%) increase in customer pay revenue , and a $6.6 million (6%) increase in wholesale parts revenue.Parts and service gross profit, excluding reconditioning and preparation, increased by $12.6 million (3%) to $375.2 million and same store gross profit,excluding reconditioning and preparation, increased by $20.6 million (6%) to $368.7 million. The increase in same store gross profit is primarily due to anincrease in customer pay gross profit, which has continued to benefit from our strategic focus to improve customer retention and the recent trend of increasingnew vehicle sales over the past few years.47Table of ContentsFinance and Insurance, net— For the Year Ended December 31, Increase(Decrease) %Change 2017 2016 (Dollars in millions, except for per vehicle data)As Reported: Finance and insurance, net$275.2 $261.0 $14.2 5%Finance and insurance, net per vehicle sold$1,556 $1,437 $119 8% Same Store: Finance and insurance, net$266.9 $249.1 $17.8 7%Finance and insurance, net per vehicle sold$1,562 $1,448 $114 8%F&I revenue increased by $14.2 million (5%) during 2017 when compared to 2016 primarily as a result of a $119 (8%) increase in F&I per vehicleretailed partially offset by a 3% decrease in used and new retail units.On a same store basis F&I revenue increased by $17.8 million (7%) in 2017 when compared to 2016 primarily as a result of a $114 (8%) increase in F&Iper vehicle retailed partially offset by a 1% decrease in new and used retail unit sales.For the year ended December 31, 2017, we benefited from increased up-front commissions as a result of our amended agreement with our primaryinsurance products underwriter which became effective during the fourth quarter of 2016.48Table of ContentsSelling, General, and Administrative Expense— For the Year Ended December 31, Increase(Decrease) % of GrossProfit (Decrease)Increase 2017 % of GrossProfit 2016 % of GrossProfit (Dollars in millions)As Reported: Personnel costs$348.7 33.0% $343.1 32.4% $5.6 0.6 %Sales compensation111.1 10.5% 112.0 10.6% (0.9) (0.1)%Share-based compensation13.6 1.3% 12.0 1.1% 1.6 0.2 %Outside services80.8 7.7% 78.3 7.4% 2.5 0.3 %Advertising30.3 2.9% 34.0 3.2% (3.7) (0.3)%Rent26.7 2.5% 29.9 2.8% (3.2) (0.3)%Utilities15.4 1.5% 15.5 1.5% (0.1) — %Insurance13.4 1.3% 15.9 1.5% (2.5) (0.2)%Other89.7 8.4% 91.8 8.7% (2.1) (0.3)%Selling, general, and administrative expense$729.7 69.1% $732.5 69.2% $(2.8) (0.1)%Gross profit$1,055.9 $1,058.7 Same Store: Personnel costs$338.2 32.9% $327.1 32.3% $11.1 0.6 %Sales compensation107.2 10.4% 106.6 10.5% 0.6 (0.1)%Share-based compensation13.6 1.3% 12.1 1.2% 1.5 0.1 %Outside services78.7 7.7% 73.6 7.3% 5.1 0.4 %Advertising28.9 2.8% 30.1 3.0% (1.2) (0.2)%Rent26.7 2.6% 29.9 3.0% (3.2) (0.4)%Utilities15.0 1.5% 14.5 1.4% 0.5 0.1 %Insurance13.0 1.3% 14.9 1.5% (1.9) (0.2)%Other87.8 8.5% 87.9 8.6% (0.1) (0.1)%Selling, general, and administrative expense$709.1 69.0% $696.7 68.8% $12.4 0.2 %Gross profit$1,028.1 $1,013.3 SG&A expense as a percentage of gross profit decreased 10 basis points from 69.2% in 2016 to 69.1% for 2017. The decrease in SG&A expense isprimarily attributable to decreases in advertising, rent and insurance, partially offset by increases in higher personnel costs and outside services.Same store SG&A expense as a percentage of gross profit increased by 20 basis points, from 68.8% in 2016 to 69.0% in 2017. The increase in SG&Aexpense is primarily attributable to higher personnel costs and higher outside services predominately related to our investments in technologies to improveour customer experience and productivity, partially offset by decreases in insurance, advertising, and rent expense.Depreciation and Amortization Expense —The $1.4 million (5%) increase in depreciation and amortization expense during 2017 compared to 2016, was primarily the result of higher depreciablebasis of assets placed in service during 2016.Franchise rights impairment —We assessed our manufacturer franchise rights for impairment by comparing the present value of cash flows attributable to each franchise right to itscarrying value. As a result of our impairment testing, we recognized a $5.1 million pretax non-cash charge.49Table of ContentsOther Operating Expense (income), net —Other operating expense (income) net, includes gains and losses from the sale of property and equipment, income derived from lease arrangements, andother non-core operating items. The $1.3 million in other operating expense (income), net for 2017, is primarily due to recognized expenses associated withlease terminations of $3.1 million, partially offset by $0.9 million of other income, and a $0.9 million gain recognized for legal settlements.Floor Plan Interest Expense —The $3.4 million (18%) increase in floor plan interest expense during 2017 compared to 2016, was primarily the result of higher interest rates throughout2017 compared to 2016.Income Tax Expense—The $30.6 million (30%) decrease in income tax expense, is primarily due to the $58.7 million (22%) decrease in income before income taxes in 2017compared to 2016 coupled with a decrease in our effective tax rate. Our effective tax rate was 33.5% in 2017 compared to 37.6% in 2016.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act makes broad andcomplex changes to the U.S. tax code that affect 2017, including, but not limited to, accelerated depreciation that will allow for full expensing of qualifiedproperty. The Tax Act also establishes new tax laws that will affect 2018 and after, including a reduction in the U.S. federal corporate income tax rate from35% to 21%. As a result of the reduction of the federal corporate income tax rate, we revalued our net deferred tax liabilities as of December 31, 2017 andrecorded a $7.9 million reduction based on our provisional estimate, with the offset recorded as a reduction to income tax expense for the year endedDecember 31, 2017. Our effective tax rate decreased primarily as a result of the revaluation of our net deferred tax liability balance.LIQUIDITY AND CAPITAL RESOURCESAs of December 31, 2018, we had total available liquidity of $356.1 million, which consisted of cash and cash equivalents of $8.3 million, $32.2 millionof available funds in our floor plan offset accounts, $190.0 million of availability under our new vehicle floor plan facility that is able to be re-designated toour revolving credit facility, $47.0 million of availability under our revolving credit facility, and $78.6 million of availability under our used vehiclerevolving floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited byborrowing base calculations and, from time to time, may be further limited by our required compliance with certain financial covenants. As of December 31,2018, these financial covenants did not further limit our availability under our other credit facilities. For more information on our financial covenants, see"Covenants and Defaults" below.We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on hand, (ii) the funds that we expect to generatethrough future operations, (iii) current and expected borrowing availability under our 2016 Senior Credit Facility, our other floor plan facilities, our PriorReal Estate Credit Agreement, our Restated Master Loan Agreement, and our mortgage financings (each, as defined below), (iv) amounts in our new vehiclefloor plan notes payable offset accounts, and (v) the potential impact of our capital allocation strategy and any contemplated or pending future transactions,including but not limited to, financings, acquisitions, dispositions, equity and/or debt repurchases, dividends, or other capital expenditures. We believe wewill have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity andrepurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months.We currently are party to the following material credit facilities and agreements, and have the following material indebtedness outstanding. For a moredetailed description of the material terms of these agreements and facilities, and this indebtedness, refer to the "Long-Term Debt" footnote included in theNotes to Consolidated Financial Statements.•2016 Senior Credit Facility — On July 25, 2016, the Company and certain of its subsidiaries entered into an amended and restated senior securedcredit agreement with Bank of America, as administrative agent, and the other lenders party thereto. The 2016 Senior Credit Facility amended andrestated the Company's pre-existing senior secured credit agreement, dated as of August 8, 2013, by and among the Company and certain of itssubsidiaries and Bank of America, as administrative agent, and the other agents and lenders party thereto (the "Restated Credit Agreement").50Table of ContentsThe 2016 Senior Credit Facility provides for the following:Revolving Credit Facility — A $250.0 million revolving credit facility for, among other things, acquisitions, working capital and capitalexpenditures, including a $50.0 million sub-limit for letters of credit. As of December 31, 2018, we re-designated $190.0 million ofavailability from our revolving credit facility to our new vehicle floor plan facility, resulting in $60.0 million of borrowing capacity. Inaddition, we had $13.0 million in outstanding letters of credit, resulting in $47.0 million of borrowing availability as of December 31, 2018.New Vehicle Floor Plan Facility — A $900.0 million new vehicle revolving floor plan facility. In connection, with the new vehicle floorplan facility, we established an account with Bank of America that allows us to transfer cash as an offset to floor plan notes payable. Thesetransfers reduce the amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, while retaining theability to transfer amounts from the offset account into our operating cash accounts within one to two days. As a result of the use of our floorplan offset account, we experience a reduction in Floor Plan Interest Expense on our Consolidated Statements of Income. As of December 31,2018, we had $822.1 million outstanding under our new vehicle floor plan facility, which is net of $20.9 million in our floor plan offsetaccount.Used Vehicle Floor Plan Facility — A $150.0 million used vehicle revolving floor plan facility to finance the acquisition of used vehicleinventory and for, among other things, working capital and capital expenditures, as well as to refinance used vehicles. Our borrowingcapacity under the used vehicle floor plan facility was limited to $78.6 million, based on our borrowing base calculation as of December 31,2018. We began the year with nothing drawn on our used vehicle floor plan facility and during the year ended December 31, 2018, we hadborrowings of $300.0 million and made repayments of $270.0 million, resulting in $30.0 million outstanding under our used vehicle floorplan facility as of December 31, 2018.Subject to compliance with certain conditions, the agreement governing the 2016 Senior Credit Facility provides that we have the ability, at ouroption and subject to the receipt of additional commitments from existing or new lenders, to increase the size of the facilities by up to $325.0million in the aggregate without lender consent.At our option, we have the ability to re-designate a portion of our availability under our Revolving Credit Facility to the New Vehicle Floor PlanFacility or the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to re-designate is determined based on our current borrowingavailability under our Revolving Credit Facility, less $50.0 million. In addition, we are able to re-designate any amounts moved to the New VehicleFloor plan facility or Used Vehicle Floor Plan Facility back to the Revolving Credit Facility. As of December 31, 2018, we re-designated $190.0million of availability under our Revolving Credit Facility to our New Vehicle Floor Plan facility. We re-designated this amount to take advantageof the lower commitment fee rates on our New Vehicle Floor Plan Facility when compared to our Revolving Credit Facility.Borrowings under the 2016 Senior Credit Facility bear interest, at our option, based on the London Interbank Offered Rate ("LIBOR") or the BaseRate, in each case plus an Applicable Margin (as defined in the 2016 Senior Credit Facility). The Base Rate is the highest of the (i) Bank of Americaprime rate, (ii) Federal Funds rate plus 0.50%, and (iii) one month LIBOR plus 1.00%. The Applicable Margin, for borrowings under the RevolvingCredit Facility, ranges from 1.25% to 2.50% for LIBOR loans and 0.25% to 1.50% for Base Rate loans, in each case based on the Company's totallease adjusted leverage ratio. Borrowings under the New Vehicle Floor Plan Facility bear interest, at the option of the Company, based on LIBORplus 1.25% or the Base Rate plus 0.25%. Borrowings under the Used Vehicle Floor Plan Facility bear interest, at the option of the Company, basedon LIBOR plus 1.50% or the Base Rate plus 0.50%.In addition to the payment of interest on borrowings outstanding under the 2016 Senior Credit Facility, we are required to pay a quarterlycommitment fee on the total commitments thereunder. The fee for commitments under the Revolving Credit Facility is between 0.20% and 0.45%per year, based on the Company's total lease adjusted leverage ratio, and the fee for commitments under the New Vehicle Facility Floor Plan and theUsed Vehicle Facility Floor Plan Facility is 0.15% per year.•Manufacturer affiliated new vehicle floor plan facilities and other financing facilities — We have a floor plan facility with the Ford Motor CreditCompany ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory, which matures on December 5, 2019. We also have a floor plan offsetaccount with Ford Credit, which operates in a similar manner to our floor plan offset account with Bank of America. As of December 31, 2018, wehad $114.051Table of Contentsmillion, outstanding under our floor plan facility which is net of $11.3 million in our floor plan offset account. Additionally, we had $87.5 millionoutstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts Payable andAccrued Liabilities in our Consolidated Balance Sheets. Neither our floor plan facility with Ford Credit nor our facilities for loaner vehicles havestated borrowing limitations.•6.0% Senior Subordinated Notes due 2024 ("6.0% Notes") — as of December 31, 2018 we had $600.0 million in aggregate principal amountsoutstanding related to our 6.0% Notes. We are required to pay interest on the 6.0% Notes on June 15 and December 15 of each year until maturity onDecember 15, 2024. •Mortgage notes — as of December 31, 2018, we had $132.2 million of mortgage note obligations. These obligations are collateralized by theassociated real estate at our dealership locations.•Restated Master Loan Agreement — provides for term loans to certain of our subsidiaries in an aggregate amount not to exceed $100.0 million.Borrowings under the Restated Master Loan Agreement are guaranteed by us and are collateralized by the real property financed under the RestatedMaster Loan Agreement. As of December 31, 2018, the outstanding balance under the Restated Master Loan Agreement was $83.3 million. There isno further borrowing availability under this facility.•Prior Real Estate Credit Agreement — a real estate term loan credit agreement (the "Prior Real Estate Credit Agreement"), with an initial principalvalue of $75.0 million collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder. Asof December 31, 2018, we had $40.8 million of mortgage note obligations outstanding under the Prior Real Estate Credit Agreement. There is nofurther borrowing availability under the Prior Real Estate Credit Agreement.•2018 Bank of America Facility - On November 13, 2018, the Company and certain of its subsidiaries entered into a real estate term loan creditagreement (the “Bank of America Credit Agreement") with Bank of America N.A. which provides for term loans in an aggregate amount not toexceed $128.1 million (the "Bank of America Facility"). The borrowers under the Bank of America Credit Agreement may borrow thereunder fromtime to time during the period beginning on November 13, 2018 until and including November 12, 2019. On November 13, 2018, certain of theborrowers borrowed an aggregate amount of $25.7 million under the Bank of America Credit Agreement, a portion of which was used to refinancecertain of the Company’s other outstanding mortgage indebtedness. All of the real property financed by an operating dealership subsidiary of theCompany under the Bank of America Facility is collateralized by first priority liens, subject to certain permitted exceptions. As of December 31,2018, we had $25.7 million of outstanding borrowings under the Bank of America Facility.•2018 Wells Fargo Master Loan Facility - On November 16, 2018, certain subsidiaries of the Company entered into a master loan agreement (the“Wells Fargo Master Loan Agreement”) with Wells Fargo Bank, National Association, as lender which provides for term loans to certain of theCompany’s subsidiaries that are borrowers under the Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $100.0 million (the"Wells Fargo Master Loan Facility"). The borrowers under the Wells Fargo Master Loan Agreement may borrow thereunder from time to time duringthe period beginning on November 16, 2018 until and including December 31, 2019 (the "Wells Fargo Draw Termination Date"). On November 16,2018, certain of the borrowers borrowed an aggregate amount of $25.0 million under the Wells Fargo Master Loan Facility, the proceeds of whichwere used for general corporate purposes. Borrowings under the Wells Fargo Master Loan Facility are guaranteed by the Company pursuant to aunconditional guaranty (the "Company Guaranty"), and all of the real property financed by any operating dealership subsidiary of the Companyunder the Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions. As of December 31, 2018,we had $25.0 million outstanding borrowings under the Wells Fargo Master Loan Facility.Covenants and DefaultsWe are subject to a number of customary covenants in our various debt and lease agreements, including those described below. We were in compliancewith all of our covenants as of December 31, 2018. Failure to comply with any of our debt covenants would constitute a default under the relevant debtagreements, which would entitle the lenders under such agreements to terminate our ability to borrow under the relevant agreements and accelerate ourobligations to repay outstanding borrowings, if any, unless compliance with the covenants were waived. In many cases, defaults under one of our agreementscould trigger cross-default provisions in our other agreements. If we are unable to remain in compliance with our financial or other covenants, we would berequired to seek waivers or modifications of our covenants from our lenders, or we would need to raise debt and/or equity financing or sell assets to generateproceeds sufficient to repay such debt. We cannot give any assurance that we would be able to successfully take any of these actions on terms, or at times,that may be necessary or desirable.52Table of ContentsThe representations and covenants contained in the 2016 Senior Credit Facility include, among others, a requirement to comply with a minimumconsolidated current ratio, consolidated fixed charge coverage ratio and a maximum consolidated total lease adjusted leverage ratio, in each case as set out inthe 2016 Senior Credit Facility. In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose ofassets.The 2016 Senior Credit Facility also provides for events of default that are customary for financing transactions of this nature, including cross-defaults toother material indebtedness. In certain instances, an event of default under either the revolving credit facility or the used vehicle floor plan facility could be,or result in, an event of default under the new vehicle floor plan facility, and vice versa. Upon the occurrence of an event of default, we could be required toimmediately repay all amounts outstanding under the 2016 Senior Credit Facility.The representations and covenants contained in the Prior Real Estate Credit Agreement are customary for financing transactions of this nature including,among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio, and a maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Prior Real Estate Credit Agreement. In addition, certain other covenants couldrestrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.The representations and covenants contained in the Bank of America Credit Agreement are customary for financing transactions of this nature, including,among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Bank of America Credit Agreement. In addition, certain other covenants couldrestrict the Company’s ability to incur additional debt, pay dividends or acquire or dispose of assets. The Bank of America Credit Agreement also providesfor events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness. Upon the occurrenceof an event of default, the Company could be required by the Bank of America Facility to immediately repay all amounts outstanding thereunder.The representations, warranties and covenants contained in the Wells Fargo Master Loan Agreement, the Company Guaranty and the related documentsare customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated current ratio,minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the CompanyGuaranty. In addition, certain other covenants could restrict the Company’s ability to incur additional debt, pay dividends or acquire or dispose of assets.The representations, warranties, and covenants contained in the Restated Master Loan Agreement and the related documents include, among others, arequirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated total leaseadjusted leverage ratio, in each case as set out in the Restated Master Loan Agreement. In addition, certain other covenants could restrict our ability to incuradditional debt, pay dividends, or acquire or dispose of assets. The Restated Master Loan Agreement also provides for events of default that are customary forfinancing transactions of this nature, including cross-defaults to other material indebtedness. Upon the occurrence of an event of default, the Real EstateBorrowers or, failing such compliance, we could be required to immediately repay all amounts outstanding under the Restated Master Loan Agreement.Certain of our lease agreements also require compliance with various financial covenants and incorporate by reference the financial covenants set forth inthe 2016 Senior Credit Facility. A breach of any of these covenants could immediately give rise to certain landlord remedies under our various leaseagreements, the most severe of which include the following: (i) termination of the applicable lease and/or other leases with the same or an affiliated landlordunder a cross-default provision, (ii) eviction from the premises, and (iii) the landlord having a claim for various damages.The 2016 Senior Credit Facility and the Indenture currently allow for restricted payments without limit so long as our Consolidated Total Leverage ratio(as defined in the 2016 Senior Credit Facility and the Indenture) is no greater than 3.0 to 1.0 after giving effect to such proposed restricted payments.Restricted payments generally include items such as dividends, share repurchases, unscheduled repayments of subordinated debt, or purchases of certaininvestments. In the event that our Consolidated Total Leverage ratio does (or would) exceed 3.0 to 1.0, the 2016 Senior Credit Facility and the Indenturewould then also allow for restricted payments under the following mutually exclusive parameters, subject to certain exclusions:•Restricted payments in an aggregate amount not to exceed $20.0 million in any fiscal year;•General restricted payments allowance of $150.0 million; and•Subject to our continued compliance with a minimum consolidated current ratio, a consolidated fixed charge coverage ratio and a maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Indenture, restricted payments capacity additions (or subtractions ifnegative) equal to (i) 50% of our net income (as defined in the 2016 Senior Credit Facility and the Indenture) beginning on October 1, 2014 andending on the date of the most recently53Table of Contentscompleted fiscal quarter (the "Measurement Period"), plus (ii) 100% of any cash proceeds we receive from the sale of equity interests during theMeasurement Period minus (iii) the dollar amount of share purchases made and dividends paid on or after December 4, 2014.Share Repurchases and Dividend RestrictionsOur ability to repurchase shares or pay dividends on our common stock is subject to our compliance with the covenants and restrictions described in"Covenants and Defaults" above. On January 30, 2014, our Board of Directors authorized the Repurchase Program. We began 2018 with $53.3 million in remaining share repurchaseauthorization. On both January 24, 2018 and October 19, 2018, our Board of Directors reset the authorization under our Repurchase Program to $100.0million in the aggregate, for the repurchase of our common stock in open market transactions or privately negotiated transactions, from time to time. During2018, we repurchased 1,580,910 shares of our common stock under the Repurchase Program for a total of $105.4 million. As of December 31, 2018 we hadremaining authorization to repurchase $81.5 million in shares of our common stock under the Repurchase Program.During 2018, we repurchased 71,434 shares of our common stock for $4.8 million from employees in connection with a net share settlement feature ofemployee equity-based awards.Contractual ObligationsAs of December 31, 2018, we had the following contractual obligations (in millions; note references are to the notes to our Consolidated FinancialStatements included elsewhere herein): Payments due by period 2019 2020 2021 2022 2023 Thereafter TotalFloor plan notes payable (Notes10&11)$966.1 $— $— $— $— $— $966.1Operating leases (Note 18)22.5 22.2 19.2 14.0 6.0 25.5 109.4Long-term debt (Note 13)40.8 33.9 17.2 32.0 53.9 732.3 910.1Interest on long-term debt (a)50.2 48.5 47.6 45.5 43.5 42.0 277.3Total contractual obligations$1,079.6 $104.6 $84.0 $91.5 $103.4 $799.8 $2,262.9________________________________________(a)Includes variable rate interest payments calculated using an estimated LIBOR rate of 2.52%, and assumes that borrowings will not be refinancedprior to or upon maturity.Cash FlowsClassification of Cash Flows Associated with Floor Plan Notes PayableBorrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle("Non-Trade"), and all floor plan notes payable relating to used vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified asfinancing activities on the accompanying Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net change infloor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor PlanNotes Payable—Trade") is classified as an operating activity on the accompanying Consolidated Statements of Cash Flows. Borrowings of floor plan notespayable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as afinancing activity in the accompanying Consolidated Statement of Cash Flows. Cash flows related to floor plan notes payable included in operatingactivities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lenderaffiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturerfrom which we purchased the related inventory. The majority of our floor plan notes are payable to parties unaffiliated with the entities from which wepurchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan lenders require amounts borrowed forthe purchase of a vehicle to be repaid within a short time period after the related vehicle is sold. As a result, we believe that it is important to understand therelationship between the cash flows of all of our floor plan notes payable and new vehicle inventory in order to understand our working capital and operatingcash flow and to be able to compare our operating cash flow to that of our competitors (i.e., if our competitors have a different mix of trade and non-trade floorplan financing as compared to us). In addition, we include all floor plan borrowings and repayments in our internal54Table of Contentsoperating cash flow forecasts. As a result, we use the non-GAAP measure "cash provided by operating activities, as adjusted" (defined below) to compare ourresults to forecasts. We believe that splitting the cash flows of floor plan notes payable between operating activities and financing activities, while all newvehicle inventory activity is included in operating activities, results in significantly different operating cash flow than if all the cash flows of floor plan notespayable were classified together in operating activities.Cash provided by operating activities, as adjusted, includes borrowings and repayments of floor plan notes payable to lenders not affiliated with themanufacturer from which we purchase the related new vehicles and all floor plan notes payable relating to used vehicles. Cash provided by operatingactivities, as adjusted, has material limitations, and therefore, may not be comparable to similarly titled measures of other companies and should not beconsidered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP. In order to compensate for these potential limitationswe also review the related GAAP measures.We have provided below a reconciliation of cash flow from operating activities, as if all changes in floor plan notes payable, except for (i) borrowingsassociated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicleinventory, were classified as an operating activity. For the Years Ended December 31, 2018 2017 2016 (In millions)Reconciliation of Cash provided by operating activities to Cash provided by operating activities, as adjusted Cash provided by operating activities, as reported$10.1 $266.3 $142.5New vehicle floor plan borrowings (repayments)—non-trade, net171.5 (70.7) 118.0Cash provided by operating activities, as adjusted$181.6 $195.6 $260.5Operating Activities—Net cash provided by operating activities totaled $10.1 million, $266.3 million, and $142.5 million for the years ended December 31, 2018, 2017, and2016, respectively. Net cash provided by operating activities, as adjusted, totaled $181.6 million, $195.6 million, and $260.5 million for the years endedDecember 31, 2018, 2017, and 2016, respectively. Net cash provided by operating activities, as adjusted, includes net income, adjustments to reconcile netincome to net cash provided by operating activities, changes in working capital, and changes in floor plan notes payable—non-trade.The $14.0 million decrease in our net cash provided by operating activities, as adjusted, for the year ended December 31, 2018 compared to the yearended December 31, 2017, was primarily the result of the following:•$19.8 million related to the change in inventory, net of floor plan notes payable, including both trade and non-trade;•$13.6 million related to the change in accounts payable and accrued liabilities;•$6.0 million related timing and collection of accounts receivable and contracts-in-transit during 2018 as compared to 2017; and•$2.0 million related to the change in other current and non-current assets and liabilities.The decrease in our net cash provided by operating activities, as adjusted, was partially offset by:•$27.4 million related to non-cash adjustments to net income.The $64.9 million decrease in our net cash provided by operating activities, as adjusted, for the year ended December 31, 2017 as compared to the yearended December 31, 2016 was primarily the result of the following:•$29.4 million related to an increase in inventory, net of floor plan notes payable, including both trade and non-trade;•$47.1 million related to the change in other current and non-current assets and liabilities; and•$34.0 million related to the change in accounts payable and accrued liabilities.The decrease in our net cash provided by operating activities, as adjusted, was partially offset by:55Table of Contents•$25.9 million related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2017 as compared to 2016;and•$19.7 million related to non-cash adjustments to net income.Investing Activities—Net cash used in investing activities totaled $149.6 million and $127.8 million for the years ended December 31, 2018 and 2017, respectively. Net cashprovided by investing activities totaled $4.9 million for the year ended December 31, 2016. Cash flows from investing activities relate primarily to capitalexpenditures, acquisitions, divestitures, and the sale of property and equipment.Capital expenditures, excluding the purchase of real estate and acquisitions, were $40.3 million, $42.3 million, and $81.4 million for the years endedDecember 31, 2018, 2017, and 2016, respectively. Purchases of real estate totaled $17.6 million, $5.8 million, and $10.6 million for the years endedDecember 31, 2018, 2017, and 2016, respectively. In addition, we purchased previously leased facilities for $4.4 million, $5.4 million, and 19.6 millionduring the years ended December 31, 2018, 2017, and 2016, respectively.We expect that capital expenditures during 2019 will total approximately $55.0 million to upgrade or replace our existing facilities, construct newfacilities, expand our service capacity, and invest in technology and equipment. In addition, as part of our capital allocation strategy, we continuallyevaluate opportunities to purchase properties currently under lease and acquire properties in connection with future dealership relocations. No assurances canbe provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.During the years ended December 31, 2018 and 2017 we acquired three franchises (three dealership locations) for an aggregate purchase price of $91.3million and two franchises (two dealership locations) and one collision center for an aggregate purchase price of 80.1 million, respectively. We did notacquire any franchises during the year ended December 31, 2016.There were no divestitures during the year ended December 31, 2018 and 2017. During the year ended December 31, 2016, we divested five franchises(four dealership locations) and two collision centers for proceeds of $114.3 million. Additionally, proceeds from the sale of assets, unrelated to the dealershipdivestitures, were $4.0 million, $5.8 million and $2.2 million for the years ended December 31, 2018, 2017, and 2016, respectively.Financing Activities—Net cash provided by financing activities totaled $143.1 million for the year ended December 31, 2018. Net cash used in financing activities totaled$137.2 million and $146.8 million for the years ended December 31, 2017 and 2016, respectively.During the years ended December 31, 2018, 2017, and 2016, we had non-trade floor plan borrowings of $4.59 billion, $3.85 billion, and $3.87 billion,respectively. Included in our non-trade floor plan borrowings, were borrowings of $300.0 million, $35.0 million, and $55.0 million, for the years endedDecember 31, 2018, 2017, and 2016, respectively, related to our used vehicle floor plan facility. In addition, during the years ended December 31, 2018, and2017, we had non-trade floor plan borrowings of $22.7 million, and 25.1 million, respectively, related to acquisitions. There were no borrowings related toacquisitions during the year ended December 31, 2016. The majority of our floor plan notes are payable to parties unaffiliated with the entities from which wepurchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.During the years ended December 31, 2018, 2017, and 2016, we made non-trade floor plan repayments of $4.39 billion, $3.92 billion, and $3.75 billion,respectively. Included in our non-trade floor plan repayments were repayments of $270.0 million, $35.0 million, and $55.0 million for the years endedDecember 31, 2018, 2017, and 2016, respectively, related to our used vehicle floor plan facility. In addition, during the years ended December 31, 2016, wehad floor plan repayments associated with dealership divestitures of $31.2 million. There were no repayments related to divestitures during the year endedDecember 31, 2018 and 2017.Repayments of borrowings totaled $19.9 million, $52.0 million, and $15.2 million, for the years ended December 31, 2018, 2017, and 2016, respectively.During the year ended December 31, 2018, we received proceeds from borrowings totaling $50.7 million.During the year ended December 31, 2017 we repaid three mortgages prior to their maturity date for a total of $36.6 million.56Table of ContentsDuring the year ended December 31, 2018, we repurchased a total of 1,580,910 shares of our common stock under our Repurchase Program for a total of$105.4 million and 71,434 shares of our common stock for $4.8 million from employees in connection with a net share settlement feature of employeeequity-based awards.Off Balance Sheet ArrangementsWe had no off balance sheet arrangements during any of the periods presented other than those disclosed in Note 18 "Lease Obligations" and Note 19"Commitments and Contingencies" of the Notes to Consolidated Financial Statements thereto.Item 7A. Quantitative and Qualitative Disclosures About Market RiskInterest Rate RiskWe are exposed to risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on $999.3 million of total variableinterest rate debt, which includes our floor plan notes payable and certain mortgage liabilities, outstanding as of December 31, 2018, a 100 basis pointchange in interest rates would result in a change of $10.0 million in annual interest expense.We periodically receive floor plan assistance from certain automobile manufacturers. Floor plan assistance reduced our cost of sales for the years endedDecember 31, 2018, 2017, and 2016, by $39.2 million, $36.4 million, and $35.3 million, respectively. We cannot provide assurance as to the future amountof floor plan assistance and these amounts may be negatively impacted due to future changes in interest rates.As part of our strategy to mitigate our exposure to fluctuations in interest rates, we have various interest rate swap agreements. All of our interest rateswaps qualify for hedge accounting treatment and do not contain any ineffectiveness.In June 2015, we entered into an interest rate swap agreement with a notional principal amount of $100.0 million. This swap was designed to provide ahedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in February 2025. The notionalvalue of this swap was $85.1 million and $90.4 million as of December 31, 2018 and 2017, respectively, and is reducing over its remaining term to $53.1million at maturity.In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to providea hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in September 2023. The notionalvalues of this swap as of December 31, 2018 and 2017, were $56.5 million and $60.2 million, respectively, and the notional value will reduce over itsremaining term to $38.7 million at maturity.For additional information about the effect of our derivative instruments on the accompanying Consolidated Financial Statements, see Note 14 "FinancialInstruments and Fair Value" of the Notes thereto.57Table of ContentsItem 8.Financial Statements and Supplementary DataINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReports of Independent Registered Public Accounting Firm59 Consolidated Balance Sheets as of December 31, 2018 and 201762 Consolidated Statements of Income for the Years Ended December 31, 2018, 2017, and 201663 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017, and 201664 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2018, 2017, and 201665 Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017, and 201666 Notes to Consolidated Financial Statements6758Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders ofAsbury Automotive Group, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Asbury Automotive Group, Inc. as of December 31, 2018 and 2017, the relatedconsolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31,2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all materialrespects, the consolidated financial position of the Company at December 31, 2018 and 2017, and the consolidated results of its operations and its cash flowsfor each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2019 expressed an unqualifiedopinion thereon.Adoption of ASU No. 2014-09As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue in 2018 due to the adoption ofAccounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and the related amendments.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2008.Atlanta, GeorgiaFebruary 28, 201959Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders ofAsbury Automotive Group, Inc.Opinion on Internal Control over Financial ReportingWe have audited Asbury Automotive Group, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Inour opinion, Asbury Automotive Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2018, based on the COSO criteria.As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on theeffectiveness of internal control over financial reporting did not include the internal controls of three franchises acquired during 2018, which are included inthe 2018 consolidated financial statements of the Company and constituted $105.3 million of consolidated assets as of December 31, 2018 and $166.8million of consolidated revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include anevaluation of the internal control over financial reporting of the three franchises.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of Asbury Automotive Group, Inc. as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income,shareholders' equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and our report dated February 28,2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.60Table of ContentsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ Ernst & Young LLPAtlanta, GeorgiaFebruary 28, 201961Table of ContentsASBURY AUTOMOTIVE GROUP, INC.CONSOLIDATED BALANCE SHEETS(In millions, except par value and share data) As of December 31, 2018 2017ASSETS CURRENT ASSETS: Cash and cash equivalents$8.3 $4.7Contracts-in-transit, net198.3 193.3Accounts receivable, net130.3 128.5Inventories, net1,067.6 826.0Assets held for sale26.3 30.3Other current assets122.2 119.3Total current assets1,553.0 1,302.1PROPERTY AND EQUIPMENT, net886.1 834.2GOODWILL181.2 160.8INTANGIBLE FRANCHISE RIGHTS65.8 49.6OTHER LONG-TERM ASSETS9.3 10.0Total assets$2,695.4 $2,356.7LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Floor plan notes payable—trade, net$114.0 $104.2Floor plan notes payable—non-trade, net852.1 627.9Current maturities of long-term debt38.8 12.9Accounts payable and accrued liabilities298.4 313.2Total current liabilities1,303.3 1,058.2LONG-TERM DEBT866.5 862.6DEFERRED INCOME TAXES21.7 12.5OTHER LONG-TERM LIABILITIES30.7 29.2COMMITMENTS AND CONTINGENCIES (Note 19) SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued or outstanding— —Common stock, $.01 par value, 90,000,000 shares authorized; 41,065,069 and 40,969,987 shares issued,including shares held in treasury, respectively0.4 0.4Additional paid-in capital572.9 563.5Retained earnings922.7 750.3Treasury stock, at cost; 21,719,339 and 20,156,962 shares, respectively(1,023.4) (919.1)Accumulated other comprehensive loss0.6 (0.9)Total shareholders' equity473.2 394.2Total liabilities and shareholders' equity$2,695.4 $2,356.7See accompanying Notes to Consolidated Financial Statements62Table of ContentsASBURY AUTOMOTIVE GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(In millions, except per share data) For the Year Ended December 31, 2018 2017 2016REVENUE: New vehicle$3,788.7 $3,561.1 $3,611.9Used vehicle1,972.4 1,834.1 1,876.4Parts and service821.0 786.1 778.5Finance and insurance, net292.3 275.2 261.0TOTAL REVENUE6,874.4 6,456.5 6,527.8COST OF SALES: New vehicle3,623.5 3,392.1 3,424.8Used vehicle1,842.7 1,712.2 1,749.1Parts and service305.2 296.3 295.2TOTAL COST OF SALES5,771.4 5,400.6 5,469.1GROSS PROFIT1,103.0 1,055.9 1,058.7OPERATING EXPENSES: Selling, general, and administrative755.8 729.7 732.5Depreciation and amortization33.7 32.1 30.7Franchise rights impairment3.7 5.1 —Other operating (income) expenses, net(1.1) 1.3 (2.3)INCOME FROM OPERATIONS310.9 287.7 297.8OTHER EXPENSES (INCOME): Floor plan interest expense32.5 22.7 19.3Other interest expense, net53.1 53.9 53.1Swap interest expense0.5 2.0 3.1Gain on divestitures— — (45.5)Total other expenses, net86.1 78.6 30.0INCOME BEFORE INCOME TAXES224.8 209.1 267.8Income tax expense56.8 70.0 100.6NET INCOME$168.0 $139.1 $167.2EARNINGS PER COMMON SHARE: Basic— Net Income$8.36 $6.69 $7.43Diluted— Net Income$8.28 $6.62 $7.40WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic20.1 20.8 22.5Restricted stock0.1 0.1 0.0Performance share units0.1 0.1 0.1Diluted20.3 21.0 22.6 See accompanying Notes to Consolidated Financial Statements63Table of ContentsASBURY AUTOMOTIVE GROUP, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In millions) For the Year Ended December 31, 2018 2017 2016Net income$168.0 $139.1 $167.2Other comprehensive income (loss): Change in fair value of cash flow swaps2.3 1.9 2.3Income tax expense associated with cash flow swaps(0.8) (0.7) (0.9)Comprehensive income$169.5 $140.3 $168.6See accompanying Notes to Consolidated Financial Statements64Table of ContentsASBURY AUTOMOTIVE GROUP, INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(Dollars in millions) Common Stock AdditionalPaid-inCapital RetainedEarnings Treasury Stock AccumulatedOtherComprehensiveIncome (Loss) Total Shares Amount Shares Amount Balances, December 31, 201540,507,313 $0.4 $537.2 $444.3 15,696,543 $(663.9) $(3.5) $314.5Comprehensive Income: Net income— — — 167.2 — — — 167.2Change in fair value of cash flow swaps,net of reclassification adjustment and$0.9 tax expense— — — — — — 1.4 1.4Comprehensive income— — — 167.2 — — 1.4 168.6Share-based compensation— — 12.0 — — — — 12.0Issuance of common stock in connectionwith share-based payment arrangements,including $0.2 excess tax benefit243,452 — 0.2 — — — — 0.2Repurchase of common stock associatedwith net share settlements of employeeshare-based awards— — — — 70,411 (3.7) — (3.7)Purchase of treasury shares— — — — 3,730,642 (211.9) — (211.9)Balances, December 31, 201640,750,765 $0.4 $549.4 $611.5 19,497,596 $(879.5) $(2.1) $279.7Comprehensive Income: Net income— — — 139.1 — — — 139.1Change in fair value of cash flow swaps,net of reclassification adjustment and$0.7 tax expense— — — — — — 1.2 1.2Comprehensive income— — — 139.1 — — 1.2 140.3Cumulative Effect Adjustment of ASU2016-09 0.5 (0.3) 0.2Share-based compensation— — 13.6 — — — — 13.6Issuance of common stock in connectionwith share-based payment arrangements219,222 — — — — — — —Repurchase of common stock associatedwith net share settlements of employeeshare-based awards— — — — 74,670 (4.8) — (4.8)Purchase of treasury shares— — — — 584,696 (34.8) — (34.8)Balances, December 31, 201740,969,987 $0.4 $563.5 $750.3 20,156,962 $(919.1) $(0.9) $394.2Comprehensive Income: Net income— — — 168.0 — — 168.0Change in fair value of cash flow swaps,net of reclassification adjustment and$0.8 tax expense— — — — — — 1.5 1.5Comprehensive income— — — 168.0 — — 1.5 169.5Cumulative Effect Adjustment of ASU2014-09 (Note 2)— — — 9.2 — — — 9.2Share-based compensation— — 10.5 — — 10.5Issuance of common stock in connectionwith share-based payment arrangements185,049 — — — — — — —Repurchase of common stock associatedwith net share settlements of employeeshare-based awards— — — — 71,434 (4.8) — (4.8)Purchase of treasury shares — — — 1,580,910 (105.4) — (105.4)Retirement of previously repurchasedcommon stock(89,967) — (1.1) (4.8) (89,967) 5.9 — —Balances, December 31, 201841,065,069 $0.4 $572.9 $922.7 21,719,339 $(1,023.4) $0.6 $473.2See accompanying Notes to Consolidated Financial Statements65Table of ContentsASBURY AUTOMOTIVE GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions) For the Year Ended December 31, 2018 2017 2016CASH FLOW FROM OPERATING ACTIVITIES: Net income$168.0 $139.1 $167.2Adjustments to reconcile net income to net cash provided by operating activities— Depreciation and amortization33.7 32.1 30.7Share-based compensation10.5 13.6 12.0Deferred income taxes5.3 2.8 6.1Franchise rights impairment3.7 5.1 —Non-cash impairment charges— — 3.6Loaner vehicle amortization22.5 22.4 21.5Gain on divestitures— — (45.5)Other adjustments, net3.1 4.3 4.1Changes in operating assets and liabilities, net of acquisitions and divestitures— Contracts-in-transit(5.0) (10.7) (6.9)Accounts receivable(1.5) 10.2 (19.5)Inventories(24.4) 251.5 105.3Other current assets(200.8) (197.2) (152.2)Floor plan notes payable—trade, net9.8 (4.1) (17.2)Accounts payable and accrued liabilities(16.2) (2.6) 31.4Other long-term assets and liabilities, net1.4 (0.2) 1.9Net cash provided by operating activities10.1 266.3 142.5CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures—excluding real estate(40.3) (42.3) (81.4)Capital expenditures—real estate(17.6) (5.8) (10.6)Purchases of previously leased real estate(4.4) (5.4) (19.6)Acquisitions(91.3) (80.1) —Divestitures— — 114.3Proceeds from the sale of assets4.0 5.8 2.2Net cash (used in) provided by investing activities(149.6) (127.8) 4.9CASH FLOW FROM FINANCING ACTIVITIES: Floor plan borrowings—non-trade4,591.9 3,850.3 3,866.3Floor plan borrowings—acquisitions22.7 25.1 —Floor plan repayments—non-trade(4,390.4) (3,921.0) (3,748.3)Floor plan repayments—divestitures— — (31.2)Proceeds from borrowings50.7 — —Repayments of borrowings(19.9) (52.0) (15.2)Payment of debt issuance costs(1.7) — (2.8)Repurchases of common stock, including amounts associated with net share settlements of employee share-based awards(110.2) (39.6) (215.6)Net cash provided by (used in) financing activities143.1 (137.2) (146.8)Net increase in cash and cash equivalents3.6 1.3 0.6CASH AND CASH EQUIVALENTS, beginning of period4.7 3.4 2.8CASH AND CASH EQUIVALENTS, end of period$8.3 $4.7 $3.4See Note 17 for supplemental cash flow informationSee accompanying Notes to Consolidated Financial Statements66Table of ContentsASBURY AUTOMOTIVE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(December 31, 2018, 2017, and 2016)1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESWe are one of the largest automotive retailers in the United States. As of December 31, 2018, we owned and operated 97 new vehicle franchises (83dealership locations), representing 29 brands of automobiles, and 25 collision centers, in 17 metropolitan markets, within nine states. Our stores offer anextensive range of automotive products and services, including new and used vehicles, repair and maintenance services, collision repair services, and financeand insurance products. As of December 31, 2018, our new vehicle revenue brand mix consisted of 47% imports, 33% luxury, and 20% domestic brands.Our operating results are generally subject to seasonal variations. Demand for new vehicles is generally highest during the second, third, and fourthquarters of each year and, accordingly, we expect our revenues to generally be higher during these periods. In addition, we typically experience higher salesof luxury vehicles in the fourth quarter, which have higher average selling prices and gross profit per vehicle retailed. Revenues and operating results may beimpacted significantly from quarter to quarter by changing economic conditions, vehicle manufacturer incentive programs, or adverse weather events.Basis of PresentationThe accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. and our wholly owned subsidiaries. All intercompanytransactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanyingConsolidated Financial Statements in order to conform to current presentation.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts ofrevenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewedquarterly, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significantestimates made in the accompanying consolidated financial statements include, but are not limited to, those relating to inventory valuation reserves, reservesfor chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related tointangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.Cash and Cash EquivalentsCash and cash equivalents include investments in money market accounts and short-term certificates of deposit, which have maturity dates of less than 90days when purchased.Contracts-In-TransitContracts-in-transit represent receivables from third-party finance companies for the portion of new and used vehicle purchase price financed bycustomers through sources arranged by us.InventoriesInventories are stated at the lower of cost and net realizable value. We use the specific identification method to value vehicle inventories and the "first-in,first-out" method ("FIFO") to account for our parts inventories. Our new vehicle sales histories have indicated that the vast majority of the new vehicles wesell are sold for, or in excess of, our cost to purchase those vehicles. Therefore, we generally do not maintain a reserve for new vehicle inventory. We maintaina reserve for used vehicle inventory where cost basis exceeds net realizable value. In assessing lower of cost and net realizable value for used vehicles, weconsider (i) the aging of our used vehicles, (ii) historical sales experience of used vehicles, and (iii) current market conditions and trends in used vehicle sales.We also review and consider the following metrics related to used vehicle sales (both on a recent and longer-term historical basis): (i) days of supply in ourused vehicle inventory, (ii) used vehicle units sold at less than original cost as a percentage of total used vehicles sold, and (iii) average vehicle selling priceof used vehicle units sold at less than original cost. We then determine the appropriate level of reserve required to reduce our used vehicle inventory to thelower of cost and net realizable value, and record the resulting adjustment in the period in which we determine a loss has67Table of Contentsoccurred. The level of reserve determined to be appropriate for each reporting period is considered to be a permanent inventory write-down, and therefore isonly released upon the sale of the related inventory.We receive assistance from certain automobile manufacturers in the form of advertising and floor plan interest credits. Manufacturer advertising creditsthat are reimbursements of costs associated with specific advertising programs are recognized as a reduction of advertising expense in the period they areearned. All other manufacturer advertising and floor plan interest credits are accounted for as purchase discounts, and are recorded as a reduction of inventoryand recognized as a reduction to New Vehicle Cost of Sales in the accompanying Consolidated Statements of Income in the period the related vehicle is sold.Property and EquipmentProperty and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Depreciation is included inDepreciation and Amortization on the accompanying Consolidated Statements of Income. Leasehold improvements are capitalized and amortized over thelesser of the life of the lease or the useful life of the related asset. The ranges of estimated useful lives are as follows (in years): Buildings and improvements10-40Machinery and equipment5-10Furniture and fixtures3-10Company vehicles3-5Expenditures for major additions or improvements, which extend the useful lives of assets, are capitalized. Minor replacements, maintenance and repairs,which do not improve or extend the lives of such assets, are expensed as incurred. We capitalize interest on borrowings during the active construction periodof capital projects. Capitalized interest is added to the cost of the assets and is depreciated over the estimated useful lives of the assets.We review property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.When we test our long-lived assets for impairment, we first compare the carrying amount of the underlying assets to their net recoverable value by reviewingthe undiscounted cash flows expected from the use and eventual disposition of the underlying assets. If the carrying amount of the underlying assets is lessthan their net recoverable value, then we calculate an impairment equal to the excess of the carrying amount over the fair market value, and the impairmentloss would be charged to operations in the period identified. We did not record an impairment of our property and equipment in 2018, 2017, and 2016.AcquisitionsAcquisitions are accounted for under the acquisition method of accounting, and the assets acquired and liabilities assumed are recorded at their fair value,at the acquisition date. The results of operations of acquired dealerships are included in the accompanying Consolidated Statements of Income, commencingon the date of acquisition.Goodwill and Other Intangible AssetsGoodwill represents the excess cost of an acquired business over the fair market value of its identifiable net assets. We have determined that, based onhow we integrate acquisitions into our business, how the components of our business share resources and interact with one another, and how we review theresults of our operations, that we have several geographic market-based operating segments. We have determined that the dealerships in each of our operatingsegments are components that are aggregated into several geographic market-based reporting units for the purpose of testing goodwill for impairment, as they(i) have similar economic characteristics, (ii) offer similar products and services (all of our dealerships offer new and used vehicles, service, parts and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our dealerships distributeproducts and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.Our only significant identifiable intangible assets, other than goodwill, are our rights under franchise agreements with manufacturers, which are recordedat an individual franchise level. The fair value of our manufacturer franchise rights are determined at the acquisition date, by discounting the projected cashflows specific to each franchise. We have determined that manufacturer franchise rights have an indefinite life, as there are no economic, contractual or otherfactors that limit their useful lives, and they are expected to generate cash flows indefinitely due to the historically long lives of the manufacturers' brandnames. Furthermore, to the extent that any agreements evidencing our manufacturer franchise rights would expire, we expect that we would be able to renewthose agreements in the ordinary course of business.68Table of ContentsGoodwill and manufacturer franchise rights are deemed to have indefinite lives and therefore are not subject to amortization. We review goodwill andmanufacturer franchise rights for impairment annually as of October 1st, or more often if events or circumstances indicate that impairment may have occurred.We are subject to financial statement risk to the extent that goodwill becomes impaired due to decreases in the fair value of our automotive retail business ormanufacturer franchise rights become impaired due to decreases in the fair value of our individual franchises.Debt Issuance CostsDebt issuance costs are presented as a contra-liability within Current Maturities of Long-Term Debt or Long-Term Debt on our Consolidated BalanceSheets, except for debt issuance costs associated with our line-of-credit arrangements, which are presented as an asset within Other Current Assets or OtherLong-Term Assets on our Consolidated Balance Sheets. Debt issuance costs are amortized to Floor Plan Interest Expense and Other Interest Expense, net inthe accompanying Consolidated Statements of Income through maturity using the effective interest method.Derivative Instruments and Hedging ActivitiesFrom time to time, we utilize derivative financial instruments to manage our interest rate risk. The types of risks hedged are those relating to thevariability of cash flows caused by fluctuations in interest rates. We document our risk management strategy and assess hedge effectiveness at each interestrate swaps inception and during the term of each hedge. Derivatives are reported at fair value on the accompanying Consolidated Balance Sheets.The effective portion of the gain or loss on our hedges is reported as a component of Accumulated Other Comprehensive Loss on the accompanyingConsolidated Balance Sheets, and reclassified to Swap Interest Expense in the accompanying Consolidated Statements of Income in the period during whichthe hedged transaction affects earnings.Measurements of hedge effectiveness are based on comparisons between the gains or losses of the actual interest rate swaps and the gains or losses ofhypothetical interest rate swaps, which have the same critical terms of the defined hedged items. Ineffective portions of these interest rate swaps are reportedas a component of Swap Interest Expense in the accompanying Consolidated Statements of Income, in the period during which any ineffectiveness isidentified.InsuranceWe are self-insured for employee medical claims and maintain stop-loss insurance for large-dollar individual claims. We have high deductible insuranceprograms for workers compensation, property and general liability claims. We maintain and review our claim and loss history to assist in assessing ourexpected future liability for these claims. We also use professional service providers, such as account administrators and actuaries, to help us accumulate andassess this information. Provisions for retained losses and deductibles are made by charges to expense based upon periodic evaluations of the estimatedultimate liabilities on reported and unreported claims.Revenue RecognitionThe Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent amendments issued thereafter (collectively"ASC 606"), on January 1, 2018. Refer to Note 2 "Revenue Recognition" for additional information related to the impact of the Company’s adoption of ASC606.Internal ProfitRevenues and expenses associated with internal work performed by our parts and service departments on new and used vehicle inventory are eliminatedin consolidation. The gross profit earned by our parts and service departments for internal work performed is included as a reduction of Parts and Service Costof Sales on the accompanying Consolidated Statements of Income upon the sale of the vehicle. The costs incurred by our new and used vehicle departmentsfor work performed by our parts and service departments is included in either New Vehicle Cost of Sales or Used Vehicle Cost of Sales on the accompanyingConsolidated Statements of Income, depending on the classification of the vehicle serviced. We maintain a reserve to eliminate the internal profit on vehiclesthat have not been sold.Share-Based CompensationWe record share-based compensation expense under the fair value method on a straight-line basis over the vesting period, unless the awards are subject toperformance conditions, in which case we recognize the expense over the requisite service period of each separate vesting tranche. In addition, we account forthe forfeiture of share-based awards as they occur.69Table of ContentsShare RepurchasesShare repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorizationapproved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held by the Company as TreasuryShares. In accordance with our accounting policy, we allocate any excess share repurchase price over par value between additional paid-in capital, which islimited to amounts initially recorded for the same issue, and retained earnings.During the year ended December 31, 2018, the Company retired 89,967 shares of its common stock repurchased pursuant to the Repurchase Program("Retired Shares") and previously held by the Company as Treasury Shares in the amount of $5.9 million.Earnings per Common ShareBasic earnings per common share is computed by dividing net income by the weighted-average common shares outstanding during the period. Dilutedearnings per common share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding duringthe period. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.AdvertisingWe expense costs of advertising as incurred and production costs when the advertising initially takes place, net of certain advertising credits and otherdiscounts received from certain automobile manufacturers. Advertising expense from continuing operations totaled $30.6 million, $30.3 million and $34.0million for the years ended December 31, 2018, 2017 and 2016, which was net of earned advertising credits of $21.0 million, $18.0 million, and $16.8million, respectively, and is included in Selling, General, and Administrative expense in the accompanying Consolidated Statements of Income.Income TaxesWe use the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future taxconsequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates. The effecton deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reducedby a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act makes broad andcomplex changes to the U.S. tax code, including, but not limited to, a reduction in the U.S. federal corporate income tax rate from 35% to 21%. In 2017, weremeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. Theprovisional amount recorded related to the remeasurement of our deferred tax balance resulted in a $7.9 million reduction to our net deferred tax liability asof December 31, 2017.The staff of the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which providedguidance on accounting for the income tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year fromDecember 22, 2017, the Tax Act enactment date, for companies to complete the accounting under ASC 740, Income Taxes ("ASC 740"). In accordance withSAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete.During the third quarter of 2018, the IRS released Notice 2018-68, which clarified a number of changes made to Section 162(m) of the Code by the TaxAct. As a result of this new guidance, we recorded $0.6 million of additional income tax expense related to an adjustment to the deferred tax asset for certaincomponents of share-based compensation. After considering the additional guidance issued by the U.S. Treasury Department, state tax authorities and otherstandard-setting bodies we have completed our accounting for the Tax Act.Assets Held for Sale and Liabilities Associated with Assets Held for SaleCertain amounts have been classified as Assets Held for Sale as of December 31, 2018 and 2017 in the accompanying Consolidated Balance Sheets.Assets and liabilities classified as held for sale include assets and liabilities associated with pending dealership disposals, real estate not currently used in ouroperations that we are actively marketing to sell, and any related mortgage notes payable, if applicable. Classification as held for sale begins on the date thatwe have met all of the criteria for classification as held for sale.70Table of ContentsAt the time of classifying assets as held for sale, we compare the carrying value of these assets to estimates of fair value to assess for impairment. Wecompare the carrying value to estimates of fair value utilizing the assistance of third-party broker opinions of value and third-party desktop appraisals toassist in our fair value estimates related to real estate properties.Statements of Cash FlowsBorrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle("Non-Trade") and all floor plan notes payable relating to pre-owned vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classifiedas financing activities on the accompanying Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net changein floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "FloorPlan Notes Payable—Trade") is classified as an operating activity on the accompanying Consolidated Statements of Cash Flows. Borrowings of floor plannotes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classifiedas a financing activity in the accompanying Consolidated Statement of Cash Flows. Cash flows related to floor plan notes payable included in operatingactivities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lenderaffiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturerfrom which we purchased the related inventory.Loaner vehicles account for a significant portion of Other Current Assets. We acquire loaner vehicles either with available cash or through borrowingsfrom either our manufacturer affiliated lenders or through our senior secured credit agreement with Bank of America, as administrative agent, and the otheragents and lenders party thereto (the "2016 Senior Credit Facility"). Loaner vehicles are initially used by our service department for only a short period oftime (typically 6 to 12 months) before we seek to sell them. Therefore, we classify the acquisition of loaner vehicles in Other Current Assets and theborrowings and repayments of loaner vehicle notes payable in Accounts Payable and Accrued Liabilities in the accompanying Consolidated Statements ofCash Flows. Loaner vehicles are depreciated over the service period to their estimated value. At the end of the loaner service period, loaner vehicles aretransferred from Other Current Assets to used vehicle inventory. These transfers are reflected as non-cash transfers between Other Current Assets and Inventoryin the accompanying Consolidated Statements of Cash Flows.Business and Credit Concentration RiskFinancial instruments, which potentially subject us to a concentration of credit risk, consist principally of cash deposits. We maintain cash balances atfinancial institutions with strong credit ratings. Generally, amounts maintained with these financial institutions are in excess of FDIC insurance limits.We have substantial debt service obligations. As of December 31, 2018, we had total debt of $910.1 million, excluding floor plan notes payable, the debtpremium on the 6.0% Senior Subordinated Notes due 2024 ("6.0% Notes"), and debt issuance costs. In addition, we and our subsidiaries have the ability toobtain additional debt from time to time to finance acquisitions, real property purchases, capital expenditures, share repurchases or for other purposes,although such borrowings are subject to the restrictions contained in the second amended and restated senior secured credit agreement with Bank of America,N.A. ("Bank of America"), as administrative agent, and the other lenders party thereto (the "2016 Senior Credit Facility"), the indenture governing our 6.0%Senior Subordinated Notes due 2024 (the "Indenture"), and our other debt instruments. We will have substantial debt service obligations, consisting ofrequired cash payments of principal and interest, for the foreseeable future.We are subject to operating and financial restrictions and covenants in certain of our leases and in our debt instruments, including the 2016 Senior CreditFacility, the Indenture, and the credit agreements covering our mortgage obligations. These agreements contain restrictions on, among other things, ourability to incur additional indebtedness, to create liens or other encumbrances, and to make certain payments (including dividends and repurchases of ourshares and investments). These agreements may also require us to maintain compliance with certain financial and other ratios. Our failure to comply with anyof these covenants in the future would constitute a default under the relevant agreement, which would, depending on the relevant agreement, (i) entitle thecreditors under such agreement to terminate our ability to borrow under the relevant agreement and accelerate our obligations to repay outstandingborrowings; (ii) require us to apply our available cash to repay these borrowings; (iii) entitle the creditors under such agreement to foreclose on the propertysecuring the relevant indebtedness; and/or (iv) prevent us from making debt service payments on certain of our other indebtedness, any of which would havea material adverse effect on our business, financial condition or results of operations. In many cases, a default under one of our debt or mortgage, agreementscould trigger cross-default provisions in one or more of our other debt or mortgages.71Table of ContentsA number of our dealerships are located on properties that we lease. Each of the leases governing such properties has certain covenants with which wemust comply. If we fail to comply with the covenants under our leases, the respective landlords could terminate the leases and seek damages from us.Concentrations of credit risk with respect to contracts-in-transit and accounts receivable are limited primarily to automotive manufacturers and financialinstitutions. Credit risk arising from receivables from commercial customers is minimal due to the large number of customers comprising our customer base.A significant portion of our new vehicle sales are derived from a limited number of automotive manufacturers. For the year ended December 31, 2018,manufacturers representing 5% or more of our revenues from new vehicle sales were as follows: Manufacturer (Vehicle Brands): % of TotalNew VehicleRevenuesAmerican Honda Motor Co., Inc. (Honda and Acura) 23.7%Toyota Motor Sales, U.S.A., Inc. (Toyota and Lexus) 18.4%Nissan North America, Inc. (Nissan and Infiniti) 14.4%Ford Motor Company (Ford and Lincoln) 11.1%Mercedes-Benz USA, LLC (Mercedes-Benz, Smart and Sprinter) 6.5%BMW of North America, LLC (BMW and Mini) 5.6%No other manufacturers individually accounted for more than 5% of our total new vehicle revenue for the year ended December 31, 2018.Segment ReportingOur operations are organized by management into geographic market-based dealership groups. Our Chief Operating Decision Maker is our ChiefExecutive Officer who manages the business, regularly reviews financial information and allocates resources at the geographic market level. The geographicoperating segments have been aggregated into one reportable segment as their operations (i) have similar economic characteristics (our markets all havesimilar long-term average gross margins), (ii) offer similar products and services (all of our markets offer new and used vehicles, parts and service, and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our markets distributeproducts and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.Recent Accounting PronouncementsIn August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. Theamendments in this update address several specific cash flow issues with the objective of reducing the diversity in practice in how certain cash receipts andcash payments are presented and classified in the statement of cash flows. The amendments in this update were effective for interim and annual periodsbeginning after December 15, 2017 and include retrospective application. The Company adopted this update on January 1, 2018. The adoption of thisupdate did not have a material impact to our consolidated financial statements for the years ended December 31, 2018, 2017, and 2016.In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in thisupdate clarify the definition of a business in order to assist entities with evaluating whether transactions should be accounted for as acquisitions (ordisposals) of assets or businesses. The amendments in this update were to be applied prospectively and were effective for interim and annual periodsbeginning after December 15, 2017. The Company adopted this update on January 1, 2018. The adoption of this update did not have a material impact to ourconsolidated financial statements for the year ended December 31, 2018 .In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard, and its related amendments, establishes a right-of-use model("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will beclassified as finance or operating, with the classification affecting the pattern and classification of expense recognition reflected in the income statement. Amodified retrospective transition approach is required, applying the new standard to all leases existing either as of the effective date or as of the beginning ofthe earliest comparative period presented in the financial statements at the date of adoption.72Table of ContentsThe new standard is effective for us on January 1, 2019 and the Company plans to adopt the new standard using the effective date method as the date ofinitial application. As a result, financial information and disclosures will not be updated under the new standard for periods ending prior to January 1, 2019.Moreover, the Company expects to elect the package of practical expedients to use in transition, which permits us not to reassess under the new standard ourprior conclusions about lease identification and lease classification. In addition, we expect to elect the short-term lease exemption for all leases that qualifyas well as the practical expedient to not separate lease and non-lease components for all leases.The adoption of the new standard will have a material impact to our consolidated financial statements due to the recognition of ROU assets and liabilitiesfor real estate and equipment leases on our consolidated balance sheet. In preparation for adoption of the new standard, the Company established animplementation team to assist with the implementation of key controls for transition as well as controls related to on-going accounting considerations. TheCompany is currently in the process of finalizing the transition amounts of ROU assets and liabilities that will be recorded on the balance sheet as a result ofthe adoption of the new standard. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.This update is intended to simplify hedge accounting by better aligning how an entity’s risk management activities and hedging relationships are presentedin its financial statements and simplifies the application of hedge accounting guidance in certain situations and is effective for the Company on January 1,2019. This update expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation ofthe effects of the hedging instrument and the hedged item in the financial statements. For cash flow hedges existing at the adoption date, this update requiresadoption on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the effective date. The amendments to presentationguidance and disclosure requirements are required to be adopted prospectively. We are currently evaluating this update and the significance of any impactthis update may have to our consolidated financial statements.2. REVENUE RECOGNITIONOn January 1, 2018, the Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption.We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to retained earnings as of January 1, 2018. Therefore,prior period comparative information has not been adjusted and continues to be reported under accounting standards ("previous guidance" or "ASC 605") ineffect for those periods. Disaggregation of RevenueThe following table summarizes revenue from contracts with customers for the twelve months ended December 31, 2018: For the Year Ended December31, 2018Revenue: New vehicle$3,788.7 Used vehicle retail1,783.3 Used vehicle wholesale189.1New and used vehicle5,761.1 Sale of vehicle parts and accessories139.2 Vehicle repair and maintenance services681.8Parts and services821.0Finance and insurance, net292.3Total revenue$6,874.4The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at thetime the related performance obligation is satisfied by transferring a promised good or service to a customer. Sales and other taxes we collect concurrent withrevenue-producing activities are excluded from revenue.73Table of ContentsNew vehicle and used vehicle retailRevenue from the sale of new and used vehicles (which excludes sales and other taxes) is recognized when the terms of the customer contract are satisfiedwhich generally occurs with the signing of the sales contract and transfer of control of the vehicle to the customer. Incidental items that are immaterial in thecontext of the contract are accrued at the time of sale.Used vehicle wholesaleProceeds from the sale of these vehicles are recognized in used vehicle revenue upon transfer of control to end-users at auction.Sale of vehicle parts and accessoriesThe Company recognizes revenue upon transfer of control to the customer which occurs at a point in time. When the Company performs shipping andhandling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, andaccordingly, the costs are accrued for when the related revenue is recognized.Vehicle repair and maintenance servicesThe Company provides vehicle repair and maintenance services to its customers pursuant to the terms and conditions included within the customercontract ("repair order"). Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment forperformance to date exists within our contractual agreements. As such, the Company recognizes revenue over time as the Company satisfies its performanceobligation. Additionally, the Company has determined that parts and labor are not individually distinct in the context of a repair order and therefore aretreated as a single performance obligation.Finance and Insurance, netWe receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle servicecontracts, guaranteed auto protection (known as "GAP") insurance, and other insurance, to end-users. Finance and insurance commission revenue isrecognized at the point of sale since our performance obligation is to arrange financing or facilitating the sale of a third party’s products or services to ourcustomers.The Company’s commission arrangements with third-party lenders and insurance administrators consists of fixed ("upfront") and variable consideration.Variable consideration includes commission chargebacks ("chargebacks") in the event a contract is prepaid, defaulted upon, or terminated by the end-user.The Company reserves for future chargebacks based on historical chargeback experience and the termination provisions of the applicable contract and thesereserves are established in the same period that the related revenue is recognized.We also participate in future profits pursuant to retrospective commission arrangements, which meet the definition of variable consideration, for certaininsurance products associated with a third-party portfolio. The Company estimates the amount of variable consideration to be included in the transactionprice based on historical payment trends and further constrains the variable consideration such that it is probable that a significant reversal of previouslyrecognized revenue will not occur. In making these assessments the Company considers the likelihood and magnitude of a potential reversal of revenue andupdates its assessment when uncertainties associated with the constraint are removed.Financial Statement Impact of Adopting ASC 606The Company adopted ASC 606 using the modified retrospective method. The cumulative effect of applying the new guidance to all contracts withcustomers that were not completed as of January 1, 2018 was recorded as an adjustment to retained earnings as of the adoption date. As a result of applyingthe modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the Company's CondensedConsolidated Balance Sheet as of January 1, 2018:74Table of Contents As Reported Adjustments Balance at December 31, 2017 Vehicle Repair andMaintenance Services Finance and Insurance,net January 1, 2018 (In millions)Assets: Inventories$826.0 $(4.1) $— $821.9Other current assets119.3 6.4 10.0 135.7Liabilities: Deferred income taxes$12.5 $0.6 $2.5 $15.6Equity: Retained earnings$750.3 $1.7 $7.5 $759.5Vehicle repair and maintenance servicesUnder the previous guidance, revenue was recognized at the time all repairs were completed. Under ASC 606, revenue is recognized as the Companysatisfies its performance obligation. The amounts reflected within the table above relate to the Company’s measure of progress for open contracts as ofJanuary 1, 2018. In addition, contract assets are reported within Other Current Assets on the Company's Consolidated Balance Sheets.Finance and Insurance, netUnder the previous guidance, retrospective commissions were not fixed or determinable, and as a result, the associated revenue was recognized on a cashbasis. Under ASC 606, the Company recognizes an estimate of the variable consideration to be received, subject to constraint, as it satisfies its performanceobligation. As the Company’s performance obligation is satisfied at the time of arranging the insurance product sale, the Company recorded a contract assetand corresponding increase to retained earnings based on an estimate, subject to constraint, of amounts expected to be received associated with previouslysatisfied performance obligations.Impact of New Revenue Guidance on Financial Statement Line ItemsIn accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our Consolidated Balance Sheets and Statementsof Income was as follows: As of December 31, 2018 As Reported Amounts Under ASC605 Effect of ChangeIncrease/(Decrease) (In millions)Balance Sheet: Assets: Accounts receivable$130.3 $143.6 $(13.3)Inventories1,067.6 1,070.2 (2.6)Other current assets122.2 107.5 14.7Liabilities: Accounts payable and accrued liabilities$298.4 $298.5 $(0.1)Deferred income taxes21.7 18.6 3.1Equity: Retained earnings$922.7 $926.9 $(4.2)75Table of Contents For the Year Ended December 31, 2018 As Reported Amounts Under ASC605 Effect of ChangeIncrease/(Decrease) (In millions, except per share data)Statement of Income: Revenue: Parts and service$821.0 $823.3 $(2.3)Finance and insurance, net292.3 291.7 0.6Cost of Sales: Parts and service305.2 306.7 (1.5)Income before income taxes224.8 225.0 (0.2)Income tax expense56.8 56.9 (0.1)Net income$168.0 $168.1 $(0.1)Earnings Per Common Share: Basic$8.36 $8.36 $—Diluted$8.28 $8.28 $—The following summarizes the changes to the Company’s Condensed Consolidated Statements of Income for the year ended December 31, 2018 as aresult of the adoption of ASC 606 on January 1, 2018 compared to if the Company had continued to recognize revenues under ASC 605:•ASC 606 accelerated the recognition of revenue and costs related to open vehicle repair orders in which recognition was previously deferred untilthe completion of the repair order. For the year ended December 31, 2018, gross profit decreased $0.8 million due to differences in open repair ordersas of December 31, 2018 compared to open repair orders as of December 31, 2017.•ASC 606 accelerated the timing of recognition of certain retro-commission arrangements (i.e. variable consideration) reported within finance andinsurance, net. Under ASC 605, retro-commission income was recorded at the time it was received from our third-party provider. For the year endedDecember 31, 2018, net revenue increased $0.6 million due to the difference between the amounts received compared to the Company's estimate ofvariable consideration, subject to a constraint, for products arranged during the same comparative period.76Table of ContentsContract AssetsChanges in contract assets during the period are reflected in the table below. Contract assets related to vehicle repair and maintenance services aretransferred to receivables when a repair order is completed and invoiced to the customer. Vehicle Repair andMaintenance Services Finance andInsurance, net Total (In millions)Contract Assets (Current), January 1, 2018$6.4 $10.0 $16.4Transferred to receivables from contract assets recognized at the beginning ofthe period(6.4) (3.2) (9.6)Increases related to revenue recognized, inclusive of adjustments to constraint,during the period5.1 2.6 7.7Contract Assets (Current), March 31, 20185.1 9.4 14.5Transferred to receivables from contract assets recognized at the beginning ofthe period(5.1) (3.2) (8.3)Increases related to revenue recognized, inclusive of adjustments to constraint,during the period4.0 2.7 6.7Contract Assets (Current), June 30, 20184.0 8.9 12.9Transferred to receivables from contract assets recognized at the beginning ofthe period(4.0) (3.0) (7.0)Increases related to revenue recognized, inclusive of adjustments to constraint,during the period4.3 3.1 7.4Contract Assets (Current), September 30, 20184.3 9.0 13.3Transferred to receivables from contract assets recognized at the beginning ofthe period$(4.3) $(3.9) $(8.2)Increases related to revenue recognized, inclusive of adjustments to constraint,during the period$4.1 $5.5 $9.6Contract Assets (Current), December 31, 2018$4.1 $10.6 $14.73. ACQUISITIONS AND DIVESTITURESResults of acquired dealerships are included in our accompanying Consolidated Statements of Income commencing on the date of acquisition. Ouracquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that the assets acquired and liabilitiesassumed be recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiablenet assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assetsacquired in a business combination that are not individually identified and separately recognized.During the year ended December 31, 2018, we acquired the assets of one franchise (one dealership location) in the Indianapolis, Indiana market and twofranchises (two dealership locations) in the Atlanta, Georgia market for a combined aggregate purchase price of $93.2 million. Consideration paid (orpayable) to fund these acquisitions included $68.6 million of cash, $22.7 million of floor plan borrowings for the purchase of the related new vehicleinventory, and purchase price holdbacks of $1.9 million for potential indemnity claims made by us with respect to the acquired franchises.During the year ended December 31, 2017, we acquired the assets of two franchises (two dealership locations) and one collision center in the Indianapolis,Indiana market for an aggregate purchase price of $80.1 million. We financed these acquisitions with $55.0 million of cash and $25.1 million of floor planborrowings for the purchase of the related new vehicle inventory. We did not acquire any dealerships during the year ended December 31, 2016.77Table of ContentsBelow is the allocation of purchase price for these acquisitions. Goodwill and manufacturer franchise rights associated with our acquisitions will bedeductible for federal and state income tax purposes ratably over a 15-year period. For the Year Ended December 31, 2018 2017 (In millions)Inventory$27.3 $25.9Real estate23.5 12.2Property and equipment0.6 1.4Goodwill20.4 32.7Manufacturer franchise rights19.9 6.2Loaner vehicles1.7 3.2Liabilities assumed(0.2) $(1.5)Total purchase price$93.2 $80.1We did not divest any dealerships during the years ended December 31, 2018 and 2017.During the year ended December 31, 2016, we sold the remaining five franchises (four dealership locations) and two collision centers in the Little Rock,Arkansas market. We recorded a gain associated with the sale of the franchises totaling $45.5 million ($28.4 million net of tax) in our accompanyingConsolidated Statements of Income. Our 2016 divestitures are not considered significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X.4. ACCOUNTS RECEIVABLEAccounts receivable consisted of the following: As of December 31, 2018 2017 (In millions)Vehicle receivables$45.7 $48.3Manufacturer receivables51.2 47.0Other receivables34.7 34.8Total accounts receivable131.6 130.1Less—Allowance for doubtful accounts(1.3) (1.6)Accounts receivable, net$130.3 $128.55. INVENTORIESInventories consisted of the following: As of December 31, 2018 2017 (In millions)New vehicles$867.2 $646.5Used vehicles158.9 135.9Parts and accessories41.5 43.6Total inventories$1,067.6 $826.0The lower of cost and net realizable value reserves reduced total inventory cost by $6.1 million and $5.7 million as of December 31, 2018 andDecember 31, 2017, respectively. As of December 31, 2018 and December 31, 2017, certain automobile manufacturer incentives reduced new vehicleinventory cost by $10.1 million and $7.4 million, respectively, and reduced new vehicle cost of sales from continuing operations for the years endedDecember 31, 2018, 2017, and 2016 by $42.4 million, $40.1 million, and $40.6 million, respectively.78Table of Contents6. ASSETS HELD FOR SALEAssets held for sale, comprising real estate not currently used in our operations and that we are actively marketing to sell, totaled $26.3 million and $30.3million as of December 31, 2018 and 2017, respectively. There were no liabilities associated with the real estate assets held for sale. Additionally, during theyears ended December 31, 2018 and 2017, we sold two vacant properties each year with total net book values of $4.0 million and $5.7 million, respectively.In January 2019, the Company's Board of Directors authorized Management's request for approval to divest of one dealership location. The Company iscurrently in negotiations with a potential buyer for this dealership.During the year ended December 31, 2016, we recorded $2.7 million of impairment expense related to real estate properties we were actively marketing tosell, based on offers received from prospective buyers and third-party brokers' opinions of value. We did not record any impairment expense associated withreal estate properties that we were actively marketing to sell during the years ended December 31, 2018 or 2017.In addition to the above impairments, during the year ended December 31, 2016, we recognized a $0.9 million non-cash impairment associated with alease buyout and lease termination related to real estate not classified as held for sale. This was recorded in Other Operating (income) expenses, net in ouraccompanying Consolidated Statements of Income.7. OTHER CURRENT ASSETSOther current assets consisted of the following: As of December 31, 2018 2017 (In millions)Service loaner vehicles$87.0 $85.4Contract Assets (see Note 2)14.7 —Prepaid expenses5.9 5.2Prepaid taxes9.1 19.5Other5.5 9.2Other current assets$122.2 $119.38. PROPERTY AND EQUIPMENT, NETProperty and equipment, net consisted of the following: As of December 31, 2018 2017 (In millions)Land$330.4 $303.9Buildings and leasehold improvements617.5 582.0Machinery and equipment94.8 93.7Furniture and fixtures62.2 61.7Company vehicles8.8 8.8Construction in progress30.1 22.4Gross property and equipment1,143.8 1,072.5Less—Accumulated depreciation(257.7) (238.3)Property and equipment, net$886.1 $834.2During the years ended December 31, 2018, 2017, and 2016, we capitalized $0.5 million, $0.2 million, and $1.1 million, respectively, of interest inconnection with various capital projects to upgrade or remodel our facilities. Depreciation expense was $33.7 million, $32.1 million, and $30.7 million forthe years ended December 31, 2018, 2017, and 2016, respectively.9. GOODWILL AND INTANGIBLE FRANCHISE RIGHTSOur acquisitions have resulted in the recording of goodwill and intangible franchise rights. Goodwill is an asset representing operational synergies andfuture economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.Intangible franchise rights is an asset representing our rights under franchise agreements with vehicle manufacturers. The changes in goodwill and intangiblefranchise rights for the years ended79Table of ContentsDecember 31, 2018 and 2017 are as follows: Goodwill (In millions)Balance as of December 31, 2016 (a)$128.1Acquisitions32.7Balance as of December 31, 2017 (a)160.8Acquisitions20.4Balance as of December 31, 2018 (a)$181.2______________________________(a)Net of accumulated impairment losses of $537.7 million recorded prior to the year ended December 31, 2016. Intangible FranchiseRights (In millions)Balance as of December 31, 2016$48.5Acquisitions6.2Impairments(5.1)Balance as of December 31, 2017$49.6Acquisitions$19.9Impairments$(3.7)Balance as of December 31, 2018$65.8Goodwill and intangible franchise rights are tested annually as of October 1st or more frequently in the event that facts and circumstances indicate atriggering event has occurred.Goodwill impairment is recognized based on the difference between the carrying value of a reporting unit and its fair value. We elected to perform aqualitative assessment for our October 1, 2018 goodwill impairment testing and determined that it was more likely than not that the fair value exceeded thecarrying value of our reporting units. The Company elected to perform a quantitative assessment for our October 1, 2017 goodwill impairment assessmentand concluded the fair value of each our reporting units exceeded its carrying value.The quantitative impairment test for franchise rights includes comparison of the estimated fair value to the carrying value for each of our intangible franchiserights. The Company estimates fair value by using a discounted cash flow model (income approach) based on assumptions related to the cash flows directlyattributable to the franchise. These assumptions include revenue growth rates, working capital requirements, weighted average cost of capital, future grossmargins, and future selling, general, and administrative expenses.We elected to perform a quantitative assessment for our October 1, 2018 and 2017 franchise rights impairment testing. In connection with our testing, weidentified the carrying values of certain of our intangible franchise rights exceeded fair value, and as a result, recognized $3.7 million and $5.1 million in pre-tax non-cash impairment charges during the years ended December 31, 2018 and 2017, respectively.80Table of Contents10. FLOOR PLAN NOTES PAYABLE—TRADEWe consider floor plan notes payable to a party that is affiliated with the entity from which we purchase our new vehicle inventory as Floor Plan NotesPayable—Trade on our Consolidated Balance Sheets. Floor plan notes payable—trade, net consisted of the following: As of December 31, 2018 2017 (In millions)Floor plan notes payable—trade$125.3 $114.8Floor plan notes payable offset account(11.3) (10.6)Total floor plan notes payable—trade, net$114.0 $104.2We have a floor plan facility with the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory. Our floor planfacility with Ford Credit matures on December 5, 2019 and does not have a stated borrowing limitation.We established a floor plan offset account with Ford Credit, that allows us to transfer cash as an offset to floor plan notes payable. These transfers reducethe amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from theoffset account into our operating cash accounts within one to two days. As a result of using our floor plan offset account, we experience a reduction in FloorPlan Interest Expense on our Consolidated Statements of Income.The representations and covenants contained in the agreement governing our floor plan facility with Ford Credit are customary for financing transactionsof this nature. Further, the agreement governing our floor plan facility with Ford Credit also provides for events of default that are customary for financingtransactions of this nature, including cross-defaults to other material indebtedness. Upon the occurrence of an event of default, the Company could berequired to immediately repay all outstanding amounts under our floor plan facility with Ford Credit.11. FLOOR PLAN NOTES PAYABLE—NON-TRADEWe consider floor plan notes payable to a party that is not affiliated with the entity from which we purchase our new vehicle inventory as Floor Plan NotesPayable—Non-Trade on our Consolidated Balance Sheets. Floor plan notes payable—non-trade, net consisted of the following: As of December 31, 2018 2017 (In millions)Floor plan notes payable—new non-trade$843.0 $666.6Floor plan notes payable—used non-trade30.0 —Floor plan notes payable offset account(20.9) (38.7)Total floor plan notes payable—non-trade, net$852.1 $627.9On July 25, 2016, the Company and certain of its subsidiaries entered into a second amended and restated senior secured credit agreement with Bank ofAmerica, as administrative agent, and the other lenders party thereto. The 2016 Senior Credit Facility amended and restated the Company's pre-existingsenior secured credit agreement, dated as of August 8, 2013, by and among the Company and certain of its subsidiaries and Bank of America, asadministrative agent, and the other agents and lenders party thereto (the "Restated Credit Agreement").The 2016 Senior Credit Facility provides for the following, in each case subject to limitations on availability as set forth therein:•a $250.0 million revolving credit facility (the "Revolving Credit Facility") with a $50.0 million sublimit for letters of credit;•a $900.0 million new vehicle revolving floor plan facility (the "New Vehicle Floor Plan Facility"); and•a $150.0 million used vehicle revolving floor plan facility (the "Used Vehicle Floor Plan Facility").81Table of ContentsSubject to compliance with certain conditions, the agreement governing the 2016 Senior Credit Facility provides that the Company and its subsidiariesthat are borrowers under the 2016 Senior Credit Facility (collectively, the "Borrowers") have the ability, at their option and subject to the receipt ofadditional commitments from existing or new lenders, to increase the size of the facilities by up to $325.0 million in the aggregate without lender consent.At our option, we have the ability to re-designate a portion of our availability under our Revolving Credit Facility to the New Vehicle Floor Plan facilityor the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to re-designate is determined based on our current borrowing availability, less$50.0 million. In addition, we are able to re-designate any amounts moved to the New Vehicle Floor Plan Facility or Used Vehicle Floor Plan Facility back tothe Revolving Credit Facility. As of December 31, 2018, we re-designated $190.0 million of availability under our Revolving Credit Facility to our NewVehicle Floor Plan Facility. We re-designated this amount to take advantage of the lower commitment fee rates on our new vehicle floor plan facility whencompared to our revolving credit facility.In connection, with the New Vehicle Floor Plan Facility, we established an account with Bank of America that allows us to transfer cash as an offset tofloor plan notes payable. These transfers reduce the amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, whileretaining the ability to transfer amounts from the offset account into our operating cash accounts within one to two days. As a result of the use of our floorplan offset account, we experience a reduction in Floor Plan Interest Expense on our Consolidated Statements of Income.In addition to using proceeds from borrowings under the 2016 Senior Credit Facility to repay amounts outstanding under the Restated Credit Agreement,proceeds from borrowings from time to time under the (i) Revolving Credit Facility may be used for, among other things, acquisitions, working capital andcapital expenditures; (ii) New Vehicle Floor Plan Facility may be used to finance the acquisition of new vehicle inventory and to refinance new vehicleinventory at acquired dealerships; and (iii) Used Vehicle Floor Plan Facility may be used to finance the acquisition of used vehicle inventory and for, amongother things, other working capital and capital expenditures.Borrowings under the 2016 Senior Credit Facility bear interest, at the option of the Company, based on the London Interbank Offered Rate ("LIBOR") orthe Base Rate, in each case plus an Applicable Margin. The Base Rate is the highest of the (i) Bank of America prime rate, (ii) Federal Funds rate plus 0.50%,and (iii) one month LIBOR plus 1.00%. Borrowings under the New Vehicle Floor Plan Facility bear interest, at the option of the Company, based on LIBORplus 1.25% or the Base Rate plus 0.25%. Borrowings under the Used Vehicle Floor Plan Facility bear interest, at the option of the Company, based on LIBORplus 1.50% or the Base Rate plus 0.50%. In addition to the payment of interest on borrowings outstanding under the 2016 Senior Credit Facility, we arerequired to pay a quarterly commitment fee of 0.15% per year on both the New Vehicle Facility Floor Plan and the Used Vehicle Facility Floor Plan Facility.The 2016 Senior Credit Facility is guaranteed by each existing, and will be guaranteed by each future, direct and indirect domestic subsidiary of theCompany, other than, at the option of the Company, certain immaterial subsidiaries. The 2016 Senior Credit Facility is also guaranteed by the Company. Theobligations under each of the Revolving Credit Facility and the Used Vehicle Floor Plan Facility are collateralized by liens on substantially all of the presentand future assets, other than real property, of the Company and the guarantors. The obligations under the New Vehicle Floor Plan Facility are collateralizedby liens on substantially all of the present and future assets, other than real property, of the Borrowers under the New Vehicle Floor Plan Facility.Each of the above provisions is subject to limitations on borrowing availability as set out in the 2016 Senior Credit Facility. Based on these borrowingbase limitations, as of December 31, 2018 we had $78.6 million of borrowing availability under our used vehicle revolving floor plan facility. The 2016Senior Credit Facility matures, and all amounts outstanding thereunder will be due and payable, on July 25, 2021.See the "Representations and Covenants" section below under our "Long-Term Debt" footnote for a description of the representations, covenants andevents of default contained in the 2016 Senior Credit Facility.82Table of Contents12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIESAccounts payable and accrued liabilities consisted of the following: As of December 31, 2018 2017 (In millions)Accounts payable$81.9 $92.4Loaner vehicle notes payable87.5 86.8Accrued compensation27.6 24.9Accrued finance and insurance chargebacks23.0 23.3Accrued insurance20.9 20.4Taxes payable23.7 26.6Accrued advertising3.9 6.5Accrued interest6.6 5.1Other23.3 27.2Accounts payable and accrued liabilities$298.4 $313.213. LONG-TERM DEBTLong-term debt consisted of the following: As of December 31,2018 2017(In millions)6.0% Senior Subordinated Notes due 2024$600.0 $600.0Mortgage notes payable bearing interest at fixed rates (the weighted average interest rates were 5.2% and 5.4% for theyears ended December 31, 2018 and 2017, respectively)132.2 139.1 2018 Bank of America Facility25.7 — 2018 Wells Fargo Master Loan Facility25.0 —Prior real estate credit agreement40.8 48.5Restated master loan agreement83.3 88.5Capital lease obligations3.1 3.2Total debt outstanding910.1 879.3Add—unamortized premium on 6.0% Senior Subordinated Notes due 20246.0 6.8Less—debt issuance costs(10.8) (10.6)Long-term debt, including current portion905.3 875.5Less—current portion, net of current portion of debt issuance costs(38.8) (12.9)Long-term debt$866.5 $862.6The aggregate maturities of long-term debt as of December 31, 2018 are as follows (in millions): 2019$40.8202033.9202117.2202232.0202353.9Thereafter732.3Total maturities of long-term debt$910.16.0% Senior Subordinated Notes due 2024In December 2014, we completed a refinancing of certain of our long-term debt, which included the issuance of $400.0 million of 6.0% Notes, theproceeds of which were used to redeem the $300.0 million in outstanding aggregate principal of our 8.375% Senior Subordinated Notes due 2020 (the"8.375% Notes").83Table of ContentsIn October 2015, we completed an add-on issuance of $200.0 million aggregate principal amount of our 6.0% Notes at a price of 104.25% of par, plusaccrued interest from June 15, 2015 (the "October 2015 Offering"). After deducting the initial purchasers' discounts and expenses we received net proceeds ofapproximately $210.2 million from this offering. The $8.5 million premium paid by the initial purchasers of the 6.0% Notes was recorded as a component ofLong-Term Debt on our Consolidated Balance Sheet and is being amortized as a reduction of interest expense over the remaining term of the 6.0% Notes.Based on the amortization of the debt premium, the effective interest rate on the 6.0% Notes issued in the October 2015 Offering is 5.41%. In addition, wecapitalized $3.8 million of costs associated with the issuance and sale of the 6.0% Notes, of which $2.8 million of underwriters fees were withheld from theproceeds received from the issuance. These costs are being amortized to interest expense over the remaining term of the 6.0% Notes using the effectiveinterest method.We are a holding company with no independent assets or operations. For all relevant periods presented, our 6.0% Notes have been fully andunconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries. Any subsidiaries that have not guaranteed such notes are"minor" (as defined in Rule 3-10(h) of Regulation S-X). As of December 31, 2018, there were no significant restrictions on the ability of our subsidiaries todistribute cash to us or our guarantor subsidiaries.Mortgage Notes PayableWe have multiple mortgage agreements with finance companies affiliated with our vehicle manufacturers ("captive mortgages") and other lenders. As ofDecember 31, 2018 and 2017, we had total mortgage notes payable outstanding of $132.2 million and $139.1 million, respectively, which are collateralizedby the associated real estate.2018 Bank of America FacilityThe Bank of America Credit Agreement provides for term loans to certain of the Company’s subsidiaries that are borrowers under the Bank of AmericaCredit Agreement in an aggregate amount not to exceed $128.1 million ("Bank of America Facility"), subject to customary terms and conditions.The borrowers under the Bank of America Credit Agreement may borrow thereunder from time to time during the period beginning on November 13,2018 until and including November 12, 2019. On November 13, 2018, certain of the borrowers borrowed an aggregate amount of $25.7 million under theBank of America Credit Agreement, a portion of which was used to repay certain existing mortgage indebtedness outstanding on the Prior Real Estate CreditAgreement.Term loans under the Bank of America Facility bear interest, at the option of the Company, based on the London Interbank Offered Rate ("LIBOR") plus1.90% or the Base Rate (as described below) plus 0.90%. The Base Rate is the highest of (i) the Federal Funds rate plus 0.50%, (ii) the Bank of America primerate, and (iii) one month LIBOR plus 1.00%. The Company is required to make quarterly principal payments of 1.25% of the initial amount of each loan on atwenty year repayment schedule, with a balloon repayment of the outstanding principal amount of loans due on November 13, 2025, subject to an earliermaturity if the Company’s existing senior secured credit facility matures or is not otherwise refinanced by certain dates.Borrowings under the Bank of America Facility are guaranteed by each applicable operating dealership subsidiary of the Company and all of the realproperty financed by such operating dealership under the Bank of America Facility is collateralized by first priority liens, subject to certain permittedexceptions.2018 Wells Fargo Master Loan FacilityThe Wells Fargo Master Loan Agreement provides for term loans to certain of the Company’s subsidiaries that are borrowers under the Wells FargoMaster Loan Agreement in an aggregate amount not to exceed $100.0 million (the "Wells Fargo Master Loan Facility"), subject to customary terms andconditions.The borrowers under the Wells Fargo Master Loan Agreement may borrow thereunder from time to time during the period beginning on November 16,2018 until and including December 31, 2019 (the "Wells Fargo Draw Termination Date"). On November 16, 2018, certain of the borrowers borrowed anaggregate amount of $25.0 million under the Wells Fargo Master Loan Facility, the proceeds of which were used for general corporate purposes.Loans under the Wells Fargo Master Loan Facility bear interest based on LIBOR plus 1.85%. After the Wells Fargo Draw Termination Date, the borrowerswill be required to make 108 equal monthly principal payments based on a hypothetical 19 year amortization schedule, with a balloon repayment of theoutstanding principal amount of loans due on December 1, 2028. The borrowers can voluntarily prepay any loan in whole or in part any time withoutpremium or penalty.Borrowings under the Wells Fargo Master Loan Facility are guaranteed by the Company pursuant to a unconditional guaranty (the "CompanyGuaranty"), and all of the real property financed by any operating dealership subsidiary of the Company under the Wells Fargo Master Loan Facility, iscollateralized by first priority liens, subject to certain permitted exceptions.84Table of ContentsPrior Real Estate Credit AgreementWe are also party to a separate real estate term loan credit agreement with Bank of America, as the lender (the "Prior Real Estate Credit Agreement"). ThePrior Real Estate Credit Agreement provides for term loans in an aggregate amount not to exceed $75.0 million, subject to customary terms and conditions.Concurrent with the execution of the Bank of America Facility, the Prior Real Estate Credit Agreement was modified to incorporate the pricing termsprovided within the Bank of America Facility. Accordingly, term loans under the Prior Real Estate Credit Agreement bear interest, at our option, based on theLIBOR plus 1.90% or the Base Rate (as described below) plus 0.90%. The Base Rate is the highest of (i) the Federal Funds rate plus 0.50%, (ii) the Bank ofAmerica prime rate, and (iii) one month LIBOR plus 1.00%. We are required to make quarterly principal payments of 1.25% of the initial amount of each loanon a twenty year repayment schedule, with a balloon repayment of the outstanding principal amount of loans due on September 26, 2023, subject to anearlier maturity if our existing revolving credit facility matures or is not otherwise refinanced by certain dates.Borrowings under the Prior Real Estate Credit Agreement are guaranteed by each operating dealership subsidiary of ours whose real estate is financedunder the Prior Real Estate Credit Agreement, and collateralized by first priority liens, subject to certain permitted exceptions, on all of the real propertyfinanced thereunder.Restated Master Loan AgreementOn February 3, 2015, certain of our subsidiaries entered into an amended and restated master loan agreement (the "Restated Master Loan Agreement") withWells Fargo. In June 2015, we made additional borrowings under the Restated Master Loan Agreement with Wells Fargo, resulting in our having drawn thefull $100.0 million (the "Restated Master Loan Facility") of availability thereunder. Concurrent with execution of the Wells Fargo Master Loan Facility, theRestated Master Loan Agreement was modified to incorporate the pricing terms provided within the Wells Fargo Master Loan Facility. Accordingly, loansunder the Restated Master Loan Agreement bear interest based on LIBOR plus 1.85%.Below is a summary of our outstanding mortgage notes payable, the carrying values of the related collateralized real estate, and years of maturity as ofDecember 31, 2018 and 2017: As of December 31, 2018 As of December 31, 2017Mortgage Agreement AggregatePrincipalOutstanding Carrying Value ofCollateralizedRelated Real Estate MaturityDates AggregatePrincipalOutstanding Carrying Value ofCollateralizedRelated Real Estate Maturity DatesCaptive mortgages $111.6 $185.5 2019-2024 $116.8 $179.3 2018-2024Other mortgage debt 20.6 43.3 2020-2022 22.3 45.3 2018-20222018 Bank of America Facility 25.7 137.2 2025 — — 2018 Wells Fargo Master LoanFacility 25.0 114.3 2028 — — Prior real estate credit agreement 40.8 82.2 2023 48.5 89.8 2023Restated master loan agreement 83.3 130.2 2025 88.5 132.7 2025Total mortgage debt $307.0 $692.7 $276.1 $447.1 Revolving Credit FacilityAs discussed above under our "Floor Plan Notes Payable—Non-Trade" footnote, the 2016 Senior Credit Facility includes a $250.0 million RevolvingCredit Facility. We may request Bank of America to issue letters of credit on our behalf thereunder up to $50.0 million. Availability under the RevolvingCredit Facility is limited by borrowing base calculations. Availability is reduced on a dollar-for-dollar basis by the aggregate face amount of any outstandingletters of credit. As of December 31, 2018, we re-designated $190.0 million of borrowing capacity from our Revolving Credit Facility to our New VehicleRevolving Floor Plan Facility, resulting in $60.0 million of borrowing capacity. In addition, we had $13.0 million in outstanding letters of credit, resulting in$47.0 million of borrowing availability as of December 31, 2018. Proceeds from borrowings from time to time under the revolving credit facility may be usedfor among other things, acquisitions, working capital and capital expenditures.Borrowings under the 2016 Senior Credit Facility bear interest, at the option of the Company, based on LIBOR or the Base Rate, in each case plus anApplicable Margin (as defined in the 2016 Senior Credit Facility). The Base Rate is the highest of the85Table of Contents(i) Bank of America prime rate, (ii) Federal Funds rate plus 0.50%, and (iii) one month LIBOR plus 1.00%. The Applicable Margin, for borrowings under theRevolving Credit Facility, ranges from 1.25% to 2.50% for LIBOR loans and 0.25% to 1.50% for Base Rate loans, in each case based on the Company's totallease adjusted leverage ratio. In addition to the payment of interest on borrowings outstanding under the 2016 Senior Credit Facility, we are required to pay aquarterly commitment fee between 0.20% and 0.45% per year, based on the Company's total lease adjusted leverage ratio on the Revolving Credit Facility.Stock Repurchase and Dividend RestrictionsThe 2016 Senior Credit Facility and the Indenture currently allow for restricted payments without limit so long as our consolidated total leverage ratio (asdefined in the 2016 Senior Credit Facility and the Indenture) is not greater than 3.0 to 1.0 after giving effect to such proposed restricted payments. Restrictedpayments generally include items such as dividends, share repurchases, unscheduled repayments of subordinated debt, or purchases of certain investments. Inthe event that our consolidated total leverage ratio does (or would) exceed 3.0 to 1.0, the 2016 Senior Credit Facility and the Indenture would then also allowfor restricted payments under the following mutually exclusive parameters, subject to certain exclusions:•Restricted payments in an aggregate amount not to exceed $20.0 million in any fiscal year;•General restricted payments allowance of $150.0 million; and•Subject to our continued compliance with a minimum consolidated current ratio, a consolidated fixed charge coverage ratio and a maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Indenture, restricted payments capacity additions (or subtractions ifnegative) equal to (i) 50% of our net income (as defined in the 2016 Senior Credit Facility and the Indenture) beginning on October 1, 2014 andending on the date of the most recently completed fiscal quarter (the "Measurement Period"), plus (ii) 100% of any cash proceeds we receive from thesale of equity interests during the Measurement Period, minus (iii) the dollar amount of share repurchases made and dividends paid on or afterDecember 4, 2014.Representations and CovenantsWe are subject to a number of covenants in our various debt and lease agreements, including those described below. We were in compliance with all ofour covenants throughout 2018. Failure to comply with any of our debt covenants would constitute a default under the relevant debt agreements, whichwould entitle the lenders under such agreements to terminate our ability to borrow under the relevant agreements and accelerate our obligations to repayoutstanding borrowings, if any, unless compliance with the covenants is waived. In many cases, defaults under one of our agreements could trigger cross-default provisions in our other agreements. If we are unable to remain in compliance with our financial or other covenants, we would be required to seekwaivers or modifications of our covenants from our lenders, or we would need to raise debt and/or equity financing or sell assets to generate proceedssufficient to repay such debt. We cannot give any assurance that we would be able to successfully take any of these actions on terms, or at times, that may benecessary or desirable.The representations and covenants contained in the Bank of America Credit Agreement are customary for financing transactions of this nature, including,among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Bank of America Credit Agreement. In addition, certain other covenants couldrestrict the Company’s ability to incur additional debt, pay dividends or acquire or dispose of assets. The Bank of America Credit Agreement also providesfor events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness. Upon the occurrenceof an event of default, the Company could be required by the Bank of America Facility to immediately repay all amounts outstanding thereunder.The representations, warranties and covenants contained in the Wells Fargo Master Loan Agreement, the Company Guaranty and the related documentsare customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated current ratio,minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the CompanyGuaranty. In addition, certain other covenants could restrict the Company’s ability to incur additional debt, pay dividends or acquire or dispose of assets.The representations and covenants contained in the Prior Real Estate Credit Agreement are customary for financing transactions of this nature including,among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio, and a maximumconsolidated total lease adjusted leverage ratio, in each case as set out in the Prior Real Estate Credit Agreement. In addition, certain other covenants couldrestrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.Our guarantees under the Restated Master Loan Agreement also require compliance with certain financial covenants, including a consolidated currentratio, consolidated fixed charge coverage ratio, and an adjusted net worth calculation. Further,86Table of Contentsthe Restated Master Loan Agreement contains customary representations and warranties and the guarantees under such agreements contain negativecovenants, including, among other things, covenants not to, with permitted exceptions, (i) incur any additional debt; (ii) create any additional liens on theProperty, as defined in the Restated Master Loan Agreement; and (iii) enter into any sale-leaseback transactions in connection with the underlying properties.The representations and covenants contained in the agreement governing the 2016 Senior Credit Facility are customary for financing transactions of thisnature including, among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio andmaximum consolidated total lease adjusted leverage ratio, in each case as set out in the agreement governing the 2016 Senior Credit Facility. In addition,certain other covenants could restrict the Company's ability to incur additional debt, pay dividends or acquire or dispose of assets.The agreement governing the 2016 Senior Credit Facility also provides for events of default that are customary for financing transactions of this nature,including cross-defaults to other material indebtedness. In certain instances, an event of default under either the Revolving Credit Facility or the UsedVehicle Floor Plan Facility could be, or result in, an event of default under the New Vehicle Floor Plan Facility, and vice versa. Upon the occurrence of anevent of default, the Company could be required to immediately repay all amounts outstanding under the applicable facility.14. FINANCIAL INSTRUMENTS AND FAIR VALUEIn determining fair value, we use various valuation approaches, including market and income approaches. Accounting standards establish a hierarchy forinputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the mostobservable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed basedon market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participantswould use in pricing the asset or liability, developed based on the best information available in the circumstances. The hierarchy is broken down into threelevels based on the reliability of inputs as follows:Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do nothave a high trading volume, mortgage notes payable, and certain real estate properties on a non-recurring basis.Level 3-Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizingLevel 3 inputs include those used in estimating the fair value of certain non-financial assets and non-financial liabilities in purchase acquisitions and thoseused in the assessment of impairment for goodwill and intangible franchise rights.The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs thatare less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required todetermine fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels ofthe fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed isdetermined based on the lowest level input that is significant to the fair value measurement.Fair value is a market-based exit price measure considered from the perspective of a market participant who holds the asset or owes the liability ratherthan an entity-specific measure. Therefore, even when market assumptions are not readily available, our assumptions are set to reflect those that marketparticipants would use in pricing the asset or liability at the measurement date. We use inputs that are current as of the measurement date, including duringperiods of significant market fluctuations.Financial instruments consist primarily of cash and cash equivalents, contracts-in-transit, accounts receivable, cash surrender value of corporate-ownedlife insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments.The carrying values of our financial instruments, with the exception of subordinated long-term debt and mortgage notes payable, approximate fair value dueto (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates. The fairvalue of our subordinated long-term debt is based on reported market prices in an inactive market that reflects Level 2 inputs. We estimate the fair value ofour mortgage notes payable using a present value technique based on current market interest rates for similar types of financial instruments that reflect Level2 inputs.87Table of ContentsA summary of the carrying values and fair values of our 6.0% Notes and our mortgage notes payable is as follows: As of December 31, 2018 2017 (In millions)Carrying Value: 6.0% Senior Subordinated Notes due 2024$606.0 $606.8Mortgage notes payable307.0 276.1Total carrying value$913.0 $882.9 Fair Value: 6.0% Senior Subordinated Notes due 2024$570.0 $625.5Mortgage notes payable306.7 275.3Total fair value$876.7 $900.8Interest Rate Swap AgreementsIn June 2015, we entered into an interest rate swap agreement with a notional principal amount of $100.0 million. This swap was designed to provide ahedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in February 2025. The notionalvalues of this swap as of December 31, 2018 and 2017, were $85.1 million and $90.4 million, respectively, and the notional value will reduce over itsremaining term to $53.1 million at maturity.In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to providea hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in September 2023. The notionalvalues of this swap as of December 31, 2018 and 2017, were $56.5 million and $60.2 million, respectively, and the notional value will reduce over itsremaining term to $38.7 million at maturity.The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates andpresent value factors. Fair value estimates reflect a credit adjustment to the discount rate applied to all expected cash flows under the swaps. Other than thisinput, all other inputs used in the valuation for these swaps are designated to be Level 2 fair values. The fair value related to the swaps for the years endedDecember 31, 2018 and 2017, reflect an asset of $0.6 million and liability of $1.7 million, respectively. The following table provides information regardingthe fair value of our interest rate swap agreements and the impact on the Consolidated Balance Sheets: As of December 31, 2018 2017 (In millions)Other current assets$(0.2) $—Accounts payable and accrued liabilities— 1.0Other long-term (assets) liabilities(0.4) 0.7Total fair value$(0.6) $1.7All of our interest rate swaps qualify for cash flow hedge accounting treatment. For the years ended December 31, 2018, 2017, and 2016, neither of ourcash flow swaps contained any ineffectiveness, nor was any ineffectiveness recognized in earnings. Information about the effect of our interest rate swapagreements on the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, are as follows (in millions):For the Year Ended December 31, Results Recognized in Accumulated OtherComprehensive Loss(Effective Portion) Location of Results Reclassified fromAccumulated Other ComprehensiveLoss to Earnings Results Reclassified from AccumulatedOther Comprehensive Loss to Earnings2018 $1.8 Swap interest expense $(0.5)2017 $(0.1) Swap interest expense $(2.0)2016 $(0.8) Swap interest expense $(3.1)88Table of Contents On the basis of yield curve conditions as of December 31, 2018 and including assumptions about future changes in fair value, we expect the amount to bereclassified out of Accumulated Other Comprehensive Loss into earnings within the next 12 months will be income of $0.2 million.15. INCOME TAXESThe components of income tax expense from continuing operations are as follows: For the Years Ended December 31, 2018 2017 2016 (In millions)Current: Federal$43.8 $59.1 $83.8State7.1 8.3 10.7Total current income tax expense50.9 67.4 94.5Deferred: Federal3.9 1.2 4.9State2.0 1.4 1.2Total deferred income tax expense5.9 2.6 6.1Total income tax expense$56.8 $70.0 $100.6A reconciliation of the statutory federal rate to the effective tax rate from continuing operations is as follows (dollar amounts shown in millions): For the Years Ended December 31, 2018 % 2017 % 2016 %Income tax provision at the statutory rate$47.2 21.0 $73.2 35.0 $93.7 35.0State income tax expense, net of federal benefit8.7 3.9 6.4 3.0 7.8 2.9Non-deductible / non-tax items0.4 0.2 (0.3) (0.1) 0.2 0.1Effect of enactment of tax reform0.6 0.2 (7.9) (3.8) — —Adjustments and settlements— — (0.6) (0.3) (0.8) (0.3)Other, net(0.1) — (0.8) (0.3) (0.3) (0.1) Income tax expense$56.8 25.3 $70.0 33.5 $100.6 37.6Deferred income tax asset and liability components consisted of the following: As of December 31, 2018 2017 (In millions)Deferred income tax assets: F&I chargeback liabilities$11.0 $11.1Other accrued liabilities3.2 3.4Stock-based compensation2.4 3.9Other, net3.9 5.5Total deferred income tax assets20.5 23.9Deferred income tax liabilities: Intangible asset amortization(12.5) (8.4)Depreciation(26.4) (27.1)Other, net(3.3) (0.9)Total deferred income tax liabilities(42.2) (36.4)Net deferred income tax liabilities$(21.7) $(12.5)There were no valuation allowances recorded against the deferred tax assets as of December 31, 2018 or 2017. As of December 31, 2018 and 2017, we hadpre-paid income taxes of $4.6 million and $15.2 million, respectively, which were included in Other Current Assets.89Table of ContentsAs of December 31, 2016, the net amount of our unrecognized tax benefits was $0.8 million, which if recognized, would not impact our effective tax rate.There was no unrecognized tax benefits as of December 31, 2018 or 2017.The statutes of limitations related to our consolidated Federal income tax returns are closed for all tax years up to and including 2014. The expiration ofthe statutes of limitations related to the various state income tax returns that we and our subsidiaries file varies by state. The 2011 through 2017 tax yearsgenerally remain subject to examination by most state tax authorities. We believe that our tax positions comply with applicable tax law and that we haveadequately provided for these matters.Tax ReformOn December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act made broad andcomplex changes to the U.S. tax code that affects 2017, including, but not limited to, accelerated depreciation that will allow for full expensing of qualifiedproperty. The Tax Act also established new tax laws including a reduction in the U.S. federal corporate income tax rate from 35% to 21%.The SEC staff issued SAB 118 on December 22, 2017, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 allowed for ameasurement period, not extend beyond one year from the Tax Act enactment date, for companies to complete the accounting under ASC 740, IncomeTaxes. In 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which wasgenerally 21%. We recorded a $7.9 million reduction to our net deferred tax liability for the year ended December 31, 2017 related to the remeasurement ofour deferred tax balance.During the third quarter of 2018, the IRS released Notice 2018-68, which clarified a number of changes made to Section 162(m) of the Code by the TaxAct. As a result of this new guidance, we recorded $0.6 million of additional income tax expense related to an adjustment to the December 31, 2017 deferredtax asset for certain components of share-based compensation. After considering the additional guidance issued by the U.S. Treasury Department, state taxauthorities and other standard-setting bodies we have completed our accounting for the Tax Act.16. OTHER LONG-TERM LIABILITIESOther long-term liabilities consisted of the following: As of December 31, 2018 2017 (In millions)Accrued finance and insurance chargebacks$21.2 $20.4Deferred rent4.5 5.0Swap fair value— 0.7Unclaimed property3.3 3.0Other1.7 0.1Other long-term liabilities$30.7 $29.217. SUPPLEMENTAL CASH FLOW INFORMATIONDuring the years ended December 31, 2018, 2017, and 2016, we made interest payments, including amounts capitalized, totaling $82.5 million, $76.0million, and $73.8 million, respectively. Included in these interest payments are $31.2 million, $22.3 million, and $19.1 million, of floor plan interestpayments for the years ended December 31, 2018, 2017, and 2016, respectively.During the years ended December 31, 2018, 2017, and 2016 we made income tax payments, net of refunds received, totaling $40.4 million, $102.7million, and $79.6 million, respectively.During the years ended December 31, 2018, 2017, and 2016, we transferred $193.9 million, $156.2 million, and $121.9 million, respectively, of loanervehicles from Other Current Assets to Inventory on our Consolidated Balance Sheets.There were no divestitures during the years ended December 31, 2018 and 2017. During the year ended December 31, 2016, we received $114.3 millionof proceeds from the sale of dealerships, and $13.1 million of mortgage note repayments were paid directly by the buyer as part of these divestitures.90Table of ContentsDuring the year ended December 31, 2017, we had non-cash investing and financing activities of $4.1 million related to purchases of real estateproperties that were previously leased.The following items are included in Other Adjustments, net to reconcile net income to net cash provided by operating activities: For the Years Ended December 31, 2018 2017 2016Amortization of debt issuance costs$2.5 $3.2 $2.6Loss on disposal of fixed assets0.9 2.1 0.4Other individually immaterial items(0.3) (1.0) 1.1Other adjustments, net$3.1 $4.3 $4.118. LEASE OBLIGATIONSWe lease real estate and equipment primarily under operating lease agreements, most of which have terms ranging from one to twenty years. Escalationclauses, lease payments dependent on existing rates/indexes, and other lease incentives are included in the minimum lease payments and are recognized on astraight-line basis over the minimum lease term. Rent expense under such arrangements totaled $25.6 million, $26.7 million, and $29.9 million for the yearsended December 31, 2018, 2017, and 2016, respectively.During the year ended December 31, 2018, we entered into one transaction in which we purchased previously leased real estate for $4.4 million.During the year ended December 31, 2017, we entered into two transactions in which we purchased previously leased real estate for an aggregate purchaseprice of $9.5 million. These transactions included the termination of the related lease obligations, resulting in $0.2 million of lease termination charges,which were included in Other operating (income) expenses, net in our Consolidated Statement of Income for the year ended December 31, 2017.During the year ended December 31, 2016, we entered into three transactions in which we purchased previously leased real estate for an aggregatepurchase price of $19.6 million. These transactions included the termination of the related lease obligations, resulting in $2.1 million of lease terminationcharges and $0.9 million of real estate impairment charges, which were based on the associated property appraisals. Both the lease termination charges andthe real estate impairment charges were included in Other operating (income) expenses, net in our Consolidated Statement of Income for the year endedDecember 31, 2016.Future minimum payments under non-cancelable leases with initial terms in excess of one year at December 31, 2018, are as follows: Capital Operating (In millions)2019$0.4 $22.520200.4 22.220210.4 19.220220.4 14.020230.4 6.0Thereafter2.8 25.5Total minimum lease payments4.8 109.4Less: Amounts representing interest(1.7) N/A $3.1 $109.4Certain of our lease agreements include financial covenants and incorporate by reference the financial covenants set forth in the 2016 Senior CreditFacility. A breach of any of these covenants could immediately give rise to certain landlord remedies under our various lease agreements, the most severe ofwhich include the following: (i) termination of the applicable lease and/or other leases with the same or an affiliated landlord under a cross-default provision,(ii) eviction from the premises; and (iii) the landlord having a claim for various damages.91Table of Contents19. COMMITMENTS AND CONTINGENCIESOur dealerships are party to dealer and framework agreements with applicable vehicle manufacturers. In accordance with these agreements, eachdealership has certain rights and is subject to restrictions typical in the industry. The ability of these manufacturers to influence the operations of thedealerships or the loss of any of these agreements could have a materially negative impact on our operating results.In some instances, manufacturers may have the right, and may direct us, to implement costly capital improvements to dealerships as a condition toentering into, renewing, or extending franchise agreements with them. Manufacturers also typically require that their franchises meet specific standards ofappearance. These factors, either alone or in combination, could cause us to use our financial resources on capital projects that we might not have planned foror otherwise determined to undertake.From time to time, we and our dealerships are or may become involved in various claims relating to, and arising out of, our business and our operations.These claims may involve, but not be limited to, financial and other audits by vehicle manufacturers or lenders and certain federal, state, and localgovernment authorities, which have historically related primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegationsof violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants, and (iii) payments made to government authoritiesrelating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, governmentproceedings, and other dispute resolution processes. Such claims, including class actions, could relate to, but may not be limited to, the practice of chargingadministrative fees and other fees and commissions, employment-related matters, truth-in-lending and other dealer assisted financing obligations, contractualdisputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reservesbased upon outcomes we currently believe to be probable and reasonably estimable.We believe we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Based on our review ofthe various types of claims currently known to us, there is no indication of material reasonably possible losses in excess of amounts accrued in theaggregate. We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity, or results ofoperations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known orarising in the future could have a material adverse effect on our financial condition, liquidity, or results of operations.A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of parts that are manufactured outside the United States. Asa result, our operations are subject to customary risks of importing merchandise, including fluctuations in the relative values of currencies, import duties,exchange controls, trade restrictions, work stoppages, and general political and socio-economic conditions in foreign countries. The United States or thecountries from which our products are imported may, from time to time, impose new quotas, duties, tariffs, or other restrictions; or adjust presently prevailingquotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment. Compliancewith these provisions has not had, nor do we expect such compliance to have, any material effect upon our capital expenditures, net earnings, financialcondition, liquidity or competitive position. We believe that our current practices and procedures for the control and disposition of such materials complywith applicable federal, state, and local requirements. No assurances can be provided, however, that future laws or regulations, or changes in existing laws orregulations, would not require us to expend significant resources in order to comply therewith.We had $13.0 million of letters of credit outstanding as of December 31, 2018, which are required by certain of our insurance providers. In addition, as ofDecember 31, 2018, we maintained a $5.0 million surety bond line in the ordinary course of our business. Our letters of credit and surety bond line areconsidered to be off balance sheet arrangements.Our other material commitments include (i) floor plan notes payable, (ii) operating leases, (iii) long-term debt and (iv) interest on long-term debt, asdescribed elsewhere herein.20. SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANSOn March 13, 2012, our Board of Directors, upon the recommendation of our Compensation and Human Resources Committee, approved the 2012 EquityIncentive Plan (the "Plan"). On April 18, 2012, our shareholders approved the Plan, which replaced our previous equity incentive plan. The Plan expires onMarch 13, 2022 and provides for the grant of options, performance share units, restricted share units, and shares of restricted stock to our directors, officers,and employees in the total amount of 1.5 million shares. Since the inception of the Plan, we have granted 0.8 million performance share units and 0.8 millionshares of restricted stock. There have been 0.8 million shares that have either been forfeited or repurchased in92Table of Contentsassociation with the net share settlement of employee share-based awards, both of which are added back to shares available for grant. As such, there wereapproximately 0.8 million shares available for grant in accordance with the Plan as of December 31, 2018.We issue shares of our common stock upon the vesting of performance share units or restricted stock. These shares are issued from our authorized and notoutstanding common stock. In addition, in connection with the vesting of performance share units or restricted stock, we expect to repurchase a portion of theshares issued equal to the amount of employee income tax withholding.We have recognized $10.5 million ($2.6 million tax benefit), $13.6 million ($4.5 million tax benefit), and $12.0 million ($4.5 million tax benefit) inshare-based compensation expense for the years ended December 31, 2018, 2017, and 2016, respectively. As of December 31, 2018, there was $10.3 millionof total unrecognized share-based compensation expense related to non-vested share-based awards granted under the Plan, and the weighted average periodover which it is expected to be recognized is 2.15 years. Further, we expect to recognize $6.3 million of this expense in 2019, $3.3 million in 2020, and $0.7million in 2021.Performance Share UnitsDuring the year ended December 31, 2018, the Compensation and Human Resources Committee of the Board of Directors approved the grant of up to101,802 performance share units, which represents 150% of the target award. Performance share units provide an opportunity for the employee-recipient toreceive a number of shares of our common stock based on our performance during a specified year period following the grant as measured against objectiveperformance goals as determined by the Compensation and Human Resources Committee of our Board of Directors. The actual number of units earned mayrange from 0% to 150% of the target number of units depending upon achievement of the performance goals. Performance share units vest in three equalannual installments with one-third of the award vesting on each of the (i) later of the first anniversary of the grant date, or the date the Compensation andHuman Resources Committee determines the actual award, (ii) second anniversary of the grant date and (iii) third anniversary of the grant date. Upon vesting,each performance share unit equals one share of common stock of the Company. Compensation cost for performance share units is based on the closing priceof our common stock on the date of grant and the ultimate performance level achieved, and is recognized on a graded basis over the three-year vesting period.The following table summarizes information about performance share units for 2018: Shares Weighted AverageGrant Date Fair ValueNon-vested at January 1, 2018229,651 $57.21Granted101,802 68.50Vested(95,472) 59.27Forfeited or unearned(30,245) 56.64Non-vested at December 31, 2018205,736 $61.28 The weighted average grant-date fair value of performance share units and total fair value of performance share units vested are summarized in thefollowing table: For the Years Ended December 31, 2018 2017 2016Weighted average grant-date fair value of performance share units granted$68.50 $65.65 $46.70Total fair value of performance share units vested (in millions)$6.4 $6.5 $6.0Restricted Stock AwardsDuring the year ended December 31, 2018, the Compensation and Human Resources Committee of the Board of Directors approved the grant of 71,575shares of restricted stock. Restricted stock awards vest in three equal annual installments commencing on the first anniversary of the grant date.Compensation cost for restricted stock awards is based on the closing price of our common stock on the date of grant and is recognized on a straight-linebasis over the three-year vesting period.93Table of ContentsThe following table summarizes information about restricted stock awards for 2018: Shares Weighted Average Grant Date Fair ValueNon-vested at January 1, 2018224,826 $60.36Granted71,575 71.18Vested(82,961) 61.34Forfeited(14,664) 63.09Non-vested at December 31, 2018198,776 $63.65The weighted average grant-date fair value of restricted stock awards and total fair value of restricted stock awards vested are summarized in the followingtable: For the Years Ended December 31, 2018 2017 2016Weighted average grant-date fair value of restricted stock granted$71.18 $63.64 $47.07Total fair value of restricted stock awards vested (in millions)$5.5 $5.3 $3.7Employee Retirement PlanWe sponsor the Asbury Automotive Retirement Savings Plan (the "Retirement Savings Plan"), a 401(k) plan, for eligible employees. Employees areeligible to participate in the Retirement Savings Plan on or after 12 weeks of service with us. Employees electing to participate in the Retirement SavingsPlan may contribute up to 75% of their annual eligible compensation. IRS rules limited total participant contributions during 2018 to $18,500, or $24,500 ifage 50 or more. For non-highly compensated employees, after one year of employment we match 50% of employees' contributions up to 4% of their eligiblecompensation. Employer contributions vest on a graded basis over 4 years after the date of hire. Expenses from continuing operations related to employermatching contributions totaled $3.2 million, $3.0 million, and $2.7 million for the years ended December 31, 2018, 2017, and 2016, respectively.21. CONDENSED QUARTERLY REVENUES AND EARNINGS (UNAUDITED): For the Three Months Ended March 31, June 30, September 30, December 31, (In millions, except per share data)2017: Revenues$1,551.7 $1,631.8 $1,602.1 $1,670.9Gross profit$260.1 $267.1 $260.3 $268.4Net income (2)(3)(4)$34.0 $31.9 $30.7 $42.5Net income per common share: Basic (1)(2)(3)(4)$1.62 $1.53 $1.49 $2.06Diluted (1)(2)(3)(4)$1.61 $1.52 $1.48 $2.032018: Revenues$1,609.2 $1,723.6 $1,757.4 $1,784.2Gross profit$265.4 $277.8 $278.0 $281.8Net income (5)(6)(7)$40.1 $43.2 $44.3 $40.4Net income per common share: Basic (1)(5)(6)(7)$1.95 $2.13 $2.22 $2.09Diluted (1)(5)(6)(7)$1.93 $2.11 $2.18 $2.06____________________________(1)The sum of income per common share for the four quarters does not equal total income per common share due to changes in the average number ofshares outstanding during the respective periods.(2)Results for the three months ended March 31, 2017 were increased by $0.6 million as a result of gains from legal settlements, net of tax, or $0.03 perbasic and diluted share.94Table of Contents(3)Results for the three months ended June 30, 2017 were increased by $0.5 million from investment income, partially offset by a $1.8 million loss onreal estate-related charges, all previous items were net of tax, or $0.06 per basic and diluted share.(4)Results for the three months ended December 31, 2017 were increased by a $7.9 million income tax benefit, partially offset by $3.2 million offranchise rights impairment, net of tax, or $0.22 per basic and diluted share, respectively, in the aggregate.(5)Results for the three months ended June 30, 2018 were increased by $0.5 million as a result of gains from legal settlements, net of tax, or $0.03 perbasic and diluted share.(6)Results for the three months ended June 30, 2018 were decreased by $0.6 million as a result of an adjustment to the deferred tax asset related tocertain components of share-based compensation, net of tax, or $0.03 per basic and diluted share.(7)Results for the three months ended December 31, 2018 were decreased by a $2.8 million franchise rights impairment, net of tax, or $0.14 per basicand diluted share, respectively, in the aggregate.22. SUBSEQUENT EVENTSIn February 2019, the Company closed on the acquisition of four stores in the Indianapolis market, increasing our total stores in the Indianapolis marketto six.Item 9. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresDisclosure Controls and ProceduresAs of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principalexecutive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined inRule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer andprincipal financial officer concluded that as of the end of such period such disclosure controls and procedures were effective to ensure that informationrequired to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periodspecified in the rules and forms of the U.S. Securities and Exchange Commission, and (ii) accumulated and communicated to our management, including ourprincipal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding disclosure. Management necessarily applies itsjudgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regardingmanagement's control objectives. Management, including the principal executive officer and the principal financial officer, does not expect that ourdisclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide onlyreasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realitiesthat judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can becircumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about thelikelihood of future events, and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonablybe expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over our company's financial reporting, as such term is definedin Exchange Act Rule 13(a)-15(f). Our internal control system was designed to provide reasonable assurance to our management and our board of directorsregarding the preparation and fair presentation of published financial statements. Our internal control over financial reporting also includes those policiesand procedures that: •Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; •Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our managementand directors; and 95Table of Contents•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could havea material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree orcompliance with the policies or procedures may deteriorate. Our management, including the principal executive officer and the principal financial officer,assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, we used the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Ourassessment included a review of the documentation of controls, evaluation of the design effectiveness of controls and testing of the effectiveness of controls.Based on our assessment under the framework in Internal Control—Integrated Framework issued by COSO, our management concluded that our internalcontrol over financial reporting was effective as of December 31, 2018. Our auditors, Ernst & Young LLP, an independent registered public accounting firm,have audited and reported on our consolidated financial statements and on the effectiveness of our internal controls over financial reporting. Their reports arecontained herein.During 2018, we acquired substantially all of the assets, including certain real estate, of three franchises (three dealership locations). As permitted by theSecurities and Exchange Commission, the scope of our Section 404 evaluation for the fiscal year ended December 31, 2018 does not include an evaluation ofthe internal control over financial reporting of these acquired operations. The results for these acquisitions are included in our consolidated financialstatements from the date of acquisition and represented approximately $105.3 million of consolidated assets as of December 31, 2018, and approximately$166.8 million of consolidated revenues for the year then ended.From the acquisition dates to December 31, 2018, the processes and systems of the acquired operations did not significantly impact the internal controlover financial reporting of the Company and our other consolidated subsidiaries.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected, or arereasonably likely to materially affect, the Company's internal control over financial reporting.Item 9B. Other InformationNone.96Table of ContentsPART IIIItem 10. Directors, Executive Officers, and Corporate Governance.Reference is made to the information to be set forth in the "Proposal No. 1 Election of Directors," "Governance of the Company," "2018 DirectorCompensation Table-Code of Business Conduct and Ethics and Corporate Governance Guidelines," "Section 16(a) Beneficial Ownership ReportingCompliance," and "Executive Officers" sections of our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information isincorporated herein by reference.Item 11. Executive Compensation.Reference is made to the information to be set forth in the "Compensation Discussion & Analysis," "Compensation and Human Resources CommitteeReport," "Compensation Committee Interlocks and Insider Participation," "Executive Compensation," "2018 Director Compensation Table," and"Governance of the Company" sections of our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information is incorporatedherein by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.Reference is made to the information to be set forth in the "Securities Owned by Management and Certain Beneficial Owners" and "Securities Authorizedfor Issuance under Equity Compensation Plans" sections of our Proxy Statement to be filed within 120 days after the end of our fiscal year, which informationis incorporated herein by reference.Item 13. Certain Relationships and Related Transactions, and Director Independence.Reference is made to the information to be set forth in the "Related Person Transactions" and "Governance of the Company" sections of our ProxyStatement to be filed within 120 days after the end of our fiscal year, which information is incorporated herein by reference.Item 14. Principal Accountant Fees and Services.Reference is made to the information to be set forth in the "Independent Auditors' Fees" section of our Proxy Statement to be filed within 120 days afterthe end of our fiscal year, which information is incorporated herein by reference.97Table of ContentsPART IVItem 15. Exhibits, Financial Statement Schedules(a)The following documents are filed as a part of this annual report on Form 10-K:(1)Financial Statements: See index to Consolidated Financial Statements.(2)Financial Statement Schedules: None required.(3)Exhibits required to be filed by Item 601 of Regulation S-K:The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K.ExhibitNumber Description of Documents3.1 Amended and Restated Certificate of Incorporation of Asbury Automotive Group, Inc. (filed as Exhibit 3.1 to the Company's CurrentReport on Form 8-K, filed with the SEC on April 25, 2016)*3.2 Bylaws of Asbury Automotive Group, Inc. (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on April21, 2014)*4.1 Indenture, dated as of December 4, 2014, among Asbury Automotive Group, Inc., each of the Guarantors named therein and U.S. BankNational Association, as Trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on December 4,2014)*4.2 Form of 6.0% Senior Subordinated Note due 2024 (included as Exhibit A in Exhibit 4.1 to the Company's Current Report on Form 8-Kfiled with the SEC on December 4, 2014)*4.3 First Supplemental Indenture, dated as of July 29, 2015, by and among Asbury Automotive Group, Inc., Asbury Jax Ford, LLC and U.S.Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2015)*4.4 Second Supplemental Indenture, dated as of October 28, 2015, among Asbury Automotive Group, Inc., each of the guarantors namedtherein and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with theSEC on October 28, 2015)*4.5 Third Supplemental Indenture, dated as of July 20, 2016, among Asbury Automotive Group, Inc., each of the guarantors named therein andU.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2016)*4.6 Fourth Supplemental Indenture, dated as of February 17, 2017, among Asbury Automotive Group, Inc., Asbury IN Chev, LLC, andU.S.Bank National Association, as Trustee (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year endedDecember 31, 2016)*4.7 Fifth Supplemental Indenture, dated as of February 5, 2018, among Asbury Automotive Group, Inc., Asbury IN Chev, LLC, and U.S.BankNational Association, as Trustee (filed as Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31,2017)*4.8 Sixth Supplemental Indenture, dated as of May 30, 2018, among Asbury Automotive Group, Inc., Asbury Atlanta CHEV, LLC, AsburyGeorgia TOY, LLC, and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Qfor the quarter ended June 30, 2018)*10.1** Amended and Restated 2002 Equity Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SECon February 14, 2012)*10.2** 2012 Equity Incentive Plan (filed as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC onMarch 16, 2012)*10.3** First Amendment to 2012 Equity Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC onJanuary 27, 2017)*10.4** Amended and Restated Key Executive Incentive Compensation Plan (filed as Exhibit 10.2 to the Company's Current Report on Form 8-Kfiled with the SEC on May 4, 2009)*10.5** Amendment No. 1 to Amended and Restated Key Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2018)*98Table of Contents10.6** Form of Officer/Director Indemnification Agreement (filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterended March 31, 2010)*10.7** Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of October 23, 2014 (filed as Exhibit 10.1 tothe Company's Current Report on Form 8-K filed with the SEC on October 23, 2014)*10.8** First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017(filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*10.9** Termination and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017(filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*10.10** Letter Agreement between Asbury Automotive Group, Inc. and Sean Goodman, dated as of May 3, 2017 (filed as Exhibit 10.1 to theCompany's Current Report on Form 8-K filed with the SEC on May 5, 2017)*10.11** Severance Pay Agreement for key employees between Asbury Automotive Group, Inc. and Sean Goodman, dated as of July 7, 2017 (filedas Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017)*10.12** Amended and Restated Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and George A. Villasana,dated as of February 21, 2017 (filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31,2016)*10.13** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and Jed M. Milstein, dated as of February 21, 2017(filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016)*10.14** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and William F. Stax, dated as of February 21, 2017(filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016)*10.15** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and John Hartman dated January 4, 2018 (filed asExhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017)*10.16** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and George C. Karolis dated July 18, 2005 (filed asExhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017)*10.17** Form of Equity Award Agreement under the 2012 Equity Incentive Plan (filed as Exhibit 10.19 to the Company's Annual Report on Form10-K for the year ended December 31, 2012)*10.18 Asbury Automotive Group, Inc. Deferred Compensation Plan (Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filedwith the SEC on October 23, 2017)*10.19 Ford Sales and Service Agreement (filed as Exhibit 10.13 to Amendment No. 2 to the Company's Registration Statement on Form S-1, FileNo. 333-65998, filed with the SEC on October 12, 2001)*10.20 General Motors Dealer Sales and Service Agreement (filed as Exhibit 10.14 to Amendment No. 2 to the Company's Registration Statementon Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.21 Honda Automobile Dealer Sales and Service Agreement (filed as Exhibit 10.15 to Amendment No. 2 to the Company's RegistrationStatement on Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.22 Mercedes-Benz Passenger Car Dealer Agreement (filed as Exhibit 10.16 to Amendment No. 2 to the Company's Registration Statement onForm S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.23 Nissan Dealer Sales and Service Agreement (filed as Exhibit 10.17 to Amendment No. 2 to the Company's Registration Statement on FormS-1, File No. 333-65998, filed with the SEC on October 12, 2001)*99Table of Contents10.24 Toyota Dealer Agreement (filed as Exhibit 10.18 to Amendment No. 2 to the Company's Registration Statement on Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.25 Credit Agreement, dated as of September 26, 2013, among Asbury Automotive Group, Inc., certain of subsidiaries of Asbury AutomotiveGroup, Inc. and Bank of America, N.A. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed with the SEC onSeptember 30, 2013)*10.26 Second Amended and Restated Credit Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc., as a Borrower,and certain of its Subsidiaries, as Vehicle Borrowers, Bank of America, N.A., as Administrative Agent, Revolving Swing Line Lender, NewVehicle Floorplan Swing Line Lender, Used Vehicle Floorplan Swing Line 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, Toyota Motor Credit Corporation and Mercedes-Benz Financial Services USA LLC, as Co-Documentation agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole LeadArranger and Sole Bookrunner (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10‑Q for the quarter ended June 30,2016)*10.27 Second Amended and Restated Company Guaranty Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc.and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterended June 30, 2016)*10.28 Second Amended and Restated Subsidiary Guaranty Agreement, dated as of July 25, 2016, by and among certain subsidiaries of AsburyAutomotive Group, Inc. and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.3 to the Company's Quarterly Report onForm 10-Q for the quarter ended June 30, 2016)*10.29 Second Amended and Restated Security Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc., certain of itssubsidiaries and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Qfor the quarter ended June 30, 2016)*10.30 Second Amended and Restated Escrow & Security Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc.,certain of its subsidiaries and Bank of America, N.A., a national banking association, as Administrative Agent (filed as Exhibit 10.5 to theCompany's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016)*10.31 Amended and Restated Master Loan Agreement, dated as of February 3, 2015, by and among certain subsidiaries of Asbury AutomotiveGroup, Inc. and Wells Fargo Bank, National Association (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with theSEC on February 4, 2015)*10.32 Second Amended and Restated Unconditional Guaranty, dated as of February 3, 2015, by and between Asbury Automotive Group, Inc. andWells Fargo Bank, National Association (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC onFebruary 4, 2015)*10.33 Credit Agreement, dated as of November 13, 2018, among Asbury Automotive Group, Inc., certain subsidiaries of Asbury AutomotiveGroup, Inc. and Bank of America, N.A.10.34 Master Loan Agreement, dated as of November 16, 2018, by and among certain subsidiaries of Asbury Automotive Group, Inc. and WellsFargo Bank, National Association10.35 Unconditional Guaranty, dated as of November 16, 2018, between Asbury Automotive Group, Inc. and Wells Fargo Bank, NationalAssociation21 Subsidiaries of the Company23.1 Consent of Ernst & Young LLP31.1 Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 200231.2 Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 200232.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of200232.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002100Table of Contents101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document* Incorporated by reference.** Management contract or compensatory plan or arrangement.Item 16. Form 10-K SummaryNone.101Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Asbury Automotive Group, Inc. Date:February 28, 2019By: /s/ David W. Hult Name: David W. Hult Title: Chief Executive Officer and PresidentPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.Signature Title Date /s/ David W. Hult Chief Executive Officer, President and Director February 28, 2019(David W. Hult) /s/ Sean D. Goodman Senior Vice President and Chief Financial Officer February 28, 2019(Sean D. Goodman) /s/ William F. Stax Vice President, Controller and February 28, 2019(William F. Stax) Chief Accounting Officer /s/ Thomas C. DeLoach, Jr. Director February 28, 2019(Thomas C. DeLoach, Jr.) Non-Executive Chairman of the Board /s/ Joel Alsfine Director February 28, 2019(Joel Alsfine) /s/ Dennis E. Clements Director February 28, 2019(Dennis E. Clements) /s/ Juanita T. James Director February 28, 2019(Juanita T. James) /s/ Eugene S. Katz Director February 28, 2019(Eugene S. Katz) /s/ Philip F. Maritz Director February 28, 2019(Philip F. Maritz) /s/ Maureen F. Morrison Director February 28, 2019(Maureen F. Morrison) /s/ Bridget R. Berman Director February 28, 2019(Bridget R. Berman) /s/ Thomas J. Reddin Director February 28, 2019(Thomas J. Reddin) 102Table of ContentsINDEX TO EXHIBITSExhibitNumber Description of Documents3.1 Amended and Restated Certificate of Incorporation of Asbury Automotive Group, Inc. (filed as Exhibit 3.1 to the Company's CurrentReport on Form 8-K, filed with the SEC on April 25, 2016)*3.2 Bylaws of Asbury Automotive Group, Inc. (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on April21, 2014)*4.1 Indenture, dated as of December 4, 2014, among Asbury Automotive Group, Inc., each of the Guarantors named therein and U.S. BankNational Association, as Trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on December 4,2014)*4.2 Form of 6.0% Senior Subordinated Note due 2024 (included as Exhibit A in Exhibit 4.1 to the Company's Current Report on Form 8-Kfiled with the SEC on December 4, 2014)*4.3 First Supplemental Indenture, dated as of July 29, 2015, by and among Asbury Automotive Group, Inc., Asbury Jax Ford, LLC and U.S.Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2015)*4.4 Second Supplemental Indenture, dated as of October 28, 2015, among Asbury Automotive Group, Inc., each of the guarantors namedtherein and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with theSEC on October 28, 2015)*4.5 Third Supplemental Indenture, dated as of July 20, 2016, among Asbury Automotive Group, Inc., each of the guarantors named therein andU.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2016)*4.6 Fourth Supplemental Indenture, dated as of February 17, 2017, among Asbury Automotive Group, Inc., Asbury IN Chev, LLC, andU.S.Bank National Association, as Trustee (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year endedDecember 31, 2016)*4.7 Fifth Supplemental Indenture, dated as of February 5, 2018, among Asbury Automotive Group, Inc., Asbury IN Chev, LLC, and U.S.BankNational Association, as Trustee (filed as Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31,2017)*4.8 Sixth Supplemental Indenture, dated as of May 30, 2018, among Asbury Automotive Group, Inc., Asbury Atlanta CHEV, LLC, AsburyGeorgia TOY, LLC, and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Qfor the quarter ended June 30, 2018)*10.1** Amended and Restated 2002 Equity Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SECon February 14, 2012)*10.2** 2012 Equity Incentive Plan (filed as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC onMarch 16, 2012)*10.3** First Amendment to 2012 Equity Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC onJanuary 27, 2017)*10.4** Amended and Restated Key Executive Incentive Compensation Plan (filed as Exhibit 10.2 to the Company's Current Report on Form 8-Kfiled with the SEC on May 4, 2009)*10.5** Amendment No. 1 to Amended and Restated Key Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2018)*10.6** Form of Officer/Director Indemnification Agreement (filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterended March 31, 2010)*10.7** Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of October 23, 2014 (filed as Exhibit 10.1 tothe Company's Current Report on Form 8-K filed with the SEC on October 23, 2014)*10.8** First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017(filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*10.9** Termination and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017(filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*103Table of Contents10.10** Letter Agreement between Asbury Automotive Group, Inc. and Sean Goodman, dated as of May 3, 2017 (filed as Exhibit 10.1 to theCompany's Current Report on Form 8-K filed with the SEC on May 5, 2017)*10.11** Severance Pay Agreement for key employees between Asbury Automotive Group, Inc. and Sean Goodman, dated as of July 7, 2017 (filed asExhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017)*10.12** Amended and Restated Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and George A. Villasana,dated as of February 21, 2017 (filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31,2016)*10.13** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and Jed M. Milstein, dated as of February 21, 2017(filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016)*10.14** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and William F. Stax, dated as of February 21, 2017(filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016)*10.15** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and John Hartman dated January 4, 2018 (filed asExhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017)*10.16** Severance Pay Agreement for Key Employee between Asbury Automotive Group, Inc. and George C. Karolis dated July 18, 2005 (filed asExhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017)*10.17** Form of Equity Award Agreement under the 2012 Equity Incentive Plan (filed as Exhibit 10.19 to the Company's Annual Report on Form10-K for the year ended December 31, 2012)*10.18 Asbury Automotive Group, Inc. Deferred Compensation Plan (Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filedwith the SEC on October 23, 2017)*10.19 Ford Sales and Service Agreement (filed as Exhibit 10.13 to Amendment No. 2 to the Company's Registration Statement on Form S-1, FileNo. 333-65998, filed with the SEC on October 12, 2001)*10.20 General Motors Dealer Sales and Service Agreement (filed as Exhibit 10.14 to Amendment No. 2 to the Company's Registration Statementon Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.21 Honda Automobile Dealer Sales and Service Agreement (filed as Exhibit 10.15 to Amendment No. 2 to the Company's RegistrationStatement on Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.22 Mercedes-Benz Passenger Car Dealer Agreement (filed as Exhibit 10.16 to Amendment No. 2 to the Company's Registration Statement onForm S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.23 Nissan Dealer Sales and Service Agreement (filed as Exhibit 10.17 to Amendment No. 2 to the Company's Registration Statement on FormS-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.24 Toyota Dealer Agreement (filed as Exhibit 10.18 to Amendment No. 2 to the Company's Registration Statement on Form S-1, File No. 333-65998, filed with the SEC on October 12, 2001)*10.25 Credit Agreement, dated as of September 26, 2013, among Asbury Automotive Group, Inc., certain of subsidiaries of Asbury AutomotiveGroup, Inc. and Bank of America, N.A. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed with the SEC onSeptember 30, 2013)*10.26 Second Amended and Restated Credit Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc., as a Borrower,and certain of its Subsidiaries, as Vehicle Borrowers, Bank of America, N.A., as Administrative Agent, Revolving Swing Line Lender, NewVehicle Floorplan Swing Line Lender, Used Vehicle Floorplan Swing Line 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, Toyota Motor Credit Corporation and Mercedes-BenzFinancial Services USA LLC, as Co-Documentation agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arrangerand Sole Bookrunner (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10‑Q for the quarter ended June 30, 2016)*10.27 Second Amended and Restated Company Guaranty Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc.and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterended June 30, 2016)*104Table of Contents10.28 Second Amended and Restated Subsidiary Guaranty Agreement, dated as of July 25, 2016, by and among certain subsidiaries of AsburyAutomotive Group, Inc. and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.3 to the Company's Quarterly Report onForm 10-Q for the quarter ended June 30, 2016)*10.29 Second Amended and Restated Security Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc., certain of itssubsidiaries and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q forthe quarter ended June 30, 2016)*10.30 Second Amended and Restated Escrow & Security Agreement, dated as of July 25, 2016, by and among Asbury Automotive Group, Inc.,certain of its subsidiaries and Bank of America, N.A., a national banking association, as Administrative Agent (filed as Exhibit 10.5 to theCompany's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016)*10.31 Amended and Restated Master Loan Agreement, dated as of February 3, 2015, by and among certain subsidiaries of Asbury AutomotiveGroup, Inc. and Wells Fargo Bank, National Association (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with theSEC on February 4, 2015)*10.32 Second Amended and Restated Unconditional Guaranty, dated as of February 3, 2015, by and between Asbury Automotive Group, Inc. andWells Fargo Bank, National Association (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC onFebruary 4, 2015)*10.33 Credit Agreement, dated as of November 13, 2018, among Asbury Automotive Group, Inc., certain subsidiaries of Asbury AutomotiveGroup, Inc. and Bank of America, N.A.10.34 Master Loan Agreement, dated as of November 16, 2018, by and among certain subsidiaries of Asbury Automotive Group, Inc. and WellsFargo Bank, National Association10.35 Unconditional Guaranty, dated as of November 16, 2018, between Asbury Automotive Group, Inc. and Wells Fargo Bank, NationalAssociation21 Subsidiaries of the Company23.1 Consent of Ernst & Young LLP31.1 Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 200231.2 Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 200232.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of200232.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document* Incorporated by reference.** Management contract or compensatory plan or arrangement.105Exhibit 10.33CREDIT AGREEMENT Dated as of November 13, 2018 among ASBURY AUTOMOTIVE GROUP, INC.,as the Company, CERTAIN OF ITS SUBSIDIARIES,as Borrowers, and BANK OF AMERICA, N.A.,as Lender TABLE OF CONTENTS PageARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 61.01 Defined Terms 61.02 Other Interpretive Provisions 251.03 Accounting Terms. 261.04 Times of Day 271.05 References to Defined Terms in the Syndicated Credit Agreement 27ARTICLE II. THE COMMITMENTS AND LOANS 282.01 Loans 282.02 Borrowings, Conversions and Continuations of Loans. 292.03 Prepayments; Termination or Reduction of Commitment. 292.04 Repayment of Loans. 302.05 Interest. 302.06 Automatic Debit Authorization 312.07 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate 322.08 Evidence of Debt 322.09 Payments Generally. 322.10 Borrowers. 322.11 [Reserved]. 342.12 Amendments to 2013 Real Estate Credit Agreement 34ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY 343.01 Taxes 343.02 Illegality 383.03 Inability to Determine Rates 393.04 Increased Costs. 413.05 Designation of a Different Lender’s Office 423.06 Survival 43ARTICLE IV. CONDITIONS PRECEDENT TO LOANS 434.01 Conditions of Initial Loans 434.02 Conditions to all Borrowings 45i TABLE OF CONTENTS PageARTICLE V. REPRESENTATIONS AND WARRANTIES 485.01 Existence, Qualification and Power 485.02 Authorization; No Contravention 485.03 Governmental Authorization; Other Consents 485.04 Binding Effect 495.05 Financial Statements; No Material Adverse Effect. 495.06 Litigation 495.07 No Default 495.08 Ownership of Property; Liens 495.09 Environmental Compliance 505.10 Insurance 505.11 Taxes 505.12 ERISA Compliance. 505.13 Loan Party Information; Subsidiaries; Addresses; Equity Interests 515.14 Margin Regulations; Investment Company Act. 525.15 Disclosure 525.16 Compliance with Laws 525.17 Intellectual Property; Licenses, Etc 525.18 Books and Records 525.19 Franchise Agreements and Framework Agreements 535.20 Engaged in Business of Vehicle Sales and Related Businesses 535.21 Collateral 535.22 Solvency 535.23 Labor Matters 535.24 Taxpayer Identification Number 535.25 OFAC 535.26 Anti-Corruption Laws 545.27 Leases 545.28 Beneficial Ownership 54ARTICLE VI. AFFIRMATIVE COVENANTS 546.01 Notices 55ii TABLE OF CONTENTS Page6.02 Maintenance of Insurance. 556.03 Inspection Rights 576.04 Use of Proceeds 586.05 Additional Subsidiaries 586.06 Preservation of Existence, Etc. 586.07 Further Assurances 596.08 Leases 596.09 Syndicated Credit Agreement 596.10 Anti-Corruption Laws 596.11 Patriot Act and Beneficial Ownership Regulation 596.12 Use of Financed Properties as Vehicle Dealerships 59ARTICLE VII. NEGATIVE COVENANTS 607.01 Use of Proceeds 607.02 Amendments of Certain Indebtedness 607.03 Dispositions 617.04 Amendments of Organizational Documents 617.05 Sanctions 617.06 Leases 617.07 Collateral 617.08 Anti-Corruption Laws 617.09 Use of Financed Properties 61ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES 618.01 Events of Default 618.02 Remedies Upon Event of Default 648.03 Application of Funds 64ARTICLE IX. MISCELLANEOUS 659.01 Amendments, Etc 659.02 Notices; Effectiveness; Electronic Communication. 659.03 No Waiver; Cumulative Remedies; Enforcement 669.04 Expenses; Indemnity; Damage Waiver. 669.05 Payments Set Aside 68iii TABLE OF CONTENTS Page9.06 Successors and Assigns 689.07 Treatment of Certain Information; Confidentiality 699.08 Right of Setoff 699.09 Interest Rate Limitation 709.10 Counterparts; Integration; Effectiveness 709.11 Survival of Representations and Warranties 709.12 Severability 709.13 Governing Law; Jurisdiction; Etc. 719.14 Waiver of Jury Trial 729.15 Electronic Execution of Assignments and Certain Other Documents 729.16 USA PATRIOT Act 729.17 Designated Senior Debt 729.18 Keepwell 729.19 Releases 73ivSCHEDULESSchedule 2.01 Financed Properties and Loan AmountsSchedule 4.01(a)(i) Closing Date MortgagesSchedule 4.01(a)(iv) Good Standing Jurisdictions and Foreign QualificationsSchedule 5.06 LitigationSchedule 5.08 Ownership of PropertySchedule 5.12(d) Pension Plan LiabilitySchedule 5.13 Subsidiaries; AddressesSchedule 5.19 Franchise and Framework AgreementsSchedule 5.27 LeasesSchedule 6.10 Post-Closing ItemsSchedule 9.02 Lender’s Office; Certain Addresses for NoticesEXHIBITS Form ofExhibit A Loan NoticeExhibit B Master NoteExhibit C GuarantyExhibit D Joinder AgreementExhibit E Subordination and Attornment AgreementExhibit F Opinion MattersExhibit G U.S. Tax Compliance CertificatesvCREDIT AGREEMENTThis CREDIT AGREEMENT (“Agreement”) is entered into as of November 13, 2018, among ASBURY AUTOMOTIVEGROUP, INC., a Delaware corporation (the “Company”), certain Subsidiaries of the Company party hereto as borrowers pursuant toSection 2.10 (each such Subsidiary, a “Borrower” and collectively, the “Borrowers”) and BANK OF AMERICA, N.A., as lender (the“Lender”).WHEREAS, the Company and the Borrowers have requested that the Lender make loans and other financial accommodationsto the Borrowers in an aggregate amount of up to $128,120,500.00.WHEREAS, the Lender has agreed to make such loans and other financial accommodations to the Loan Parties on the termsand subject to the conditions set forth herein.NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenantand agree as follows:ARTICLE I.DEFINITIONS AND ACCOUNTING TERMS1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:“Added Property” has the meaning specified in the definition of “Collateral Substitution”.“Adjusted FIRREA Appraisal Value” means, with respect to a Financed Property, the value set forth for such FinancedProperty in the most recent FIRREA Appraisal, as accepted by the Lender following its internal review and, if applicable, adjustmentthereof by the Lender, based on criteria and factors then generally used and considered by Lender in determining the value of similarreal estate properties and any applicable rules or regulations adopted by any Governmental Authority. The Adjusted FIRREAAppraised Value of each Financed Property (other than an Added Property) is set forth on Schedule 2.01.“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries,Controls or is Controlled by or is under common Control with the Person specified.“Agreement” has the meaning specified in the introductory paragraph hereto.“Applicable Rate” means a per annum rate equal to:(a) with respect to Eurodollar Rate Loans, 1.90%; and(b) with respect to Base Rate Loans, 0.90%.“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereofthat would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of anySynthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on6a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.“Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscalyear ended December 31, 2017, and the related consolidated statements of income or operations, shareholders’ equity and cash flowsfor such fiscal year of the Company and its Subsidiaries, including the notes thereto.“Austin Financed Property” means the Financed Property located at 13573 Research Boulevard, Austin, Texas.“Automatic Debit Date” means the first Business Day of a calendar month.“Availability Period” means the period from and including the Closing Date to the earliest of (i) the date that is one year afterthe Closing, (ii) the date of termination of the Commitment pursuant to Section 2.04, and (iii) the date of termination of the commitmentof Lender to make Loans pursuant to Section 8.02,“Bank of America” means Bank of America, N.A. and its successors.“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%,(b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c)the Eurodollar Rate plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank ofAmerica’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing someloans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of Americashall take effect at the opening of business on the day specified in the public announcement of such change.“Base Rate Loan” means a Loan that bears interest based on the Base Rate.“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the BeneficialOwnership Regulation.“Beneficial Ownership Regulation” means 31 C.F.R. §1010.230.“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a“plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) orotherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.“Borrower” and “Borrowers” each has the meaning specified in the introductory paragraph hereto.“Borrowings” means a borrowing consisting of simultaneous Loans of the same Type made by the Lender pursuant to Section2.01.“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to closeunder the Laws of, or are in fact closed in, the state where7the Lender’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day that is also a London BankingDay.“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or takingeffect of any law, rule, regulation or treaty, (b) any change in any law, rule regulation or treaty or in the administration, interpretation,implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline ordirective (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein tothe contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directivesthereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank forInternational Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United Statesregulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the dateenacted, adopted or issued.“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance withSection 9.01.“Code” means the Internal Revenue Code of 1986.“Collateral” means, collectively, the interests in real property, fixtures, related real property interests, related contracts andproceeds of the foregoing in which a Lien is granted or purported to be granted pursuant to the Mortgages.“Collateral Substitution” means the removal of all or a portion of a Financed Property (such Financed Property or portionthereof, a “Removed Property”) from the Property Pool (and the release of any Liens of the Lender on such Removed Property andany Collateral related to such Removed Property, as applicable) substantially simultaneously with, and in any event on the same dayas, the addition of a different Financed Property (the “Added Property”) to the Property Pool; provided that, (i) there shall exist noDefault or Event of Default at the time of any such Collateral Substitution, (ii) any such Collateral Substitution shall be subject tosatisfaction of those requirements set forth in Section 4.02 and such Added Property (and any Collateral related to such property) shallbe subject to a Mortgage and Real Estate Support Documents, (iii) in the event any Subsidiary which owns or leases the real propertyproposed to be Added Property in connection with such Collateral Substitution is not an existing Borrower or Subsidiary Guarantor, asthe case may be, such Subsidiary shall have complied with the provisions of Section 6.05 prior to or substantially simultaneously withthe addition of such proposed Added Property to the Property Pool, (iv) the Company shall have paid all fees related to any suchCollateral Substitution, and (v) in the event of a Collateral Substitution for a portion of a Financed Property, such substitution shall beeffected in connection with a Permitted Financed Property Disposition.“Collateral Substitution Test” shall mean:(i) with respect to a Collateral Substitution of an entire Financed Property, that the Lender shall have received a FIRREAAppraisal of the Added Property dated no more than six (6) months before such Collateral Substitution which evidences an AdjustedFIRREA Appraisal Value of the8Added Property equal to at least the Initial FIRREA Appraisal Value of the Initial Financed Property associated with the Related Loanapplicable to such Removed Property; and(ii) with respect to a Collateral Substitution of a portion of a Financed Property (such Financed Property (including therespective Removed Property and the respective Remaining Property) being referred to as, the “Subject Financed Property”), that:(x) the Lender shall have received FIRREA Appraisals dated no more than six (6) months before such CollateralSubstitution of (1) the portion of the Financed Property that will remain as Collateral after Collateral Substitution (the“Remaining Property”) and (2) any Added Property proposed to be added to the Property Pool in connection with suchCollateral Substitution; and(y) (1) the Adjusted FIRREA Appraisal Value of the Remaining Property, plus the Adjusted FIRREA AppraisalValue of any such Added Property shall be equal to at least the Initial FIRREA Appraisal Value of the Initial FinancedProperty associated with the Related Loan applicable to such Subject Financed Property or (2) in the event the proportionateamount of the Initial Adjusted FIRREA Appraisal Value associated with such Removed Property is readily identifiable by theapplicable initial FIRREA Appraisal for such Subject Financed Property (as determined by Lender), the Adjusted FIRREAAppraisal Value of any such Added Property shall be equal to at least such readily identifiable proportionate amount of suchInitial FIRREA Appraisal Value (and in which case of this clause (2), the FIRREA Appraisal referenced in clause (x)(1) aboveshall not be required to be delivered to Lender).“Commitment” means the Lender’s obligation to make Loans to the Borrowers pursuant to Section 2.01 in an aggregateprincipal amount not to exceed $128,120,500.00.“Company” has the meaning specified in the introductory paragraph hereto.“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (howeverdenominated) or that are franchise Taxes or branch profits Taxes.“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement,instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management orpolicies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”have meanings correlative thereto.“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy,assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor reliefLaws of the United States or other applicable jurisdictions from time to time in effect.“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passageof time, or both, would be an Event of Default.9“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base RateLoans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rateequal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.“Delaware LLC” means any limited liability company organized or formed under the laws of the State of Delaware.“Delaware Divided LLC” means any Delaware LLC which has been formed upon consummation of a Delaware LLCDivision.“Delaware LLC Division” means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant toSection 18-217 of the Delaware Limited Liability Company Act.“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of anySanction.“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leasebacktransaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of anynotes or accounts receivable or any rights and claims associated therewith and including any disposition of property to a DelawareDivided LLC or pursuant to a Delaware LLC Division.“Dollar” and “$” mean lawful money of the United States.“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.“Environmental Issue” means, with respect to a Financed Property, any potential or existing Environmental Liability relating tosuch Financed Property that is identified in any environmental reports obtained by any Borrower as requiring further remediation orinvestigation, including, without limitation, any potential Environmental Liability of which any Borrower or any Borrower’senvironmental consultant becomes aware.“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules,judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating topollution and the protection of the environment or the release of any materials into the environment, including those related tohazardous substances or wastes, air emissions and discharges to waste or public systems.“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs ofenvironmental remediation, fines, penalties or indemnities), of the Company, any other Loan Party or any of their respectiveSubsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use,handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) therelease or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensualarrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.10“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interestsin) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of(or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of(or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person ofsuch shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member ortrust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests areoutstanding on any date of determination.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulationspromulgated.“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Company withinthe meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating toSection 412 of the Code).“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Company or anyERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantialemployer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan ornotification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a PensionPlan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminatea Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or theappointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or aplan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 ofERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent underSection 4007 of ERISA, upon the Company or any ERISA Affiliate.“Eurodollar Rate” means:(a) With respect to a Eurodollar Rate Loan, the rate per annum equal to (i) the London Interbank Offered Rate (“LIBOR”) ora comparable or successor rate which rate is approved by the Lender, as published on the Reuters screen page (or such othercommercially available source providing such quotations as may be designated by the Lender from time to time) at approximately11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery onthe first day of such Interest Period) with a term equivalent to such Interest Period;(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, atapproximately 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of onemonth commencing that day; and11(c) if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement;provided that to the extent a comparable or successor rate is approved by the Lender in connection herewith, the approved rateshall be applied to the applicable Interest Period in a manner consistent with market practice; provided, further that to the extent suchmarket practice is not administratively feasible for the Lender, such approved rate shall be applied to the applicable Interest Period asotherwise reasonably determined by the Lender.A Loan bearing interest at the Eurodollar Rate may be (a) borrowed on any day (whether or not it is the first day of theapplicable Interest Period) and (b) repaid or converted to a different Type of Loan on any day (whether or not it is the last day of anInterest Period) without giving rise to any additional payment for “break funding” losses.“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”“Event of Default” has the meaning specified in Section 8.01.“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or aportion of the Guarantee of such Loan Party of, the joint and several liability of such Loan Party for, or the grant by such Loan Party ofa security interest to secure, such Swap Obligation (or any Guarantee thereof or joint and several liability therefor) is or becomes illegalunder the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or theapplication or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligiblecontract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 9.18 and any other“keepwell, support or other agreement” for the benefit of such Loan Party and any and all guarantees of such Loan Party’s SwapObligations by other Loan Parties) at the time the Guarantee of such Loan Party, the joint and several liability of such Loan Party or agrant by such Loan Party of a security interest, becomes effective with respect to such Swap Obligation. If a Swap Obligation arisesunder a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation thatis attributable to swaps for which such Guarantee or security interest is or becomes excluded in accordance with the first sentence ofthis definition. The parties hereto agree that if any Loan Party has granted a Lien on any Collateral of such Loan Party pursuant to anySecurity Instrument, the obligations secured by such Lien shall exclude any Excluded Swap Obligation with respect to such LoanParty, and such Security Instrument is hereby deemed amended to effect such exclusion.“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld ordeducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes,and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having itsprincipal office or, in the case of the Lender, its Lender’s Office located in, the jurisdiction imposing such Tax (or any politicalsubdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of the Lender, U.S. federal withholding Taxes imposed onamounts payable to or for the account of the Lender with respect to an applicable interest in a Loan or Commitment pursuant12to a law in effect on the date on which the Lender changes its Lender’s Office, except in each case to the extent that, pursuant toSection 3.01(a)(ii), (a)(iii) or (c), amounts with respect to such Taxes were payable to the Lender immediately before it changed itsLender’s Office, and (c) any U.S. federal withholding Taxes imposed pursuant to FATCA.“Facility Termination Date” means the date as of which all of the following shall have occurred: (a) the Commitment hasterminated, and (b) all Obligations have been indefeasibly paid in full in cash (other than (x) contingent indemnification obligations asto which no claim has been made and (y) obligations and liabilities under Secured Hedge Agreements as to which arrangementssatisfactory to the applicable Hedge Bank have been made).“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successorversion that is substantively comparable and not materially more onerous to comply with), any current or future regulations or officialinterpretations thereof and any agreements entered into pursuant to Section 1471 (b) (1) of the Code.“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federalfunds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by theFederal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a BusinessDay, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so publishedon the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal FundsRate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank ofAmerica on such day on such transactions as determined by the Lender.“Financed Property” means a real property parcel (and improvements related thereto) which (a) is owned in fee by a Borrowerand located at or near a dealership or otherwise used or to be used by a dealership in its business, (b) is located in any state of theUnited States of America or the District of Columbia, (c) has been identified as a Financed Property with respect to any Loans on theapplicable Loan Notice and (d) is one of the properties identified on Schedule 2.01 or an Added Property that has been added pursuantto a Collateral Substitution in accordance with the terms hereof. The Lender may revise Schedule 2.01 from time to time to reflect anyAdded Property that has been added to the Property Pool, or any Removed Property that has been removed from the Property Pool,from time to time.“FIRREA Appraisal” means an appraisal of a Financed Property that is commissioned by the Lender and satisfies therequirement of the Federal Institutions Reform, Recovery and Enforcement Act or is otherwise acceptable to the Lender in its solediscretion.“Flood Hazard Property” means any real property with respect to which the Lender requests a flood hazard determination in itssole discretion and which is determined to be in an area designated by the Federal Emergency Management Agency as having specialflood or mudslide hazards.13“Flood Requirements” means the following, with respect to any Flood Hazard Property, in each case in form and substancesatisfactory to the Lender: (a) the applicable Loan Party’s written acknowledgment of receipt of written notification from the Lender (i)as to the fact that such real property is a Flood Hazard Property, (ii) as to whether the community in which each such Flood HazardProperty is located is participating in the National Flood Insurance Program and (iii) such other flood hazard determination forms,notices and confirmations thereof as requested by the Lender and naming the Lender as lender’s loss payee; (b) copies of insurancepolicies or certificates of insurance of the applicable Loan Parties and naming the Lender as lender’s loss payee; and (c) property levelinformation sufficient for the Lender to determine the adequacy of flood insurance.“Foreign Lender” means, in the event of an assignment pursuant to Section 9.06 any Lender that is organized under the Lawsof a jurisdiction other than that in which the Company is resident for tax purposes. For purposes of this definition, the United States,each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.“FRB” means the Board of Governors of the Federal Reserve System of the United States.“Framework Agreement” means a framework agreement, in each case between the Company or any Subsidiary and amanufacturer or distributor of Vehicles.“Franchise Agreement” means any dealer franchise agreement, dealer sales and service agreement or similar agreement.“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements ofthe Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of theFinancial Accounting Standards Board or such other principles as may be approved by a significant segment of the accountingprofession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.“Governmental Authority” means the government of the United States or any other nation, or of any political subdivisionthereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entityexercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government(including any supra-national bodies such as the European Union or the European Central Bank).“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having theeconomic effect of guaranteeing any Indebtedness (the “primary obligations”) payable or performable by another Person (the “primaryobligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchaseor pay (or advance or supply funds for the purchase or payment of) such primary obligations, (ii) to purchase or lease property,securities or services for the purpose of assuring the obligee in respect of such primary obligations of the payment or performance ofsuch primary obligations, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or levelof income or cash flow of the primary obligor so as to enable the primary obligor to pay such primary obligations, or (iv) entered intofor the purpose of assuring in any other manner the obligee in respect of such primary obligations of the payment or performancethereof or to14protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing anyprimary obligations of any primary obligor, whether or not such primary obligation is assumed by such Person (or any right, contingentor otherwise, of any holder of such primary obligation to obtain any such Lien). The amount of any Guarantee (other than a Guaranteeof the type described in clause (b) above) shall be deemed to be an amount equal to the stated or determinable amount of the relatedprimary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximumreasonably anticipated liability in respect thereof as reasonably determined by the guaranteeing Person in good faith. The amount ofany Guarantee of the type described in clause (b) above shall be deemed to be an amount equal to the lesser of (x) the fair market valueof the property subject to such Lien and (y) the stated or determinable amount of the related primary obligation, or portion thereof, inrespect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respectthereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning. Theterm “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business.“Guaranty” means the Guaranty Agreement made by the Guarantors in favor of the Lender, substantially in the form of ExhibitC as supplemented from time to time by execution and delivery of Joinder Agreements pursuant to Section 6.05 and as otherwisesupplemented, amended, or modified from time to time.“Guarantors” means, collectively, (a) the Company, (b) the Subsidiary Guarantors, and (c) with respect to (i) Obligationsowing by any Loan Party or any Subsidiary of a Loan Party under any Swap Contract and (ii) the payment and performance by eachSpecified Loan Party of its obligations under its Guarantee with respect to all Swap Obligations, each Borrower.“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes orother pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls,radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.“Hedge Bank” means any Person that, (a) at the time it enters into a Swap Contract not prohibited under Article VI or VII, isthe Lender or an Affiliate of the Lender, or (b) at the time it (or its Affiliate) becomes the Lender, is a party to a Swap Contract notprohibited under Article VI or VII, in each case, in its capacity as a party to such Swap Contract.“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not includedas indebtedness or liabilities in accordance with GAAP:(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds,debentures, notes, loan agreements or other similar instruments;(b) all direct or contingent obligations of such Person arising under letters of credit (including standby andcommercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;15(c) net obligations of such Person under any Swap Contract;(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accountspayable in the ordinary course of business and, in each case, not past due for more than 60 days after the original specified duedate thereof, or if such trade account payable has no specified due date, the date on which such trade account payable wascreated);(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased bysuch Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not suchindebtedness shall have been assumed by such Person or is limited in recourse;(f) capital leases and Synthetic Lease Obligations;(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect ofany Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater ofits voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and(h) all Guarantees of such Person in respect of any of the foregoing.For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (otherthan a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer,unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contracton any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or SyntheticLease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. Theamount of Indebtedness of the type described in clause (e) above to the extent the recourse for such Indebtedness is limited to recourseagainst the property subject to the Lien described in clause (e) shall be deemed to be an amount equal to the lesser of (x) the fair marketvalue of the property subject to such Lien and (y) the outstanding amount if indebtedness secured by such Lien. The term“Indebtedness” shall not include (x) customer deposits and interest payable thereon in the ordinary course of business or (y)indebtedness to the extent that it has been defeased or satisfied and discharged in accordance with the terms of the documentsgoverning such indebtedness; provided that (i) to the extent the deposit of assets with the applicable holders (or trustee on behalf ofsuch holders) is required in connection with the defeasance or satisfaction and discharge of such indebtedness, such assets are limitedto cash and cash equivalents and (ii) none of the assets associated with such defeasance, or any income earned on such assets, shall beincluded in the calculation of any financial covenant or ratio or incurrence test hereunder, any borrowing base hereunder or thePrepayment Test Amount.“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or onaccount of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), OtherTaxes.“Indemnitees” has the meaning specified in Section 9.04(b).16“Indenture” means that certain Indenture, dated as of December 4, 2014 (as amended, supplemented and otherwise modifiedprior to the date hereof, and as further amended, supplemented or otherwise modified from time to time to the extent permittedhereunder), governing the $600,000,000 aggregate principal amount of outstanding 6.0% Senior Subordinated Notes due 2024 of theCompany.“Information” has the meaning specified in Section 9.07.“Initial Financed Property” means, with respect to any Related Loan, each Financed Property as it existed at the time it wasfinanced by such Loan on the Closing Date or during the Availability Period, as applicable.“Initial FIRREA Appraisal Value” means, with respect to any Initial Financed Property, the Adjusted FIRREA AppraisalValue applicable to such Initial Financed Property at the time the initial Related Loan was made for such Initial Financed Property.“Interest Payment Date” means the Automatic Debit Date of each calendar month.“Interest Period” means a period of approximately one month commencing on the first Business Day of each month and endingon the first Business Day of the following month.“IRS” means the United States Internal Revenue Service.“Joinder Agreement” means each Joinder Agreement, substantially in the form of Exhibit D, executed and delivered by aSubsidiary or any other Person to the Lender, pursuant to Section 6.05.“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations,ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by anyGovernmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrativeorders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in eachcase whether or not having the force of law.“Lease” means each operating lease or capital lease of all or any portion of a Financed Property, including but not limited tothose leases set forth on Schedule 5.26.“Lender” has the meaning specified in the introductory paragraph hereto.“Lender’s Office” means, the Lender’s address and, as appropriate, account as set forth on Schedule 9.02, or such otheraddress or account as the Lender may from time to time notify to the Company.“LIBOR” has the meaning specified in the definition of “Eurodollar Rate”.“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other),charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind ornature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or17other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of theforegoing).“Loan” has the meaning specified in Section 2.01(a).“Loan Documents” means this Agreement, the Master Note, each Mortgage, each other Security Instrument, any JoinderAgreement and the Guaranty.“Loan Notice” means a notice of (a) a Borrowing relating to one or more Financed Properties, or (b) a conversion of Loansfrom one Type to the other, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.“Loan Parties” means, collectively, the Company, each Borrower, each Guarantor, and each Person (other than the Lender orany landlord executing a landlord waiver) executing a Security Instrument.“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in theLondon interbank eurodollar market.“Marietta/2086 Cobb Financed Property” means the Financed Property located at 2086 Cobb Parkway SE, Marietta, Georgia.“Marietta/2086 Cobb Cell Tower Lessee” means the current lessee of a portion of the Marietta/2086 Cobb Financed Propertyfor use as the site of a cell tower.“Marietta/2086 Cobb Restaurant Lessee” means the current lessee of a portion of the Marietta/2086 Cobb Financed Propertyfor use as a restaurant.“Master Note” means a master promissory note made by the Borrowers in favor of the Lender, evidencing Loans made by theLender, substantially in the form of Exhibit B.“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business,properties, liabilities (actual or contingent), or financial condition of the Company and its Subsidiaries taken as a whole; (b) a materialimpairment of the rights and remedies of the Lender under any Loan Document, or of ability of the Loan Parties taken as a whole toperform their respective obligations under the respective Loan Documents to which any of them is a party; or (c) a material adverseeffect upon the legality, validity, binding effect or enforceability against the Loan Parties taken as a whole of the Loan Documents.“Maturity Date” means the earlier of (i) November 13, 2025, (ii) the maturity date of the Syndicated Credit Agreement (asamended from time to time, including amendments which extend the maturity date thereunder) if such maturity date is earlier than July25, 2021, (iii) April 25, 2021, if the Syndicated Credit Agreement is not refinanced, replaced or restated prior to April 25, 2021 or thematurity date of the Syndicated Credit Agreement has not been extended beyond July 25, 2021 and (iv) if the Syndicated CreditAgreement is refinanced, replaced or restated with a credit facility having a maturity date prior to November 13, 2025, or if thematurity date of the Syndicated Credit Agreement has been extended beyond July 25, 2021 but before November 13, 2025, such priormaturity date; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next precedingBusiness Day.18“Memorandum of Lease” means each memorandum of lease of all or any portion of a Financed Property.“Mortgage Permitted Liens” means, with respect to any Financed Property, the “Permitted Liens” as defined in the Mortgagefor such Financed Property.“Mortgaged Property” means, with respect to any Financed Property, the “Mortgaged Property” as defined in the Mortgagerelated to such Financed Property.“Mortgages” means, collectively, the mortgages, deeds of trust or security deeds now or hereafter encumbering any portion ofany Borrower’s interests in the Financed Properties and other property as described therein in favor of, or for the benefit of, the Lender.“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which theCompany or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made orbeen obligated to make contributions.“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Company or any ERISAAffiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.“New Vehicle” means a Vehicle which has never been owned except by a manufacturer, distributor or dealer and has neverbeen registered.“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising underany Loan Document or otherwise with respect to any Loan or Secured Hedge Agreement, whether direct or indirect (including thoseacquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest andfees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any DebtorRelief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims insuch proceeding; provided, that Obligations of a Loan Party shall exclude any Excluded Swap Obligation with respect to such LoanParty.“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws(or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liabilitycompany, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, jointventure, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organizationand any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with theapplicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles offormation or organization of such entity.19“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connectionbetween such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed,delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under,engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or LoanDocument).“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arisefrom any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfectionof a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxesimposed with respect to an assignment (other than an assignment made pursuant to Section 3.05).“Outstanding Amount” means, on any date, the aggregate outstanding principal amount of all Loans after giving effect to anyborrowings and prepayments or repayments of Loans occurring on such date.“PBGC” means the Pension Benefit Guaranty Corporation.“Pension Act” means the Pension Protection Act of 2006.“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including anyinstallment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of thePension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, after the effective dateof the Pension Act, Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that ismaintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject tothe minimum funding standards under Section 412 of the Code.“Permitted Financed Property Disposition” means a sale of a Financed Property in whole or in part by a Borrower, providedthat (i) such Financed Property is sold at a time when no Default or Event of Default exists, (ii) such sale shall be on fair andreasonable terms substantially as favorable to such Borrower as would be obtainable by such Borrower at the time in an arm’s-lengthcommercial transaction, (iii) substantially simultaneously with such sale, such Borrower shall either (x) repay to the Lender in full theentire outstanding principal balance of the Loan associated with such Financed Property and all accrued and unpaid interest and anyfees associated therewith or (y) effectuate a Collateral Substitution pursuant to the terms and conditions of this Agreement, and (iv) inthe event of any such Collateral Substitution, the Collateral Substitution Test shall have been met.“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company,partnership, Governmental Authority or other entity.20“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintainedfor employees of the Company or any ERISA Affiliate or any such Plan to which the Company or any ERISA Affiliate is required tocontribute on behalf of any of its employees.“Principal Amortization Payment Date” means, with respect to any Loan made as of the Closing Date, the first Business Dayof each January, April, July and October commencing January 1, 2019, and with respect to any Loan made after the Closing Date, thefirst Business Day of each January, April, July and October which is more than 90 days after the date on which such Loan as made.“Property Pool” means, collectively, as of any date, the Financed Properties constituting Collateral as of such date.“Qualified ECP Guarantor” shall mean, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifiesat such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an“eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.“Real Estate Support Documents” means, for each Financed Property, (a) mortgagee title insurance policies (in amounts andwith endorsements reasonably acceptable to the Lender and insuring over, and without exception for, any then existing or futuremechanics, materialmen or similar Liens), and such surveys (certified to the Lender and applicable title insurance company), zoningreports, appraisals (including FIRREA Appraisals), environmental reports (including Phase I and if requested by the Lender, Phase IIenvironmental assessments) and other mortgage-related documents, as the Lender may reasonably request, (b) a lessee estoppel,subordination and attornment agreement in substantially the form attached hereto as Exhibit E, or such other form as the Lender mayaccept in its sole discretion, (c) third party consents, flood hazard certifications, and evidence of flood insurance (if required), as theLender may reasonably request; and (d) such lessee’s affidavits and opinions of local counsel with respect to the Mortgages as theLender may reasonably request. Each Phase I or Phase II environmental assessment described above shall be (i) prepared by anenvironmental expert acceptable to the Lender and (ii) dated as of a date within twelve (12) months before the Closing Date (or, if theapplicable Financed Property is an Added Property, a date within twelve (12) months before the date of addition of such property tothe Property Pool).“Recipient” means the Lender or any other recipient of any payment to be made by or on account of any obligation of anyLoan Party hereunder.“Related Loan” means, with respect to any Financed Property, (a) the Loan made with respect to such Financed Property or (b)the Loan made with respect to another Financed Property that was replaced by such Financed Property (either directly through aCollateral Substitution or indirectly through a series of successive Collateral Substitutions).“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees,agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.21“Remaining Property” has the meaning specified in the definition of “Collateral Substitution Test”.“Removal Event” has the meaning specified in the definition of “Syndicated Credit Agreement”.“Removed Property” has the meaning specified in the definition of “Collateral Substitution”.“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 daynotice period has been waived.“Revolving Administrative Agent” has the meaning specified in the definition of Syndicated Credit Agreement.“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer orcontroller of a Loan Party and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary orany assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee ofthe applicable Loan Party so designated by any of the foregoing officers in a notice to the Lender. Any document delivered hereunderthat is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessarycorporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumedto have acted on behalf of such Loan Party.“Sanction(s)” means any international economic sanction administered or enforced by the United States Government (includingwithout limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevantsanctions authority.“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principalfunctions.“Secured Hedge Agreement” means any Swap Contract permitted under Article VII that is (a) entered into by and between anyLoan Party and any Hedge Bank and (b) related to any Loan or portion thereof.“Security Instruments” means, collectively or individually as the context may indicate, the Mortgages and all other agreements,instruments and other documents, whether now existing or hereafter in effect, pursuant to which any Borrower, any other Loan Partyor any other Person shall grant or convey to the Lender a Lien on, or any other Person shall acknowledge any such Lien on, propertyas security for all or any portion of the Obligations, any other obligation under any Loan Document.“Specified Financed Properties” means the Financed Properties owned by Atlanta Real Estate Holdings L.L.C. and located at2551 The Nalley Way, Atlanta, GA 30360, 2550 The Nalley Way, Atlanta, GA 30360 and 2500 The Nalley Way, Atlanta, GA30360.“Specified Loan Party” means any Loan Party that is not then an “eligible contract participant” under the CommodityExchange Act (determined prior to giving effect to Section 9.18).22“Subordination and Attornment Agreement” has the meaning specified in Section 7.06.“Subsequent Provision” means (a) any amendment to, consent to, or waiver of any covenant or agreement contained in ArticleVI (Affirmative Covenants) or Article VII (Negative Covenants) of the Syndicated Credit Agreement which has been incorporated byreference into Article VI (Affirmative Covenants) or Article VII (Negative Covenants) or (b) any covenant or agreement that is addedto Article VI (Affirmative Covenants) or Article VII (Negative Covenants) of the Syndicated Credit Agreement, in each case after thedate hereof (and including pursuant to any amendment or restatement of the Syndicated Credit Agreement), as such amended oradditional covenant, or agreement is in effect on the date so amended or added (without giving effect to any subsequent amendment orother modification thereof unless the terms thereof qualify as a “Subsequent Provision” hereunder); provided that, in the event Bank ofAmerica shall have received any amendment, consent, waiver or work fee in its capacity as a “Lender” under the Syndicated CreditAgreement in connection with such amendment, consent, amendment and restatement, waiver or agreement, (a “Syndicated LenderFee”), in order for such amendment, consent, amendment and restatement, wavier or agreement to be considered a “SubsequentProvision” hereunder, the Lender shall have received fees equal to (x) fifty percent (50%) times (y) the basis points used in calculatingthe Syndicated Lender Fee times (z) the Outstanding Amount, received by Bank of America (in its capacity as a lender) under theSyndicated Credit Agreement; provided further however, (A) such fees shall not exceed five (5) basis points of the OutstandingAmount and (B) such fees shall only be required to be paid in the case when such Subsequent Provision provides an accommodationto or is otherwise less restrictive on the Company and its Subsidiaries than the covenants and agreements in effect immediately prior tosuch Subsequent Provision.“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity ofwhich a majority of the shares of securities or other interests having ordinary voting power for the election of directors or othergoverning body (other than securities or interests having such power only by reason of the happening of a contingency) are at the timebeneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, orboth, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiaryor Subsidiaries of the Company.“Subsidiary Guarantors” means, collectively, all Subsidiaries executing the Guaranty on the Closing Date and all otherSubsidiaries that enter into a Joinder Agreement as a Subsidiary Guarantor.“Swap Contract” means any and all rate swap transactions, basis swaps, credit derivative transactions, forward ratetransactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond orbond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rateoptions, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions,cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any ofthe foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subjectto any master agreement.23“Swap Obligations” means with respect to any Guarantor any obligation to pay or perform under any agreement, contract ortransaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of anylegally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts havebeen closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior tothe date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determinedbased upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts(which may include the Lender or any Affiliate of the Lender).“Syndicated Credit Agreement” means that certain Second Amended and Restated Credit Agreement dated as of July 25, 2016among the Company, as a Borrower, certain of its Subsidiaries as Vehicle Borrowers, Bank of America, N.A., as AdministrativeAgent (in such capacity, the “Revolving Administrative Agent”), Revolving Swing Line Lender, New Vehicle Floorplan Swing LineLender and Used Vehicle Floorplan Swing Line Lender and L/C Issuer, and the other lenders party thereto, as the same SecondAmended and Restated Credit Agreement may be amended, amended and restated, modified, supplemented or replaced from time totime, provided, that, at the time upon which Bank of America (i) is no longer the Revolving Administrative Agent or (ii) is no longerthe left-lead arranger (either event of clause (i) or (ii) above being hereinafter referred to as a “Removal Event”) under such facility(including any such replacement facility), any references herein to the Syndicated Credit Agreement shall be to the Syndicated CreditAgreement as in effect immediately prior to such Removal Event. In the event that (x) all outstanding loans and other obligations underthe then existing Syndicated Credit Agreement have been paid in full (other than (1) contingent indemnification obligations as to whichno claim has been made and (2) obligations and liabilities under secured hedge agreements as to which arrangements satisfactory to theapplicable hedge bank have been made), (y) all commitments under such Syndicated Credit Agreement have terminated and (z) suchSyndicated Credit Agreement has not been replaced by a credit agreement that constitutes a Syndicated Credit Agreement (such eventsatisfying all of conditions (x), (y) and (z) being referred to as an “SCA Termination Event”), any references herein to the SyndicatedCredit Agreement shall be to the Syndicated Credit Agreement as in effect immediately prior to such SCA Termination Event.“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet ortax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balancesheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of suchPerson (without regard to accounting treatment).“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding),assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penaltiesapplicable thereto.“Type” means with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.24“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect ofperfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as ineffect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time insuch other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection orpriority.“United States” and “U.S.” mean the United States of America.“Used Vehicle” means a Vehicle other than a New Vehicle.“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.“Vehicle” means any automobile or truck approved for highway use by any State of the United States.“2013 Real Estate Credit Agreement” means the Credit Agreement dated as of September 26, 2013 among the Company,certain of its Subsidiaries, as Borrowers, and Bank of America, N.A., as lender, as the same Credit Agreement may be amended,amended and restated, modified, supplemented or replaced from time to time.1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwisespecified herein or in such other Loan Document:(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Any capitalizedterms used herein but not defined herein that are defined in the UCC shall have the respective meanings assigned to such terms in theUCC. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Thewords “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shallbe construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of orreference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring tosuch agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to anyrestrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any referenceherein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof”and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document inits entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits andSchedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which suchreferences appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacingor interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation asamended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the samemeaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts andcontract rights.25(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from andincluding;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall notaffect the interpretation of this Agreement or any other Loan Document.(d) Any reference herein to a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similarterm, shall be deemed to apply to a division of or by a limited liability company, or any allocation of assets to a series of a limitedliability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation,assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limitedliability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary,joint venture or any other like term shall also constitute such a Person or entity).1.03 Accounting Terms.(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and allfinancial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall beprepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent withthat used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding theforegoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) containedherein, Indebtedness of the Company and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amountthereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirementset forth in any Loan Document, and either the Company or the Lender shall so request, the Lender and the Company shall negotiatein good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that,until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change thereinand (ii) the Company shall provide to the Lender financial statements and other documents required under this Agreement or asreasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and aftergiving effect to such change in GAAP. Notwithstanding anything else set forth herein, any lease that was or would have been treatedas an operating lease under GAAP as in effect on the Closing Date that would become or be treated as a capital lease solely as a resultof a change in GAAP after the Closing Date shall always be treated as an operating lease for all purposes and at all times under thisAgreement; provided that, the Company shall nonetheless provide to the Lender financial statements and other documents requiredunder this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio orrequirement made before and after giving effect to such change in GAAP.26(c) Rounding. Any financial ratios required to be maintained by the Company pursuant to this Agreement shall be calculatedby dividing the appropriate component by the other component, carrying the result to one place more than the number of places bywhich such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is nonearest number).1.04 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time(daylight or standard, as applicable).1.05 References to Defined Terms in the Syndicated Credit Agreement.(a) The following terms shall have the meanings assigned thereto in the Syndicated Credit Agreement, as of the date hereof:(i) Acquisition,(ii) Aggregate Revolving Commitments,(iii) Approved Fund,(iv) Available Unused Revolving Commitments,(v) Investment,(vi) New Vehicle Floorplan Commitments,(vii) Permitted Floorplan Indebtedness,(viii) Permitted Liens,(ix) Permitted Real Estate Debt,(x) Restricted Subsidiary,(xi) Revolving Commitments,(xii) Subordinated Indebtedness,(xiii) Subordinated Indenture Indebtedness, and(xiv) Used Vehicle Floorplan Commitments.(b) The following terms shall have the meanings assigned thereto in the Syndicated Credit Agreement in effect from time totime (including all related defined terms referred to therein), provided that, in the event of any Removal Event, any references to suchterms shall be as such terms were defined in the Syndicated Credit Agreement as in effect immediately prior to such Removal Event:27(i) Change of Control, and(ii) Threshold Amount.ARTICLE II. THE COMMITMENTS AND LOANS2.01 Loans. Subject to the terms and conditions set forth herein, the Lender agrees to make up to fourteen (14) term loans(each such term loan, a “Loan”) to the Borrowers from time to time on any Business Day during the Availability Period; providedhowever, that, (a) each Loan shall be made to the applicable Borrower with respect to a single Financed Property (except that in thecase of the Specified Financed Properties, a Loan may be made to the applicable Borrower with respect to all three Specified FinancedProperties) identified in the Loan Notice for such Loan (it being understood and agreed that any Financed Property may only be usedfor one such Loan); (b) each Loan shall be made only on a Business Day; (c) more than one Loan may be made on the same day, butthe number of days on which Loans are made shall not exceed four (4) in the aggregate; (d) after giving effect to any Borrowing, theaggregate Outstanding Amount shall not exceed the Lender’s Commitment; (e) the aggregate principal amount of the applicable Loanwith respect to any Financed Property or Financed Properties (i) identified on Schedule 2.01 shall not exceed the amount indicatedwith respect to such property or properties under the column “Maximum Amount” on Schedule 2.01 or (ii) included in the PropertyPool pursuant to clause (e)(ii) below shall not exceed an amount equal to eighty-five percent (85%) of the Adjusted FIRREA AppraisalValue of such Financed Property; and (f) no Loan shall be advanced with respect to any Financed Property other than those properties(i) listed on Schedule 2.01 or (ii) for which all the requirements set forth in Section 4.02(d) have been satisfied. The principal amountof each Loan outstanding hereunder from time to time shall bear interest, and the Loans shall be repayable, in each case, as hereinprovided. No amount of any Loan repaid or prepaid by any Borrower may be reborrowed. Loans may be Base Rate Loans orEurodollar Rate Loans, as further provided herein. No Financed Property may be the subject of more than one Loan.282.02 Borrowings, Conversions and Continuations of Loans.(a) Each Borrowing and each conversion of Loans from one Type to the other shall be made upon the Company’s irrevocablenotice to the Lender, which may be given by telephone. Each such notice must be received by the Lender not later than 1:00 p.m. (i)one Business Day prior to the requested date of any Borrowing of Eurodollar Rate Loans or of any conversion of Eurodollar RateLoans to Base Rate Loans, and (ii) one Business Day prior to the requested date of any Borrowing of Base Rate Loans; provided thatany such notice of Borrowing delivered in connection with initial funding on the Closing Date may be provided on the Closing Date.Each telephonic notice by the Company pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Lender of awritten Loan Notice, appropriately completed and signed by a Responsible Officer of the Company. Each Borrowing of, conversion toor continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excessthereof. Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of$100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Company is requesting aBorrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date ofthe Borrowing or conversion, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowedor converted, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, (v) the applicable Borrower and(vi) the applicable Financed Property or Financed Properties. If the Company fails to provide a timely Loan Notice requesting aconversion of Eurodollar Rate Loans to Base Rate Loans, such Loans shall, subject to Article III, continue as Eurodollar Rate Loans.If the Company fails to specify a Type of Loan in a Loan Notice, then the applicable Loans shall, subject to Article III, be made as, orconverted to, Eurodollar Rate Loans.(b) Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is an initial Borrowing,Section 4.01), the Lender shall make all funds available to the applicable Borrower either by (i) crediting the account of such Borroweron the books of the Lender with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance withinstructions provided to (and reasonably acceptable to) the Lender by the Company.(c) The Lender shall promptly notify the Company of the interest rate applicable to any Eurodollar Rate Loans upondetermination of such interest rate. At any time that Base Rate Loans are outstanding, the Lender shall notify the Company of anychange in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of suchchange.2.03 Prepayments; Termination or Reduction of Commitment.(a) Each Borrower may, upon notice by the Company to the Lender, at any time or from time to time voluntarily prepayLoans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Lender not later than 1:00p.m. on the date of prepayment of such Loans; (ii) any prepayment of Loans shall be (A) in a principal amount of $500,000 or a wholemultiple of $100,000 in excess thereof, or (B) in the case of the prepayment in full of any Loan with respect to a particular FinancedProperty or particular Financed Properties, in the aggregate outstanding amount of the Loan made in connection with such FinancedProperty or Financed Properties and all accrued but unpaid interest thereon. Each such notice shall specify the29date and amount of such prepayment, the Type(s) of Loans to be prepaid and the particular Financed Property or Financed Propertiesrelating to each Loan being prepaid. If such notice is given by the Company, the applicable Borrower shall make such prepayment andthe payment amount specified in such notice shall be due and payable on the date specified therein. Each such prepayment shall beapplied to the remaining installments of principal of the Loans in the inverse order of maturity.(b) If for any reason the Outstanding Amount at any time exceeds the Commitment then in effect, the Borrowers shallimmediately prepay Loans in an aggregate amount equal to such excess. The Lender, in its sole discretion, shall determine whichLoans (or portions thereof) are deemed prepaid by such prepayment.(c) If the Austin Financed Property or any building located at such Financed Property is damaged or destroyed to such anextent that, under applicable Law, such Financed Property or such building may not be repaired, redeveloped or rebuilt or suchFinanced Property may not be used as a Vehicle dealership (an “Austin Casualty Event”), then the Borrowers shall, within twelve (12)months after the date of such Austin Casualty Event, either: (a) repay to the Lender the entire outstanding principal balance of anyLoan associated with the Austin Financed Property and all accrued and unpaid interest and any fees associated therewith, (b) obtain anamendment to, or a variance under, such Law so that such repair, redevelopment or rebuilding is permitted and the Austin FinancedProperty may continue to be used as a Vehicle dealership at all times after the end of such 12-month period, or (c) effectuate aCollateral Substitution for the entire Austin Financed Property pursuant to the terms and conditions of this Agreement, and, in the caseof such a Collateral Substitution, satisfy the Collateral Substitution Test.2.04 Repayment of Loans.(a) Each Borrower shall make quarterly amortization payments with respect to each of its respective Loans on each PrincipalAmortization Payment Date. Each such quarterly amortization payment shall be in an amount equal to 1.25% of the initial principalamount of such Loan.(b) The Borrowers shall repay to the Lender on the date of any Permitted Financed Property Disposition any amountsrequired to be paid as set forth in the definition of “Permitted Financed Property Disposition.”(c) The Borrowers shall repay to the Lender on the Maturity Date the aggregate principal amount of Loans outstanding onsuch date.2.05 Interest.(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstandingprincipal amount thereof from the applicable borrowing date at a rate per annum equal to the Eurodollar Rate plus the Applicable Rate;and (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowingdate at a rate per annum equal to the Base Rate plus the Applicable Rate.30(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods),whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rateper annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.(ii) Upon the request of the Lender, if any amount (other than principal of any Loan) payable by any Borrower underany Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, byacceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all timesequal to the Default Rate to the fullest extent permitted by applicable Laws.(iii) Upon the request of the Lender, while any Event of Default exists (other than as set forth in clauses (b)(i) and (b)(ii) above), the applicable Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at afluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payableupon demand.(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at suchother times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and afterjudgment, and before and after the commencement of any proceeding under any Debtor Relief Law.2.06 Automatic Debit Authorization. The Company and each Borrower hereby agree that interest on Loans and principalpayments with respect to Loans required to be paid pursuant to this Agreement may be deducted from the Company’s account withBank of America referenced below or such other account as identified in writing by the Company from time to time:Account Name: Asbury Automotive Group, LLCAccount Name: 3447413354ABA Number: 026009593Bank: Bank of America, N.A.Without limiting the generality of the foregoing, the Lender may debit such account (a) for interest on each Interest Payment Date andon the Maturity Date and (b) for scheduled principal payments on each Principal Amortization Payment Date and on the MaturityDate. The Company and the Borrowers will maintain sufficient funds in the account on the dates the Lenders enters debits authorizedby this Section. If there are insufficient funds in the account on the date the Lender enters any debit authorized by this Agreement, thedebit will be reversed. Nothing contained in31this Section will alter any obligation of any Loan Party to pay any amount required by this Agreement or any other Loan Document.2.07 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate. All computations of interest forBase Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis ofa 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basisof a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or anyportion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on whichit is made shall, subject to Section 2.09(a), bear interest for one day. Each determination by the Lender of an interest rate or feehereunder shall be conclusive and binding for all purposes, absent manifest error.2.08 Evidence of Debt. The Loans made by the Lender shall be evidenced by one or more accounts or records maintained bythe Lender in the ordinary course of business. The accounts or records maintained by the Lender shall be conclusive absent manifesterror of the amount of the Loans made by the Lender to the Borrowers and the interest and payments thereon. Any failure to so recordor any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amountowing with respect to the Obligations. Upon the request of the Lender, the Borrowers shall execute and deliver to the Lender a MasterNote, which shall evidence the Loans in addition to such accounts or records. The Lender may attach schedules to the Master Note andendorse thereon the date, Type (if applicable), amount and maturity of the Loans and payments with respect thereto.2.09 Payments Generally.(a) General. All payments to be made by any Borrower shall be made free and clear of and without condition or deduction forany counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by any Borrowerhereunder shall be made to the Lender, at the Lender’s Office in Dollars and in immediately available funds not later than 2:00 p.m. onthe date specified herein. All payments received by the Lender after 2:00 p.m. shall be deemed received on the next succeedingBusiness Day and any applicable interest or fee shall continue to accrue. If any payment to be made by any Borrower or the Companyshall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension oftime shall be reflected in computing interest or fees, as the case may be.(b) Funding Source. Nothing herein shall be deemed to obligate the Lender to obtain the funds for any Loan in any particularplace or manner or to constitute a representation by the Lender that it has obtained or will obtain the funds for any Loan in anyparticular place or manner.2.10 Borrowers.(a) Effective as of the date hereof, each Subsidiary that has executed this Agreement as a Borrower shall be a “Borrower”hereunder and may receive or cause the Company (as agent for such Subsidiary) to receive Loans for the account of such Subsidiaryon the terms and conditions set forth in this Agreement.32(b) In the event of any proposed Collateral Substitution wherein any Subsidiary which owns the real property proposed to bea Financed Property in connection with such Collateral Substitution is not an existing Borrower, the Company shall designate suchSubsidiary as a Borrower and such Subsidiary shall deliver the documents required by Section 6.05 prior to or substantiallysimultaneously with such proposed Financed Property entering the Property Pool, including the delivery of a Joinder Agreementexecuted by such Subsidiary identifying such Subsidiary as a Borrower. The parties hereto acknowledge and agree that prior to anysuch Subsidiary becoming entitled to receive Loans hereunder, the Lender shall have received the documents required by Section 6.05.Upon satisfaction of the foregoing requirements and any other requirements herein applicable to any such Subsidiary becoming aBorrower hereunder and any proposed Financed Property entering the Property Pool, the Lender agrees to permit such Borrower toreceive Loans hereunder on the terms and conditions set forth herein, and each of the parties agrees that such Borrower otherwise shallbe a Borrower for all purposes of this Agreement.(c) Notwithstanding any other provision of this Agreement, each Borrower shall be jointly and severally liable as a primaryobligor, and not merely as surety, for any and all Obligations, whether voluntary or involuntary and however arising, whether direct oracquired by the Lender by assignment or succession, whether due or not due, absolute or contingent, liquidated or unliquidated,determined or undetermined (such Obligations, the “Borrowers’ Liabilities”). (d) Each Borrower expressly waives any and all defenses now or hereafter arising or asserted by reason of (i) any lack oflegality, validity or enforceability of this Agreement, of the Master Note, of any other Loan Document, or of any other agreement orinstrument creating, providing security for, or otherwise relating to any of the Obligations or any guaranty of any of the Borrowers’Liabilities (the Loan Documents and all such other agreements and instruments being collectively referred to as the “RelatedAgreements”); (ii) any action taken under any of the Related Agreements, any exercise of any right or power therein conferred, anyfailure or omission to enforce any right conferred thereby, or any waiver of any covenant or condition therein provided; (iii) anyacceleration of the maturity of any of the Borrowers’ Liabilities or of any other obligations or liabilities of any Person under any of theRelated Agreements; (iv) any release, exchange, non-perfection, lapse in perfection, disposal, deterioration in value, or impairment ofany security for any of the Borrowers’ Liabilities, or for any other obligations or liabilities of any Person under any of the RelatedAgreements; (v) any dissolution of any Borrower, any Loan Party or any other party to a Related Agreement, or the combination orconsolidation of any Borrower, any Loan Party or any other party to a Related Agreement into or with another entity or any transfer ordisposition of any assets of any Borrower, any Loan Party or any other party to a Related Agreement; (vi) any extension (includingwithout limitation extensions of time for payment), renewal, amendment, restructuring or restatement of, any acceptance of late orpartial payments under, or any change in the amount of any borrowings or any credit facilities available under, this Agreement, theMaster Note or any other Loan Document or any other Related Agreement, in whole or in part; (vii) the existence, addition,modification, termination, reduction or impairment of value, or release of any other guaranty (or security therefor) of the Borrowers’Liabilities; (viii) any waiver of, forbearance or indulgence under, or other consent to any change in or departure from any term orprovision contained in this Agreement, any other Loan Document or any other Related Agreement, including without limitation anyterm pertaining to the payment or performance of any of the Borrowers’ Liabilities, or any of the obligations or liabilities of any partyto any other Related Agreement; and33(ix) any other circumstance whatsoever (with or without notice to or knowledge of such Borrower) which may or might in any manneror to any extent vary the risks of such Borrower, or might otherwise constitute a legal or equitable defense available to, or discharge of,a surety or a guarantor, including without limitation any right to require or claim that resort be had to any Borrower or any other LoanParty or to any collateral in respect of the Borrowers’ Liabilities. It is the express purpose and intent of the parties hereto that the jointand several liability of each Borrower for the Borrowers’ Liabilities shall be absolute and unconditional under any and allcircumstances and shall not be discharged except by payment as herein provided. Notwithstanding the foregoing, the liability of eachBorrower with respect to its Borrowers’ Liabilities shall be limited to an aggregate amount equal to the largest amount that would notrender its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code of the United States or anycomparable provisions of any applicable state law.(e) Each Borrower hereby irrevocably appoints the Company as its agent for all purposes relevant to this Agreement and eachof the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents,instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loan made bythe Lender to any such Borrower hereunder. Any acknowledgment, consent, direction, certification or other action which mightotherwise be valid or effective only if given or taken by all Borrowers, or by any Borrower acting singly, shall be valid and effective ifgiven or taken only the Company, whether or not any such other Borrower joins therein. Any notice, demand, consent,acknowledgement, direction, certification or other communication delivered the Company in accordance with the terms of thisAgreement shall be deemed to have been delivered the Company and each other Borrower.2.11 [Reserved].2.12 Amendments to 2013 Real Estate Credit Agreement. At such time as the outstanding amount of the Loans hereunderexceeds $20,000,000, Bank of America, N.A., in its capacity as the lender under the 2013 Real Estate Credit Agreement, agrees toenter into an amendment to the 2013 Real Estate Credit Agreement to (a) reduce the interest rate pricing (including “ApplicableRates”) thereunder to match the interest rate pricing (including Applicable Rates) in this Agreement, (b) amend the definition of“Syndicated Credit Agreement” in the 2013 Real Estate Credit Agreement to match the definition of “Syndicated Credit Agreement”in this Agreement and (c) add a covenant substantively similar to Section 6.12, provided that the amendment to the 2013 Real EstateCredit Agreement would not (y) permit raw land that is not under development or (z) contain exceptions for (i) the use of a portion ofthe Marietta/2086 Cobb Financed Property as a restaurant or (ii) the use of a portion of the Marietta/2086 Cobb Financed Property foruse as the site of a cell tower.ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY3.01 Taxes.(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.(i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall bemade without deduction or withholding for any Taxes,34except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the Lender)require the deduction or withholding of any Tax from any such payment by the Lender or a Loan Party, then the Lender orsuch Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentationto be delivered pursuant to this Agreement.(ii) If any Loan Party or the Lender shall be required by the Code to withhold or deduct any Taxes, including bothUnited States Federal backup withholding and withholding taxes, from any payment, then (A) the Lender shall withhold ormake such deductions as are determined by the Lender to be required based upon the information and documentation it hasreceived pursuant to this Agreement, (B) the Lender shall timely pay the full amount withheld or deducted to the relevantGovernmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made onaccount of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after anyrequired withholding or the making of all required deductions (including deductions applicable to additional sums payableunder this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no suchwithholding or deduction been made.(iii) If any Loan Party or the Lender shall be required by any applicable Laws other than the Code to withhold ordeduct any Taxes from any payment, then (A) such Loan Party or the Lender, as required by such Laws, shall withhold ormake such deductions as are determined by it to be required based upon the information and documentation it has receivedpursuant to subsection (e) below, (B) such Loan Party or the Lender, to the extent required by such Laws, shall timely pay thefull amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extentthat the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shallbe increased as necessary so that after any required withholding or the making of all required deductions (including deductionsapplicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum itwould have received had no such withholding or deduction been made.(b) Payment of Other Taxes by the Borrowers. Without limiting the provisions of subsection (a) above, each Borrower shalltimely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Lender timely reimburse itfor the payment of, any Other Taxes.(c) Tax Indemnifications.(i) Each Borrower shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment inrespect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including IndemnifiedTaxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient orrequired to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expensesarising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or assertedby the35relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Company by theLender shall be conclusive absent manifest error.(ii) The Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 daysafter demand therefor, the Borrowers, as applicable, against any Excluded Taxes attributable to such Lender that are payable orpaid by a Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respectthereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.(d) Evidence of Payments. Upon request by any Borrower or the Lender after any payment of Taxes by any Borrower or theLender to a Governmental Authority as provided in this Section 3.01, such Borrower shall deliver to the Lender or the Lender shalldeliver to such Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authorityevidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such paymentreasonably satisfactory to the Company or such Borrower or the Lender, as the case may be.(e) Status of Lender; Tax Documentation.(i) If Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made underany Loan Document, the Lender shall deliver to the Company, at the time or times reasonably requested by the Company, suchproperly completed and executed documentation reasonably requested by the Company as will permit such payments to bemade without withholding or at a reduced rate of withholding. In addition, the Lender, if reasonably requested by theCompany, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company aswill enable the Company to determine whether or not the Lender is subject to backup withholding or information reportingrequirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution andsubmission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A), and (ii)(B) below) shallnot be required if in the Lender’s reasonable judgment such completion, execution or submission would subject the Lender toany material unreimbursed cost or expense or would materially prejudice the legal or commercial position of the Lender.(ii) Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person,(A) the Lender (to the extent it is a U.S. Person) shall deliver to the Company on or prior to the Closing Date(and from time to time thereafter upon the reasonable request of the Company), executed originals of IRS Form W-9certifying that such Lender is exempt from U.S. federal backup withholding tax;(B) in the event Lender is a Foreign Lender, such Foreign Lender shall, to the extent it is legally entitled to doso, deliver to the Company (in such number of copies as shall be requested by the recipient) on or prior to the date onwhich such36Foreign Lender becomes the Lender under this Agreement (and from time to time thereafter upon the reasonablerequest of the Company), whichever of the following is applicable:(I) in the case of any such Foreign Lender claiming the benefits of an income tax treaty to which theUnited States is a party (x) with respect to payments of interest under any Loan Document, executed originals ofIRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant tothe “interest” article of such tax treaty and (y) with respect to any other applicable payments under any LoanDocument, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Taxpursuant to the “business profits” or “other income” article of such tax treaty;(II) executed originals of IRS Form W-8ECI;(III) in the case of any such Foreign Lender claiming the benefits of the exemption for portfolio interestunder Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that suchForeign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percentshareholder” of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreigncorporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y)executed originals of IRS Form W-8BEN; or(IV) to the extent any such Foreign Lender is not the beneficial owner, executed originals of IRS FormW-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificatesubstantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documentsfrom each beneficial owner, as applicable; provided that if such Foreign Lender is a partnership and one or moredirect or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such ForeignLender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G‑4 on behalf ofeach such direct and indirect partner;(C) in the event Lender is a Foreign Lender, any Foreign Lender shall, to the extent it is legally entitled to doso, deliver to the Company (in such number of copies as shall be requested by the recipient) on or prior to the date onwhich such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon thereasonable request of the Company), executed originals of any other form prescribed by applicable law as a basis forclaiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with suchsupplementary documentation as may be prescribed by applicable law to permit the Company to determine thewithholding or deduction required to be made; and37(D) if a payment made to the Lender under any Loan Document would be subject to U.S. federal withholdingTax imposed by FATCA if the Lender were to fail to comply with the applicable reporting requirements of FATCA(including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender shall deliver to theCompany at the time or times prescribed by law and at such time or times reasonably requested by the Company suchdocumentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and suchadditional documentation reasonably requested by the Company as may be necessary for the Company to comply withits obligations under FATCA and to determine that the Lender has complied with the Lender’s obligations underFATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (B),“FATCA” shall include any amendments made to FATCA after the date of this Agreement.(iii) Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires orbecomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Company and theLender in writing of its legal inability to do so.(f) Treatment of Certain Refunds. If any Recipient determines, in its sole discretion, that it has received a refund of any Taxesas to which it has been indemnified by the Company or any other Borrower or with respect to which the Company or any Borrowerhas paid additional amounts pursuant to this Section 3.01, it shall pay to the Company or such Borrower an amount equal to suchrefund (but only to the extent of indemnity payments made, or additional amounts paid, by the Company under this Section 3.01 withrespect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, andwithout interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that theCompany and each other Borrower, upon the request of the Recipient, agrees to repay the amount paid over to the Company or suchBorrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the eventthe Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in thissubsection, in no event will the applicable Recipient be required to pay any amount to the Company or any other Borrower pursuant tothis subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient wouldhave been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposedand the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not beconstrued to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deemsconfidential) to the Company, any Borrower, or any other Person.(g) Survival. Each party’s obligations under this Section 3.01 shall survive any assignment of rights by, the Lender, thetermination of the Commitment and the repayment, satisfaction or discharge of all other Obligations.3.02 Illegality. If the Lender determines that any Law has made it unlawful, or that any Governmental Authority has assertedthat it is unlawful, for the Lender or its Lender’s Office to make, maintain or fund Loans whose interest is determined by reference tothe Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority hasimposed material restrictions on the authority of the Lender to purchase or sell, or to take deposits38of, Dollars in the London interbank market, then, on notice thereof by the Lender to the Company, (a) any obligation of the Lender tomake or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (b) if suchnotice asserts the illegality of the Lender making or maintaining Base Rate Loans the interest rate on which is determined by referenceto the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of the Lender shall, if necessary toavoid such illegality, be determined by the Lender without reference to the Eurodollar Rate component of the Base Rate, in each caseuntil the Lender notifies the Company that the circumstances giving rise to such determination no longer exist. Upon receipt of suchnotice, (i) each Borrower (jointly and severally) shall, upon demand from the Lender, prepay or, if applicable, convert all EurodollarRate Loans to Base Rate Loans (the interest rate on which Base Rate Loans shall, if necessary to avoid such illegality, be determinedby the Lender without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Periodtherefor, if the Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if the Lender maynot lawfully continue to maintain such Eurodollar Rate Loans and (ii) if such notice asserts the illegality of the Lender determining orcharging interest rates based upon the Eurodollar Rate, the Lender shall during the period of such suspension compute the Base Ratewithout reference to the Eurodollar Rate component thereof until the Lender determines that it is no longer illegal for the Lender todetermine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, each Borrower (jointlyand severally) shall also pay accrued interest on the amount so prepaid or converted.3.03 Inability to Determine Rates.(a) If in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof, (i) the Lenderdetermines that (A) Dollar deposits are not being offered to banks in the applicable offshore interbank market for such currency for theapplicable amount and Interest Period of such Eurodollar Rate Loan, or (B) adequate and reasonable means do not exist fordetermining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connectionwith an existing or proposed Base Rate Loan (in each case with respect to clause (i) above, “Impacted Loans”), or (ii) the Lenderdetermines that for any reason the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loandoes not adequately and fairly reflect the cost to the Lender of funding such Eurodollar Rate Loan, the Lender will promptly so notifythe Company. Thereafter, (x) the obligation of the Lender to make or maintain Eurodollar Rate Loans shall be suspended (to the extentof the affected Eurodollar Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentencewith respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining theBase Rate shall be suspended, in each case until the Lender revokes such notice. Upon receipt of such notice, the Company mayrevoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans (to the extent of the affectedEurodollar Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for aBorrowing of Base Rate Loans in the amount specified therein. Notwithstanding the foregoing, if the Lender has made thedetermination described in clause (i) of the first sentence of this clause (a), the Lender, in consultation with the Company, may establishan alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to theImpacted Loans until (1) the Lender revokes39the notice delivered with respect to the Impacted Loans under clause (i) of the first sentence of this section, (2) the Lender notifies theCompany that such alternative interest rate does not adequately and fairly reflect the cost to the Lender of funding the Impacted Loans,or (3) the Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful,for the Lender or its applicable Lender’s Office to make, maintain or fund Loans whose interest is determined by reference to suchalternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposedmaterial restrictions on the authority of the Lender to do any of the foregoing and provides the Company written notice thereof.(b) LIBOR Successor Rate. Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if theLender determines (which determination shall be conclusive absent manifest error), or the Borrowers notify the Lender that theBorrowers have determined, that:(i)adequate and reasonable means do not exist for ascertaining LIBOR for any applicable interest period,including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and suchcircumstances are unlikely to be temporary; or(ii) the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over theLender has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longerbe made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”),or(iii)syndicated loans currently being executed, or that include language similar to that contained in this Section,are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,then, reasonably promptly after such determination by the Lender or receipt by the Lender of such notice, as applicable, the Lender andthe Borrowers may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or otheradjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention forsimilar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBORSuccessor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes (as defined below) and any suchamendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Lender shall have posted suchproposed amendment to the Borrowers.If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the ScheduledUnavailability Date has occurred (as applicable), the Lender will promptly so notify the Borrower. Thereafter, (x) any obligation ofthe Lender to make or maintain Loans based on LIBOR shall be suspended (to the extent of the affected Loans or applicable interestperiods), and (y) the LIBOR Rate component shall no longer be utilized in determining the Base Rate. Upon receipt of such notice,any affected Loans will be subject to the foregoing clause (y).40Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBORSuccessor Rate be less than zero for purposes of this Agreement.As used above:“LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Lender designates to determine LIBOR (or suchother commercially available source providing such quotations as may be designated by the Lender from time to time).“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conformingchanges to the definition of Base Rate, timing and frequency of determining rates and making payments of interest and otheradministrative matters as may be appropriate, in the discretion of the Lender, to reflect the adoption of such LIBOR Successor Rateand to permit the administration thereof by the Lender in a manner substantially consistent with market practice (or, if the Lenderdetermines that adoption of any portion of such market practice is not administratively feasible or that no market practice for theadministration of such LIBOR Successor Rate exists, in such other manner of administration as the Lender determines in consultationwith the Borrower).3.04 Increased Costs.(a) Increased Costs Generally. If any Change in Law shall:(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similarrequirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender (exceptany reserve requirement contemplated by Section 3.04(e));(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through(d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit,commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or(iii) impose on the Lender or the London interbank market any other condition, cost or expense (other than Taxes)affecting this Agreement or Eurodollar Rate Loans made by the Lender;and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining any Loan the interest onwhich is determined by reference to the Eurodollar Rate (or of maintaining its obligation to make any such Loan), or to reduce theamount of any sum received or receivable by the Lender (whether of principal, interest or any other amount) then, upon request of theLender, each Borrower (jointly and severally) will pay to the Lender, as the case may be, such additional amount or amounts as willcompensate the Lender, as the case may be, for such additional costs incurred or reduction suffered.(b) Capital Requirements. If the Lender determines that any Change in Law affecting the Lender or any Lender’s Office ofthe Lender or the Lender’s holding company, if any, regarding41capital requirements has or would have the effect of reducing the rate of return on the Lender’s capital or on the capital of the Lender’sholding company, if any, as a consequence of this Agreement, the Commitment of the Lender or the Loans made by, the Lender, to alevel below that which the Lender or the Lender’s holding company could have achieved but for such Change in Law (taking intoconsideration the Lender’s policies and the policies of the Lender’s holding company with respect to capital adequacy), then from timeto time each Borrower (jointly and severally) will pay to the Lender such additional amount or amounts as will compensate the Lenderor the Lender’s holding company for any such reduction suffered.(c) Certificates for Reimbursement. A certificate of the Lender setting forth the amount or amounts necessary to compensatethe Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to theCompany shall be conclusive absent manifest error. Each Borrower shall pay the Lender the amount shown as due on any suchcertificate within 10 days after receipt thereof.(d) Delay in Requests. Failure or delay on the part of the Lender to demand compensation pursuant to the foregoingprovisions of this Section 3.04 shall not constitute a waiver of the Lender’s right to demand such compensation, provided that noBorrower shall be required to compensate the Lender pursuant to the foregoing provisions of this Section for any increased costsincurred or reductions suffered more than nine (9) months prior to the date that the Lender notifies the Company of the Change in Lawgiving rise to such increased costs or reductions and of the Lender’s intention to claim compensation therefor (except that, if theChange in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall beextended to include the period of retroactive effect thereof).(e) Reserves on Eurodollar Rate Loans. Each Borrower, jointly and severally, shall pay to the Lender, as long as the Lendershall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits(currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equalto the actual costs of such reserves allocated to such Loan by the Lender (as determined by the Lender in good faith, whichdetermination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, providedthe Company shall have received at least ten (10) days’ prior notice of such additional interest from the Lender. If the Lender fails togive notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) daysfrom receipt of such notice.3.05 Designation of a Different Lender’s Office. If the Lender requests compensation under Section 3.04, or requires anyBorrower to pay any Indemnified Taxes or additional amounts to the Lender or any Governmental Authority for the account of theLender pursuant to Section 3.01, or if the Lender gives a notice pursuant to Section 3.02, then at the request of the Company, theLender shall use reasonable efforts to designate a different Lender’s Office for funding or booking the Loans hereunder or to assign itsrights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of the Lender, such designation orassignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, oreliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject the Lender to anyunreimbursed cost or expense and would not otherwise be42disadvantageous to the Lender. Each Borrower (jointly and severally) hereby agrees to pay all reasonable costs and expenses incurredby the Lender in connection with any such designation or assignment.3.06 Survival. All of the Company’s and each other Borrower’s obligations under this Article III shall survive termination ofthe Commitment, repayment of all other Obligations hereunder, and the Maturity Date.ARTICLE IV. CONDITIONS PRECEDENT TO LOANS4.01 Conditions of Initial Loans. This Agreement shall be effective subject to satisfaction of the following conditionsprecedent:(a) The Lender’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals)unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date(or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substancesatisfactory to the Lender:(i) executed counterparts of (A) this Agreement (B) the Mortgages set forth on Schedule 4.01(a)(i), (C) the Guarantyand (D) the Subordination and Attornment Agreements required to be delivered in connection herewith, in each case, sufficientin number for distribution to the Lender, the Lender’s counsel and the Company;(ii) the Master Note executed by the Borrowers in favor of the Lender;(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of ResponsibleOfficers of each Loan Party as the Lender may require evidencing the identity, authority and capacity of each ResponsibleOfficer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents towhich such Loan Party is a party;(iv) such documents and certifications as the Lender may reasonably require to evidence that each Loan Party is dulyorganized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in therespective jurisdictions specified in Schedule 4.01(a)(iv), which includes each jurisdiction where its ownership, lease oroperation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so couldnot reasonably be expected to have a Material Adverse Effect;(v) a favorable opinion of Jones Day, counsel to the Loan Parties, addressed to the Lender, in the form attached asExhibit F(vi) a favorable opinion of local counsel to the Loan Parties in Indiana, Texas, Georgia and North Carolina, addressedto the Lender in form and substance reasonably satisfactory to the Lender, as to such matters concerning the Borrowers theGuarantors, and the Loan Documents as the Lender may reasonably request;43(vii) a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses andapprovals (including pursuant to any Franchise Agreement or Framework Agreement) required in connection with theexecution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents towhich it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no suchconsents, licenses or approvals are so required;(viii) a certificate signed by a Responsible Officer of the Company certifying (A) that the conditions specified inSections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the AuditedFinancial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a MaterialAdverse Effect;(ix) a certificate signed by the chief financial officer, treasurer or chief accounting officer of the Company, certifyingthat the Company individually is Solvent and the Loan Parties taken as a whole are Solvent, in each case after giving effect tothis Agreement and the other Loan Documents and the Indebtedness pursuant hereto and thereto;(x) With respect to each Financed Property identified on Schedule 2.01, the Lender shall have received each of thefollowing, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, eachdated as of the Closing Date or a recent date before the Closing Date and each in form and substance reasonably satisfactory tothe Lender:(A) a satisfactory FIRREA Appraisal;(B) (x) a Mortgage properly executed by a Responsible Officer of the signing Loan Party and evidence of theproper recordation of such Mortgage in the appropriate filing office (or delivery of such Mortgage to the applicable titlecompany for recordation), and (y) the Real Estate Support Documents with respect to such Financed Property;(C) environmental reports (including Phase I and if requested by the Lender, Phase II environmentalassessments) as the Lender may reasonably request, in each case (x) prepared by an environmental expert acceptable toLender and (y) dated as of a date within twelve (12) months before the Closing Date;(D) evidence that such Financed Property is not a Flood Hazard Property;(E) a copy of the Lease of such Financed Property to the applicable Subsidiary and any sublease orMemorandum of Lease associated therewith, if any;(xi) evidence that all insurance (including flood insurance, if applicable) required to be maintained pursuant to theLoan Documents has been obtained and is in effect, including endorsements naming the Lender as an additional insured orlender’s loss payee, as the case may be, on all insurance policies maintained with respect to properties of the Company of anyLoan Party constituting part of the Collateral;44(xii) UCC financing statements and fixture filings for filing in all places required by applicable law to perfect the Liensof the Lender under the Security Instruments as a perfected Lien as to items of Collateral in which a security interest may beperfected by the filing of financing statements or fixture filings and such other documents and/or evidence of other actions asmay be necessary under applicable Law to perfect the Liens of the Lender under the Mortgages and other Security Instrumentsas a first priority Lien (subject only to Mortgage Permitted Liens) in and to such other Collateral as the Lender may require;(xiii) UCC search results with respect to the Loan Parties showing only Liens acceptable to the Lender (or pursuant towhich arrangements reasonably satisfactory to the Lender shall have been made to remove any unacceptable Liens promptlyafter the Closing Date);(xiv) the documentation and other information requested by Lender in connection with applicable “know yourcustomer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five days priorto the Closing Date; and(xv) such other assurances, certificates, documents, consents or opinions as the Lender reasonably may require.(b) Any fees required to be paid on or before the Closing Date shall have been paid.(c) Unless waived by the Lender, the Company shall have paid all accrued fees, charges and disbursements of counsel to theLender (directly to such counsel if requested by the Lender) to the extent invoiced prior to or on the Closing Date, plus such additionalamounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursementsincurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settlingof accounts between the Company and the Lender).4.02 Conditions to all Borrowings. The obligation of the Lender to honor any Loan Notice (other than a Loan Noticerequesting only a conversion of Loans to the other Type) or to make any Loan pursuant to Section 2.01, or to effect any CollateralSubstitution, is subject to the following conditions precedent:(a) The representations and warranties of the Company and each other Loan Party contained in Article V or any other LoanDocument, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be trueand correct on and as of the date of such Borrowing or Collateral Substitution, except to the extent that such representations andwarranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that forpurposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemedto refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Syndicated CreditAgreement.(b) No Default shall exist or would result from such proposed Borrowing or Collateral Substitution or from the application ofthe proceeds thereof.45(c) In the event of a Borrowing, the Lender shall have received a Loan Notice in accordance with the requirements hereof.(d) With respect to each Financed Property which is added to the Property Pool by such Collateral Substitution, the Lendershall have received each of the following, each of which shall be originals or telecopies (followed promptly by originals) unlessotherwise specified, each dated as of the date of such Loan (or a recent date before the date of such Loan, or, with respect to suchFinanced Properties to be financed as of the Closing Date, except to the extent permitted to be delivered in accordance with Section6.10) and each in form and substance reasonably satisfactory to the Lender:(i) a satisfactory FIRREA Appraisal;(ii) (x) a Mortgage properly executed by a Responsible Officer of the signing Loan Party and evidence of the properrecordation of such Mortgage in the appropriate filing office (or delivery of such Mortgage to the applicable title company forrecordation), and (y) the Real Estate Support Documents with respect to such Financed Property;(iii) environmental reports (including Phase I and if requested by the Lender, Phase II environmental assessments) asthe Lender may reasonably request, in each case (x) prepared by an environmental expert acceptable to Lender and (y) dated asof a date within twelve (12) months before the date of addition of such property to the Property Pool;(iv) a copy of the Lease of such Financed Property to the applicable Subsidiary and any sublease or Memorandum ofLease associated therewith, if any;(v) to the extent the applicable lessee is not already a party to the Guaranty, a fully executed Joinder Agreementexecuted by the lessee under any Lease of such Financed Property joining such lessee to the Guaranty;(vi) a favorable opinion of local counsel to the Borrowers in the state where such Financed Property is located,addressed to the Lender, as to such matters concerning the Borrowers owning such Financed Property, any Guarantor leasingsuch property, and the Loan Documents as the Lender may reasonably request;(vii) a certificate of a Responsible Officer of the Company in form and detail reasonably satisfactory to the Lender(which may be contained in the applicable Loan Notice) demonstrating that the Collateral Substitution Test shall have beenmet;(viii) Uniform Commercial Code search results showing no Liens on the Financed Property other than MortgagePermitted Liens and those liens acceptable to the Lender in its sole discretion;(ix) delivery of Uniform Commercial Code financing statements and fixture filings suitable in form and substance forfiling in all places required by applicable Law to perfect the Liens of the Lender under the Mortgage and other SecurityInstruments related to such Financed Property as a first priority Lien (subject only to Mortgage Permitted Liens) as to items ofCollateral in which a security interest may be perfected by the filing of financing statements or fixture filings, and such otherdocuments and/or evidence of other actions as46may be necessary under applicable Law to perfect the Liens of the Lender under the Mortgage and other Security Instrumentsrelated to such Financed Property as a first priority Lien (subject only to Mortgage Permitted Liens) in and to such otherCollateral as the Lender may require;(x) evidence that all insurance (including flood insurance, if applicable) required to be maintained pursuant to the LoanDocuments with respect to such Financed Property has been obtained and is in effect; and endorsements naming the Lender asan additional insured and loss payee, as the case may be, on all such insurance policies maintained with respect to suchFinanced Property; and(xi) evidence that such Financed Property is not a Flood Hazard Property; and(xii) with respect to the applicable Borrower associated with such Financed Property (to the extent not previouslydelivered):(A) such certificates of resolutions or other action, incumbency certificates and/or other certificates ofResponsible Officers of such Borrower as the Lender may require evidencing the identity, authority and capacity ofeach Responsible Officer thereof authorized to act as a Responsible Officer in connection with the Loan Documents towhich such Borrower is a party;(B) such documents and certifications as the Lender may reasonably require (x) to evidence that each LoanParty is duly organized or formed, and (y) to evidence that such Borrower is validly existing, in good standing andqualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conductof its business requires such qualification, except to the extent that failure to do so could not reasonably be expected tohave a Material Adverse Effect;(C) a certificate of a Responsible Officer of such Borrower either (A) attaching copies of all consents, licensesand approvals required in connection with the execution, delivery and performance by such Borrower and the validityagainst such Borrower of the Loan Documents to which it is a party, and such consents, licenses and approvals shall bein full force and effect, or (B) stating that no such consents, licenses or approvals are so required; and(D) a certificate signed by the chief financial officer, treasurer or chief accounting officer of the Company,certifying that the Company individually is Solvent and the Loan Parties taken as a whole are Solvent, in each case aftergiving effect to the Collateral Substitution and the other Loan Documents and the Indebtedness pursuant hereto andthereto.(e) The applicable Borrower associated with such Financed Property must be a Borrower as of the Closing Date or pursuantto Section 6.05.(f) With respect to each Collateral Substitution, (i) the Lender shall have received a $7,500.00 collateral substitution fee and(ii) the Lender shall have determined that no Environmental47Issue exists with respect to any Financed Property that is added to the Collateral Pool by such Collateral Substitution.(g) Any fees required to be paid on or before the date of the applicable Borrowing or Collateral Substitution shall have beenpaid.Each Loan Notice (other than a Loan Notice requesting only a conversion of Loans to the other Type) submitted by theCompany and each Collateral Substitution shall be deemed to be a representation and warranty that the conditions specified in Sections4.02(a) and (b) have been satisfied on and as of the date of the applicable Borrowing or Collateral Substitution.The Company and the Borrowers, jointly and severally, shall pay to the Lender any collateral substitution fees required by thisSection 4.02.ARTICLE V. REPRESENTATIONS AND WARRANTIESThe Company and each Borrower represents and warrants to the Lender that:5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed,validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has allrequisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease itsassets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party,and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership,lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to inclause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each LoanDocument to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and donot and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach orcontravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to whichsuch Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries, or (ii) any order, injunction,writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate anyLaw; except, in the case of clause (b)(i) or (c), to the extent such contravention, conflict or violation would not reasonably be expectedto have Material Adverse Effect.5.03 Governmental Authorization; Other Consents. No registration with, or consent or approval of, or other action by, anyfederal, state or other Governmental Authority is or will be required in connection with the execution, delivery and performance of thisAgreement or any other Loan Document, the execution and delivery of the Master Note or repayment of the Borrowings hereunder.485.04 Binding Effect. This Agreement and each of the Loan Documents have been duly executed and delivered by each LoanParty which is a party thereto and constitute legal, valid and binding obligations of each Loan Party thereto enforceable in accordancewith their respective terms, subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,moratorium and similar Laws affecting creditors’ rights generally and general principles of equity.5.05 Financial Statements; No Material Adverse Effect.(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the periodcovered thereby, except as otherwise expressly noted therein; and (ii) fairly present in all material respects the financial condition of theCompany and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance withGAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.(b) The unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries dated June 30, 2018,and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for the fiscalquarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby,except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Company and itsSubsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and(ii), to the absence of footnotes and to normal year-end audit adjustments.(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in theaggregate, that has had or could reasonably be expected to have a Material Adverse Effect.5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Companyafter due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority,by or against the Company or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain tothis Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed inSchedule 5.06, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to any ContractualObligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Defaulthas occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any otherLoan Document.5.08 Ownership of Property; Liens. Except as specifically disclosed in Schedule 5.08 (a) each of the Company and eachSubsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in theordinary conduct of its business, and (b) each of the Company and each Subsidiary owns all property necessary in theoperation of its business, except in each case for such defects in title or such failure to own or lease property as could not, individuallyor in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Company and its Subsidiaries issubject to no Liens, other than Permitted Liens.5.09 Environmental Compliance. The Company and each of its Subsidiaries has complied in all respects with allEnvironmental Laws except where the failure to comply could not be expected to have a Material Adverse Effect. Neither theCompany nor any of its Subsidiaries has received written notice of any failure so to comply except where the failure to comply couldnot be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries manages any hazardous wastes,hazardous substances, hazardous materials, toxic substances or toxic pollutants in a manner that violates any regulations promulgatedpursuant to Environmental Laws except for any such violation that could not be expected to have a Material Adverse Effect.5.10 Insurance. The properties of the Company and its Subsidiaries are insured with financially sound and reputableinsurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarilycarried by companies engaged in similar businesses and owning similar properties in localities where the Company or the applicableSubsidiary operates.5.11 Taxes. The Company and its Subsidiaries have filed all Federal, state and other material tax returns required to be filed,and have paid, or have made adequate provision for payment of, all Federal, state and other material taxes, assessments, fees and othergovernmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except thosewhich are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves or otherappropriate provisions have been provided in accordance with GAAP. There is no proposed tax assessment against the Company orany Subsidiary that would, if made, have a Material Adverse Effect.5.12 ERISA Compliance.(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal orstate laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorabledetermination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of theCode and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax underSection 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service or, in thecase of a Pension Plan that is maintained pursuant to the adoption of a master or prototype or volume submitter document, the sponsorof such master or prototype or volume submitter document has obtained from the Internal Revenue Service a favorable opinion letterstating that the form of such master or prototype or volume submitter document is acceptable for the establishment of a tax-qualifiedplan under Section 401(a) of the Code. To the best knowledge of the Company, nothing has occurred that would prevent or cause theloss of such tax-qualified status.50(b) There are no pending or, to the best knowledge of the Company, threatened claims, actions or lawsuits, or action by anyGovernmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There hasbeen no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or couldreasonably be expected to result in a Material Adverse Effect.(c) No ERISA Event has occurred that would reasonably be expected to result in a material liability, and neither the Companynor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in anERISA event that would result in a material liability. Except to the extent the following would not reasonably be expected to have aMaterial Adverse Effect, (i) the Company and each ERISA Affiliate has met all applicable requirements under the Pension FundingRules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has beenapplied for or obtained; (ii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (asdefined in Section 430(d)(2) of the Code) is 60% or higher and neither the Company nor any ERISA Affiliate knows of any facts orcircumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below60% as of the most recent valuation date; (iii) neither the Company nor any ERISA Affiliate has incurred any liability to the PBGCother than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) neither theCompany nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA;and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance hasoccurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminateany Pension Plan.(d) Neither the Company nor any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contributeto, or liability under, any active or terminated Pension Plan other than (A) on the Closing Date, those listed on Schedule 5.12(d) heretoand (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.(e) Each Borrower represents and warrants as of the Closing Date that such Borrower is not and will not be using “planassets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans inconnection with the Loans or the Commitments.5.13 Loan Party Information; Subsidiaries; Addresses; Equity Interests. As of the Closing Date, the Company has noSubsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in suchSubsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the percentages specified onPart (a) of Schedule 5.13 free and clear of all Liens (except for Liens permitted by Section 7.02(a), (c) or (d) of the Syndicated CreditAgreement, and transfer restrictions contained in the Franchise Agreements and the Framework Agreements). As of the Closing Date,the addresses set forth in Schedule 5.13 are each Loan Party’s place of business, name, type or organization, state organization number,jurisdiction of organization and each Loan Party is formed or incorporated only in the state shown for it on Schedule 5.13 hereto. Eachof the Company and each Borrower51shall, and shall cause each other Loan Party to, promptly (but in any event within five (5) Business Days) report to the Lender anychange in any such Person’s name, type of organization, state organization number, jurisdiction of organization or federal employersidentification number.5.14 Margin Regulations; Investment Company Act.(a) Neither the Company nor any Borrower is engaged or will engage, principally or as one of its important activities, in thebusiness of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for thepurpose of purchasing or carrying margin stock.(b) None of the Company, any Person Controlling the Company, or any Subsidiary is or is required to be registered as an“investment company” under the Investment Company Act of 1940.5.15 Disclosure. Neither this Agreement, the other Loan Documents, nor any other document delivered by or with theknowledge and consent of the Company on behalf of the Company or any Subsidiary in connection with the transactions contemplatedhereby and the negotiation of this Agreement or in connection with any Loan Document or included therein contained or contains anymaterial misstatement of fact or omitted or omits to state any fact necessary to make the statements therein, in the light of thecircumstances under which they were made, not materially misleading; provided that, with respect to projected financial information,the Company and the Borrowers represent only that such information was prepared in good faith based upon assumptions believed tobe reasonable at the time prepared, it being understood that projections by their nature are uncertain and no assurance is given that theresults reflected in such projections will be achieved.5.16 Compliance with Laws. Each of the Company and each Subsidiary thereof is in compliance in all material respects withthe requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances inwhich (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedingsdiligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected tohave a Material Adverse Effect.5.17 Intellectual Property; Licenses, Etc. The Company and its Subsidiaries own, or possess the right to use, all of thetrademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights(collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rightsof any other Person, except to the extent such conflict would not reasonably be expected to result in a Material Adverse Effect. Noslogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated tobe employed, by the Company or any Subsidiary infringes upon any rights held by any other Person in a manner that wouldreasonably be expected to result in a Material Adverse Effect.5.18 Books and Records. Each of the Company and each Subsidiary maintains proper books of record and account, inwhich full, true and correct entries in conformity with GAAP consistently applied have been made of all financial transactions andmatters involving the assets and business of the Company or such Subsidiary, as the case may be.525.19 Franchise Agreements and Framework Agreements. As of the Closing Date, neither the Company nor any of itsSubsidiaries is a party to any dealer Franchise Agreements, or any Framework Agreements, other than those listed in Schedule 5.19,which schedule shows the manufacturer and the Loan Party which is a party to each such agreement. Each of the FranchiseAgreements and Framework Agreements is currently in full force and effect, and as of the Closing Date no Loan Party has receivedany notice of termination with respect to any such agreements; and, except as disclosed on Schedule 5.19, no Loan Party is aware ofany event which with notice, lapse of time, or both would allow any manufacturer which is a party to any of the Franchise Agreementsor Framework Agreements to terminate any such agreements. There exists no present condition or state of facts or circumstances inregard to said Franchise Agreements or Framework Agreements, in the aggregate, which could reasonably be expected to have aMaterial Adverse Effect.5.20 Engaged in Business of Vehicle Sales and Related Businesses. Neither the Company nor any Borrower is engaged inany business other than (a) in the case of each Borrower, the business of owning and operating the applicable Financed Property andbusiness ancillary thereto and (b) in the case of the Company and each Borrower which is a dealership, the business of (i) sellingVehicles and related activities and (ii) acquiring, owning, operating and, in some cases, selling dealerships engaged in such businesses.5.21 Collateral. The provisions of each of the Security Instruments are effective to create in favor of the Lender, a legal, validand enforceable perfected security interest in all right, title and interest of each applicable Loan Party in the Collateral described therein,except as otherwise permitted hereunder.5.22 Solvency. Both before and after giving effect to the Loans hereunder, the Company individually is Solvent, and theLoan Parties taken as a whole are Solvent.5.23 Labor Matters. As of the Closing Date, to the Company’s and its Subsidiaries’ knowledge, there are no material labordisputes to which the Company or any of its Subsidiaries are or are reasonably expected to become a party, including, withoutlimitation, any strikes, lockouts or other disputes relating to such Persons’ plants and other facilities.5.24 Taxpayer Identification Number. The Company’s true and correct U.S. taxpayer identification number is set forth onSchedule 9.02.5.25 OFAC. No Borrower, nor any of their respective Subsidiaries, nor, to the knowledge of any Borrower and theirrespective Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently thesubject of any Sanctions or included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of FinancialSanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority, nor is anyBorrower or any Subsidiary located, organized or resident in a Designated Jurisdiction.535.26 Anti-Corruption Laws. Each Borrower and its Subsidiaries have conducted their businesses in compliance in allmaterial respects with the United States Foreign Corrupt Practices Act of 1977 and other similar anti-corruption legislation in otherjurisdictions that are applicable to any Borrower or its Subsidiaries (including, if applicable, the UK Bribery Act 2010), and haveinstituted and maintained policies and procedures designed to promote and achieve compliance with such laws.5.27 Leases. There is a Lease in force for each Financed Property listed on Schedule 5.27, each Lease is in full force andeffect without amendment or modification from the form or copy delivered to the Lender except for amendments permitted hereunder;no default by any party exists under any such Lease that could result in termination of such Lease, nor has any event occurred which,with the passage of time or the giving of notice, or both, would constitute such a default under any such Lease. Schedule 5.27 is acomplete and correct listing of all Leases as of the Closing Date.5.28 Beneficial Ownership. As of the date that any Beneficial Ownership Certification is delivered to Lender pursuant toSection 6.11, the information included in such Beneficial Ownership Certification delivered to the Lender is true and correct in allrespects.ARTICLE VI. AFFIRMATIVE COVENANTSThe Company and the Borrowers covenant that, so long as the Lender shall have a Commitment hereunder or any Loan orother Obligation shall remain unpaid or outstanding, the covenants and agreements applicable to the Company and its Subsidiarieswhich are contained in Sections 6.01, 6.02 and 6.03 of the Syndicated Credit Agreement (including all related exhibits, schedules anddefined terms referred to therein) are hereby (or, in the case of each Subsequent Provision, shall, upon its effectiveness, be)incorporated herein by reference as if set forth in full herein, mutatis mutandis; and the Company and each Borrower shall comply, andshall cause their respective Subsidiaries to comply, with such incorporated covenants and agreements.The Company and the Borrowers further covenant that, so long as the Lender shall have a Commitment hereunder or any Loanor other Obligation shall remain unpaid or unsatisfied, all covenants and agreements (other than the covenants and agreementsspecified in the immediately preceding paragraph and those covenants and agreements set forth in Sections 6.05, 6.07, 6.10, 6.11, 6.12,6.13, 6.14, 6.16, and 6.17 of the Syndicated Credit Agreement) set forth in Article VI of the Syndicated Credit Agreement (includingall related exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Subsequent Provision, shall,upon its effectiveness, be) incorporated herein by reference as if set forth in full herein, mutatis mutandis, but only to the extent as theyapply to the Company or any other Loan Party; and the Company and each Borrower shall comply, and cause each other Loan Partyto comply, with the covenants and agreements incorporated by reference pursuant to this sentence.So long as the Lender shall have a Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid orunsatisfied, the Company and each other Borrower shall, and shall cause each Loan Party to:546.01 Notices. Promptly notify the Lender:(a) of the occurrence of any Default;(b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including any report,study, inspection or test that indicates the presence of any Hazardous Materials on or about any Financed Property or any adversecondition relating to any Financed Property, any buildings or any such materials which presence or adverse condition could reasonablybe expected to have a Material Adverse Effect;(c) of (i) any Lease (and deliver to the Lender a copy of such Lease) entered into after the Closing Date, (ii) any amendmentor other modification (and deliver to the Lender a copy of such amendment or modification) of any Lease, (iii) the termination orexpiration of any Lease and (iv) any material adverse change in the relationship between the applicable Borrower and any lessee underany Lease;Each notice pursuant to this Section 6.01 shall be accompanied by a statement of a Responsible Officer of the Company setting forthdetails of the occurrence referred to therein and stating what action the Company or the applicable Borrower has taken and proposes totake with respect thereto. Each notice pursuant to Section 6.01(a) shall describe with particularity any and all provisions of thisAgreement and any other Loan Document that have been breached.6.02 Maintenance of Insurance.(a) Maintain, on a consolidated basis, insurance to such extent and against such hazards and liabilities as is commonlymaintained by companies similarly situated (and in any event each Borrower will maintain such insurance). In addition to the insurancereferred to above, with respect to each Mortgaged Property, each Borrower will maintain the following policies:(i) Prior to construction of any improvements on any Mortgaged Property, an “all-risk”, completed value, non-reporting builder’s risk insurance policy or policies that provide coverage similar to the foregoing must be submitted to theLender, unless such construction is covered by a policy already provided to the Lender. This policy must be from a companyand in an amount satisfactory to the Lender, must have a vandalism and malicious mischief endorsement and must be sufficientto avoid the application of any co-insurance provisions, must include provisions for a minimum 30-day advance written noticeof any intended policy cancellation or non-renewal, and must designate the Lender as mortgagee and loss payee in a standardmortgagee endorsement with the following address:Bank of America, N.A.NC4-105-02-174161 Piedmont ParkwayGreensboro NC 27410Attn: Monitoring and Compliance55(ii) Each Borrower covenants to maintain or cause to be maintained, by such Borrower and, during the construction ofany improvements on any Mortgaged Property, the general contractor, general accident and public liability insurance against allclaims for bodily injury, death or property damage occurring upon, in or about any part of such Mortgaged Property. Thepolicies must be from companies and in amounts satisfactory to the Lender. The contractor’s policy must include worker’scompensation coverage in an amount sufficient to satisfy statutory requirements;(iii) An “all-risk” property insurance policy must be in effect, and an original certificate from the issuing insurancecompany evidencing that the policy is in full force and effect must be submitted to the Lender; provided that such insuranceshall include coverage for earthquakes and against wind damage on such terms as the Lender may reasonably require. Thepolicy must be from a company satisfactory to the Lender, must be in an amount satisfactory to the Lender, must eliminate allco-insurance provisions, must include a Replacement Cost and Agreed Amount/Stipulated Value Endorsement (or policyprovisions providing similar coverage), must include provisions for a minimum 30-day advance written notice to the Lender ofany intended policy cancellation or non-renewal, and must designate the Lender as mortgagee and loss payee in a standardmortgagee endorsement, as its interest may appear;(iv) If, and to the extent that, any Mortgaged Property is or becomes a Flood Hazard Property, the Company shallcarry flood insurance with respect to such Mortgaged Property in an amount not less than the maximum amount available underthe Flood Disaster Protection Act of 1973 and the regulations issued pursuant thereto, as amended from time to time, in formcomplying with the “insurance purchase” requirement of that act;(v) Each such liability insurance policy shall name the Lender as an additional insured party with respect to suchMortgaged Property, and each such casualty insurance policy shall name the Lender as a loss payee, and shall provide by wayof endorsements, riders or otherwise that (i) proceeds will be payable to the Lender as its interest may appear; (ii) suchinsurance policy shall be renewed, if renewal is available, and shall not be canceled and further, shall not be endorsed, alteredor reissued to effect a change in coverage in any manner materially adverse to the Lender, for any reason and to any extentwhatsoever unless such insurer shall have first given the Lender thirty (30) days’ prior written notice thereof; (iii) suchinsurance policy shall not be impaired by any act or neglect of any Borrower or any use of such Mortgaged Property forpurposes more hazardous than are permitted by such policy; and (iv) the Lender may, but shall not be obliged to, makepremium payments to prevent any nonrenewal, cancellation, endorsement, alteration or reissuance and such payments shall beaccepted by the insurer to prevent same;(vi) The Lender shall be furnished with the original of each such initial policy (or a binder for the issuance of suchpolicy) or a certificate with a duplicate of such original policy (or binder) coincident with the execution of the Mortgage relatedto such Mortgaged Property and satisfactory evidence of renewal thereof upon expiration of the initial or each precedingrenewal policy (provided that the coverage required hereunder remains in effect56at all times), together with receipts or other evidence that the premiums thereon have been paid within thirty (30) daysfollowing the billing for such renewal, with the original of each renewal policy or a certificate with a duplicate of such renewalpolicy to follow as soon as available or, in any such case, an appropriate broker’s certificate in respect thereto. Upon request bythe Lender, each Borrower shall furnish to the Lender a statement certified by such Borrower or a duly authorized officer ofsuch Borrower of the amounts of insurance maintained in compliance with this Section 6.02, a general description of the riskscovered by such insurance and of the insurance company or companies which carry such insurance. In addition, each Borrowerwill promptly comply with any and all requirements of any insurer of any portion of any Mortgaged Property and any and allrules and regulations of any insurance commission or board of fire underwriters having jurisdiction over such MortgagedProperty; and(vii) Without limiting any of the other provisions of this Section 6.02, all losses under, and the proceeds payable under,any policies of insurance that any Borrower may elect to obtain, whether or not required hereunder, which insure, cover orrelate to any Mortgaged Property, or any portion thereof, shall be applied in the same manner and to the same extent asprovided herein with respect to any insurance required to be carried by such Borrower.(b) Unless the Company or a Borrower provides the Lender with evidence of the insurance coverage as required by thisAgreement or any other Loan Document, the Lender (at its discretion) may purchase insurance at the Company’s and the Borrowers’expense to protect the Lender’s interest. This insurance may, but need not, also protect the Company’s and the Borrowers’ interest. Ifthe Collateral becomes damaged, the coverage the Lender purchases may not pay any claim the Company, any Borrower or any oftheir Subsidiaries makes or any claim made against the Company, any Borrower or any of their Subsidiaries. The Company or aBorrower, as applicable, may later cancel this coverage by providing evidence that the Company or such Borrower, as applicable, hasobtained property coverage elsewhere.(c) The Company and the Borrowers (jointly and severally) are responsible for the cost of any insurance purchased by theLender. The cost of this insurance may be added to the Obligations. If the cost is added to the Obligations, the interest rate provided inSection 2.05(b)(i) shall apply to such added amount. The effective date of coverage may be the date the Company’s or the applicableBorrower’s prior coverage lapsed or the date the Company or the applicable Borrower failed to provide proof of coverage.(d) Each of the Company and each Borrower acknowledges that the coverage the Lender purchases may be considerablymore expensive than insurance the Company or such Borrower can obtain on its own and may not satisfy any need for propertydamage coverage or any mandatory liability insurance requirements imposed by applicable law.6.03 Inspection Rights. Permit representatives and independent contractors of the Lender to visit and inspect any of itsproperties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss itsaffairs, finances and accounts with its directors, officers, and independent public accountants, all at such reasonable57times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company;provided, however, that (a) without limiting any expense amounts that may be owned under the Syndicated Credit Agreement or anydocuments relating thereto, while no Event of Default exists the Borrowers shall be responsible for expenses associated with only onesuch visit or inspection by the Lender and its contractors per calendar year, and (b) when an Event of Default exists the Lender (or anyof its respective representatives or independent contractors) may do any of the foregoing at any time or times (all at the expense of theBorrowers) during normal business hours and without advance notice.6.04 Use of Proceeds. The Borrowers shall use the proceeds of the Loans for general working capital, capital expendituresand other lawful purposes of the Company (including, without limitation, the repayment of Indebtedness). No Loans shall be used forany purpose which would be in contravention of any requirement of Law.6.05 Additional Subsidiaries. (a) As soon as practicable (but in any event within ten (10) days or such longer period as theLender may agree in its sole discretion) after the acquisition or creation of any Subsidiary which is or will be a lessee of FinancedProperty or the designation of any existing Subsidiary as a lessee of Financed Property or (b) prior to or simultaneously with anyCollateral Substitution, in the event any Subsidiary which owns real property proposed to be Financed Property in connection withsuch Collateral Substitution is not an existing Borrower (or any Subsidiary which leases such property, Subsidiary Guarantor, as thecase may be), cause to be delivered to the Lender (in addition to any other documents required to be delivered under this Agreement,including pursuant to Section 4.02 or otherwise) each of the following:(a) a Joinder Agreement duly executed by such Subsidiary with all schedules and information thereto appropriately completedwith respect to such Subsidiary becoming a “Borrower” or a “Subsidiary Guarantor”, as applicable;(b) in the case of any such Subsidiary becoming a “Borrower”, UCC financing statements naming such Subsidiary as“Debtor” and naming the Lender as “Secured Party,” in form, substance and number sufficient in the reasonable opinion of the Lenderand its counsel to be filed in all UCC filing offices in which filing is necessary or advisable to perfect in favor of the Lender the Lienson the Collateral conferred under such Joinder Agreement and other Security Instruments to the extent such Lien may be perfected byUCC filings;(c) an opinion or opinions of counsel to such Subsidiary dated as of the date of delivery of such Joinder Agreements (andother Loan Documents) provided for in this Section 6.05 and addressed to the Lender, in form and substance acceptable to the Lender;(d) the documents described in Sections 4.01(a)(iii), (iv), (vii), (xi), (xiii) and (xv) with respect to such Subsidiary; and(e) evidence satisfactory to the Lender that all taxes, filing fees, recording fees related to the perfection of the Liens securingthe Obligations have been paid and all reasonable costs and expenses of the Lender in connection therewith have been paid.6.06 Preservation of Existence, Etc.. (a) Preserve, renew and maintain in full force and effect its legal existence and goodstanding under the Laws of the jurisdiction of its organization58except in a transaction permitted by Section 7.03 or 7.04 of the Syndicated Credit Agreement; (b) take all reasonable action to maintainall rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extentthat failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registeredpatents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a MaterialAdverse Effect.6.07 Further Assurances. Each of the Company and the Borrowers shall, and shall cause each of the Loan Parties to, to theextent applicable, execute, acknowledge, deliver, and record or file such further instruments, including, without limitation, furthersecurity agreements, financing statements, and continuation statements, and do such further acts as may be reasonably necessary,desirable, or proper to carry out more effectively the purposes of this Agreement, and to protect the Liens granted in this Agreement orthe Loan Documents to which any of them respectively is a party and against the rights or interests of third persons, and the Companyand the Borrowers (jointly and severally) will pay all reasonable costs connected with any of the foregoing.6.08 Leases. At all times, comply in all material respects with the terms and provisions of the Leases of the FinancedProperties, and cause such Leases to be kept in full force and effect without termination, amendment or modification, except for (i) anymodification or amendment of a Lease made in the ordinary course of business consistent with past practices of the Loan Parties, andwhich amendment or modification is not materially adverse to the Loan Parties or the Lender or (ii) renewals or extensions (A) oneither substantially the same terms as the existing Lease of a Financed Property, or (B) as otherwise approved by the Lender in writing.6.09 Syndicated Credit Agreement. On or after the date of any Removal Event, all certificates or notices required to bedelivered to under Section 6.01, 6.02 or 6.03 of the Syndicated Credit Agreement shall be delivered to Lender hereunder.6.10 Anti-Corruption Laws. Conduct its businesses in material compliance with the United States Foreign Corrupt PracticesAct of 1977 and other similar anti-corruption legislation in other jurisdictions that are applicable to any Borrower or its Subsidiaries(including, if applicable, the UK Bribery Act 2010), and maintain policies and procedures designed to promote and achievecompliance with such laws.6.11 Patriot Act and Beneficial Ownership Regulation. Promptly following any request therefor, information anddocumentation reasonably requested by the Lender for purposes of compliance with applicable “know your customer” and anti-moneylaundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation. Without limiting the generality ofthe foregoing, promptly following any request therefor made by the Lender at any time, the Borrowers shall deliver to the Lender aBeneficial Ownership Certification with respect to any Borrower or other Loan Party identified by the Lender in such request.6.12 Use of Financed Properties as Vehicle Dealerships. Ensure that each Financed Property is at all times either (a) used(or under development for use) by a Borrower as a Vehicle dealership, (b) used (or under development for use) by a Borrower as afacility for the sale, repair, service or storage of Vehicles or the provision of related goods or services, (c) used by a Borrower for anypurpose ancillary to the uses described in clause (a) or (b), or (d) raw land; except that (Y) the portion of the Marietta/2086 CobbFinanced Property currently sub-leased through 2021 to the Marietta/2086 Cobb Restaurant Lessee for use as a restaurant maycontinue to be used for such59purpose through 2021 and (Z) the portion of the Marietta/2086 Cobb Financed Property currently sub-leased to the Marietta/2086Cobb Cell Tower Lessee for use as the site of a cell tower may continue to be used for such purpose.ARTICLE VII. NEGATIVE COVENANTSThe Company and the Borrowers covenant that, so long as the Lender shall have a Commitment hereunder or any Loan orother Obligation shall remain unpaid or outstanding, the covenants and agreements applicable to the Company and its Subsidiarieswhich are contained in Sections 7.01, 7.04, 7.05, 7.07, 7.08, 7.10, 7.11, 7.14, 7.16 and 7.19 of the Syndicated Credit Agreement(including all related exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Subsequent Provision,shall, upon its effectiveness, be) incorporated herein by reference as if set forth in full herein, mutatis mutandis; and the Company andeach Borrower shall comply, and shall cause their respective Subsidiaries to comply, with such incorporated covenants andagreements.The Company and the Borrowers further covenant that, so long as the Lender shall have a Commitment hereunder or any Loanor other Obligation shall remain unpaid or unsatisfied, all covenants and agreements (other than the covenants and agreementsspecified in the immediately preceding paragraph and those covenants and agreements set forth in Sections 7.13, 7.17. 7.21 and 7.22 ofthe Syndicated Credit Agreement) set forth in Article VII of the Syndicated Credit Agreement (including all related exhibits, schedulesand defined terms referred to therein) are hereby (or, in the case of each Subsequent Provision, shall, upon its effectiveness, be)incorporated herein by reference as if set forth in full herein, mutatis mutandis, but only to the extent as they apply to the Company orany other Loan Party; and the Company and each Borrower shall comply, and cause each other Loan Party to comply, with thecovenants and agreements incorporated by reference pursuant to this sentence.So long as the Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid orunsatisfied, neither the Company nor any other Loan Party shall, nor shall it permit any Borrower to, directly or indirectly:7.01 Use of Proceeds. Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally orultimately, to purchase or carry margin stock (within the meaning of Regulation U) or to extend credit to others for the purpose ofpurchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.7.02 Amendments of Certain Indebtedness. Amend, modify or change in any manner, any term or condition of anySubordinated Indenture Indebtedness or any refinancing of any Subordinated Indenture Indebtedness so that the terms and conditionsthereof are less favorable in all material respects to the Lender than the terms and conditions of the relevant Subordinated IndentureIndebtedness as of the later of the Closing Date or the date of incurrence thereof; provided that the Company may enter intosupplements to the Indenture (as required by the terms of the Indenture) if the sole effect of such supplements is to add additionalguarantors of the Subordinated Indenture Indebtedness.607.03 Dispositions. Permit any Subsidiary to, permit any Disposition (whether in one or a series of transactions) of anyFinanced Property or any portion of any Financed Property, or enter into any agreement so to do, except Permitted Financed PropertyDispositions.7.04 Amendments of Organizational Documents. Amend its Organizational Documents in a manner that could reasonablybe expect to (a) impair the enforceability of any Loan Document in any material respect or the perfection or priority of any Lien createdthereunder, (b) impair in any material respect its ability to perform its obligations under the Loan Documents or (c) otherwise have aMaterial Adverse Effect.7.05 Sanctions. Directly or indirectly, use the proceeds of any Loan, or lend, contribute or otherwise make available suchproceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individualor entity, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner thatwill result in a violation by any individual or entity (including any individual or entity participating in the transaction) of Sanctions.7.06 Leases. Permit any Person to occupy, lease or sublease any Financed Property except for (i) the current Lease of aportion of the Marietta/2086 Cobb Financed Property to the Marietta/2086 Cobb Restaurant Lessee, (ii) the Lease of a portion of theMarietta/2086 Cobb Financed Property to the Marietta/2086 Cobb Cell Tower Lessee, provided (in the case of this clause (ii)) that theCompany has used commercially reasonable efforts to obtain a subordination and attornment agreement reasonably acceptable to theLender from such lessee, and (iii) a Lease of a Financed Property to a Subsidiary that has executed and delivered to the Lender aSubordination and Attornment agreement in substantially the form of Exhibit E (each a “Subordination and Attornment Agreement”)and has joined the Subsidiary Guaranty and provided to the Lender the documents required by Section 6.05.7.07 Collateral. Permit to exist any Lien or security interest on the Collateral other than (i) the Liens and security interests ofthe Lender and (b) Mortgage Permitted Liens.7.08 Anti-Corruption Laws. Directly or indirectly use the proceeds of any Loan for any purpose which would breach theUnited States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in otherjurisdictions.7.09 Use of Financed Properties. Use any Financed Property for any purpose except for uses expressly permitted by Section6.12.ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES8.01 Events of Default. Any of the following shall constitute an Event of Default:(a) Non-Payment. Any Borrower or any other Loan Party fails to pay (i) any principal of any Loan when and as the sameshall become due and payable pursuant to the terms of this Agreement, whether at the due date thereof or at a date fixed forprepayment thereof or by acceleration thereof or otherwise, or (ii) within five (5) days after the same becomes due, any interest61on any Loan or any other amount due under this Agreement (other than principal of any Loan) when and as the same shall become dueand payable; or(b) Specific Covenants. The Company or any Borrower fails to perform or observe any term, covenant or agreementcontained in any of (x) Section 6.01, 6.02(a) or (b), 6.03, or 6.05 (as it relates to maintenance of existence), of the Syndicated CreditAgreement as incorporated by reference in Article VI, (y) Section 6.01, 6.03, 6.04 or 6.05 or Article VII (including any covenant oragreement incorporated into Article VII by reference); or(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30)days after the giving of written notice to such Loan Party specifying the alleged default; or(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made byor on behalf of the Company or any other Loan Party herein, in any other Loan Document, or in any document delivered in connectionherewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make any payment when due (whether by scheduledmaturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other thanIndebtedness hereunder and Indebtedness under Swap Contracts and Indebtedness under the Syndicated Credit Agreement) having anaggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors underany combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any otheragreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing,securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder orholders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder orholders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to becomedue or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease orredeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respectthereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract)resulting from (A) any event of default under such Swap Contract as to which the Company or any Subsidiary is the Defaulting Party(as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Companyor any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Company or suchSubsidiary as a result thereof is greater than the Threshold Amount; or(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of anyproceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to theappointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any materialpart of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar62officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its propertyis instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief isentered in any such proceeding; or(g) Inability to Pay Debts; Attachment. (i) The Company or any Subsidiary becomes unable or admits in writing its inability orfails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued orlevied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30)days after its issue or levy; or(h) Judgments. There shall be entered against the Company or any of its Subsidiaries (i) one or more judgments or decrees inexcess of the Threshold Amount in the aggregate at any one time outstanding for the Company and all its Subsidiaries or (ii) any oneor more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a MaterialAdverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B)there is a period of 60 consecutive days during which such judgment is not satisfied and a stay of enforcement of such judgment, byreason of a pending appeal or otherwise, is not in effect, excluding (in the case of clause (i)) those judgments or decrees for which andto the extent that the Company or any such Subsidiary is insured and with respect to which the insurer has not contested or deniedresponsibility in writing (subject to usual deductibles); or(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan, Multiemployer Plan or Multiple Employer Plan whichhas resulted or could reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan,Multiemployer Plan, Multiple Employer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) theCompany or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment paymentwith respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess ofthe Threshold Amount; or(j) Invalidity of Loan Documents. (i) Any Loan Document, at any time after its execution and delivery and for any reasonother than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force andeffect; or (ii) any Security Instrument shall for any reason (other than pursuant to the terms thereof or as a result of the failure of theLender to file UCC financing statements or UCC continuation statements) cease to create a valid security interest in the Collateralpurported to be covered thereby or such security interest shall for any reason cease to be a perfected security interest with the priorityprovided therefor in such Security Instrument subject only to Mortgage Permitted Liens;(k) Change of Control. There occurs any Change of Control;(l) Default Under Syndicated Credit Agreement. Any “Event of Default” specified in the Syndicated Credit Agreement exists,after giving effect to any waiver or amendment thereof under the Syndicated Credit Agreement (it being agreed that each such “Eventof Default” shall63survive any termination, cancellation, discharge or replacement of the Syndicated Credit Agreement); or(m) Default Under 2013 Real Estate Credit Agreement. Any “Event of Default” specified in the 2013 Real Estate CreditAgreement exists, after giving effect to any waiver or amendment thereof under the 2013 Real Estate Credit Agreement (it beingagreed that each such “Event of Default” shall survive any termination, cancellation, discharge or replacement of the 2013 Real EstateCredit Agreement).8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Lender may take any or all ofthe following actions:(a) declare the Commitment of the Lender to make Loans to be terminated, whereupon such commitments and obligation shallbe terminated;(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all otheramounts owing or payable hereunder or under any other Loan Document with respect to the Loans to be immediately due and payable,without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company and eachBorrower;(c) exercise all rights and remedies available to the Lender under the Loan Documents;provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under theBankruptcy Code of the United States, the obligation of the Lender to make Loans shall automatically terminate and the unpaidprincipal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payablewithout further act of the Lender.8.03 Application of Funds. After the exercise of remedies provided for in this Article VIII (or after the Loans haveautomatically become immediately due and payable), any amounts received on account of the Obligations shall be applied by theLender in the following order:First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees,charges and disbursements of counsel to the Lender and amounts payable under Article III) payable to the Lender;Second, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and otherObligations (other than in respect of Swap Contracts);Third, on a pari passu basis, to payment of that portion of (a) the Obligations constituting unpaid principal of the Loans and (b)that portion of the Obligations constituting Obligations then owing under Secured Hedge Agreements, ratably among the Hedge Banksin proportion to the respective amounts described in this clause Third payable to them;Fourth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Documents that aredue and payable to the Lender on such date; and64Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Company or as otherwiserequired by Law;provided that, Excluded Swap Obligations with respect to any Loan Party shall not be paid with amounts received from suchLoan Party or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve theallocation to Obligations otherwise set forth above in this Section.Notwithstanding the foregoing, Obligations arising under Secured Hedge Agreements shall be excluded from the application describedabove if the Lender has not received written notice thereof, together with such supporting documentation as the Lender may request,from the applicable Hedge Bank. Excluded Swap Obligations with respect to any Loan Party shall not be paid with amounts receivedfrom such Loan Party, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve theallocation to Obligations otherwise set forth above in this Section.ARTICLE IX. MISCELLANEOUS9.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and noconsent to any departure by the Company or any other Loan Party therefrom, shall be effective unless in writing signed by the Lenderand the Company or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in thespecific instance and for the specific purpose for which given.9.02 Notices; Effectiveness; Electronic Communication.(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone(and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shallbe delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or other electronic mailtransmission to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.02and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicabletelephone number.Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemedto have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent(except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of businesson the next Business Day for the recipient). Notices and other communications delivered through electronic communications to theextent provided in subsection (b) below, shall be effective as provided in such subsection (b).(b) Electronic Communications. The Lender or the Company may each, in its discretion, agree to accept notices and othercommunications to it hereunder by electronic communications65pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices orcommunications.Unless the Lender otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemedreceived upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested”function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sentduring the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening ofbusiness on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall bedeemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) ofnotification that such notice or communication is available and identifying the website address therefor.(c) Change of Address, Etc. Each of the Company and the Lender may change its address, facsimile number or telephonenumber or electronic mail address for notices and other communications hereunder by notice to the other parties hereto.(d) Reliance by Lender. The Lender shall be entitled to rely and act upon any notices (including telephonic or electronic LoanNotices) purportedly given by or on behalf of the Company or any Borrower even if (i) such notices were not made in a mannerspecified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the termsthereof, as understood by the recipient, varied from any confirmation thereof. The Company and each Borrower shall indemnify theLender and its Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Personon each notice purportedly given by or on behalf of the Company or any Borrower. All telephonic notices to and other telephoniccommunications with the Lender may be recorded by the Lender, and each of the parties hereto hereby consents to such recording.9.03 No Waiver; Cumulative Remedies; Enforcement. No failure by the Lender, to exercise, and no delay by any suchPerson in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiverthereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Documentpreclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,powers and privileges herein provided, and provided under each other Loan Document are cumulative and not exclusive of any rights,remedies, powers and privileges provided by law.9.04 Expenses; Indemnity; Damage Waiver.(a) Costs and Expenses. The Company and each Borrower (jointly and severally) shall pay (i) all reasonable out-of-pocketexpenses incurred by the Lender and its Affiliates (including, but not limited to, the reasonable fees, charges and disbursements of onelaw firm acting as outside counsel for the Lender and one law firm acting as local counsel in each jurisdiction where necessary, thecosts of appraisals, environmental reports and reviews thereof, title work, recording fees, recording taxes and the costs of any otherReal Estate Support Documents), in connection with the66syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of thisAgreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whetheror not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurredby the Lender (including the fees, charges and disbursements of any counsel for the Lender), in connection with the enforcement orprotection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or(B) in connection with the Loans made hereunder, including all such out of pocket expenses incurred during any workout,restructuring or negotiations in respect of such Loans.(b) Indemnification by the Borrowers. The Company and each Borrower (jointly and severally) shall indemnify the Lenderand each Related Party of the Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmlessfrom, any and all losses, claims, damages, liabilities and related expenses (but limited, in the case of legal fees and expenses, to thereasonable and documented fees, disbursements and other charges of (i) one counsel for the Lender, and (ii) one local counsel in eachrelevant jurisdiction), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Company or anyother Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other LoanDocument or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respectiveobligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or the administration of thisAgreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or the use orproposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any propertyowned or operated by the Company, any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to theCompany, any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceedingrelating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by theCompany or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not,as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by acourt of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconductof such Indemnitee, (y) result from a claim brought by the Company or any other Loan Party against an Indemnitee for breach in badfaith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Company or such other Loan Party hasobtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) ariseout of a dispute solely between or among Indemnitees that does not involve an act or omission by any Loan Party or any Loan Party’sAffiliates other than any action, suit, proceeding or claim against any Indemnitee or any of its Related Parties in its capacity or infulfilling its role as an agent or similar role under hereunder or under any other Loan Document. Without limiting the provisions ofSection 3.01(c), this Section 9.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages,etc. arising from any non-Tax claim.(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, neither the Company nor anyBorrower shall assert, and each of the Company and each Borrower67hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (asopposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document orany agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of theproceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintendedrecipients of any information or other materials distributed to such unintended recipients by such Indemnitee throughtelecommunications, electronic or other information transmission systems in connection with this Agreement or the other LoanDocuments or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the grossnegligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competentjurisdiction.(d) Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.(e) Survival. The agreements in this Section and the indemnity provisions of Section 9.02(e) shall survive the termination ofthe Commitment and the repayment, satisfaction or discharge of all the other Obligations.9.05 Payments Set Aside. To the extent that any payment by or on behalf of the Company or any Borrower is made to theLender, or the Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequentlyinvalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by theLender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any DebtorRelief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall berevived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.9.06 Successors and Assigns.(a) Successors and Assigns Generally. This Agreement and the other Loan Documents shall be binding on and shall inure tothe benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that neither theCompany nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the Lender’sprior written consent. The Lender may at any time (i) assign all or any part of its rights and obligations hereunder to any other Person,and (ii) grant to any other Person participating interests in all or part of its rights and obligations hereunder, provided, however, theconsent of the Company (such consent not to be unreasonably withheld) shall be required unless (1) an Event of Default has occurredand is continuing at the time of such assignment or (2) such assignment is to an Affiliate of a Lender or an Approved Fund; providedfurther that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice tothe Lender within ten (10) Business Days after having received notice thereof. The Company and each Borrower agrees to executeany documents reasonably requested by the Lender in connection with any such assignment. All information provided by or on behalfof the Company or any Borrower to the Lender or its Affiliates may be furnished by the Lender to its Affiliates and to any actual orproposed assignee or participant.68(b) Certain Pledges. The Lender may at any time pledge or assign a security interest in all or any portion of its rights under thisAgreement (including under the Master Note) to secure obligations of the Lender, including any pledge or assignment to secureobligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Lender from any of its obligationshereunder or substitute any such pledgee or assignee for the Lender as a party hereto.9.07 Treatment of Certain Information; Confidentiality. The Lender agrees to maintain the confidentiality of theInformation (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respectivepartners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whomsuch disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Informationconfidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws orregulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of anyremedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other LoanDocument or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially thesame as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights orobligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transactionrelating to the Company or any Borrower and its obligations, (g) on a confidential basis to (i) any rating agency in connection withrating the Company or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similaragency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the creditfacilities provided hereunder, (h) with the consent of the Company or (i) to the extent such Information (x) becomes publicly availableother than as a result of a breach of this Section or (y) becomes available to the Lender or any of its Affiliates on a nonconfidentialbasis from a source other than the Company. For purposes of this Section, “Information” means all information received from theCompany or any Subsidiary relating to Company or any Subsidiary or any of its respective businesses, other than any such informationthat is available to the Lender on a nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in thecase of information received from the Company or any Subsidiary after the date hereof, such information is clearly identified at thetime of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall beconsidered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain theconfidentiality of such Information as such Person would accord to its own confidential information.The Lender acknowledges that (a) the Information may include material non-public information concerning the Company or aSubsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and(c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and statesecurities Laws.9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, the Lender and its respective Affiliates ishereby authorized at any time and from time to time, to the69fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional orfinal, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender, or anysuch Affiliate to or for the credit or the account of the Company or any Loan Party against any and all of the obligations of theCompany or any Loan Party, as applicable, now or hereafter existing under this Agreement or any other Loan Document to the Lenderor its Affiliates, irrespective of whether or not the Lender or Affiliate shall have made any demand under this Agreement or any otherLoan Document and although such obligations of the Company or such Loan Party may be contingent or unmatured, or are owed to abranch, office or Affiliate of the Lender different from the branch, office or Affiliate holding such deposit or obligated on suchindebtedness; The rights of the Lender, and its Affiliates under this Section are in addition to other rights and remedies (including otherrights of setoff) that the Lender, or its Affiliates may have. The Lender agrees to notify the Company promptly after any such setoffand application, provided that the failure to give such notice shall not affect the validity of such setoff and application.9.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paidor agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicableLaw (the “Maximum Rate”). If the Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shallbe applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Company or the Borrowers. Indetermining whether the interest contracted for, charged, or received by Lender exceeds the Maximum Rate, such Person may, to theextent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather thaninterest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequalparts the total amount of interest throughout the contemplated term of the Obligations hereunder.9.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different partieshereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a singlecontract. This Agreement, and the other Loan Documents constitute the entire contract among the parties relating to the subject matterhereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Exceptas provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Lender and when theLender shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf or“tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.9.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other LoanDocument or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the executionand delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Lender, regardless of anyinvestigation made by the Lender or on their behalf and notwithstanding that the Lender may have had notice or knowledge of anyDefault at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shallremain unpaid or unsatisfied.9.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid orunenforceable, (a) the legality, validity and enforceability of the70remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the partiesshall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economiceffect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in aparticular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.9.13 Governing Law; Jurisdiction; Etc.(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.(b) SUBMISSION TO JURISDICTION. THE COMPANY AND EACH BORROWER IRREVOCABLY ANDUNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OFTHE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATESDISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANYTHEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANYOTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THEPARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANYSUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR,TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THEPARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BECONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANYOTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENTSHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION ORPROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE COMPANYOR ANY BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.(c) WAIVER OF VENUE. THE COMPANY AND EACH BORROWER IRREVOCABLY ANDUNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTIONTHAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDINGARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURTREFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLYWAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENTFORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESSIN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02.71NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANYOTHER MANNER PERMITTED BY APPLICABLE LAW.9.14 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLESTEXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGALPROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANYOTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHERBASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NOREPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OROTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCETHE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEENINDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHERTHINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.9.15 Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature,”and words of like import in any amendment, assignment or other modification hereof (including waivers and consents) shall be deemedto include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approvedby the Lender, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability asa manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided forin any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York StateElectronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.9.16 USA PATRIOT Act. The Lender hereby notifies the Company and the other Borrowers that pursuant to therequirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required toobtain, verify and record information that identifies the Company and the other Borrowers, which information includes the name andaddress of the Company and the other Borrowers and other information that will allow such Lender to identify the Company and eachother Borrower in accordance with the Act. The Company and each other Borrower shall, promptly following a request by the Lender,provide all documentation and other information that the Lender requests in order to comply with its ongoing obligations underapplicable “know your customer” and anti-money laundering rules and regulations, including the Act.9.17 Designated Senior Debt. Each party acknowledges and agrees that the Indebtedness under the Loan Documents is“Designated Senior Debt” (or any similar term) under, and as defined in, each of the Indenture, any other indenture and any otherSubordinated Indebtedness.9.18 Keepwell. Each Borrower that is a Qualified ECP Guarantor at the time the joint and several liability of any SpecifiedLoan Party (pursuant to Section 2.10), or the Guaranty or the grant of a Lien under the Loan Documents, in each case, by anySpecified Loan Party, becomes72effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes toprovide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by suchSpecified Loan Party from time to time to honor all of its obligations under the Loan Documents in respect of such Swap Obligation(but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Borrower’sobligations and undertakings under this Article X voidable under applicable law relating to fraudulent conveyance or fraudulenttransfer, and not for any greater amount). The obligations and undertakings of each Borrower under this Section shall remain in fullforce and effect until the Obligations have been indefeasibly paid and performed in full. Each Borrower intends this Section toconstitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support or otheragreement” for the benefit of, each Specified Loan Party for all purposes of the Commodity Exchange Act.9.19 Releases.(a) On the Facility Termination Date, the Collateral shall be released from the Liens created by the Loan Documents, withoutdelivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Loan Parties,except for Collateral as to which the Lender has exercised any remedies. At the request and sole expense of any Loan Party followingthe Facility Termination Date, the Lender shall execute and deliver to such Loan Party such documents as such Loan Party shallreasonably request to evidence such payment and release.(b) Any of the Collateral sold, transferred or otherwise disposed of by any Loan Party in a Permitted Financed PropertyDisposition, shall be transferred free of the security interest created hereby on such Collateral, and such security interest shallautomatically terminate upon such permitted disposition, in each case upon the satisfaction of any conditions set forth in the LoanDocuments with respect to such Permitted Financed Property Disposition. The Lender, at the request and sole expense of such LoanParty, shall execute and deliver to such Loan Party all releases or other documents reasonably necessary to evidence such release of theLiens created under the Loan Documents on such Collateral.[Signature pages follow.]73IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.COMPANY:ASBURY AUTOMOTIVE GROUP, INC.By: /s/ Matthew Pettoni Name: Matthew Pettoni Title: Vice President and Treasurer BORROWERS:ASBURYAUTOMOTIVE TEXAS REAL ESTATE HOLDINGS L.L.C., a Delaware limitedliability companyASBURY IN CHEV, LLC, a Delaware limited liability companyASBURY IN HON, LLC, a Delaware limited liability companyATLANTA REAL ESTATE HOLDINGS L.L.C., a Delaware limited liabilitycompanyCROWN CHH L.L.C., a Delaware limited liability companyCROWN FDO L.L.C., a Delaware limited liability companyMCDAVID AUSTIN-ACRA, L.L.C., a Delaware limited liability companyMCDAVID FRISCO-HON, L.L.C., a Delaware limited liability companyMCDAVID HOUSTON-NISS, L.L.C., a Delaware limited liability companyQ AUTOMOTIVE CUMMING GA, LLC, a Delaware limited liability companyBy: /s/ Matthew Pettoni Name: Matthew Pettoni Title: Vice President and Treasurer CREDIT AGREEMENT(Asbury Automotive Group, Inc.)Signature PageLENDER:BANK OF AMERICA, N.A.By: /s/ M. Patricia Kay Name: M. Patricia Kay Title: Senior Vice President CREDIT AGREEMENT(Asbury Automotive Group, Inc.)Signature PageExhibit 10.34MASTER LOAN AGREEMENTTHIS MASTER LOAN AGREEMENT (the “Agreement”) is entered into as of November _16_, 2018, by and betweenATLANTA REAL ESTATE HOLDINGS L.L.C., a Delaware limited liability company, ASBURY JAX FORD, LLC, a Delawarelimited liability company, COGGIN CARS L.L.C., a Delaware limited liability company, WTY MOTORS, L.P., a Delaware limitedpartnership, Q AUTOMOTIVE BRANDON FL, LLC, a Delaware limited liability company, ASBURY ST. LOUIS M L.L.C., aDelaware limited liability company, ASBURY ATLANTA CHEV, LLC, a Delaware limited liability company, and ASBURYGEORGIA TOY, LLC, a Delaware limited liability company (each referred to herein individually and collectively as “Borrower”),and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors andassigns, “Lender”).W I T N E S S E T H :In consideration of the premises and of the mutual covenants herein contained and to induce Lender to extend credit toBorrower, the parties agree as follows:1.DefinitionsCapitalized terms that are not otherwise defined herein shall have the meanings set forth in this Section 1.1.1 Defined Terms: “Advance” or “Advances” has the meaning set forth in Section 2.1 hereof.“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or moreintermediaries, Controls or is Controlled by or is under common Control with the Person specified.“Aggregate Commitment” has the meaning set forth in Section 2.1.1 hereof.“ALTA” means American Land Title Association, or any successor thereto.“Applicable Margin” means as to any portion of any Loan that is a LIBOR Loan, 1.85% per annum.“Appraisal” means an appraisal prepared in accordance with the requirements of FIRREA, prepared by an independentthird party appraiser holding an MAI designation, and who is State licensed or State certified if required under the laws of the Statewhere the Property is located, who meets the requirements of FIRREA and who is otherwise acceptable to Lender in all respects.“Appraised Value” means, as to any Property, the value of the Property determined by Appraisal as set forth on ExhibitA-3 attached hereto and made a part hereof.“Arbitration Rules” has the meaning set forth in Section 11.16.“Asbury” means Asbury Automotive Group, Inc., a Delaware corporation.“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amountthereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect ofany Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear ona1balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.“Borrower” means individually and collectively, the entities listed in the preamble to this Agreement and any otherPerson now or hereafter otherwise becoming liable for the Obligations, other than as a Guarantor.“Business Day” means a weekday on which Lender is open for business in Charlotte, North Carolina.“Change of Control”, as to any Borrower, means the occurrence of any of the following: (a) the direct or indirect sale,transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of transactions, of all of theproperties or assets of Borrower to any Person the result of which Borrower ceases to be a Subsidiary of Asbury; (b) the adoption of aplan relating to the liquidation or dissolution of Borrower; or (c) the consummation of any transaction (including, without limitation,any merger or consolidation) the result of which is that Borrower ceases to be a Subsidiary of Asbury.“Closing Date” means the date on which all of the conditions precedent in Section 3 of this Agreement are satisfied andthe Loan is made under this Agreement.“Code” means the Uniform Commercial Code (or any successor statute), as adopted and in force in the Jurisdiction or,when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of theCollateral, the Uniform Commercial Code (or any successor statute) of such state. Any term used in this Agreement and in anyfinancing statement filed in connection herewith which is defined in the Code and not otherwise defined in this Agreement or in anyother Loan Document has the meaning given to the term in the Code.“Collateral” means the Property and all Fixtures of the Property pledged by a Borrower to Lender as security for theLoan.“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the managementor policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”have meanings correlative thereto.“Dealership Property” means each Property at which the primary use is the sale of motor vehicles pursuant to aFranchise Agreement with an automobile manufacturer, as such Dealership Properties are designated on Exhibit A-2 attached heretoand made a part hereof.“Debt” means, as to any Person at a particular time, without duplication, all of the following, whether or not included asindebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of suchPerson evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all direct or contingent obligations ofsuch Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bondsand similar instruments, (c) net obligations of such Person under any Swap Agreements, (d) all obligations of such Person to pay thedeferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case,not past due for more than 60 days after the original specified due date thereof, or if such trade account payable has no specified duedate, the date on which such trade account payable was created), (e) indebtedness (excluding prepaid interest thereon) secured by aLien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other titleretention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse,2(f) capital leases and Synthetic Lease Obligations, (g) all obligations of such Person to purchase, redeem, retire, defease or otherwisemake any payment in respect of any equity interest in such Person or any other Person, valued, in the case of a redeemable preferredinterest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, and (h) all guarantees ofsuch Person in respect of any of the foregoing.For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than ajoint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unlesssuch Debt is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Agreement on any dateshall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic LeaseObligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. The amountof Debt of the type described in clause (e) above to the extent the recourse for such Debt is limited to recourse against the propertysubject to the Lien described in clause (e) shall be deemed to be an amount equal to the lesser of (x) the fair market value of theproperty subject to such Lien and (y) the outstanding amount if indebtedness secured by such Lien. The term “Debt” shall not includeindebtedness to the extent that it has been defeased or satisfied and discharged in accordance with the terms of the documentsgoverning such indebtedness; provided that (i) to the extent the deposit of assets with the applicable holders (or trustee on behalf ofsuch holders) is required in connection with the defeasance or satisfaction and discharge of such indebtedness, such assets are limitedto cash and cash equivalents and (ii) none of the assets associated with such defeasance, or any income earned on such assets, shall beincluded in the calculation of any financial covenant or ratio or incurrence test hereunder.“Default” has the meaning set forth in the definition of Event of Default.“Default Rate” on any date, means a rate per annum that is equal to 2.0% in excess of the rate otherwise applicable tothe Loan or any other Obligations outstanding on such date, provided that Obligations under Swap Agreements shall bear interest atthe Default Rate determined in accordance with the terms of said Swap Agreements.“Default Period” means a period, occurring from time to time during the term of the Loan, commencing on the date onwhich an Event of Default occurs and continuing until the date ending on which the applicable Event of Default has been cured andsuch cure has been accepted by Lender in its sole and absolute discretion or waived by Lender in its sole and absolute discretion.“Deposit Account” has the meaning set forth in the Code.“Draw Period” means the period from and including the date hereof through but excluding the Draw Termination Date.“Draw Termination Date” means December 31, 2019.“Environmental Laws” means, collectively the following acts and laws, as amended: the ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980; the Superfund Amendments and Reauthorization Act of 1986; theResource Conservation and Recovery Act; the Toxic Substances Act; the Clean Water Act; the Clean Air Act; the Oil Pollution andHazardous Substances Control Act of 1978; and any other “Superfund” or “Superlien” law or any other federal, state or local statute,law, ordinance, code, rule, regulation, order or decree relating to, or imposing liability or standards3of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect.“ERISA” has the meaning set forth in Section 4.14.“Event of Default” means any event specified as such in Section 9.1 hereof (“Event of Default”), provided that thereshall have been satisfied any requirement in connection with such event for the giving of notice or the lapse of time, or both; “Default”or “default” means any of such events, whether or not any such requirement for the giving of notice or the lapse of time or thehappening of any further condition, event or act shall have been satisfied.“Excluded Rate Contract Obligation” means, with respect to any Borrower or Guarantor, any guarantee of any SwapAgreement if, and only to the extent that and for so long as, all or a portion of the guarantee of such Borrower or Guarantor of, or thegrant by such Borrower or Guarantor of a security interest to secure, such Swap Agreement (or any guarantee thereof) is or becomesillegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or theapplication or official interpretation of any thereof) by virtue of such Borrower’s or Guarantor’s failure for any reason to constitute an“eligible contract participant” as defined in the Commodity Exchange Act at the time the guarantee or the grant of such security interestbecomes effective with respect to such Swap Agreement. If an obligation under a Swap Agreement arises under a master agreementgoverning more than one swap, such exclusion shall apply only to the portion of such obligation under a Swap Agreement that isattributable to swaps for which such guarantee or security interest is or becomes illegal.“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as the same may beamended from time to time.“Fixtures” has the meaning set forth in the Code.“Franchise Agreements” means all franchise, personal sales and service, dealer term sales and service, public ownershipagreements and other operating agreements (including, without limitation, any buy-sell agreements or similar agreements affecting thecontrol of the business being operated at or from the Property) pursuant to which the business is being operated at or from the Property.“GAAP” means generally accepted accounting principles as in effect in the United States from time to time.“Governmental Authority” means any court, board, agency, commission, office or other authority of any naturewhatsoever for any governmental unit (federal, State, county, district, municipal, city or otherwise) whether now or hereafter inexistence.“Guarantor” means each, any and all of (a) Asbury, (b) Asbury Atlanta Toy L.L.C., (c) Asbury Atlanta Toy 2 L.L.C.,(d) Asbury Atlanta Hund L.L.C., (e) Asbury Atlanta Hon L.L.C., and (f) any other Person now or hereafter guaranteeing, endorsingor otherwise becoming liable for any Obligations of Borrower.“Guaranty Agreement” means any guaranty now or hereafter executed and delivered by any Guarantor to Lender, as itmay be modified.“Hazardous Materials” means oil, petroleum products and compounds containing them, including gasoline, diesel fueland oil; explosives; flammable materials, radioactive materials,4polychlorinated biphenyls (“PCBs”), and compounds containing them; lead and lead based paint, asbestos and asbestos-containingmaterials in any form that is or could become friable, underground or above-ground storage tanks, whether empty or containing anysubstance; any substance the presence of which at any Property is prohibited by any Governmental Authority; any substance thatrequires special handling; and any other hazardous or toxic substances, hazardous waste, regulated substances or hazardous airpollutants defined as such under any existing or future Environmental Law.“Improvements” means all buildings and improvements now or hereafter erected on the Property and all Fixtures nowor hereafter attached to or installed in or upon the Property or any buildings or improvements situated thereon.“Jurisdiction” means the State of New York.“Knowledge” means the actual knowledge of any Person obtained after making reasonable inquiry and exercisingreasonable diligence with respect to the particular matter in question.“Lease” means each, any and all present and future leases, subleases, licenses, or occupancy agreements of all or anyportion of any Property, together with any renewals, modifications or replacements thereof, and any options, rights of first refusal orguarantees of any lease now or hereafter in effect.“LIBOR” means, with respect to each LIBOR Period, the rate for U.S. dollar deposits with a one month maturity asreported on Reuters Screen LIBOR01 page (or any successor page) at approximately 11:00 a.m., London time, on the second LondonLIBOR Business Day before such LIBOR Period begins (or if not so reported, then as determined by the Bank from anotherrecognized source or interbank quotation); provided, however, that if LIBOR determined as provided above for a LIBOR Periodwould be less than zero percent (0.0%), then LIBOR shall be deemed to be zero percent (0.0%) for such LIBOR Period.“LIBOR Business Day” means with respect to all notices and determinations in connection with, and payments ofprincipal and interest on, any LIBOR Loan, any day that is a Business Day and that is also a day for trading by and between banks inDollar deposits in the London interbank market.“LIBOR Loan” means a Loan, or portion thereof, during any period in which it bears interest at a rate based upon theLIBOR Rate.“LIBOR Period” means, as to any LIBOR Loan, a period of one (1) month during which the entire outstandingprincipal balance of the LIBOR Loan bears interest determined in relation to LIBOR, with the understanding that:(a) the initial LIBOR Period shall commence on the date such LIBOR Loan is disbursed and shall continueup to, but shall not include, the first day of the immediately following month, subject to the provisions of (c) below;(b) thereafter each LIBOR Period shall commence automatically, without notice to or consent fromBorrower, on the first day of each month and shall continue up to, but shall not include, the first day of the immediatelyfollowing month;(c) if any LIBOR Period is scheduled to commence on a day that is not a LIBOR Business Day, then suchLIBOR Period shall commence on the next succeeding5LIBOR Business Day (and the preceding LIBOR Period shall continue up to, but shall not include, the first day of suchLIBOR Period), unless the result of such extension would be to cause such LIBOR Period to begin in the next calendarmonth, in which event such LIBOR Period shall commence on the immediately preceding LIBOR Business Day (andthe preceding LIBOR Period shall continue up to, but shall not include, the first day of such LIBOR Period); and(d) if, on the first day of the last LIBOR Period applicable hereto the remaining term of the LIBOR Loan isless than one (1) month, said LIBOR Period shall be in effect only until the scheduled maturity date hereof.“Lien” means any mortgage, deed of trust, deed to secure debt, pledge, statutory lien or other lien arising by operationof law, security interest, trust arrangement, security deed, financing lease, collateral assignment or other encumbrance, conditional saleor title retention agreement, or any other interest in property designed to secure the repayment of Obligations, whether arising byagreement or under any statute or law or otherwise.“Loan” or “Loans” means the Term Loan with Draw Period.“Loan Documents” means this Agreement, each Mortgage, Note, Guaranty Agreement, Security Agreement, UCC-1financing statement and all other documents and instruments now or hereafter evidencing, describing, guaranteeing or securing theObligations contemplated hereby or delivered in connection herewith, as they may be modified, amended, extended, renewed orsubstituted from time to time, but does not include Swap Agreements.“Loan to Value Ratio” means the aggregate outstanding principal balance of the Loans as of any date of determination,divided by an amount equal to the sum of the Appraised Value of each of the Properties.“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations,business, properties, liabilities (actual or contingent), or financial condition of the Borrowers and the Guarantors taken as a whole; (b) amaterial impairment of the rights and remedies of the Lender under any Loan Document, or of ability of the Borrowers and theGuarantors taken as a whole to perform their respective obligations under the respective Loan Documents to which any of them is aparty; (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrowers and the Guarantorstaken as a whole of the Loan Documents; or (d) a material adverse effect on the Collateral, taken as a whole.“Material Agreement” means an agreement to which Borrower or Guarantor is a party (other than theLoan Documents) (a) which is deemed to be a material contract as provided in Regulation S-K promulgated by the Securities andExchange Commission under the Securities Act of 1933 or (b) for which breach, termination, cancellation, nonperformance or failureto renew could reasonably be expected to have a Material Adverse Effect and shall include, without limitation, any operating lease ofany Property or any Franchise Agreement or dealership agreement.“Material Casualty Loss” has the meaning set forth in Section 5.6.4 hereof.“Maximum Aggregate Amount” has the meaning set forth in Section 2.1.1 hereof.6“Mortgage” means any mortgage, deed of trust or similar instrument now or hereafter executed by Borrower or otherPerson granting Lender a security interest in any Collateral and granting Lender an assignment of the Leases to secure the Obligationsof such Borrower, as modified, restated or replaced from time to time.“Note” or “Notes” shall mean each Term Note and any other promissory note now or hereafter evidencing anyObligations, and all modifications, extensions and renewals thereof.“OFAC” means the United States Department of the Treasury’s Office of Foreign Assets Control or any successorthereto.“Obligations” means, with respect to each Borrower, all obligations now or hereafter owed to Lender or any Affiliate ofLender by such Borrower related to the Loans, this Agreement or the Loan Documents, including, without limitation, amounts owedor to be owed under the terms of the Loan Documents, or arising out of the transactions described therein, including, withoutlimitation, the Loans, all fees, all existing and future obligations under any Swap Agreements between Lender or any Affiliate ofLender and such Borrower or Guarantor which are executed in connection with or related to the Loans (including obligations undersuch Swap Agreements entered into prior to any transfer or sale of Lender’s interests hereunder if Lender ceases to be a party hereto),all costs of collection, attorneys’ fees and expenses of or advances by Lender which Lender pays or incurs in discharge of obligationsof such Borrower under the Loan to such Borrower or to inspect, repossess, protect, preserve, store or dispose of any Collateral ownedby such Borrower, whether such amounts are now due or hereafter become due, direct or indirect and whether such amounts due arefrom time to time reduced or entirely extinguished and thereafter re‑incurred in each case to the extent otherwise payable under theLoan Documents; provided, that Obligations of any Borrower or any Guarantor shall not include any Excluded Rate ContractObligations solely of such Person.“Parent” means any corporation, partnership or other entity that directly or indirectly, owns more than fifty percent(50%) of the stock, capital or income interests, or other beneficial interests, of a Person or which effectively controls such Person.“Permitted Debt” has the meaning set forth in Section 6.1 hereof.“Permitted Liens” has the meaning set forth in Section 6.2 hereof.“Person” means any natural person, corporation, unincorporated organization, trust, joint‑stock company, joint venture,association, company, limited or general partnership, limited liability company, any government or any agency or political subdivisionof any government, or any other entity or organization.“Properly Contested” means, in the case of any Debt of any Borrower or Guarantor (including any taxes) that is notpaid as and when due or payable by reason of such Borrower’s or Guarantor’s bona fide dispute concerning its liability to pay same orconcerning the amount thereof, (a) such Debt is being properly contested in good faith by appropriate proceedings timely instituted anddiligently conducted; (b) such Borrower or Guarantor has established appropriate reserves as shall be required in conformity withGAAP; (c) the non-payment of such Debt will not have a Material Adverse Effect and will not result in a forfeiture or sale of anyassets of such Borrower or Guarantor; (d) no Lien is imposed upon any of such Borrower’s or Guarantor’s assets with respect to suchDebt unless such Lien is at all times junior and subordinate in priority to the Liens in favor of Lender (except only with respect toproperty taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior tothe final resolution or disposition of such dispute; (e) if the Debt7results from, or is determined by the entry, rendition or issuance against such Borrower or Guarantor or any of its assets of a judgment,writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review;(f) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Borrower or Guarantor, such Borrower orGuarantor forthwith pays such Debt and all penalties, interest and other amounts due in connection therewith; and (g) such Borrowershall notify Lender thereof.“Property” has the meaning set forth in Section 2.1.4 of this Agreement.“Regulated Materials” means any hazardous, toxic or dangerous waste, substance or material, the generation, handling,storage, disposal, treatment or emission of which is subject to any Environmental Law.“Revolving Credit Agreement” means that certain Second Amended and Restated Credit Agreement, dated as of July25, 2016, among Asbury as a Borrower, and certain of its subsidiaries as Vehicle Borrowers, Bank of America, N.A., asAdministrative Agent, Revolving Swing Line Lender, New Vehicle Floorplan Swing Line Lender and Used Vehicle Floorplan SwingLine Lender and an L/C Issuer, and The Other Lenders Party thereto, as renewed and/or extended from time to time. For so long asLender is a lender under the Revolving Credit Facility, the defined term “Revolving Credit Agreement” also shall include anyamendments, modifications, replacements and/or amendments and restatements thereto.“Revolving Credit Facility” means that certain senior credit facility evidenced in part by the Revolving CreditAgreement, as renewed and/or extended from time to time. For so long as Lender is a lender under the Revolving Credit Facility, thedefined term “Revolving Credit Facility” also shall include any amendments, modifications, replacements and/or amendments andrestatements thereto.“Sanctioned Country” means a country subject to the sanctions program identified on the list maintained by OFAC andavailable at http://www.treas.gov/offices/enforcement/ofac/programs/ or as otherwise published from time to time.“Sanctioned Person” means (a) a Person named on the list of Specially Designated Nationals or Blocked Personsmaintained by OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html or as otherwise published from time to time,or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) aPerson resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.“Security Agreement” means any security agreement now or hereafter executed and delivered by any Borrower toLender, as it may be modified.“Senior Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer,secretary, assistant secretary or controller of a Borrower, and any other officer or employee of the applicable Borrower so designatedby any of the foregoing officers in a notice to the Lender.“Solvent” means, as to any Person, that such Person has capital sufficient to carry on its business and transactions inwhich it is currently engaged and all business and transactions in which it is about to engage, is able to pay its debts as they mature,and has assets having a fair value greater than its liabilities, at fair valuation.“Subsidiary” or “Subsidiaries” of a Person means a corporation, partnership, joint venture, limited liability company orother business entity of which a majority of the shares of securities8or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interestshaving such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of whichis otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.“Survey” means a survey prepared by a surveyor located in the state where the applicable Property is located andreasonably satisfactory to Lender and the company or companies issuing the Title Insurance Policy and containing a certification ofsuch surveyor reasonably satisfactory to Lender.“Swap Agreement” has the meaning for swap agreement as defined in 11 U.S.C. § 101, as in effect from time to time,or any successor statute, and includes, without limitation, any rate swap agreement, forward rate agreement, commodity swap,commodity option, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement,rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option and anyother similar agreement.“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effectof any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such SwapAgreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) forany date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements,as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in suchSwap Agreements (which may include the Lender or any Affiliate of the Lender).“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balancesheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on thebalance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as theindebtedness of such Person (without regard to accounting treatment).“Tenant” means each, any and all of the tenants on each Property as set forth on Exhibit 4.21 of this Agreement andeach other tenant under a Lease for any Property.“Termination Date” means the earliest of (a) the Term Loan Maturity Date, and (b) the date on which Lender terminatesits obligation to make Loans and other extensions of credit to Borrower pursuant to Section 9.2 hereof.“Term Loan with Draw Period” means the term loan with draw period made by Lender to Borrower pursuant toSection 2.1 of this Agreement.“Term Loan with Draw Period Commitment” means the commitment of Lender to make the Term Loan with DrawPeriod in accordance with the provisions of Section 2.1.1 of this Agreement.“Term Loan Maturity Date” means December 1, 2028.“Term Note” has the meaning set forth in Section 2.1.2 of this Agreement.“Third Party Agreement” means a waiver or subordination of Liens reasonably satisfactory to Lender from anyTenants, subtenants, lessors, mortgagees or other third parties (in each case other than any Borrower or any Guarantor) that might havelienholders’ enforcement rights against any Collateral, waiving or subordinating those rights in favor of Lender and assuring Lender’saccess9to the Collateral in exercise of Lender’s rights hereunder and such estoppel certificates, subordination and attornment agreements andother documents or agreements as Lender may reasonably require from any such Tenant or subtenant.“Title Insurance Policy” means an ALTA mortgagee title insurance policy (or if the Property is located in a State whichdoes not permit the issuance of such ALTA policy, such form as shall be permitted by such State and acceptable to Lender) in formand substance and containing endorsements to the extent available under the title insurance regulations under the law of the applicableState) and affirmative coverages (to the extent available under the title insurance regulations under the law of the applicable State)reasonably acceptable to Lender and issued with respect to each Property and insuring the lien of the Mortgage encumbering theProperty.“Unused Commitment Fee” has the meaning set forth in Section 2.7 hereof.“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required toIntercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.1.2 Financial Terms. All financial terms used herein shall have the meanings assigned to them under GAAP unlessanother meaning shall be specified.2. The Credit Facility Interest and Fees.2.1 The Credit Facility.2.1.1 Term Loan with Draw Period Commitment. Lender agrees, on the terms and conditions set forth in thisAgreement and the Term Note, to make a Term Loan with Draw Period (the “Term Loan with Draw Period Commitment”) in themaximum principal amount of ONE HUNDRED MILLION AND 00/100 DOLLARS ($100,000,000.00) (the “AggregateCommitment”). Subject to all of the terms and conditions of this Agreement and the Term Note, during the Draw Period, Lenderagrees from time to time at the request of Borrower to make advances (each, an “Advance” and collectively, the “Advances”) toBorrower in a maximum aggregate principal amount not to exceed the Maximum Aggregate Amount. Subject to all of the terms andconditions of this Agreement and the Term Note, during the Draw Period the Borrower may borrow, repay and reborrow under thisSection 2.1.1. Unless Lender otherwise determines in its sole and absolute commercially reasonable discretion, the “MaximumAggregate Amount” means 80% of the sum of the Appraised Value of each of the Properties; provided, however, that as to theProperties listed on Schedule A-2, the Maximum Aggregate Amount shall not be less than 80% of the sum of the Appraised Value ofeach such Property except as otherwise set forth herein and on Schedule A-2 with respect to the Property located at 1207 East BrandonBoulevard, Brandon, Hillsborough County, Florida, designated as Property Number 14. Borrower acknowledges that the Lender hasdetermined that the “Maximum Aggregate Amount” for the Property located at 1207 East Brandon Boulevard, Brandon, HillsboroughCounty, Florida, designated as Property Number 14 means 60% of the sum of the Appraised Value for such Property. As of the datehereof, the maximum aggregate principal amount available for borrowing is NINETY-FOUR MILLION FOUR HUNDREDTWELVE THOUSAND AND 00/100 DOLLARS ($94,412,000.00) (the “Initial Aggregate Amount”). Commencing as of the DrawTermination Date, the principal balance of the Term Loan with Draw Period then outstanding shall be due and payable over a nine (9)year term in accordance with the terms of the Term Note and this Agreement. The proceeds of the Term Loan with Draw Period shallbe used for general corporate purposes. From and after the Closing Date up to the Draw Termination Date, the Borrower shall have theoption to include additional Properties as Collateral and increase the10maximum aggregate principal amount available for borrowing from the Initial Aggregate Amount to the Aggregate Commitment,subject to the following:(a) Any request for an increase to the Maximum Aggregate Amount from the Initial AggregateAmount shall be made by delivering to Lender a written request in a form satisfactory to Lender. The request shall include, withoutlimitation, (i) the amount of the requested increase up to the Maximum Aggregate Amount from the Initial Aggregate Amount, (ii) theproposed Property to be added as Collateral, (iii) the current use of the proposed Property, (iv) the names of any tenants at theapplicable Property, (e) the names of any lease guarantors that are guaranteeing the leases at the applicable Property, (v) copies of anyleases and lease guarantees for the applicable Property, with the leases having a remaining term of not less than ten (10) years, and (vi)any other information regarding the applicable Property as the Lender may reasonably request. Any such delivery may be made byfacsimile or email delivered to the individuals designated by the Lender to receive such notice.(b) Upon receiving a request from the Borrower, the Lender shall determine, in its commerciallyreasonable discretion, (i) if the proposed Property is acceptable, (ii) if the lease and lease guarantees (if any) for the applicable Propertyare acceptable, (iii) the due diligence to be required with respect to such Property, and (d) the amount and requirements of any fees andexpenses to be borne by Borrower with respect to including such Property in the Collateral, including, without limitation, the fees andexpenses for the initial Appraisal, and for a survey, environmental due diligence, legal, and title work.(c) The date for inclusion of each such Property and any increase to the Maximum Aggregate Amountas a result of adding a Property to the Collateral shall occur upon satisfaction of all conditions precedent set forth in Section 3 hereof, inthe sole opinion of Lender and its counsel together with such additional reasonable requirements, if any, of Lender and its counsel.2.1.2 Term Loan with Draw Period Note. On the Closing Date, Borrower shall execute and deliver to Lendera promissory note (the “Term Note”), in the form of Exhibit A-1 attached hereto and made a part hereof, which Term Note, in additionto the records of Lender, shall evidence the Term Loan with Draw Period and interest accruing thereon. The outstanding principalamount and all accrued interest under the Term Note shall be due and payable in accordance with the terms of the Term Note and thisAgreement.2.1.3 Request for Borrowing; Funding Date. Any request for an Advance shall be made by Borrowerdelivering to Lender a written request for borrowing in a form satisfactory to Lender no later than 3:00 p.m. (eastern time) on the dateof funding of the Advance. Any such delivery may be made by electronic mail delivered to the individuals designated by Lender toreceive such requests. Contemporaneously with each written request for borrowing, Borrower shall deliver or cause to be delivered toLender a certificate from Asbury, in the form attached as Exhibit 4.11 to the Guaranty Agreement of Asbury, signed by a principalfinancial officer of Asbury warranting that (a) no “Event of Default” as specified in the Loan Documents nor any event which, uponthe giving of notice or lapse of time or both, would constitute such an Event of Default, has occurred, and (b) except as disclosed toLender in writing, the representations and warranties contained in the Loan Documents are true and correct in all material respects(except to the extent relating to an earlier date, in which case such representation and warranty shall be true and correct in all materialrespects as of such earlier date).112.1.4 Mortgages. On the Closing Date, each Borrower shall execute and deliver to Lender a Mortgage as toeach property owned by such Borrower as set forth on Exhibit A-2 attached hereto and made a part hereof (each property set forth onExhibit A-2, a “Property”). After the Closing Date, Exhibit A-2 shall be amended from time to time to provide for (a) Advances beingmade hereunder and additional Properties being mortgaged as a result thereof, and (b) a Mortgage on a Property being released asprovided in Section 2.4.5 hereof; provided, however, that the failure to update or amend Exhibit A-2 shall not affect the validity orenforceability of the Loan or any Advance made hereunder, Lender’s interest in the Collateral, Lender’s rights under the LoanDocuments and/or the Obligations of the Borrower or the Guarantors under the Loan Documents.2.2 Interest. Each Borrower agrees to pay interest in respect of all unpaid principal amounts of the Loan from therespective dates such principal amounts are advanced until paid (whether at stated maturity, on acceleration or otherwise) at theApplicable Margin for such LIBOR Loan plus LIBOR. Such interest rate shall be fixed for each LIBOR Period for which it isdetermined and shall apply for that Loan.2.3 Repayment of Loans. The principal amount of the Term Loan with Draw Period is due and payable and shall berepaid by Borrower in accordance with the provisions of the Term Note.2.4 Additional Payment Provisions.2.4.1 Payment of Other Obligations. The balance of the Obligations under the Loan Documents requiring thepayment of money shall be repaid by Borrower to Lender as and when provided in the relevant Loan Documents, or, if no date ofpayment is otherwise specified in the Loan Documents, on demand. 2.4.2 Time and Location of Payment. Borrower shall make each payment of principal of and interest on theLoan and fees hereunder not later than 2:00 p.m. (local time Charlotte, North Carolina) on the date when due, without set off,counterclaim or other deduction. Whenever any payment of principal of, or interest on, the Loan or of fees shall be due on a day whichis not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any paymentof principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.2.4.3 Late Charge. If any payments are not timely made, Borrower shall also pay to Lender a late chargeequal to 5% of each payment past due for 10 or more days. This late charge shall not apply to payments due at maturity or byacceleration of the Loan, unless such late payment is in an amount not greater than the highest periodic payment due hereunder.2.4.4 Swaps are Independent. Any prepayment shall not affect Borrower’s obligation to continue makingpayments under any Swap Agreement, which shall remain in full force and effect notwithstanding such prepayment, subject to theterms of such Swap Agreement.2.4.5 Releases of Property. So long as no Default or Event of Default shall have occurred and be continuingunder the Loan Documents, Lender agrees, upon the request of Borrower, to release a Property from the lien of the Mortgage securingthe Term Loan with Draw Period upon the12payment to Lender of the Required Release Amount (as hereinafter defined). During the Draw Period, the “Required ReleaseAmount”, if any, means an amount equal to the aggregate outstanding principal balance of the Term Loan with Draw Period at suchtime, minus the Maximum Aggregate Amount immediately following the release of the applicable Property. Upon the expiration of theDraw Period and at all times thereafter, the “Required Release Amount” means an amount equal to the sum of (a) the aggregateoutstanding principal balance of the Term Loan with Draw Period at such time, minus (b) an amount equal to the Loan to Value Ratioat such time multiplied by the Appraised Value of each of the Properties for which a release has not been requested or required ashereinafter provided, plus (c) all accrued interest and other expenses payable under the Loan Documents.Upon payment by Borrower of the Required Release Amount and release of the applicable Property from thelien of the Mortgage, any Guarantor (other than Asbury) that occupies and operates the applicable Property as a Tenant shall bereleased as a Guarantor and its Guaranty Agreement terminated; provided, however, that if such Guarantor occupies and operates morethan one Property as a Tenant, such Guarantor shall be released from its Guaranty Agreement only as to the portion of the Loanallocated to the released Property. Notwithstanding anything to the contrary set forth herein, (i) Certain Properties listed on Exhibit A-3are designated as being affiliated with and/or useful to the operations of one or more other Properties listed on Exhibit A-3. Any suchProperties which are so designated as being so affiliated/useful to the operations of another are referred to as an “Affiliated PropertyGroup”. If Borrower shall request release of a Property from the lien of the Mortgage securing the Term Loan with Draw Period andsuch Property is included within an Affiliated Property Group, Lender reserves the right, within three (3) days of receipt of Borrower’swritten request for release of such Property from the lien of the Mortgage, to require that the Required Release Amount be paid foreach and/or any other Property included within such Affiliated Property Group and each such Property included within such AffiliatedProperty Group also shall be released upon payment of the Required Release Amount for such Property; and (ii) At such time as theaggregate Appraised Values of the Dealership Properties comprise less than fifty (50%) percent of the aggregate Appraised Values ofall of the then remaining Properties, Lender reserves the right at any time thereafter, upon thirty (30) days prior written notice, torequire that the Required Release Amount be paid for each and/or any Property which is not a Dealership Property and each suchProperty which is not a Dealership Property also shall be released upon payment of the Required Release Amount for such Property.2.5 Default Rate. In addition to all other rights contained in the Loan Documents, if an Event of Default occurs, theprincipal amount of all outstanding Obligations, other than Obligations under any Swap Agreements between Borrower and Lender orits Affiliates, may, at Lender’s option, bear interest at the Default Rate. The Default Rate shall apply from acceleration until suchObligations or any judgment thereon is paid in full.2.6 Calculation of Interest. All fees and other charges provided for in this Agreement that are calculated as a perannum percentage of any amount and all interest shall be calculated daily and shall be computed on the actual number of days elapsedover a year of 360 days. 2.7 Unused Commitment Fee. During the Draw Period, Borrower shall pay to Lender a non-refundable fee (“UnusedCommitment Fee”) equal to 0.02% per month on the difference between (a) the Aggregate Commitment and (b) the aggregateAdvances outstanding during such month; provided, however, so long as the aggregate Advances outstanding during any applicablemonth shall exceed fifty percent (50%) of the Aggregate Commitment, no such Unused Commitment Fee shall be due and payable13for such month. The Unused Commitment Fee for any month shall be due and payable by Borrower on or before the 1st day of theimmediately succeeding month.2.8 Statement of Account. If Lender provides Borrower with a statement of account on a periodic basis, suchstatement will be presumed complete and accurate and will be definitive and binding on Borrower, unless objected to with specificityby Borrower in writing within forty-five (45) days after receipt.2.9 USA Patriot Act Notice. To help fight the funding of terrorism and money laundering activities, Federal lawrequires all financial institutions to obtain, verify, and record information that identifies each Person who opens an account. Forpurposes of this Section, account shall be understood to include loan accounts.3. Conditions Precedent to Extensions of Credit.3.1 Conditions Precedent to Initial Extensions of Credit. Lender shall not be required to fund any Advance or makeany other extension of credit hereunder unless and until the following initial conditions shall have been satisfied by Borrower, in thesole opinion of Lender and its counsel:3.1.1 Loan Documents. Borrower and each other party to any Loan Document, as applicable, shall haveexecuted and delivered this Agreement, the Note, the Mortgages and other required Loan Documents, as applicable, all in form andsubstance satisfactory to Lender.3.1.2 Supporting Documents and Other Conditions. Borrower shall cause to be delivered to Lender thefollowing documents and shall satisfy the following conditions:(a) Governing Documents. A copy of the governing instruments of each Borrower and Guarantor, andgood standing certificates of each Borrower and Guarantor certified by the appropriate official of their respective states of incorporationand such other states requested by Lender in which the Collateral is located;(b) Incumbency Certificates and Resolutions. Incumbency certificate and certified resolutions of theboard of directors (or other appropriate governing body) of each Borrower and Guarantor, signed by the Secretary or anotherauthorized officer of each Borrower or Guarantor, as the case may be, authorizing the execution, delivery and performance of the LoanDocuments;(c) Legal Opinions. The legal opinions of Borrower’s and Guarantor’s legal counsel, each addressedto Lender regarding such matters as Lender and its counsel may request;(d) Property Searches. Title Insurance Commitment, Surveys, zoning reports, evidence of zoningcompliance and such other searches and due diligence as the Lender shall require regarding each Property;(e) Additional Searches. UCC‑11 searches and other Lien searches showing no existing securityinterests in or Liens on the Collateral other than Permitted Liens;14(f) Insurance. Satisfactory evidence of insurance meeting the requirements of Section 5.6;(g) Security Interest Documents. The Mortgages and UCC‑1 financing statements covering theCollateral shall duly have been recorded or filed in the manner and places required by law to establish, preserve, protect and perfect theinterests and rights created or intended to be created by the Loan Documents; and all taxes, fees and other charges in connection withthe execution, delivery and filing thereof shall duly have been paid;(h) Subordinations. Subordinations satisfactory to Lender from all Affiliates (other than Asbury) asrequired by Section 5.15;(i) Third Party Agreements. Third Party Agreements as required by Lender;(j) Payoff Letters. A complete and final payoff letter from any lender whose outstanding Debt is to besatisfied by remittance of proceeds of the Loan, and, if applicable, such disbursement letter as shall be required to direct the payment ofloan proceeds and discharges and/or other termination documents to release and discharge all Liens encumbering the Collateral all inrecordable form and reasonably satisfactory to Lender;(k) Appraisals. All required appraisals shall have been completed to Lender’s satisfaction;(l) Environmental. All required environmental due diligence shall have been completed to Lender’ssatisfaction;(m) Additional Documents. All additional opinions, documents, certificates and other assurances that Lender or its counselmay reasonably require;(n) Payment of Fees. Satisfactory evidence of payment of all fees due and reimbursement of all costsincurred by Lender, and evidence of payment to other parties of all fees or costs which Borrower is required under the LoanDocuments to pay by the date of the Loan;(o) No Litigation. There shall be no litigation in which any Borrower or Guarantor is a partydefendant, which Lender reasonably determines may have a Material Adverse Effect; and(p) Financial Information. Such financial information regarding each Borrower and Guarantor asLender shall have requested, and Lender shall be satisfied therewith.3.2 Conditions Precedent to All Extensions of Credit. In addition to any other requirement set forth in this Agreement,Lender shall not be required to fund any Advance or make any other extension of credit hereunder unless and until the followingconditions shall have been satisfied by Borrower, in the sole opinion of Lender and its counsel:153.2.1 Compliance. The representations and warranties contained herein and in each of the other LoanDocuments shall be true on and as of the date of the signing of this Agreement and true and correct in all material respects on the dateof each Advance or other extension of credit by Lender pursuant hereto (except to the extent relating to an earlier date, in which casesuch representation or warranty shall be true and correct in all material respects as of such earlier date), with the same effect as thoughsuch representations and warranties had been made on and as of each such date, and on each such date, no Default or Event of Defaultshall have occurred and be continuing.3.2.2 Additional Documentation. Lender shall have received all additional documents which may beotherwise required under the Loan Documents in connection with such Advance or other extension of credit.4. Representations and Warranties. In order to induce Lender to enter into this Agreement and to make the Loan orotherwise extend credit as provided for herein, Borrower, jointly and severally, makes the following representations and warranties, allof which shall survive the execution and delivery of the Loan Documents. Unless otherwise specified, such representations andwarranties shall be deemed made as of the date hereof and as of the date of each extension of credit hereunder:4.1 Valid Existence and Power. Borrower is duly organized, validly existing and in good standing under the laws ofthe jurisdiction of its organization and is duly qualified or licensed to transact business in all places where the failure to be so qualifiedwould have a Material Adverse Effect on it. Borrower has the power to make and perform the Loan Documents executed by it and allsuch instruments will constitute the legal, valid and binding obligations of Borrower, enforceable in accordance with their respectiveterms, subject only to bankruptcy and similar laws affecting creditors’ rights generally.4.2 Authority. The execution, delivery and performance thereof by Borrower of the Loan Documents (a) have beenduly authorized by all necessary actions of Borrower, and do not and will not violate any provision of law or regulation, or any writ,order or decree of any court or governmental or regulatory authority or agency or any provision of the governing instruments ofBorrower, and (b) do not and will not, with the passage of time or the giving of notice, result in a breach of, or constitute a default orrequire any consent under, or result in the creation of any Lien upon any property or assets of Borrower pursuant to, any law,regulation, instrument or agreement to which Borrower is a party or by which Borrower or its properties may be subject, bound oraffected, except, (i) solely in the case of a breach or default (and not in the case of any consent or Lien) under clause (b), to the extentsuch breach or default would not reasonably be expected to have a Material Adverse Effect, and (ii) any such consent that has beenobtained.4.3 Financial Condition. Borrower is not aware of any material adverse fact (other than facts which are generallyavailable to the public and not particular to Borrower, such as general economic trends) concerning the conditions or future prospectsof Borrower (taken as a whole) which has not been fully disclosed to Lender, including any material adverse change in the operationsor financial condition of Borrower (taken as a whole) since the date of the most recent financial statements delivered to Lender.Borrower (taken as a whole) is Solvent, and after consummation of the transactions set forth in this Agreement and the other Loandocuments, Borrower (taken as a whole) will be Solvent.164.4 Litigation. Except as disclosed on Exhibit 4.4 hereof, there are no suits or proceedings pending, or to theKnowledge of Borrower threatened, before any court or by or before any governmental or regulatory authority, commission, bureau oragency or public regulatory body against or affecting Borrower, or its assets, which would reasonably be expected to have a MaterialAdverse Effect.4.5 Agreements, Etc. Borrower is not a party to any agreement or instrument or subject to any court order,governmental decree or any charter or other corporate restriction, which would have a Material Adverse Effect. Borrower is incompliance in all material respects with the requirements of all applicable laws and all orders, writs, injunctions and decrees applicableto it or to its properties, except in such instances in which (a) such requirement of law or order, writ, injunction or decree is beingcontested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or inthe aggregate, could not reasonably be expected to have a Material Adverse Effect.4.6 Authorizations. All authorizations, consents, approvals and licenses required under applicable law or regulationfor the ownership or operation of the property owned or operated by Borrower, or for the conduct of any business in which it isengaged have been duly issued and are in full force and effect, except in each case to the extent that failure of the foregoing to be dulyissued and in full force and effect would not reasonably be expected to have a Material Adverse Effect. Borrower is not in default, norhas any event occurred which with the passage of time or the giving of notice, or both, would constitute a default, under any of theterms or provisions of any part thereof, or under any order, decree, ruling, regulation, closing agreement or other decision or instrumentof any governmental commission, bureau or other administrative agency or public regulatory body having jurisdiction over Borrower,which default would have a Material Adverse Effect on Borrower. Borrower has all requisite governmental licenses, authorizations,consents and approvals to execute, deliver and perform its obligations under the Loan Documents to which it is a party.4.7 Title. Borrower has insurable title to the Property and owns all property necessary in the operation of its business,except in each case for such defects in title or such failure to own or lease property as could not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect. Borrower owns the Property free and clear of all Liens, except PermittedLiens. Except as disclosed on Exhibit 4.7 hereof, Borrower alone has full ownership rights in the Collateral.4.8 Collateral. The security interests granted to Lender pursuant to any Mortgage (a) constitute and, as tosubsequently acquired property included in the Collateral covered by the Mortgage, will constitute, security interests entitled to all ofthe rights, benefits and priorities provided by the Code (to the extent such Collateral is personal property subject to the Code) andapplicable State law and (b) are, and as to such subsequently acquired Collateral will be, fully perfected, superior and prior to the rightsof all third persons, now existing or hereafter arising, subject only to Permitted Liens. The Collateral is intended for use solely inBorrower’s business.4.9 Jurisdiction of Organization. The jurisdiction in which Borrower is organized, existing and in good standing, thechief executive office of Borrower where Borrower’s business records are located, all of Borrower’s other places of business and anyother places where any information regarding Collateral is kept, are all correctly and completely indicated on Exhibit 4.9 hereof.174.10 Taxes. Except to the extent Properly Contested, Borrower has filed all federal and state income and other taxreturns which are required to be filed, and has paid all taxes as shown on said returns and all taxes, including withholding, FICA andad valorem taxes, shown on all assessments received by it to the extent that such taxes have become due. Except to the extent ProperlyContested, Borrower is not subject to any federal, state or local tax Liens nor has Borrower received any notice of deficiency or otherofficial notice to pay any taxes. Except to the extent Properly Contested, Borrower has paid all sales and excise taxes payable by it.4.11 Labor Law Matters. No goods or services have been or will be produced by Borrower in violation of anyapplicable labor laws or regulations or any collective bargaining agreement or other labor agreements or in violation of any minimumwage, wage-and-hour or other similar laws or regulations.4.12 Judgment Liens. Neither Borrower nor any of its assets are subject to any unpaid judgments (whether or notstayed) or any judgment liens in any jurisdiction as of the date hereof or, as to any time after the date hereof, except to the extent that(a) such unpaid judgments or judgment liens would not reasonably be expected to result in a Material Adverse Effect or (b) suchunpaid judgments or judgments liens are not senior to or pari passu with the Lien of Lender on any of the Collateral.4.13 Environmental. The Borrower has complied in all respects with all Environmental Laws except where the failureto comply could not be expected to have a Material Adverse Effect. Borrower has not received written notice of any failure so tocomply except where the failure to comply could not be expected to have a Material Adverse Effect. Borrower does not manage anyHazardous Materials in a manner that violates any regulations promulgated pursuant to Environmental Laws except for any suchviolation that could not be expected to have a Material Adverse Effect. To Borrower’s Knowledge, no portion of any Property is aprotected wetland.4.14 ERISA. Each plan (a “Plan”) maintained for employees of Borrower or any Subsidiary and covered by Title IVof the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) is in compliance in all material respects with theapplicable provisions of ERISA, the Internal Revenue Code of 1986, as amended, and other federal or state laws. No TerminationEvent (as hereinafter defined) with respect to any Plan has occurred and is continuing that would reasonably be expected to result in aMaterial Adverse Effect. For the purposes of this Agreement, a “Termination Event” shall mean a “reportable event” as defined inSection 4043(b) of ERISA, or the filing of a notice of intent to terminate under Section 4041 of ERISA. Except as disclosed on Exhibit4.14, neither Borrower nor any Subsidiary has any unfunded liability with respect to any such Plan that would reasonably be expectedto have a Material Adverse Effect.4.15 Investment Company Act. Neither Borrower nor any Subsidiary nor Guarantor is an “investment company” asdefined in the Investment Company Act of 1940, as amended.4.16 Sanctioned Persons; Sanctioned Countries. Borrower (a) is not a Sanctioned Person nor (b) does it do businessin a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administered byOFAC. The proceeds of any Loan will not be used to fund any operation in, finance any investments or activities in or make anypayments to, a Sanctioned Person or a Sanctioned Country.184.17 Compliance with Covenants; No Default. Borrower is, and upon funding of the Loans on the Closing Date willbe, in compliance with all of the covenants hereof. No Event of Default has occurred, and the execution, delivery and performance ofthe Loan Documents and the funding of the Loans on the Closing Date will not cause an Event of Default.4.18 Full Disclosure. There is no material fact of which Borrower has Knowledge that Borrower has not disclosed toLender which could reasonably be expected to have a Material Adverse Effect. No Loan Document, nor any agreement, document,certificate or statement delivered by Borrower to Lender, contains any untrue statement of a material fact or omits to state any materialfact which Borrower has Knowledge of necessary to keep the other statements from being misleading in any material respect. 4.19 Utilities and Public Access. To Borrower’s Knowledge, the Property has any necessary rights of access to publicways and is served by public water, sewer, sanitary sewer and drain facilities adequate to service the Property for its intended use. Allpublic utilities necessary to the full use and enjoyment of the Property are located either in the public right of way abutting suchProperty (which are connected so as to serve such Property without passing over other property) or in recorded easements serving suchProperty and such easements are set forth in and insured by the respective Title Insurance Policy. To Borrower’s Knowledge, all roadsnecessary for the use of the Property for its current respective purpose have been completed, are physically open and dedicated topublic use and have been accepted by all Governmental Authorities.4.20 Condemnation. Except as described in Exhibit 4.20 hereof, no condemnation or other similar proceeding hasbeen commenced, or to Borrower’s Knowledge, is overtly threatened or contemplated with respect to all or any portion of anyProperty or for the relocation of roadways providing access to such Property.4.21 Use and Operation of Property. Each Property is occupied, used and operated by each applicable Borrower oreach applicable Tenant as set forth on Exhibit 4.21 exclusively for the franchised retail motor vehicle sales, service or other relatedpurposes as identified on Exhibit 4.21 hereof or for such other purposes as identified on Exhibit 4.21 hereof.4.22 Certificate of Occupancy; Licenses. Except to the extent disclosed on Exhibit 4.22, to Borrower’s Knowledge,all material certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancypermits required for the legal use, occupancy and operation of the Property for its permitted use (collectively, the “Licenses”) pursuantto Section 4.21, have been obtained and are in full force and effect and are not subject to revocation, suspension or forfeiture.Borrower shall keep and maintain all licenses necessary for the operation of the Property for its permitted use. To Borrower’sKnowledge, the use being made of the Property is in conformity with the certificate of occupancy issued for the Property.4.23 Flood Zone. To Borrower’s Knowledge, except as shown on the related Survey, none of the Improvements onthe Property are located in an area as identified by the Federal Emergency Management Agency as an area having special floodhazards and, if so located, the flood insurance required pursuant to Section 5.6.1 is in full force and effect with respect to the Property.4.24 Physical Condition. Except to the extent disclosed on Exhibit 4.24 hereof as of the date hereof or except to theextent Borrower is diligently making repairs and/or replacements in the19ordinary course of business after the date hereof, the Property, including, without limitation, all buildings, improvements, parkingfacilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems,equipment, elevators, exterior sidings and doors, irrigation systems and all structural components, is in good condition, order and repairin all material respects; and there exists no structural or other material defects or damages in the Property, whether latent or otherwise.Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in the Property, orany part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums orcharges thereon or of any termination or threatened termination of any policy of insurance or bond. Except to the extent disclosed onExhibit 4.24 hereof as of the date hereof or to the extent disclosed in writing to Lender as to damage occurring after the date hereof, theProperty is free from material damage caused by fire or other casualty. Except to the extent disclosed on Exhibit 4.13 hereof as of thedate hereof or except to the extent Borrower is diligently making repairs and/or replacements in the ordinary course of business afterthe date hereof, to Borrower’s Knowledge, all liquid and solid waste disposal, septic and sewer systems located on the Property are ina good and safe condition and repair and in material compliance with all applicable legal requirements.4.25 Boundaries. All of the Improvements which were included in determining the appraised value of the Property liewholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroachupon the Property, and no easements or other encumbrances upon the Property encroach upon any of the Improvements, in any suchcase so as to adversely affect the value or marketability of the Property, except those which are insured against by the applicable TitleInsurance Policy and/or disclosed on the related Survey.4.26 Possession of Property. Other than Borrower, no Person has any possessory interest in the Property or right tooccupy the same except for the Tenant under the provisions of each Lease as identified on Exhibit 4.26.4.27 Survey. To Borrower’s Knowledge, the Survey for the Property delivered to Lender in connection with thisAgreement does not fail to reflect any material matter affecting the Property or the title thereto.4.28 Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activityand, to Borrower’s Knowledge, there are no illegal activities or activities relating to any controlled substances at the Property thatwould reasonably be expected to result in (a) the forfeiture or seizure of all or any portion of the Property or (b) a Material AdverseEffect.4.29 Management Agreement. Except as set forth on Exhibit 4.29 hereto, the Property is self-managed by Borrowerand, therefore, there are no property management agreements pursuant to which a third party is to provide property managementservices with respect to the Property.4.30 Brokerage/Developer Fees. There are no brokerage commissions or developers fees or agreements pursuant towhich a third party is entitled to payment from Borrower or Guarantor relating to the acquisition of the Collateral.4.31 Franchise Agreements. Each Franchise Agreement is valid and in full force and effect and, to Borrower’sKnowledge, no Borrower is aware of any event which with notice, lapse of20time, or both would allow any manufacturer which is a party to any of the Franchise Agreements to terminate any such agreements.Borrower has not received any notice of termination of any Franchise Agreement.4.32 Inter-Company Debt. Other than trade payables incurred and receivables established in the ordinary course ofbusiness, there is no outstanding debt owed by any Borrower to any Affiliate.4.33 Leases. Borrower is the owner and lessor of landlord’s interest in each Lease at the Property (if applicable).There has been no prior sale, transfer or assignment, hypothecation or pledge of the Lease or of the rents received therein. Borrowerhas delivered to Lender a true and complete copy of each Lease. Each Lease is in full force and effect and (a) there are no defaultsthereunder by either party and there are no conditions that, with the passage of time or the giving of notice, or both, would constitutedefaults thereunder; (b) no rent (including security deposits) has been paid more than one (1) month in advance of its due date; (c) thereare no offsets or defenses to the payment of any portion of the rents; (d) all work to be performed by Borrower under the Lease hasbeen performed as required and has been accepted by the applicable Tenant, and any payments, free rent, partial rent, rebate of rent orother payments, credits, allowances or abatements required to be given by Borrower to any Tenant has already been received by suchTenant; (e) the Tenant under each Lease has not assigned its Lease or sublet all or any portion of the premises demised thereby, noTenant holds its leased premises under assignment or sublease, nor does anyone except such Tenant and its employees occupy suchleased premises; (f) except to the extent expressly set forth in the Lease, no Tenant under any Lease has a right or option pursuant tosuch Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part; (g) noTenant under any Lease has any right or option for additional space in the Improvements; (h) the term of each Lease has commenced;(i) payment of base, fixed or minimum rent under each Lease has commenced; and (j) the related Franchise Agreements are in fullforce and effect.5. Affirmative Covenants of Borrower. Borrower, jointly and severally, covenants and agrees that from the date hereof anduntil payment in full of the Obligations and the formal termination of this Agreement: 5.1 Inspections; Access to Books and Records.5.1.1 Inspections of Books and Records. Borrower will allow Lender, or its agents, during normal business hours,access to the books, records and such other documents of Borrower as Lender shall reasonably require, and allow Lender, atBorrower’s expense, to inspect, audit and examine the same and to make extracts therefrom and to make copies thereof. At any timeother than during a Default Period, Lender shall provide reasonable notice prior to any inspection and/or audit and shall not conductsuch inspection and/or audit more than once in any twelve (12) month period.5.1.2 Environmental Inspections. Lender shall have the right to arrange for or conduct environmentalinspections of each Property from time to time (including the taking of soil, water, air or material samples). The cost of such inspectionsshall be borne by Borrower only in the case of such inspections made during a Default Period or which are required by laws orregulations applicable to Lender.215.1.3 Property Inspections. Lender, or its representatives or agents, are authorized to enter at any reasonabletime upon any part of any Property for the purpose of inspecting any Property and for the purpose of performing any of the acts it isauthorized to perform under the terms of the Mortgage. At any time other than during a Default Period, Lender shall providereasonable notice prior to any such Property inspection.5.2 Business Continuity. Borrower will conduct its business in substantially the same manner as such business is nowconducted, and businesses ancillary or reasonably related thereto. If any Borrower ceases to conduct business at any Property ownedby such Borrower, Borrower will provide written notice thereof to Lender together with a description of any alternate or substitutelocation in respect thereof, if any.5.3 Intentionally Omitted.5.4 Compliance with Swap Agreements. Borrower will comply with all terms and conditions contained in any SwapAgreements, if applicable, as in effect from time to time, except to the extent that noncompliance therewith would not reasonably beexpected to result in a Material Adverse Effect. Nothing in this Section 5.4 shall affect or negate any applicable notice, grace and/orcure periods provided for in this Agreement, any other Loan Documents or any Swap Agreements, if applicable, as in effect from timeto time.5.5 Intentionally Omitted.5.6 Insurance.5.6.1 Required Insurance. Borrower shall maintain with respect to each Property: (a) during construction ofany Improvements on each Property, “all-risk” builders risk insurance which must include windstorm, hail damage, fire and vandalism(non-reporting Completed Value with Special Cause of Loss form), in an amount not less than the completed replacement value of theImprovements under construction, naming Lender as mortgagee and loss payee; (b) upon completion of construction, upon occupancyof any Improvements, and at all other times, insurance against loss or damage by fire and other casualties and hazards by insurancewritten on an “all risks” basis, including malicious mischief coverage, in an amount not less than the replacement cost thereof,including coverage for loss of rents or business interruption if applicable, naming Lender as loss payee and mortgagee; (c) if anyProperty is required to be insured pursuant to the National Flood Reform Act of 1994, and the regulations promulgated thereunder,flood insurance is required in the amount equal to the lesser of the loan amount or maximum available under the National FloodInsurance Program, but in no event should the amount of coverage be less than the value of the improved structure, naming Lender asmortgagee and loss payee. If, after closing, any Property (or any part thereof) is remapped and if the vertical Improvements aredetermined to be located in a special flood hazard area, Borrower must obtain and maintain a flood insurance policy. If, within forty-five (45) days of receipt of notification from Lender that any Property has been reclassified by FEMA as being located in a specialflood hazard area, Borrower has not provided sufficient evidence of flood insurance, Lender is mandated under federal law to purchaseflood insurance on behalf of Borrower, and Lender will add the associated costs to the principal balance of the applicable Note. If theland or any portion thereof is located in a special flood hazard area, this Agreement may be terminated by Lender at its sole option; (d)as applicable, insurance which complies with the workers’ compensation and employers’ liability laws of all states in which22Borrower shall be required to maintain such insurance; and (e) commercial general liability insurance providing coverage in suchamount as Lender may require but in no event less than $1,000,000.00 combined single limit, naming Lender as an additional insured;and (f) such other insurance as Lender may reasonably require from time to time.5.6.2 Insurance Endorsement. All property insurance policies shall contain an endorsement or agreement bythe insurer in form satisfactory to Lender that any loss shall be payable in accordance with the terms of such policy notwithstandingany act or negligence of Borrower and the further agreement (within both the property and liability policies) of the insurer waivingrights of subrogation against Lender, and rights of set-off, counterclaim or deductions against Borrower.5.6.3 Type. All insurance policies shall be in form, provide coverages, be issued by companies and be inamounts reasonably satisfactory to Lender. At least 30 days prior to the expiration of each such policy, Borrower shall furnish Lenderwith evidence satisfactory to Lender that such policy has been renewed or replaced or is no longer required hereunder. All suchpolicies shall provide that the policy will not be canceled or materially amended without at least 30 days prior written notice to Lender.In the event Borrower fails to provide, maintain, keep in force, and furnish to Lender the policies of insurance required by thisparagraph, Lender may procure such insurance or single-interest insurance in such amounts, at such premium, for such risks and bysuch means as Lender chooses, at Borrower’s expense; provided however, Lender shall have no responsibility to obtain any insurance,but if Lender does obtain insurance, Lender shall have no responsibility to assure that the insurance obtained shall be adequate orprovide any protection to Borrower.5.6.4 Insurance Proceeds. After occurrence of any loss to all or any part of any Property the cost of repair,replacement or restoration of which is reasonably anticipated to exceed $2,000,000 individually or in the aggregate (a “MaterialCasualty Loss”), Borrower shall give prompt written notice thereof to Lender. In the event of a Material Casualty Loss, all insuranceproceeds, including unearned premiums, shall be payable to Lender, and Borrower hereby authorizes and directs any affectedinsurance company to make payment of such proceeds directly to Lender and not to Lender and Borrower jointly. In the event of anyMaterial Casualty Loss, Lender is hereby authorized by Borrower to make proof of loss if not promptly made by Borrower, and tosettle, adjust or compromise any claims for loss or damage under any policy or policies of insurance and Borrower appoints Lender asits attorney-in-fact to receive and endorse any insurance proceeds to Lender, which appointment is coupled with an interest and shallbe irrevocable as long as any Obligations remain unsatisfied. Borrower shall pay the costs of collection, including attorneys’ fees, ofinsurance proceeds payable on account of such damage or destruction. Except to the extent provided herein, Borrower shall have noclaim against the insurance proceeds, or be entitled to any portion thereof, and all rights to the insurance proceeds are hereby assignedto Lender as security for payment of the Obligations. In the event of any Material Casualty Loss, Lender shall have the option ofapplying or paying all or part of the insurance proceeds to (a) the Obligations in such order as Lender may determine, (b) restoration,replacement or repair of such Property in accordance with Lender’s standard construction loan disbursement conditions andrequirements, or (c) Borrower. Nothing herein shall be deemed to excuse Borrower from restoring, repairing and maintaining eachProperty as required herein. Notwithstanding the foregoing, provided that so long as either (a) the Material Casualty Loss affects lessthan fifty (50%) percent of the then current fair market value of the Property, as determined by Appraisal reviewed and approved byLender in its reasonable judgment, and no Event of Default or event, which, with the giving of notice or the passage of time, or both,would constitute an Event of Default shall have occurred, or (b) all of the23following conditions are fully satisfied by Borrower, Lender shall disburse insurance proceeds from a Material Casualty Loss for repairand restoration of a Property in accordance with Lender’s standard construction loan disbursement conditions and requirements: (i) noEvent of Default or event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default shallhave occurred and be continuing; (ii) Borrower shall have delivered evidence satisfactory to Lender that such Property can be fullyrepaired and restored at least six (6) months prior to the maturity of the Obligations; (iii) no Lease of such Property is cancelable orterminable by the Tenant or Borrower on account of the casualty or, if it is, the Tenant or Borrower (as applicable) has waived inwriting its right to cancel; (iv) the work is performed under a fixed price or guaranteed maximum price contract reasonably satisfactoryto Lender in accordance with plans and specifications and a budget reasonably satisfactory to Lender in accordance with all legalrequirements; (v) Borrower shall have deposited with Lender for disbursement in connection with the restoration the greater of: (X) theapplicable deductible under the insurance policies covering the loss; or (Y) the amount by which the cost of restoration of suchProperty to substantially the same value, condition and character as existed prior to such damage is estimated by Lender to exceed thenet insurance proceeds; (vi) Borrower has paid as and when due all of Lender’s costs and expenses incurred in connection with thecollection and disbursement of insurance proceeds, including without limitation, inspection, monitoring, engineering and legal fees. Ifnot paid on demand, at Lender’s option, such costs may be deducted from the disbursements made by Lender or added to the sumssecured by the Mortgage; and (vii) such other terms and conditions as Lender may reasonably require.Notwithstanding anything set forth in this Section 5.6.4 to the contrary, in the event of any loss to all or any part of anyProperty which is not a Material Casualty Loss, Borrower is authorized to make proof of loss, settle, adjust or compromise any claimsfor loss or damage under any policy or policies of insurance and shall be entitled to receive all insurance proceeds, including unearnedpremiums; provided that Borrower covenants to use such proceeds for the repair, replacement or restoration of the Property.5.7 Maintain Properties. Borrower will maintain, preserve and keep its property in good repair, working order andcondition, ordinary wear and tear excepted, making all replacements, additions and improvements thereto necessary for the properconduct of its business, unless prohibited by the Loan Documents.5.8 Intentionally Omitted.5.9 Notice of Default and Other Notices. Borrower (or Asbury on behalf of Borrower) shall provide to Lender prompt noticeof (a) the occurrence of any Event of Default and what action (if any) Borrower is taking to correct the same; (b) any rejection, return,offset, dispute, loss or other circumstance which, in each such case, could be expected to have a Material Adverse Effect on Borroweror on the Collateral, taken as a whole, (c) the cancellation or termination of, or any default under, any Material Agreement to whichBorrower is a party or by which any of its properties are bound, if such cancellation, termination or breach is reasonably likely to resultin a Material Adverse Effect; (d) any loss or threatened loss of material licenses or permits; (e) all notices of default or other materialnotices from any Tenant to any Borrower; (f) any dispute, litigation, investigation, proceeding or suspension between the Borrowerand any governmental authority which dispute, litigation, investigation, proceeding or suspension arising under this clause (f) hasresulted or could reasonably be expected to result in a Material Adverse Effect; (g) the commencement of, or any material developmentin, any24litigation or proceeding affecting the Borrower, including pursuant to any applicable Environmental Laws, where the result of suchevent arising under this clause (g) has resulted or could reasonably be expected to result in a Material Adverse Effect; (h) receipt of anycitations, warnings, orders, notices, consent agreements, process or claims alleging or relating to material violations of anyEnvironmental Laws or to the environmental condition of each Property; (i) any notice from taxing authorities as to claimeddeficiencies in an amount aggregating $250,000 or more or any tax lien or any notice relating to alleged ERISA violations involving anamount at issue of $250,000 or more, and (j) any Reportable Event, as defined in ERISA. Any such notice will include the status ofany unresolved item covered by any previous notices and provide such other information as may be reasonably requested by Lender.5.10 Intentionally Omitted.5.11 Intentionally Omitted.5.12 Intentionally Omitted.5.13 Maintenance of Existence and Rights. Borrower shall preserve and maintain its corporate existence, authoritiesto transact business, rights and franchises, trade names, patents, trademarks and permits necessary to the conduct of its business, exceptin connection with a transaction not otherwise prohibited hereunder, and except to the extent that the failure to preserve and maintainthe foregoing would not reasonably be expected to result in a Material Adverse Effect.5.14 Payment of Taxes. Borrower shall pay before delinquent all federal and state income or property taxes, and allother material taxes, assessments and governmental charges or levies imposed upon Borrower or which may become a lien upon anyProperty (all of the foregoing collectively, “Impositions”), except and to the extent only that such Impositions are being ProperlyContested.5.15 Subordination. Borrower shall cause all debt and other obligations now or hereafter owed to any Affiliate (other thanAsbury), other than trade payables incurred and receivables established in the ordinary course of business, to be subordinated in rightof payment and security to the Obligations in accordance with subordination agreements satisfactory to Lender.5.16 Intentionally Omitted.5.17 Leases, Subleases and Easements. Borrower shall, at all times, comply in all material respects with the terms andprovisions of any Lease or easement which may constitute a portion of any Property. Except as otherwise provided in Section 6.13hereof, Borrower shall not, without the prior written consent of Lender (which consent shall not be unreasonably withheld or delayed),enter into any new Lease of all or any portion of any Property, agree to the cancellation or surrender under any Lease of all or anyportion of any Property, agree to prepayment of rents, issues or profits (other than rent paid at the signing of a Lease), modify any suchLease so as to shorten the term, decrease the rent, accelerate the payment of rent, or change the terms of any renewal option; and anysuch purported new Lease, cancellation, surrender, prepayment or modification made without the consent of Lender shall be void asagainst Lender. Notwithstanding anything set forth herein, (a) Borrower may renew or extend any Lease on (i) the same, better orsubstantially the same terms as then existing, or (ii) as otherwise approved by Lender in writing, and (b) as to any Lease with anAffiliate of Asbury, Borrower may agree to the cancellation or surrender under any Lease of all or any portion of any Property, agreeto prepayment of rents, issues or profits (other than rent paid at the signing of a Lease), modify any such25Lease so as to shorten the term, decrease the rent, accelerate the payment of rent, or change the terms of any renewal option so long assuch cancellation, surrender, prepayment, modification, decrease in rent, acceleration or change would not reasonably be expected toresult in a Material Adverse Effect.5.18 Impositions; Escrow Deposit. Borrower will pay or cause to be paid all taxes, levies, assessments and other feesand charges imposed upon or which may become a lien upon any Property under any law or ordinance (all of the foregoingcollectively, “Impositions”) before they become delinquent and in any event in the same calendar year in which they first become due.Upon an Event of Default or if required by Federal or State law or if required by any Lender policy applicable to commercial loans ofthis type, at Lender’s request, Borrower shall add to each periodic payment required under the Notes the amount estimated by Lenderto be sufficient to enable Lender to pay, as they come due, all Impositions and insurance premiums which Borrower is required to payhereunder. Payments requested under this provision shall be supplemented or adjusted as required by Lender from time to time. Suchfunds may be commingled with the general funds of Lender and shall not earn interest.5.19 Use of Property. Borrower shall use and operate, and require its lessees or licensees to use and operate, eachProperty in compliance with all applicable laws (including, for example, the Americans with Disabilities Act and the Fair Housing Act)and ordinances, covenants, and restrictions, and with all applicable requirements of any Lease now or hereafter affecting eachProperty. Borrower shall not permit any unlawful use of any Property or any use that may give rise to a claim of forfeiture of any ofsuch Property. Except as otherwise provided in Section 6.12 hereof, Borrower shall not allow changes in the stated use of any Propertyfrom that disclosed to Lender at the time of execution hereof. Borrower shall not initiate or acquiesce to a zoning change of anyProperty without prior notice to, and written consent of, Lender.5.20 Maintenance, Repairs and Alterations. Borrower shall keep and maintain each Property in good condition andrepair, ordinary wear and tear excepted. Borrower will not remove, demolish or structurally alter, or permit any Tenant to remove,demolish or structurally alter, any of the Improvements on any Property (except such alterations as may be required by laws,ordinances or regulations and any such alterations which would not reasonably be expected to result in a diminution in the value ofsuch Property) without the prior written consent of Lender. Borrower shall promptly notify Lender in writing of any material loss,material damage or material adverse condition affecting any Property.5.21 Eminent Domain. Should the entire Property or any interest therein in excess of $250,000 in value individuallyor $3,000,000 in value in the aggregate be taken or damaged by reason of any public use or improvement or condemnation proceeding(a “Material Condemnation”), or should Borrower receive any notice or other information regarding such Material Condemnation,Borrower shall give prompt written notice thereof to Lender. Lender shall be entitled to all compensation, awards and other paymentsor relief granted in connection with such Material Condemnation and, at its option, may commence, appear in and prosecute in its ownname any action or proceedings relating thereto. Lender shall be entitled to make any compromise or settlement in connection withsuch taking or damage. All compensation, awards, and damages awarded to Borrower related to any Material Condemnation (the“Proceeds”) are hereby assigned to Lender and Borrower agrees to execute such further assignments of the Proceeds as Lender mayrequire. Lender shall have the option of applying or paying the Proceeds in the same manner as insurance proceeds as provided herein.Borrower appoints Lender as its attorney-26in-fact to receive and endorse the Proceeds to Lender, which appointment is coupled with an interest and shall be irrevocable as long asany Obligations remain unsatisfied.Notwithstanding anything set forth in this Section 5.21 to the contrary, in the event of any taking or condemnationwhich is not a Material Condemnation, Borrower is authorized to make proof of loss, settle, adjust or compromise any claims for lossor damage with the condemning authority, and shall be entitled to receive all proceeds related thereto; provided that Borrowercovenants to use such proceeds for the repair, replacement or restoration of the Property.5.22 Environmental Condition of Property. Borrower shall conduct and complete all investigations and all cleanupactions necessary to comply with the Environmental Laws and to remove, in accordance with Environmental Laws, any HazardousMaterial from each Property, except to the extent such failure to remove such Hazardous Material would not reasonably be expected tohave a material adverse effect on such Property.5.23 Appraisals. Borrower agrees that Lender may obtain an Appraisal of any Property when (a) required by theregulations of the Federal Reserve Board or the Office of the Comptroller of the Currency, or any other regulatory agency, or (b) atsuch other times as Lender may reasonably require; provided, however, that, at any time other than during a Default Period or asrequired by any policy of Lender as to mortgage loans (and not as particular to Borrower), Lender may require an Appraisal underclause (b) no more than once in any twelve (12) month period. Such Appraisals shall be performed by an independent third partyappraiser selected by Lender. The cost of such Appraisals shall be borne by Borrower. If requested by Lender, Borrower shall executean engagement letter addressed to the appraiser selected by Lender. Borrower’s failure or refusal to sign such an engagement letter,however, shall not impair Lender’s right to obtain such an Appraisal. Borrower agrees to pay the cost of such Appraisal within ten (10)days after receiving an invoice for such Appraisal.5.24 Intentionally Omitted.5.25 Liens and Subrogation. Borrower shall pay and promptly discharge all liens, claims and encumbrances upon anyProperty, other than Permitted Liens. Borrower shall have the right to contest in good faith the validity of any such lien, claim orencumbrance, provided: (a) such contest suspends the collection thereof or there is no danger of any Property being sold or forfeitedwhile such contest is pending; (b) if the lien, claim or encumbrance exceeds $1,000,000, Borrower first deposits with Lender a bond orother security satisfactory to Lender in such amounts as Lender shall reasonably require; and (c) Borrower thereafter diligentlyproceeds to cause such lien, claim or encumbrance to be removed and discharged. Lender shall be subrogated to any liens, claims andencumbrances against Borrower or any Property that are paid or discharged through payment by Lender or with loan proceeds,notwithstanding the record cancellation or satisfaction thereof.5.26 Further Assurances. Borrower shall take such further action and provide to Lender such further assurances asmay be reasonably requested to ensure compliance with the intent of this Agreement and the other Loan Documents.5.27 Management. Borrower shall not enter into any agreement for the management of the Property or any portionthereof without Lender's prior written consent.5.28 Intentionally Omitted.276. Negative Covenants of Borrower. Borrower, jointly and severally, covenants and agrees that from the date hereof anduntil payment in full of the Obligations and the formal termination of this Agreement, Borrower:6.1 Debt. Shall not create or permit to exist any Debt, including any guaranties or other contingent obligations, exceptthe following (“Permitted Debt”):(a)The Obligations;(b)Any Debt evidenced by the Revolving Credit Facility or any refinancing, replacement, modification,renewal, amendment or amendment and restatement of the Revolving Credit Facility, including any increases in the aggregate principalamounts; provided, however, that nothing contained in this Section 6.1(b) shall be deemed to modify Section 5.15 hereof;(c)Any other Debt permitted under the Revolving Credit Agreement or any refinancing, replacement,modification, renewal, amendment or amendment and restatement thereof;(d)Endorsement of checks for collection in the ordinary course of business;(e)Debt payable to suppliers and other trade creditors in the ordinary course of business on ordinary andcustomary trade terms and which is not past due;(f)Debt existing on the Closing Date and not otherwise permitted under this Section 6.1, as set forth onExhibit 6.1 hereto, and the renewal and refinancing (but not the increase in the aggregate principal amount) thereof; and(g)Debt incurred under any Swap Agreements relating to the Term Loan with Draw Period.6.2 Liens. Shall not create or permit any Liens on any Property except the following (“Permitted Liens”): Lienssecuring the Obligations;(a)Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposedpursuant to any of the provisions of ERISA or Environmental Laws) not yet due and payable or which are being Properly Contested;(b)The claims of materialmen, mechanics, carriers, warehousemen, processor or landlords arising out ofoperation of law so long as the obligations secured thereby are not past due or are being Properly Contested;(c)Liens consisting of deposits or pledges made in the ordinary course of business in connection withworkers’ compensation, unemployment insurance, social security and similar laws; and(d)Judgment and other similar non-tax Liens arising in connection with court proceedings but only if andfor so long as (i) the execution or enforcement of such Liens is and continues to be effectively stayed and bonded on appeal, (ii) thevalidity and/or amount of the claims secured28thereby are being Properly Contested and (iii) such Liens do not, in the aggregate, materially detract from the value of the Collateral ormaterially impair the use thereof in the operation of the Property.6.3 Change in Business. Shall not enter into any business which is different from the business in which it is engagedon the Closing Date, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertakeor participate in activities other than the continuance of the business in which it is engaged on the Closing Date. Notwithstandinganything set forth herein to the contrary, Borrower may engage, without the consent of Lender and in addition to the business in whichit is engaged on the Closing Date, in the operation of a business ancillary to a motor vehicle dealership.6.4 No Substitution of Collateral. Borrower shall not substitute any Collateral without Lender’s prior written consent.6.5 No Change in Name, Offices or Jurisdiction of Organization; Removal of Collateral. Unless Borrower shall havegiven 30 days’ advance written notice thereof to Lender, it shall not change its name or the jurisdiction in which Borrower isorganized, or change the location of its chief executive office or other office where books or records are kept, or permit the removal ofany material Fixtures from any Property.6.6 No Sale, Leaseback. Shall not enter into any sale-and-leaseback or similar transaction in connection with theProperty.6.7 Margin Stock. Shall not use any proceeds of the Loan to purchase or carry any margin stock (within the meaningof Regulation U of the Board of Governors of Federal Reserve System) or extend credit to others for the purpose of purchasing orcarrying any margin stock.6.8 Subsidiaries. Shall not acquire, form or dispose of any Subsidiaries or permit any Subsidiary to issue capital stockexcept to its Parent, except to the extent the acquisition, formation, disposition or issuance of capital stock would not reasonably beexpected to have a Material Adverse Effect.6.9 Change of Fiscal Year or Accounting Methods. Shall not change its fiscal year or its book accounting methodsexcept as required by GAAP or applicable law. Borrower’s fiscal year end is December 31 as of the Closing Date. As used herein, theterm “book accounting methods” means accounting methods which affect numbers reported to the Securities and ExchangeCommission (as distinguished from tax accounting methods used in reporting to the Internal Revenue Service).6.10 Zoning. Shall notinitiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoningordinance or use or permit the use of any portion of the Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent ofLender.6.11 Affiliate Transactions. Shall not, directly or indirectly purchase, acquire or lease any property from, or sell,transfer or lease any property to, pay any management fees to, enter into, or be a party to, any transaction with an Affiliate of Borrower(other than Asbury or a Subsidiary of Asbury), except on terms which are no less favorable to Borrower or such Affiliate than wouldbe obtained in a comparable arm’s-length transaction with an unrelated third party.296.12 Franchise. Shall not use the Property or permit the Property to be used for any different or additional franchisefrom the franchise operated at the Property as of the Closing Date (as set forth on Exhibit 4.21 hereof) (the “Original Franchise”)without the prior written consent of Lender (which consent shall not be unreasonably withheld or delayed). Notwithstanding anythingset forth in this Section 6.12 to the contrary, Borrower may use the Property or permit the Property to be used for an additionalfranchise so long as, within thirty (30) Business Days of such occurrence (a) Borrower provides Lender written notice of the additionof a franchise, (b) Borrower provides Lender a copy of the applicable Franchise Agreement, and (c) unless the Lender otherwiseconsents in writing (which consent shall not be unreasonably withheld or delayed), the Original Franchise is still operated at theProperty. If an Affiliate of Asbury (other than Borrower) is the franchisee of such additional or different (as approved) franchiseoperated at the Property, then Lender may require, and Borrower shall cause, such Affiliate to execute a Guaranty Agreement for theallocated portion of the Loan as to the applicable Property in the form of and subject to such terms as Lender may reasonably require.6.13 Leases. Borrower shall not, without the prior written consent of Lender (which consent shall not beunreasonably withheld or delayed), enter into any new Lease or assign any Lease of all or any portion of any Property, other thanrenewals and extensions (a) on the same, better or substantially the same terms as then existing, or (b) as otherwise approved by Lenderin writing. Notwithstanding anything set forth in this Section 6.13 to the contrary, any Property may be leased or assigned , in whole orin part, to any Affiliate of Asbury so long as (i) Borrower has provided Lender thirty (30) Business Days’ prior written notice of suchLease or assignment of Lease, (ii) Lender has approved, in its reasonable discretion, the form of Lease, (iii) Borrower has delivered toLender any Third Party Agreements required by Lender and such other information regarding the operation, business affairs, andfinancial condition of the proposed tenant which Lender may reasonably request, and (iv) such Affiliate of Asbury shall guarantee theportion of the Loan allocated to the Property leased to such Affiliate pursuant to a Guaranty Agreement in favor of Lender substantiallyin the form of Exhibit 6.13 attached hereto and made a part hereof.6.14 Change of Control. Unless Borrower has complied with the provisions of Section 2.4.5 hereof (including,without limitation, payment of the Required Release Amount), shall not make, permit or suffer a Change of Control without the priorwritten consent of Lender.7. Other Covenants of Borrower. Borrower covenants and agrees that from the date hereof and until payment in full of itsObligations and the termination of this Agreement, Borrower shall comply with the following additional covenants: 7.1 Intentionally Omitted.7.2 Due on Sale or Further Encumbrance or Transfer of an Interest in Borrower. Without the prior written consent ofLender in each instance unless Borrower has complied with the provisions of Section 2.4.5 hereof (including, without limitation,payment of the Required Release Amount), no Borrower shall (a) sell, convey, transfer or encumber its Property, or any part thereof orinterest therein, whether legal or equitable (other than Permitted Liens), (b) cause or permit any transfer of its Property or any partthereof, whether voluntarily, involuntarily or by operation of law, or (c) enter into any agreement or transaction to transfer, oraccomplish in form or substance a transfer, of such Property. A “transfer” of the Property includes: (i) the direct or indirect sale,transfer or conveyance of such Property or any portion thereof or interest therein; (ii) the execution of an installment sale contract30or similar instrument affecting all or any portion of such Property; (iii) if Borrower or any general partner or member of Borrower, is acorporation, partnership, limited liability company, trust or other business entity, the transfer (whether in one transaction or a series oftransactions, but excluding any pledge or collateral assignment) of any stock, partnership, limited liability company or other ownershipinterests in such corporation, partnership, limited liability company or entity including, without limitation, changes in stockholders,partners, members, managers, trustees, beneficiaries, or their respective interests; whether directly or indirectly, but only to the extentthe same results in a Change of Control; (iv) if Borrower, or any general partner or member of Borrower, is a corporation, the creationor issuance of new stock by which an aggregate of more than 50% of such corporation’s stock shall be vested in a party or parties whoare not now stockholders; and (v) an agreement by Borrower leasing all or a substantial part of any Property for other than actualoccupancy by a space tenant thereunder or a sale, assignment or other transfer of or the grant of a security interest in and to any Leases(other than Permitted Liens). Notwithstanding anything to the contrary set forth herein, Lender shall not unreasonably withhold,condition or delay any consent to any easement necessary in connection with the operation or development of any Property.7.3 Intentionally Omitted.7.4 Intentionally Omitted.8. Intentionally Omitted.9. Default.9.1 Events of Default. Each of the following shall constitute an Event of Default:9.1.1 Non-payment. There shalloccur any default by any Borrower in the payment, when due, of (a) any principal, or (b) within five (5) days after the same becomesdue, interest on any Note or any fee due, any other amounts due hereunder or any other Loan Document, or any other Obligations; or9.1.2 Non-Performance. There shall occur any default by any Borrower in the performance of any agreement,covenant or obligation contained in Section 5.9, 5.13, or Section 6 or Section 7 of this Agreement; or9.1.3 Default under other Loan Documents. There shall occur any default by any Borrower or Guarantor inthe performance of any other agreement, covenant or obligation contained in this Agreement or any other Loan Document notprovided for elsewhere in this Section 9 and the breach of such other agreement, covenant or obligation is not cured to Lender’ssatisfaction within 30 days after the sooner to occur of any Senior Officer’s receipt of notice of such breach from Lender or the date onwhich such failure or neglect first becomes known to any Senior Officer; provided, however, that such notice and opportunity to cureshall not apply in the case of any failure to perform, keep or observe any covenant which is not capable of being cured at all or withinsuch 30-day period or which is a willful and knowing breach by any Borrower or such other party; or9.1.4 Untrue Representation. Any representation or warranty made by any Borrower, Guarantor or any otherparty to any Loan Document (other than Lender), herein or therein or in any certificate or report furnished in connection herewith ortherewith shall prove to have been untrue or incorrect in any material respect when made; or319.1.5 Intentionally Omitted; or9.1.6 Borrower’s or Guarantor’s failure to pay other Debt. Any Borrower or any Guarantor (other thanAsbury) shall fail to make any payment in respect of its outstanding Debt (other than the Obligations) having an aggregate principalamount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined orsyndicated credit arrangement) of $3,000,000 or more when due after the expiration of any applicable grace period, or any event orcondition shall occur which results in the acceleration of the maturity of such Debt (including, without limitation, any requiredmandatory prepayment or “put” of such Debt to any such Person as a result of a failure to comply with the terms thereof) or enables theholders of such Debt (or any Person acting on such holders’ behalf) to accelerate the maturity thereof (including, without limitation,any required mandatory prepayment or “put” of such Debt to such Person as a result of a failure to comply with the terms thereof) andwhich event or condition has not been cured within any applicable cure period or waived in writing prior to any declaration of anEvent of Default or acceleration of the Loans hereunder; or9.1.7 Asbury Automotive Group, Inc.’s failure to pay other Debt. (a) Asbury or any of its Subsidiaries shallfail to make any payment in respect of its outstanding Debt (other than the Obligations) having an aggregate principal amount(including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicatedcredit arrangement) in excess of $35,000,000 (or, that when combined with any judgments rendered against Asbury or any of itsSubsidiaries or any levies, attachments, garnishments or other seizures as set forth in Section 9.1.12 exceeds $35,000,000) when dueafter the expiration of any applicable grace period, or (b) any event or condition shall occur which results in the acceleration of thematurity of such Debt (including, without limitation, any required mandatory prepayment or “put” of such Debt to any such Person asa result of a failure to comply with the terms thereof) or enables the holders of such Debt (or any Person acting on such holders’ behalf)to accelerate the maturity thereof (including, without limitation, any required mandatory prepayment or “put” of such Debt to suchPerson as a result of a failure to comply with the terms thereof) and which event or condition has not been cured within any applicablecure period or waived in writing prior to any declaration of an Event of Default or acceleration of the Loans hereunder; or9.1.8 Default under the Revolving Credit Facility. There shall occur any default under the Revolving CreditFacility, which is not cured within any applicable grace period, if any; or9.1.9 Bankruptcy; Cessation. Any Borrower or Guarantor shall (a) voluntarily dissolve, liquidate or terminateoperations or apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator ofsuch Person or of all or of a substantial part of its assets, (b) admit in writing its inability, or be generally unable, to pay its debts as thedebts become due, (c) make a general assignment for the benefit of its creditors, (d) commence a voluntary case under the federalBankruptcy Code (as now or hereafter in effect), (e) file a petition seeking to take advantage of any other law relating to bankruptcy,insolvency, reorganization, winding‑up, or composition or adjustment of debts, (f) fail to controvert in a timely and appropriate manner,or acquiesce in writing to, any petition filed against it in an involuntary case under Bankruptcy Code, or (g) take any corporate actionfor the purpose of effecting any of the foregoing; or329.1.10 Involuntary Bankruptcy. An involuntary petition or complaint shall be filed against any Borrower orGuarantor seeking bankruptcy relief or reorganization or the appointment of a receiver, custodian, trustee, intervenor or liquidator ofany Borrower or any Subsidiary or any Guarantor, of all or substantially all of its assets, and such petition or complaint shall not havebeen dismissed within sixty (60) days of the filing thereof; or an order, order for relief, judgment or decree shall be entered by anycourt of competent jurisdiction or other competent authority approving or ordering any of the foregoing actions; or9.1.11 Judgment-Borrower or Guarantor. (a) A judgment in excess of $3,000,000 shall be rendered againstany Borrower or any Guarantor (other than Asbury) and shall remain undischarged, undismissed and unstayed for more than sixty (60)days (except judgments validly covered by insurance with a deductible of not more than $3,000,000), or (b) there shall occur any levyupon, or attachment, garnishment or other seizure of, any portion of the Collateral or other assets of any Borrower, any Subsidiary orany Guarantor (other than Asbury) in excess of $3,000,000 by reason of the issuance of any tax levy, judicial attachment orgarnishment or levy of execution, or (c) a judgment lien shall attach to or there shall occur any levy or lien upon any portion of theCollateral that is senior to or pari passu with the Lien of Lender; or9.1.12 Judgment-Asbury Automotive Group, Inc. (a) One or more judgments in excess of $35,000,000 in theaggregate (or, that when combined with any outstanding Debt default of Asbury or any of its Subsidiaries as provided in Section 9.1.7exceeds $35,000,0000) shall be rendered against Asbury or any of its Subsidiaries and shall remain undischarged, undismissed andunstayed for more than sixty (60) days, or (b) there shall occur any levy upon, or attachment, garnishment or other seizure of, anyportion of the assets of Asbury or any of its Subsidiaries in excess of $35,000,000 in the aggregate (or, that when combined with anyoutstanding Debt default of Asbury or any of its Subsidiaries as provided in Section 9.1.7 exceeds $35,000,0000) by reason of theissuance of any tax levy, judicial attachment or garnishment or levy of execution; or9.1.13 Revocation of Guaranty. Any Guarantor shall repudiate or revoke any Guaranty Agreement; or9.1.14 Material Loss. Loss, theft, damage or destruction of any material portion of any Property for whichthere is either no insurance coverage or for which, in the reasonable opinion of Lender, there is insufficient insurance coverage; or9.1.15 Change of Control. A Change of Control of any Borrower in violation of Section 6.14 or a Change ofControl of any Guarantor in violation of the Guaranty Agreement; or9.1.16 Abandonment of Property. Any Property shall be abandoned or not continuously occupied for a periodof one-hundred eighty (180) days; or9.1.17 Operation of Property. Any Property shall be occupied or operated by any Person that is not anAffiliate of Asbury.9.2 Remedies. If an Event of Default shall have occurred and be continuing, Lender may at its option take any or allof the following actions with respect to each Borrower, and with respect to the Collateral provided by such Borrower as collateral forthe Loans made to it:339.2.1 Acceleration. Lender may declare any or all Obligations (other than Obligations under any SwapAgreements, between Borrower and Lender or any Affiliate of Lender, which shall be due in accordance with and governed by theprovisions of said Swap Agreements) to be immediately due and payable (if not earlier demanded), terminate its obligation to makeLoans and other extensions of credit to Borrower, bring suit against Borrower to collect such Borrower’s respective Obligations,exercise any remedy available to Lender hereunder or at law and take any action or exercise any remedy provided herein or in anyother Loan Document or under applicable law. No remedy shall be exclusive of other remedies or impair the right of Lender toexercise any other remedies.9.2.2 UCC Rights. Without waiving any of its other rights hereunder or under any other Loan Document,Lender shall have all rights and remedies of a secured party under the Code (and the Uniform Commercial Code of any otherapplicable jurisdiction) and such other rights and remedies as may be available hereunder, under other applicable law or pursuant tocontract. Borrower agrees that any notice by Lender of the sale or disposition of the Collateral or any other intended action hereunder,whether required by the Code or otherwise, shall constitute reasonable notice to Borrower if the notice is mailed to Borrower byregular or certified mail, postage prepaid, at least five (5) days before the action to be taken. Borrower shall be liable for anydeficiencies in the event the proceeds of the disposition of the Collateral do not satisfy the Obligations in full.9.2.3 Collection. Lender may demand, collect and sue for proceeds of any Collateral (either in therespective Borrower’s name or Lender’s name at the latter’s option), with the right to enforce, compromise, settle or discharge any suchamounts.9.2.4 Foreclosure. (a) Lender may exercise any or all of Lender’s remedies under the Mortgage or other LoanDocuments including, without limitation, acceleration of the maturity of all payments and Obligations, other than Obligations underany Swap Agreements with Lender or any of its Affiliates, which shall be due in accordance with and governed by the provisions ofsaid Swap Agreements; (b) Lender may take immediate possession of each, any and all Property or any part thereof (which Borroweragrees to surrender to Lender) and manage, control or lease the same to such Persons and at such rental as it may deem proper andcollect and apply Rents (as defined in the Mortgage) to the payment of: (i) the Obligations, together with all costs and attorneys’ fees;(ii) all Impositions (as defined in the Mortgage) and any other levies, assessments or liens which may be prior in lien or payment to theObligations, and premiums for insurance, with interest on all such items; and (iii) the cost of all alterations, repairs, replacements andexpenses incident to taking and retaining possession of each, any and all Property and the management and operation thereof; all insuch order or priority as Lender in its sole discretion may determine. The taking of possession shall not prevent concurrent or laterproceedings for the foreclosure sale of each, any and all Property; (c) Lender may apply to any court of competent jurisdiction for theappointment of a receiver for all purposes including, without limitation, to manage and operate each, any and all Property or any partthereof, and to apply the Rents therefrom as hereinabove provided. In the event of such application, Borrower consents to theappointment of a receiver, and agrees that a receiver may be appointed without notice to Borrower, without regard to whetherBorrower has committed waste or permitted deterioration of each, any or all of Borrower’s Property, without regard to the adequacy ofany security for the Obligations, and without regard to the solvency of Borrower or any other person, firm or corporation who orwhich may be liable for the payment of the Obligations; (d) Lender may exercise all the remedies of a mortgagee as provided by lawand in equity including, without limitation, foreclosure upon the Mortgage and sale of each, any and all Property, or any part of theProperty, at public sale conducted according to applicable law (referred to as “Sale”) and conduct34additional Sales as may be required until all of the Property is sold or the Obligations are satisfied; (e) With respect to any portion ofeach, any and all Property governed by the Code, Lender shall have all of the rights and remedies of a secured party thereunder.Lender may elect to foreclose upon any Property that is Fixtures under law applicable to foreclosure of interests in real estate or lawapplicable to personal property; (f) Lender may bid at Sale and may accept, as successful bidder, credit of the bid amount against theObligations as payment of any portion of the purchase price; and (g) Lender shall apply the proceeds of Sale, first to any fees orattorney fees permitted Lender by law in connection with Sale, second to expenses of foreclosure, publication, and sale permittedLender by law in connection with Sale, third to the Obligations, and any remaining proceeds as required by law.9.3 Receiver. In addition to any other remedy available to it, Lender shall have the absolute right, upon the occurrenceand during the continuance of an Event of Default, to seek and obtain the appointment of a receiver to take possession of and operateand/or dispose of the business and assets of Borrower and any costs and expenses incurred by Lender in connection with suchreceivership shall bear interest at the Default Rate, at Lender’s option, and shall be secured by all Collateral.10. Indemnification. Borrower, jointly and severally, shall protect, indemnify, defend and save harmless Lender and anyparticipants, successors or assigns to Lender’s interest in the Loan, and any other party who acquires any portion of the Loan at aforeclosure sale or otherwise through the exercise of Lender’s rights and remedies under the Loan Documents, and all directors,officers, employees and agents of all of the aforementioned indemnified parties, from and against all losses, liabilities, obligations,claims, damages, penalties, fines, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees andexpenses) (collectively, “Damages”) imposed upon, incurred by or asserted or assessed against Lender on account of or in connectionwith (a) the Loan Documents or any failure or alleged failure of Borrower to comply with any of the terms of, or the inaccuracy orbreach of any representation in, the Loan Documents; (b) the Collateral or any claim of loss or damage to the Property or any injury orclaim of injury to, or death of, any person or property that may be occasioned by any cause whatsoever pertaining to the Property orthe use, occupancy or operation thereof, (c) any failure or alleged failure of Borrower to comply with any law, rule or regulationapplicable to it or to the Property or the use, occupancy or operation of the Property (including, without limitation, the failure to payany taxes, fees or other charges), (d) any Damages whatsoever by reason of any alleged action, obligation or undertaking of Lenderrelating in any way to or any matter contemplated by the Loan Documents, (e) any claim for brokerage fees or such other commissionsrelating to the Property or any other Obligations, (f) any and all liability arising from any Leases related to the Property or under or byreason of the assignment of such Leases to Lender, (g) Borrower’s violation of or failure to meet the requirements of anyEnvironmental Laws, (h) any Hazardous Materials which, while any Property is subject to the Mortgage, exist on any Property, (i) anycivil penalty or fine assessed by OFAC against Lender or any Affiliate of Lender as a result of the funding of Loans or the extension ofcredit, the acceptance of payments due under the Loan Documents or any Swap Agreement or acceptance of Collateral, or (j) any statedocumentary stamp taxes, intangible taxes or similar taxes (including interest or penalties, if any) which may now or hereafter bedetermined to be payable in respect to the execution, delivery or recording of any Loan Document or the making of any Loan, whetheroriginally thought to be due or not, and regardless of any mistake of fact or law on the part of Lender or such Borrower with respect tothe applicability of such tax. Nothing contained herein shall require any Borrower to indemnify Lender for any Damages (x) resultingfrom Lender’s gross negligence or its willful misconduct, (y) resulting from a claim brought by any Borrower or any Guarantor againstan indemnitee for breach in bad faith of such indemnitee’s obligations hereunder or under any other Loan35Document, if such Borrower or such Guarantor has obtained a final and nonappealable judgment in its favor on such claim asdetermined by a court of competent jurisdiction or (z) arise out of a dispute solely between or among indemnitees that does not involvean act or omission by any Borrower, Guarantor or any of their respective Affiliates, and such indemnity shall be effective only to theextent of any Damages that may be sustained by Lender in excess of any net proceeds received by it from any insurance of suchBorrower (other than self-insurance) with respect to such Damages. The indemnity provided for herein shall survive and remain in fullforce and effect notwithstanding the payment of the Obligations, a foreclosure of or exercise of power of sale under this instrument orany Mortgage, a delivery of a deed in lieu of foreclosure, a cancellation or termination of record of any Mortgage and the transfer ofany Property. In the event the Lender incurs any Damages arising out of or in any way relating to the transaction contemplated by theLoan Documents (including any of the matters referred to in this section), the amounts of such Damages shall be added to theObligations, shall bear interest, to the extent permitted by law, at the interest rate borne by the Obligations from the date incurred untilpaid and shall be payable on demand.11. Miscellaneous.11.1 No Waiver, Remedies Cumulative. No failure on the part of Lender to exercise, and no delay in exercising, anyright hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of anyright hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided arecumulative and are in addition to any other remedies provided by law, any Loan Document or otherwise.11.2 Survival of Representations. All representations and warranties made herein shall survive the making of theLoans hereunder and the delivery of the Notes, and shall continue in full force and effect so long as any Obligations are outstanding,there exists any commitment by Lender to Borrower, and until this Agreement is formally terminated in writing.11.3 Costs and Expenses. Each Borrower and each Guarantor (jointly and severally) shall pay (a) all out-of-pocketexpenses incurred by the Lender and its Affiliates (including, but not limited to, the reasonable fees, charges and disbursements of onelaw firm acting as outside counsel for the Lender and one law firm acting as local counsel in each jurisdiction, the costs of appraisals,public record searches, environmental reports and reviews thereof, title work, recording fees, recording taxes and the costs of any otherrelated documents or examinations and investigations of the properties of Borrower and Guarantor and/or Borrower’s and Guarantor’soperations), whether incurred prior to or from and after the date hereof, in connection with the due diligence process and/or thepreparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments,modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall beconsummated) and the perfection of Lender’s Liens in the Collateral, and (b) all out-of-pocket expenses incurred by the Lender(including the reasonable fees, charges and disbursements of any counsel for the Lender), in connection with the preservation,administration, enforcement and/or protection of its rights (i) in connection with this Agreement and the other Loan Documents,including its rights under this Section, or (ii) in connection with the Loans made hereunder, including all such out-of-pocket expensesincurred during any workout, restructuring or negotiations in respect of such Loans. If any Borrower should fail to pay any tax or otheramount required by this Agreement to be paid or which may be reasonably necessary to protect or preserve any Collateral36or such Borrower’s or Lender’s interests therein, Lender may make such payment and the amount thereof shall be payable on demand,shall bear interest at the Default Rate from the date of demand until paid and shall be deemed to be Obligations entitled to the benefitand security of the Loan Documents. The requirement to pay costs and expenses provided for herein shall survive termination of thisAgreement, be a part of the Obligations and be secured by the Collateral.11.4 Notices. Any notice or other communication hereunder or under the Notes to any party hereto or thereto shall beby hand delivery, overnight delivery via nationally recognized overnight delivery service, telegram, or registered or certified UnitedStates mail with return receipt and unless otherwise provided herein shall be deemed to have been given or made when delivered,telegraphed or, if sent via United States mail, when receipt signed by the receiver, postage prepaid, addressed to the party at its addressspecified below (or at any other address that the party may hereafter specify to the other parties in writing):37Lender:Wells Fargo Bank, N.A. Commercial Lending Services MAC – D1644-018 1451 Thomas Langston Road Winterville, NC 28590 Attn: Loan Administration Manager (LDCMR) with copies to:Wells Fargo Dealer Services 100 North Main Street (MAC D4001-08A) Winston-Salem, NC 27101 Attn.: National Accounts Director -and- Sherman Wells Sylvester & Stamelman LLP 210 Park Avenue, 2nd Floor Florham Park, NJ 07932 Attn.: Jane L. Brody, Esq. Borrower:c/o Asbury Automotive Group, Inc. Sugarloaf Business Park 2905 Premiere Parkway NW, Suite 300 Duluth, GA 30097 Attn: Senior Vice President – General Counsel with copies to:Asbury Automotive Group, Inc. Sugarloaf Business Park 2905 Premiere Parkway NW, Suite 300 Duluth, GA 30097 Attn: Vice President - Corporate Development & Real Estate -and- JONES DAY® - One Firm Worldwide℠ 1420 Peachtree Street, N.E. Suite 800 Atlanta, GA 30309 Attn: Todd Roach, Esq. 38 11.5 Governing Law. This Agreement and the Loan Documents shall be deemed contracts made under the laws ofthe State of the Jurisdiction and shall be governed by and construed in accordance with the laws of said state (excluding its conflict oflaws provisions if such provisions would require application of the laws of another jurisdiction) except insofar as the laws of anotherjurisdiction may, by reason of mandatory provisions of law, govern the perfection, priority and enforcement of security interests in theCollateral.11.6 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of each Borrower andLender, and their respective successors and assigns.11.7 Counterparts; Telecopied Signatures. This Agreement may be executed in any number of counterparts and bydifferent parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original and all ofwhich when taken together shall constitute but one and the same instrument. Any signature delivered by a party by facsimiletransmission shall be deemed to be an original signature hereto.11.8 No Usury. Regardless of any other provision of this Agreement, the Notes or in any other Loan Document, if forany reason the effective interest should exceed the maximum lawful interest, the effective interest shall be deemed reduced to, and shallbe, such maximum lawful interest, and (a) the amount which would be excessive interest shall be deemed applied to the reduction ofthe principal balance of each Note and not to the payment of interest, and (b) if the Loan evidenced by such Note has been or isthereby paid in full, the excess shall be returned to the party paying same, such application to the principal balance of the Note or therefunding of excess to be a complete settlement and acquittance thereof.3911.9 Powers. All powers of attorney granted to Lender are coupled with an interest and are irrevocable.11.10 Approvals; Amendments. If this Agreement calls for the approval or consent of Lender, such approval orconsent may be given or withheld in the sole and absolute discretion of Lender unless otherwise specified herein. This Agreement andthe other Loan Documents may not be modified, altered or amended, except by an agreement in writing signed by Borrower andLender and may not be modified in any manner adverse to a provider under any secured or guarantied Swap Agreement without thatprovider’s prior written consent.11.11 Assignments and Participation. Borrower may not assign any of its rights hereunder without the prior writtenconsent of Lender, and any such assignment made without such consent will be void. Lender may from time to time: (i) with theconsent of Borrower, which consent shall not be unreasonably withheld conditioned or delayed, sell, transfer, pledge, assign andconvey the Note, the Loan and the Loan Documents (or any interest therein), and delegate any and all of its obligations with respectthereto; provided, however, that Borrower’s consent shall not be required hereunder after the occurrence and during the continuance ofan Event of Default, or for a sale, transfer, pledge, assignment or conveyance to (a) an Approved Fund (as defined in the RevolvingCredit Agreement), (b) an Affiliate or subsidiary of Lender, or (c) another bank or financial institution or to a trust, fund or other entitywhich is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financialassets provided that any such sale, transfer, pledge, assignment or conveyance under this clause (c) is not a single transaction by theLender but is part of a larger transaction or series of transactions by the Lender, and (ii) without consent of the Borrower grantparticipations in the Loan to another financial institution or other Person on terms and conditions reasonably acceptable to Lender andsplit the Loan into multiple parts, or the Note into multiple component notes or tranches. If Borrower’s consent is required ashereinabove provided, the Borrower shall be deemed to have given its consent five (5) Business Days after the Lender has requestedsuch consent, unless such consent is expressly refused by Borrower in writing. In connection with any such sale, transfer, assignment,conveyance or participation, Lender shall, acting for this purpose as an agent of Borrower, maintain at its offices a register for therecordation of the names and addresses of Lender’s participants or assignees, and the amount and terms of Lender’s sales, transfers,assignments, conveyances and participations including specifying any such participant’s or assignee’s entitlement to payments ofprincipal and interest, and any payments made, with respect to each such sale, transfer, assignment, conveyance or participation.Lender shall provide prior notice to Borrower of such assignment and Borrower shall thereafter furnish to such assignee anyinformation furnished by Borrower to Lender pursuant to the terms of the Loan Documents. Nothing in this Agreement or any otherLoan Document shall prohibit Lender from pledging or assigning this Agreement and Lender’s rights under any of the other LoanDocuments, including Collateral therefor, to any Federal Reserve Lender in accordance with applicable law.11.12 Dealings with Multiple Borrowers. If more than one Person is named as Borrower hereunder, Lender shallhave the right to deal with any individual of any Borrower with regard to all matters concerning the rights and obligations of Lenderhereunder and pursuant to applicable law with regard to the transactions contemplated under the Loan Documents. All actions orinactions of the officers, managers, members and/or agents of any Borrower with regard to the transactions contemplated under theLoan Documents shall be deemed with full authority and binding upon all Borrowers hereunder. Each Borrower hereby appoints itsSenior Officers as its true and lawful attorney-in-fact, with full right40and power, for purposes of exercising all rights of such Person hereunder and under applicable law with regard to the transactionscontemplated under the Loan Documents. The foregoing is a material inducement to the agreement of Lender to enter into the termshereof and to consummate the transactions contemplated hereby.11.13 Waiver of Certain Defenses. To the fullest extent permitted by applicable law, upon the occurrence of anyEvent of Default, neither Borrower nor anyone claiming by or under Borrower will claim or seek to take advantage of N.C.G.S.§ 26-7, et seq. or any other law requiring Lender to attempt to realize upon any Collateral or collateral of any surety or guarantor, or anyappraisement, evaluation, stay, extension, homestead, redemption or exemption laws now or hereafter in force in order to prevent orhinder the enforcement of this Agreement. Borrower, for itself and all who may at any time claim through or under Borrower, herebyexpressly waives to the fullest extent permitted by law the benefit of all such laws. All rights of Lender and all obligations of Borrowerhereunder shall be absolute and unconditional irrespective of (a) any change in the time, manner or place of payment of, or any otherterm of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any provision of theLoan Documents, (b) any exchange, release or non-perfection of any Collateral given as security for the Obligations, or any release oramendment or waiver of or consent to departure from any guaranty for all or any of the Obligations, or (c) any other circumstancewhich might otherwise constitute a defense available to, or a discharge of, Borrower or any third party, other than payment andperformance in full of the Obligations.11.14 Integration; Final Agreement. This Agreement and the other Loan Documents represent the final agreementbetween the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.There are no unwritten oral agreements between the parties.11.15 LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIESHERETO, INCLUDING LENDER BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION ORARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM (A “DISPUTE”)THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTSOR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONSEVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BELIABLE TO THE OTHER FOR, (A) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (B) PUNITIVE OREXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TOPUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE INCONNECTION WITH ANY DISPUTE, WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION, MEDIATION,JUDICIALLY OR OTHERWISE.11.16 BINDING ARBITRATION; PRESERVATION OF REMEDIES.11.16.1 Arbitration. The parties hereto agree, upon demand by any party, whether made before the institution ofa judicial proceeding or not more than 60 days after service of a complaint, third party complaint, cross-claim, counterclaim or anyanswer thereto or any amendment to any of the above, to submit to binding arbitration all claims, disputes and controversies between oramong them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract41or otherwise, in any way arising out of or relating to (a) any credit subject hereto, or any of the Loan Documents, and their negotiation,execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement,default or termination; or (b) requests for additional credit. In the event of a court ordered arbitration, the party requesting arbitrationshall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatementorder or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’sright to demand arbitration being automatically terminated.11.16.2 Governing Rules. Any arbitration proceeding will (a) proceed in a location in the Jurisdiction selectedby the American Arbitration Association ("AAA"); (b) be governed by the Federal Arbitration Act (Title 9 of the United States Code),notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (c) be conducted by theAAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA's commercial disputeresolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costsin which case the arbitration shall be conducted in accordance with the AAA's optional procedures for large, complex commercialdisputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to bereferred to herein, as applicable, as the "Rules"). If there is any inconsistency between the terms hereof and the Rules, the terms andprocedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other partyshall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shallbe deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicablestate law.11.16.3 No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does notlimit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating tocollateral or proceeds of collateral such as setoff or repossession; or (c) obtain provisional or ancillary remedies such as replevin,injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. Thisexclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder,including those arising from the exercise of the actions detailed in sections (a), (b) and (c) of this paragraph.11.16.4 Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is$5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award ofgreater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority voteof a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. Thearbitrator will be a neutral attorney licensed in the Jurisdiction with a minimum of ten years’ experience in the substantive lawapplicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable andwill give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (bydocuments only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss forfailure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantivelaw of the Jurisdiction and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and42such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costsand fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuantto the Federal Rules of Civil Procedure, the North Carolina Rules of Civil Procedure or other applicable law. Judgment upon theaward rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action forjudicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including theplaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.11.16.5 Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. Alldiscovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to finaldetermination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that noalternative means for obtaining information is available.11.16.6 Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputesby or against others in any arbitration, except parties who have executed any of the Loan Documents, or to include in any arbitrationany dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a privateattorney general capacity.11.16.7 Payment of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of thearbitration proceeding.11.16.8 Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall takeall action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator orother party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by aparty required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by orbetween the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the partiesor the subject matter of the dispute shall control. This Agreement may be amended or modified only in writing signed by each partyhereto. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law such provision shall beineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remainingprovisions of this Agreement. This arbitration provision shall survive termination, amendment or expiration of any of the documents orany relationship between the parties.11.16.9 Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right topursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputesin which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit ofthe Small Claims Court.11.16.10 Waiver of Jury Trial. The parties hereto hereby acknowledge that by agreeing to binding arbitrationthey have irrevocably waived their respective rights to a jury trial with43respect to any action, claim or other proceeding arising out of any dispute in connection with any of the Loan Documents, any rights orobligations hereunder or thereunder, or the performance of such rights and obligations. This provision is a material inducement for theparties entering into the agreement evidenced by this Agreement.[Signatures on following page]44IN WITNESS WHEREOF, the parties hereto have caused this Master Loan Agreement to be duly executed under seal as ofthe day and year first above written.Properties 1, 2, 3, 4, 10, 11 and 12ATLANTA REAL ESTATE HOLDINGS L.L.C., a Delawarelimited liability companyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerProperty 5ASBURY JAX FORD, LLC, a Delaware limited liabilitycompanyBy: /s/ Matthew Pettoni Name: Matthew Pettoni Title: TreasurerProperty 6COGGIN CARS L.L.C., a Delaware limited liability companyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerProperty 13WTY MOTORS, L.P., a Delaware limited partnershipBy: Asbury Tampa Management L.L.C., its general partnerBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerProperty 14Q AUTOMOTIVE BRANDON FL, LLC, a Delaware limitedliability companyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerProperty 7ASBURY ST. LOUIS M L.L.C., a Delaware limited liabilitycompanyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: Treasurer 45Property 9ASBURY ATLANTA CHEV, LLC, a Delaware limitedliability companyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerProperty 8ASBURY GEORGIA TOY, LLC, a Delaware limited liabilitycompanyBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: TreasurerAccepted in Winston-Salem, North Carolina:WELLS FARGO BANK, NATIONAL ASSOCIATIONBy: /s/ Chad McNeill Name: Chad McNeillTitle: Senior Vice President46SCHEDULE OF EXHIBITSExhibit Section Reference TitleA-1 2.1.2 Term NoteA-2 2.1.3 PropertyA-3 2.4.5 Appraised Values for Release of PropertyArticle 4 Exhibits:4.4 4.4 (“Litigation”) Litigation4.7 4.7 (“Title”) Title Exceptions4.9 4.9 (“Jurisdiction of Organization”) Offices of Borrower4.13 4.13 (“Environmental”) Environmental Disclosures4.20 4.20 (“Condemnation”) Condemnation Events 4.21 4.21 (“Use and Operation of Tenants, Uses and FranchisesProperty”) 4.22 4.22 (“Certificate of Occupancy;Licenses”) Certificates of Occupancy; Licenses4.24 4.24 (“Physical Condition”) Physical Condition Disclosures4.26 4.26 (“Possession of Property”) LeasesArticle 6 Exhibits:6.1 6.1 (“Debt”) Scheduled Permitted Debt6.13 6.13 (“Leases”) Form of Guaranty AgreementEXHIBIT A-1TERM NOTESee attached.EXHIBIT A-2PROPERTYName of BorrowerPropertyProperty No.DEALERSHIP PROPERTIESAtlanta Real Estate Holdings L.L.C.7909 Mall Parkway, Lithonia, DeKalb County, Georgia1Atlanta Real Estate Holdings L.L.C.7969 Mall Parkway, Lithonia, DeKalb County, Georgia2Atlanta Real Estate Holdings L.L.C.11130 Alpharetta Highway, Roswell, Fulton County, Georgia3Atlanta Real Estate Holdings L.L.C.4197, 4193 Jonesboro Road, Union City, Fulton County, Georgia4Asbury Jax Ford, LLC9650 Atlantic Boulevard, Jacksonville, Duval County, Florida5Coggin Cars L.L.C.11340 Phillips Highway, Jacksonville, Duval County, Florida6Asbury St. Louis M L.L.C.951 Technology Drive, O’Fallon, St. Charles County, Missouri7Asbury Georgia TOY, LLC4115 Jonesboro Road, Union City, Fulton County, Georgia8Asbury Atlanta CHEV, LLC4200 Jonesboro Road, Union City, Fulton County, Georgia9NON-DEALERSHIP PROPERTIESAtlanta Real Estate Holdings L.L.C.7947 Mall Parkway, Lithonia, DeKalb County, Georgia10Atlanta Real Estate Holdings L.L.C.7919 Mall Parkway, Lithonia, DeKalb County, Georgia11Atlanta Real Estate Holdings L.L.C.545 Sun Valley Drive, Roswell, Fulton County, Georgia12WTY Motors, L.P.305 Crater Lane (f/k/a 413 Crater Lane), Tampa, Hillsborough County,Florida13Q Automotive Brandon FL, LLC1207 East Brandon Boulevard, Brandon, Hillsborough County, Florida14EXHIBIT A-3APPRAISED VALUES FOR RELEASE OF PROPERTYPropertyProperty No. andAffiliationAppraised ValueLoan AllocationAmountDEALERSHIP PROPERTIES 7909 Mall Parkway, Lithonia, DeKalb County, Georgia1(affiliated withProperty 10)$3,690,000.00$2,952,000.007969 Mall Parkway, Lithonia, DeKalb County, Georgia2$12,240,000.00$9,792,000.0011130 Alpharetta Highway, Roswell, Fulton County,Georgia3(affiliated withProperty 12)$18,340,000.00$14,672,000.004197, 4193 Jonesboro Road, Union City, Fulton County,Georgia4$7,250,000.00$5,800,000.009650 Atlantic Boulevard, Jacksonville, Duval County,Florida5$13,850,000.00$11,080,000.0011340 Phillips Highway, Jacksonville, Duval County,Florida6$18,000,000.00$14,400,000.00951 Technology Drive, O’Fallon, St. Charles County,Missouri7$9,600,000.00$7,680,000.004115 Jonesboro Road, Union City, Fulton County, Georgia89.100,000.00$7,280,000.004200 Jonesboro Road, Union City, Fulton County, Georgia9$7,850,000.00$6,280,000.00NON-DEALERSHIP PROPERTIES 7947 Mall Parkway, Lithonia, DeKalb County, Georgia10(affiliated withProperty 1)$4,690,000.00$3,752,000.007919 Mall Parkway, Lithonia, DeKalb County, Georgia11$2,420,000.00$1,936,000.00545 Sun Valley Drive, Roswell, Fulton County, Georgia12(affiliated withProperty 3)$910,000.00$728,000.00305 Crater Lane (f/k/a 413 Crater Lane), Tampa,Hillsborough County, Florida13$3,550,000.00$2,840,000.001207 East Brandon Boulevard, Brandon, HillsboroughCounty, Florida14$8,700,000.00$5,220,000.00EXHIBIT 4.4LITIGATIONNONE.EXHIBIT 4.7Listed exceptions to coverage referenced in the following Title Insurance Policy Proformas as continued and completed to date:BorrowerAddress of PropertyTitle Company Name Loan ProformaAtlanta Real Estate Holdings L.L.C.7909 Mall Parkway, Lithonia, DeKalbCounty, GeorgiaOld Republic National Title InsuranceCompany302157NCT-7Atlanta Real Estate Holdings L.L.C.7969 Mall Parkway, Lithonia, DeKalbCounty, GeorgiaOld Republic National Title InsuranceCompany302157NCT-6Atlanta Real Estate Holdings L.L.C.11130 Alpharetta Highway, Roswell,Fulton County, GeorgiaOld Republic National Title InsuranceCompany302157NCT-9Atlanta Real Estate Holdings L.L.C.4197, 4193 Jonesboro Road, UnionCity, Fulton County, GeorgiaOld Republic National Title InsuranceCompany302157NCT-10Asbury Jax Ford, LLC9650 Atlantic Boulevard, Jacksonville,Duval County, FloridaOld Republic National Title InsuranceCompany18042573Coggin Cars L.L.C.11340 Phillips Highway, Jacksonville,Duval County, FloridaOld Republic National Title InsuranceCompany18042566Asbury St. Louis M L.L.C.951 Technology Drive, O’Fallon, St.Charles County, MissouriOld Republic National Title InsuranceCompany302157NCT-11Asbury Georgia TOY, LLC4115 Jonesboro Road, Union City,Fulton County, GeorgiaOld Republic National Title InsuranceCompany302157NCT-13Asbury Atlanta CHEV, LLC4200 Jonesboro Road, Union City,Fulton County, GeorgiaOld Republic National Title InsuranceCompany302157NCT-12EXHIBIT 4.7(continued)BorrowerAddress of PropertyTitle Company Name Loan ProformaAtlanta Real Estate Holdings L.L.C.7947 Mall Parkway, Lithonia, DeKalbCounty, GeorgiaOld Republic National Title InsuranceCompany302157NCT-7Atlanta Real Estate Holdings L.L.C.7919 Mall Parkway, Lithonia, DeKalbCounty, GeorgiaOld Republic National Title InsuranceCompany302157NCT-8Atlanta Real Estate Holdings L.L.C.545 Sun Valley Drive, Roswell, FultonCounty, GeorgiaOld Republic National Title InsuranceCompany302157NCT-9WTY Motors, L.P.305 Crater Lane (f/k/a 413 Crater Lane),Tampa, Hillsborough County, FloridaOld Republic National Title InsuranceCompany18042579Q Automotive Brandon FL, LLC1207 East Brandon Boulevard, Brandon,Hillsborough County, FloridaOld Republic National Title InsuranceCompany18042589EXHIBIT 4.9JURISDICTION OF ORGANIZATIONOFFICES OF BORROWERSee attached.EXHIBIT 4.13ENVIRONMENTALENVIRONMENTAL DISCLOSURESEach of the items set forth and described in those certain environmental reports delivered in connection with this Agreement.PropertyProperty No. andAffiliationEnvironmental ReportsDEALERSHIP PROPERTIES7909 Mall Parkway, Lithonia, DeKalb County, Georgia1(affiliated withProperty 10)Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20187969 Mall Parkway, Lithonia, DeKalb County, Georgia2Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 201811130 Alpharetta Highway, Roswell, Fulton County, Georgia3(affiliated withProperty 12)Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20184197, 4193 Jonesboro Road, Union City, Fulton County, Georgia4Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20189650 Atlantic Boulevard, Jacksonville, Duval County, Florida5Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 201811340 Phillips Highway, Jacksonville, Duval County, Florida6Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 2018951 Technology Drive, O’Fallon, St. Charles County, Missouri7Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20184115 Jonesboro Road, Union City, Fulton County, Georgia8Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated March 12, 2018 and March28, 20184200 Jonesboro Road, Union City, Fulton County, Georgia9Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated March 12, 2018 and March28, 2018NON-DEALERSHIP PROPERTIES7947 Mall Parkway, Lithonia, DeKalb County, Georgia10 (affiliated withProperty 1)Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20187919 Mall Parkway, Lithonia, DeKalb County, Georgia11No Report Required545 Sun Valley Drive, Roswell, Fulton County, Georgia12(affiliated withProperty 3)Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 2018305 Crater Lane (f/k/a 413 Crater Lane), Tampa, Hillsborough County,Florida13Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 20181207 East Brandon Boulevard, Brandon, Hillsborough County, Florida14Phase I Environmental Site Assessmentby Trammco Environmental Solutions,LLC dated April 20, 2018EXHIBIT 4.14ERISANONE.EXHIBIT 4.20CONDEMNATION EVENTSNONE.EXHIBIT 4.21TENANTS, USES AND FRANCHISESSee attached.EXHIBIT 4.22CERTIFICATE OF OCCUPANCY; LICENSESNONE.EXHIBIT 4.24PHYSICAL CONDITIONNONE.EXHIBIT 4.26LEASESLandlordTenantAddress of PropertyLease AgreementAtlanta Real Estate Holdings L.L.C.Asbury Atlanta Toy 2 L.L.C.7969 Mall ParkwayLithonia, GeorgiaLease Agreement datedJuly 22, 2013Atlanta Real Estate Holdings L.L.C.Asbury Atlanta Hund L.L.C.7909 & 7947 Mall ParkwayLithonia, GeorgiaLease Agreement datedJune 1, 2015Atlanta Real Estate Holdings L.L.C.Asbury Atlanta Toy L.L.C.11130 Alpharetta Highway545 Sun Valley DriveRoswell, GeorgiaLease Agreement datedMarch 3, 2008Atlanta Real Estate Holdings L.L.C.Asbury Atlanta Hon L.L.C.4197 & 4193 Jonesboro RoadUnion City, GeorgiaLease Agreement datedMay 31, 2016EXHIBIT 6.1SCHEDULED PERMITTED DEBTNONE.EXHIBIT 6.13GUARANTY AGREEMENTSee attached.Exhibit 10.35UNCONDITIONAL GUARANTYTHIS UNCONDITIONAL GUARANTY (the “Guaranty”), dated as of November _16_, 2018 between ASBURYAUTOMOTIVE GROUP, INC., a Delaware corporation (“Guarantor”), and WELLS FARGO BANK, NATIONALASSOCIATION, a national banking association (together with its successors and assigns, “Lender”).To induce Lender to make, extend or renew loans, advances, credit, or other financial accommodations to or for the benefit ofeach of ATLANTA REAL ESTATE HOLDINGS L.L.C., a Delaware limited liability company, ASBURY JAX FORD, LLC, aDelaware limited liability company, COGGIN CARS L.L.C., a Delaware limited liability company, WTY MOTORS, L.P., aDelaware limited partnership, Q AUTOMOTIVE BRANDON FL, LLC, a Delaware limited liability company, ASBURY ST.LOUIS M L.L.C., a Delaware limited liability company, ASBURY GEORGIA TOY, LLC, a Delaware limited liability company,and ASBURY ATLANTA CHEV, LLC, a Delaware limited liability company (each referred to herein individually and collectivelyas “Borrower”), all as more particularly described in the Loan Agreement (as hereinafter defined), which are and will be to the directinterest and advantage of Guarantor, and in consideration of loans, advances, credit, or other financial accommodations made,extended or renewed to or for the benefit of Borrower, which are and will be to the direct interest and advantage of Guarantor,Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Lender and its successors, assigns the timely payment andperformance of all Obligations, however and whenever incurred or evidenced, whether primary, secondary, direct, indirect, absolute,contingent, due or to become due, now existing or hereafter contracted or acquired, and all modifications, extensions and renewalsthereof (collectively, the “Guaranteed Obligations”).Guarantor further covenants and agrees:1. Loan Agreement. This Guaranty is subject to the provisions of that certain Master Loan Agreement between Lender andBorrower dated as of November _16_, 2018, as modified from time to time (the “Loan Agreement”). Capitalized terms used hereinand not defined herein shall have the meanings assigned thereto in the Loan Agreement. This Guaranty is entitled to the benefits of,and evidences Obligations incurred under, the Loan Agreement, to which reference is made for a description of the security for theGuaranteed Obligations and for a statement of the additional terms and conditions on which Borrower is permitted and required tomake prepayments and repayments of principal of the Obligations and on which such Obligations may be declared to be immediatelydue and payable.2. Guarantor’s Liability. This Guaranty is a continuing and unconditional guaranty of payment and performance and not ofcollection. The parties to this Guaranty are jointly and severally obligated together with all other parties obligated for the GuaranteedObligations. This Guaranty does not impose any obligation on Lender to extend or continue to extend credit or otherwise deal withBorrower at any subsequent time. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time anypayment of the Guaranteed Obligations is rescinded, avoided or for any other reason must be returned by Lender, and the returnedpayment1shall remain payable as part of the Guaranteed Obligations, all as though such payment had not been made. Except to the extent theprovisions of this Guaranty give Lender additional rights, this Guaranty shall not be deemed to supersede or replace any otherguaranties given to Lender by Guarantor; and the obligations guaranteed hereby shall be in addition to any other obligationsguaranteed by Guarantor pursuant to any other agreement of guaranty given to Lender and other guaranties of the GuaranteedObligations.3. Representations and Warranties. In order to induce Lender to make the Loans or otherwise extend credit to theBorrower as provided in the Loan Agreement, Guarantor makes the following representations and warranties, all of which shallsurvive the execution and delivery of the Loan Documents. Unless otherwise specified, such representations and warranties shall bedeemed made as of the date hereof and as of the date of each extension of credit under the Loan Documents:3.1 Valid Existence and Power. Guarantor is duly organized, validly existing and in good standing under the laws ofDelaware and is duly qualified or licensed to transact business in all places where the failure to be so qualified would have a MaterialAdverse Effect on it. Guarantor has the power to make and perform this Guaranty and the other Loan Documents executed by it, asapplicable, and all such instruments will constitute the legal, valid and binding obligations of Guarantor, enforceable in accordancewith their respective terms, subject only to bankruptcy and similar laws affecting creditors’ rights generally.3.2 Authority. The execution, delivery and performance thereof by Guarantor of the Loan Documents to which it is aparty (a) have been duly authorized by all necessary actions of Guarantor, and do not and will not violate any provision of law orregulation, or any writ, order or decree of any court or governmental or regulatory authority or agency or any provision of thegoverning instruments of Guarantor, and (b) do not and will not, with the passage of time or the giving of notice, result in a breach of,or constitute a default or require any consent under, or result in the creation of any Lien upon any property or assets of Guarantorpursuant to, any law, regulation, instrument or agreement to which Guarantor is a party or by which Guarantor or its properties may besubject, bound or affected, except, (i) solely in the case of a breach or default (and not in the case of any consent or Lien) under clause(b), to the extent such breach or default would not reasonably be expected to have a Material Adverse Effect, and (ii) any such consentthat has been obtained.3.3 Financial Condition. Guarantor is not aware of any material adverse fact (other than facts which are generallyavailable to the public and not particular to Guarantor, such as general economic trends) concerning the conditions or future prospectsof Guarantor which has not been fully disclosed to Lender, including any material adverse change in the operations or financialcondition of Guarantor since the date of the most recent financial statements delivered to Lender. Guarantor is Solvent, and afterconsummation of the transactions set forth in this Guaranty and the other Loan Documents, Guarantor will be Solvent.3.4 Litigation. Except as set forth on Exhibit 3.4 hereof, there are no suits or proceedings pending, or to theKnowledge of Guarantor, overtly threatened, before any court or by2or before any governmental or regulatory authority, commission, bureau or agency or public regulatory body against or affectingGuarantor, or its assets, which would reasonably be expected to have a Material Adverse Effect.3.5 Agreements, Etc. Guarantor is not a party to any agreement or instrument or subject to any court order,governmental decree or any charter or other corporate restriction, which would have a Material Adverse Effect. Guarantor is incompliance in all material respects with the requirements of all applicable laws and all orders, writs, injunctions and decrees applicableto it or to its properties, except in such instances in which (a) such requirement of law or order, writ, injunction or decree is beingcontested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or inthe aggregate, could not reasonably be expected to have a Material Adverse Effect.3.6 Authorizations. All authorizations, consents, approvals and licenses required under applicable law or regulationfor the ownership or operation of the property owned or operated by Guarantor, or for the conduct of any business in which it isengaged have been duly issued and are in full force and effect, except in each case to the extent that failure of the foregoing to be dulyissued and in full force and effect would not reasonably be expected to have a Material Adverse Effect. Guarantor is not in default, norhas any event occurred which with the passage of time or the giving of notice, or both, would constitute a default, under any of theterms or provisions of any part thereof, or under any order, decree, ruling, regulation, closing agreement or other decision or instrumentof any governmental commission, bureau or other administrative agency or public regulatory body having jurisdiction over Guarantor,which default would have a Material Adverse Effect on Guarantor. Guarantor has all requisite governmental licenses, authorizations,consents and approvals to execute, deliver and perform its obligations under the Loan Documents to which it is a party.3.7 Taxes. Except to the extent Properly Contested, Guarantor has filed all federal and state income and other taxreturns which are required to be filed, and has paid all taxes as shown on said returns and all taxes, including withholding, FICA andad valorem taxes, shown on all assessments received by it to the extent that such taxes have become due. Except to the extent ProperlyContested, Guarantor is not subject to any federal, state or local tax Liens nor has Guarantor received any notice of deficiency or otherofficial notice to pay any taxes. Except to the extent Properly Contested, Guarantor has paid all sales and excise taxes payable by it.3.8 Labor Law Matters. No goods or services have been or will be produced by Guarantor in violation of anyapplicable labor laws or regulations or any collective bargaining agreement or other labor agreements or in violation of any minimumwage, wage-and-hour or other similar laws or regulations.3.9 Judgment Liens. Neither Guarantor nor any of its assets are subject to any unpaid judgments (whether or notstayed) or any judgment liens in any jurisdiction as of the date hereof or, as to any time after the date hereof, except to the extent that(a) such unpaid judgments or judgment liens would not reasonably be expected to result in a Material Adverse Effect or (b)3such unpaid judgments or judgments liens are not senior to or pari passu with the Lien of Lender on any of the Collateral.3.10 ERISA. Each Plan maintained for employees of Guarantor or any Subsidiary and covered by Title IV of ERISAis in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended, andother federal or state laws. No Termination Event with respect to any Plan has occurred and is continuing that would reasonably beexpected to result in a Material Adverse Effect. Neither Guarantor nor any Subsidiary has any unfunded liability with respect to anysuch Plan that would reasonably be expected to have a Material Adverse Effect.3.11 Investment Company Act. Guarantor is not an “investment company” as defined in the Investment CompanyAct of 1940, as amended.3.12 Sanctioned Persons; Sanctioned Countries. Guarantor (a) is not a Sanctioned Person and (b) does not dobusiness in a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administeredby OFAC.3.13 Compliance with Covenants; No Default. Guarantor is, and upon funding of the Loans on the Closing Date willbe, in compliance with all of the covenants hereof. No Event of Default has occurred, and the execution, delivery and performance ofthe Loan Documents to which it is a party will not cause an Event of Default.3.14 Full Disclosure. There is no material fact of which Guarantor has Knowledge that Guarantor has not disclosed toLender which could have a Material Adverse Effect. No Loan Document, nor any agreement, document, certificate or statementdelivered by Guarantor to Lender, contains any untrue statement of a material fact or omits to state any material fact which Guarantorhas Knowledge of necessary to keep the other statements from being misleading.3.15 Brokerage/Developer Fees. There are no brokerage commissions or developers fees or agreements pursuant towhich a third party is entitled to payment from Guarantor relating to the acquisition of the Collateral. 4. Affirmative Covenants of Guarantor. Guarantor covenants and agrees that from the date hereof and until payment in fullof the Obligations and the formal termination of the Loan Agreement:4.1 Access to Books and Records. Guarantor will allow Lender, or its agents, during normal business hours, access tothe books, records and such other documents of Guarantor as Lender shall reasonably require, and allow Lender, at Guarantor’sexpense, to inspect, audit and examine the same and to make extracts therefrom and to make copies thereof. At any time other thanduring a Default Period, Lender shall not conduct such inspection and/or audit more than once in any twelve (12) month period.44.2 Business Continuity. Guarantor will conduct its business in substantially the same manner as such business is nowconducted, and businesses ancillary or reasonably related thereto.4.3 Certificate of Full Compliance. Guarantor will deliver to Lender, with the financial statements required herein, acertification by an authorized officer of Guarantor that Guarantor, each Borrower and each of the other Guarantors is in fullcompliance with any financial covenants imposed on Guarantor under the Loan Documents and such certification shall incorporate byreference Guarantor’s filings with the Securities and Exchange Commission, which in the case of the Form 10-K of Guarantor hasbeen reviewed and approved by Guarantor’s independent certified public accountant.4.4 Compliance with Swap Agreements. Guarantor will comply with all terms and conditions contained in any SwapAgreements, if applicable, as in effect from time to time, except to the extent that noncompliance therewith would not reasonably beexpected to result in a Material Adverse Effect. Nothing in this Section 4.4 shall affect or negate any applicable notice, grace and/orcure periods provided for in this Guaranty, any other Loan Documents or any Swap Agreements, if applicable, as in effect from time totime.4.5 Estoppel Certificate. Guarantor will furnish, within fifteen (15) Business Days after request by Lender, a writtenstatement duly acknowledged of the amount due under the Loan and whether offsets or defenses exist against the GuaranteedObligations. 4.6 Insurance. Guarantor will maintain adequate insurance coverage with respect to its properties and business againstloss or damage of the kinds and in the amounts customarily insured against by companies of established reputation engaged in the sameor similar businesses including, without limitation, commercial general liability insurance, workers compensation insurance, andbusiness interruption insurance; all acquired in such amounts and from such companies as Lender may reasonably require.4.7 Maintain Properties. Guarantor will maintain, preserve and keep its property in good repair, working order andcondition, ordinary wear and tear excepted, making all replacements, additions and improvements thereto necessary for the properconduct of its business, unless prohibited by the Loan Documents.4.8 Non-Default Certificate From Guarantor. Guarantor will deliver to Lender, with the Financial Statements requiredbelow, a certificate signed by Guarantor, in the form attached hereto as Exhibit 4.8, by an authorized financial officer of Guarantorwarranting that no “Event of Default” as specified in the Loan Documents nor any event which, upon the giving of notice or lapse oftime or both, would constitute such an Event of Default, has occurred except as specified in such certificate, and showing in detail thefigures and calculations in respect of the financial covenants of Guarantor set forth in Section 6 of this Guaranty.4.9 Notice of Default and Other Notices. Guarantor shall provide to Lender prompt notice of (a) the occurrence ofany Event of Default and what action (if any) the applicable5Borrower or Guarantor is taking to correct the same; (b) the entry of any final, non-appealable judgment or decree against it or its assetsif the aggregate amount of such judgment or decree exceeds $5,000,000 (after deducting the amount with respect to which Guarantoris insured and with respect to which the insurer has assumed responsibility in writing), (c) any rejection, return, offset, dispute, loss orother circumstance which could be expected to have a Material Adverse Effect on Guarantor or on any Collateral, (d) the cancellationor termination of, or any default under, any Material Agreement to which Guarantor is a party or by which any of its properties arebound, if such cancellation, termination or breach is reasonably likely to result in a Material Adverse Effect; and (e) any loss orthreatened loss of material licenses or permits. Guarantor also shall provide to Lender a written report within thirty (30) days after theend of each quarter describing (a) each action, suit, proceeding, governmental investigation or arbitration that affects Guarantor or itsassets, which action, suit, proceeding, governmental investigation or arbitration, or in the case of multiple actions, suits, proceedings,governmental investigations or arbitrations arising out of the same general allegations or circumstances, is likely, in Guarantor’sreasonable judgment, to result in the incurrence by Guarantor of liability in an amount aggregating $5,000,000 or more; (b) any noticefrom taxing authorities as to claimed deficiencies in an amount aggregating $5,000,000 or more or any tax lien or any notice relating toalleged ERISA violations involving an amount at issue of $5,000,000 or more, (d) any Reportable Event, as defined in ERISA. Suchquarterly report will include the status of any unresolved item covered by any previous reports and provide such other information asmay be reasonably requested by Lender.4.10 Financial Information. Guarantor shall maintain consolidated books and records in accordance with GAAP in allmaterial respects and shall furnish or cause to be furnished to Lender the following periodic financial information:4.10.1 Interim Consolidated Statements. Within forty-five (45) days after the end of each quarter of each fiscalyear of Guarantor, a copy of the Form 10-Q of Guarantor, for such quarter, prepared in accordance with the rules, regulations andguidelines of the Securities and Exchange Commission and including therein the consolidated financial statements of Guarantor,subject to normal year end audit adjustments and the absence of footnotes.4.10.2 Intentionally Omitted.4.10.3 Annual Statements. Within ninety (90) days after the end of each fiscal year of Guarantor, a copy ofthe Form 10-K of Guarantor, for such year, prepared in accordance with the rules, regulations and guidelines of the Securities andExchange Commission and including therein the consolidated financial statements of Guarantor.4.10.4 Other Financial Information. Such other information regarding the operation, business affairs, andfinancial condition of Guarantor which Lender may reasonably request.Documents required to be delivered pursuant to Section 4.10.1 or 4.10.3 (to the extent any such documents are included in materialsotherwise filed with the Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed tohave been delivered on the6date (i) on which the Guarantor posts such documents, or provides a link thereto on the Guarantor’s website on the Internet; or (ii) onwhich such documents are posted on the Guarantor’s behalf on an Internet or intranet website, if any, to which the Lender has access(whether a commercial, third-party website or whether sponsored by the Lender); provided that, the Guarantor shall notify the Lender(by telecopier or electronic mail) of the posting of any such documents and provide to the Lender by electronic mail electronic versions(i.e., soft copies) of such documents.4.11 Advance Compliance Certificate From Guarantor. Guarantor will deliver to Lender, contemporaneously witheach written request for borrowing by Borrower under the Loan Agreement, a certificate signed by Guarantor, in the form attachedhereto as Exhibit 4.11, by an authorized financial officer of Guarantor warranting that (a) no “Event of Default” as specified in theLoan Documents nor any event which, upon the giving of notice or lapse of time or both, would constitute such an Event of Default,has occurred, and (b) except as disclosed to Lender in writing, the representations and warranties contained in the Loan Documents aretrue and correct in all material respects (except to the extent relating to an earlier date, in which case such representation and warrantyshall be true and correct in all material respects as of such earlier date).4.12 Maintenance of Existence and Rights. Guarantor shall preserve and maintain its corporate existence, authoritiesto transact business, rights and franchises, trade names, patents, trademarks and permits necessary to the conduct of its business, exceptin connection with a transaction not otherwise prohibited hereunder, and except to the extent that the failure to preserve and maintainthe foregoing would not reasonably be expected to result in a Material Adverse Effect.4.13 Payment of Taxes. Guarantor shall pay before delinquent all federal and state income or property taxes, and allother material taxes, assessments and governmental charges or levies imposed upon Borrower or which may become a lien upon anyProperty (all of the foregoing collectively, “Impositions”), except and to the extent only that such Impositions are being ProperlyContested.4.14 Reports and Proxies. Upon the request of Lender, Guarantor will deliver to Lender, promptly, a copy of allfinancial statements, reports, notices, and all regular or periodic reports required to be filed by Guarantor with any governmentalagency or authority.4.15 Further Assurances. Guarantor shall take such further action and provide to Lender such further assurances asmay be reasonably requested to ensure compliance with the intent of this Guaranty and the other Loan Documents.4.16 Intentionally Omitted.5. Negative Covenants of Guarantor. Guarantor covenants and agrees that from the date hereof and until payment in full ofthe Guaranteed Obligations, Guarantor: 75.1 Debt.5.1.1 Wells Fargo Bank, National Association as Lender Under the Revolving Credit Facility. For so long as Lenderis a lender under the Revolving Credit Facility, shall not, and shall not permit any Borrower or any other Guarantor to, create or permitto exist any Debt, including any guaranties or other contingent obligations, that is secured by the Property (other than the GuaranteedObligations) or is otherwise not permitted under the Revolving Credit Facility.5.1.2 Wells Fargo Bank, National Association Not a Lender Under the Revolving Credit Facility. If Lender, at anytime, ceases to be a lender under the Revolving Credit Facility, shall not, and shall not permit any Borrower or any other Guarantor to,create or permit to exist any Debt, including guaranties or other contingent obligations, that is secured by the Property (other thanGuaranteed Obligations) or was otherwise not permitted under the Revolving Credit Facility as such Revolving Credit Facility existedon the date that Lender ceased to be a lender thereunder.5.2 Change of Fiscal Year or Accounting Methods. Shall not, and shall not permit any Borrower or any other Guarantor to,change (i) its fiscal year or (ii) its book accounting methods in any material respect except as required by GAAP or applicable law.Guarantor’s fiscal year end is December 31 as of the Closing Date. As used herein, the term “book accounting methods” meansaccounting methods which affect numbers reported to the Securities and Exchange Commission (as distinguished from tax accountingmethods used in reporting to the Internal Revenue Service).5.3 Change of Control.5.3.1 Wells Fargo Bank, National Association as Lender Under the Revolving Credit Facility. For so long as Lenderis a lender under the Revolving Credit Facility, shall not make, permit or suffer a Change of Control that is otherwise not permittedunder the Revolving Credit Facility.5.3.2 Wells Fargo Bank, National Association Not a Lender Under the Revolving Credit Facility. If Lender, at anytime, ceases to be a lender under the Revolving Credit Facility, shall not make, permit or suffer a Change of Control that is otherwisenot permitted under the Revolving Credit Facility as such Revolving Credit Facility existed on the date that Lender ceased to be alender thereunder.5.4 Intentionally Omitted.5.5 Government Intervention. Shall not permit the assertion or making of any seizure, vesting or intervention by or underauthority of any Governmental Authority, if the result of which is the management of Guarantor, any Borrower or any other Guarantoris displaced of its authority to conduct its business in any material respect or such business is materially curtailed or materially impaired.85.6 Change in Business. Shall not, and shall not permit any Borrower or any other Guarantor to, enter into any businesswhich is different from the business in which it is engaged on the Closing Date, or make any material change in the scope or nature ofits business objectives, purposes or operations, or undertake or participate in activities other than the continuance of the business inwhich it is engaged on the Closing Date. Notwithstanding anything set forth herein to the contrary, Guarantor, any Borrower and anyother Guarantor may engage, without the consent of Lender and in addition to the business in which it is engaged on the Closing Date,in the operation of a business ancillary to a motor vehicle dealership.6. Financial Covenants of Guarantor. Guarantor covenants and agrees that from the date hereof and until payment in fullof the Guaranteed Obligations:6.1 Wells Fargo Bank, National Association as Lender Under the Revolving Credit Facility. For so long as Lender isa lender under the Revolving Credit Facility, Guarantor shall comply with the financial covenants set forth in Section 7.11 of theRevolving Credit Agreement (or any analogous provision of the Revolving Credit Agreement after giving effect to any amendments,modifications, amendments and restatements or replacements thereof).6.2 Wells Fargo Bank, National Association Not a Lender Under the Revolving Credit Facility. If Lender, at anytime, ceases to be a lender under the Revolving Credit Facility, Guarantor shall comply with the financial covenants set forth in Section7.11 of the Revolving Credit Agreement (or any analogous provision of the Revolving Credit Agreement after giving effect to anyamendments, modifications, amendments and restatements or replacements thereof prior to the date on which Lender ceases to be alender thereunder) as such Revolving Credit Agreement existed on the date that Lender ceased to be a lender thereunder.7. Consent to Modifications. Guarantor consents and agrees that Lender (and, with respect to swap obligations, itsAffiliates) may from time to time, in its sole discretion, without affecting, impairing, lessening or releasing the obligations ofGuarantor hereunder: (a) extend or modify the time, manner, place or terms of payment or performance and/or otherwise change ormodify the credit terms of the Guaranteed Obligations; (b) increase, renew, or enter into a novation of the Guaranteed Obligations; (c)waive or consent to the departure from terms of the Guaranteed Obligations; (d) permit any change in the business or other dealingsand relations of Borrower or any other guarantor with Lender; (e) proceed against, exchange, release, realize upon, or otherwise dealwith in any manner any Collateral that is or may be held by Lender in connection with the Guaranteed Obligations or any liabilities orobligations of Guarantor; and (f) proceed against, settle, release, or compromise with Borrower, any insurance carrier, or any otherPerson liable as to any part of the Guaranteed Obligations, and/or subordinate the payment of any part of the Guaranteed Obligationsto the payment of any other obligations, which may at any time be due or owing to Lender; all in such manner and upon such terms asLender may deem appropriate, and without notice to or further consent from Guarantor. No invalidity, irregularity, discharge orunenforceability of, or action or omission by Lender relating to any part of the Guaranteed Obligations or any security therefor shallaffect or impair this Guaranty.98. Waivers and Acknowledgements. Guarantor waives and releases the following rights, demands, and defensesGuarantor may have with respect to Lender (and, with respect to swap obligations, its Affiliates) and collection of the GuaranteedObligations: (a) promptness and diligence in collection of any of the Guaranteed Obligations from Borrower or any other Person liablethereon, and in foreclosure of any security interest and sale of any property serving as Collateral for the Guaranteed Obligations; (b)any law or statute that requires that Lender (and, with respect to swap obligations, its Affiliates) make demand upon, assert claimsagainst, or collect from Borrower or other Persons, foreclose any security interest, sell Collateral, exhaust any remedies, or take anyother action against Borrower or other Persons prior to making demand upon, collecting from or taking action against Guarantor withrespect to the Guaranteed Obligations, including any such rights Guarantor might otherwise have had under Va. Code §§ 49-25 and49-26, et seq., N.C.G.S. §§ 26-7, et seq. , Tenn. Code Ann. § 47-12-101, O.C.G.A. § 10-7-24, Mississippi Code Ann. Section 87-5-1,California Civil Code Section §§ 2787 to 2855 inclusive, and any successor statute and any other applicable law; (c) any law or statutethat requires that Borrower or any other Person be joined in, notified of or made part of any action against Guarantor; (d) that Lenderor its Affiliates preserve, insure or perfect any security interest in Collateral or sell or dispose of Collateral in a particular manner or at aparticular time, provided that Lender’s obligation to dispose of Collateral in a commercially reasonable manner is not waived hereby;(e) notice of extensions, modifications, renewals, or novations of the Guaranteed Obligations, of any new transactions or otherrelationships between Lender, Borrower and/or any Guarantor, and of changes in the financial condition of, ownership of, or businessstructure of Borrower or any other Guarantor; (f) presentment, protest, notice of dishonor, notice of default, demand for payment,notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale, and all other notices of any kind whatsoeverto which Guarantor may be entitled; (g) the right to assert against Lender or its Affiliates any defense (legal or equitable), set-off,counterclaim, or claim that Guarantor may have at any time against Borrower or any other party liable to Lender or its Affiliates withrespect to the Guaranteed Obligations; (h) all defenses relating to invalidity, insufficiency, unenforceability, enforcement, release orimpairment of Lender or its Affiliates’ lien on any Collateral, of the Loan Documents, or of any other guaranties held by Lender; (i)any right to which Guarantor is or may become entitled to be subrogated to Lender or its Affiliates’ rights against Borrower or to seekcontribution, reimbursement, indemnification, payment or the like, or participation in any claim, right or remedy of Lender or itsAffiliates against Borrower or any security which Lender or its Affiliates now has or hereafter acquires, until such time as theGuaranteed Obligations have been fully satisfied beyond the expiration of any applicable preference period; (j) any claim or defensethat acceleration of maturity of the Guaranteed Obligations is stayed against Guarantor because of the stay of assertion or ofacceleration of claims against any other Person for any reason including the bankruptcy or insolvency of that Person; and (k) the rightto marshalling of Borrower’s assets or the benefit of any exemption claimed by Guarantor. Guarantor acknowledges and representsthat Guarantor has relied upon Guarantor’s own due diligence in making an independent appraisal of Borrower, Borrower’s businessaffairs and financial condition, and any Collateral; Guarantor will continue to be responsible for making an independent appraisal ofsuch matters; and Guarantor has not relied upon Lender or its Affiliates for information regarding Borrower or any Collateral.9. Interest and Application of Payments. Regardless of any other provision of this Guaranty or other Loan Documents, iffor any reason the effective interest on any of the Guaranteed10Obligations should exceed the maximum lawful interest, the effective interest shall be deemed reduced to and shall be such maximumlawful interest, and any sums of interest which have been collected in excess of such maximum lawful interest shall be applied as acredit against the unpaid principal balance of the Guaranteed Obligations. Monies received from any source by Lender or its Affiliatesfor application toward payment of the Guaranteed Obligations may be applied to such Guaranteed Obligations in any manner or orderdeemed appropriate by Lender and its affiliates.10. Default. An event of default (“Event of Default”) under this Guaranty shall exist if there shall be an Event of Defaultunder any of the Loan Documents. If an Event of Default occurs and is continuing, the Guaranteed Obligations shall be dueimmediately and payable upon demand by Lender, other than Guaranteed Obligations under any Swap Agreements with Lender or itsAffiliates, which shall be due in accordance with and governed by the provisions of said Swap Agreements, and, Lender may exerciseany rights and remedies as provided in this Guaranty and other Loan Documents, or as provided at law or equity.11. Attorneys’ Fees and Other Costs of Collection. Guarantor shall pay all of Lender’s reasonable out-of-pocket expensesactually incurred to enforce or collect any of the Guaranteed Obligations, including, without limitation, reasonable arbitration,paralegals’, attorneys’ and experts’ fees and expenses actually incurred, whether incurred without the commencement of a suit, in anysuit, arbitration, or administrative proceeding, or in any appellate, or bankruptcy proceeding.12. Termination of Guaranty. Guarantor may terminate this Guaranty only by written notice, delivered personally to orreceived by certified or registered United States Mail by Lender at the address and to the attention of the officer required for noticesprovided herein (if any). Such termination shall be effective only with respect to Guaranteed Obligations arising more than 15 daysafter the date such written notice is received by Lender. Such termination shall not be effective with respect to Guaranteed Obligations(including any subsequent extensions, modifications or compromises of the Guaranteed Obligations) then existing, or GuaranteedObligations arising subsequent to receipt by Lender of said notice if such Guaranteed Obligations are a result of Lender's obligation tomake advances pursuant to a commitment, or are based on Borrower’s obligations to make payments pursuant to any SwapAgreement, entered into prior to expiration of the 15 day notice period, or are a result of advances which are necessary for Lender toprotect its collateral or otherwise preserve its interests. Termination of this Guaranty by any single Guarantor will not affect the existingand continuing obligations of any other Guarantor hereunder.13. Miscellaneous.13.1 No Waiver, Remedies Cumulative. No failure on the part of Lender to exercise, and no delay in exercising, anyright hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of anyright hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided arecumulative and are in addition to any other remedies provided by law, any Loan Document or otherwise.1113.2 Notices. Any notice or other communication hereunder shall be by hand delivery, overnight delivery vianationally recognized overnight delivery service, telegram, or registered or certified United States mail with return receipt and unlessotherwise provided herein shall be deemed to have been given or made when delivered, telegraphed or, if sent via United States mail,when receipt signed by the receiver, postage prepaid, addressed to the party at its address specified below (or at any other address thatthe party may hereafter specify to the other parties in writing):Lender: Wells Fargo Bank, N.A.Commercial Lending ServicesMAC – D1644-0181451 Thomas Langston RoadWinterville, NC 28590Attn: Loan Administration Manager (LDCMR)with copies to: Wells Fargo Dealer Services100 North Main Street (MAC D4001-08A)Winston-Salem, NC 27101Attn.: National Accounts Director-and-Sherman Wells Sylvester & Stamelman LLP210 Park Avenue, 2nd FloorFlorham Park, NJ 07932Attn.: Jane L. Brody, Esq.Guarantor: Asbury Automotive Group, Inc.Sugarloaf Business Park2905 Premiere Parkway NW, Suite 300Duluth, GA 30097 Attn: Senior Vice President – General Counsel-and-Asbury Automotive Group, Inc.Sugarloaf Business Park2905 Premiere Parkway NW, Suite 300Duluth, GA 30097 Attn: Vice President - Corporate Development & Real Estatewith copies to: JONES DAY® - One Firm Worldwide℠1420 Peachtree Street, N.E.Suite 80012Atlanta, GA 30309 Attn: Todd Roach, Esq.13.3 Governing Law. This Guaranty shall be deemed a contract made under the laws of the State of the Jurisdictionand shall be governed by and construed in accordance with the laws of said state (excluding its conflict of laws provisions if suchprovisions would require application of the laws of another jurisdiction).13.4 Binding Effect. This Guaranty and the other Loan Documents shall be binding upon and shall inure to thebenefit of the parties and their respective successors and assigns.13.5 Assignments and Participation. Lender may from time to time, without the consent of Guarantor, sell, transfer,pledge, assign and convey the Guaranty, the Loan and the Loan Documents (or any interest therein), and delegate any and all of itsobligations with respect thereto, and may grant participations in the Loan to another financial institution or other Person on terms andconditions reasonably acceptable to Lender and split the Loan into multiple parts, or the Note into multiple component notes ortranches, in each case as permitted under the Loan Agreement. Any such sale, transfer, assignment, conveyance or participation shallnot release Guarantor from the Guaranteed Obligations. Upon prior notice to Guarantor of such assignment, Guarantor shall thereafterfurnish to such assignee any information furnished by Guarantor to Lender pursuant to the terms of the Loan Documents.13.6 Severability. If any provision of this Guaranty or of the other Loan Documents shall be prohibited or invalidunder applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating theremainder of such provision or the remaining provisions of this Guaranty or other Loan Documents.13.7 LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIESHERETO, INCLUDING LENDER BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION ORARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM (A “DISPUTE”)THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE LOANDOCUMENTS OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANYPARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (A) INDIRECT, SPECIAL OR CONSEQUENTIALDAMAGES OR (B) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVESANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE INTHE FUTURE IN CONNECTION WITH ANY DISPUTE, WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION,MEDIATION, JUDICIALLY OR OTHERWISE.13.8 ARBITRATION; WAIVER OF JURY TRIAL.13.8.1 Arbitration. The parties hereto agree, upon demand by any party, whether made before the institutionof a judicial proceeding or not more than 60 days after service13of a complaint, third party complaint, cross-claim, counterclaim or any answer thereto or any amendment to any of the above, to submitto binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors,attorneys, and other agents), whether in tort, contract or otherwise, in any way arising out of or relating to (a) any credit subject hereto,or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension,substitution, formation, inducement, enforcement, default or termination; or (b) requests for additional credit. In the event of a courtordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying theappropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand forarbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.13.8.2 Governing Rules. Any arbitration proceeding will (a) proceed in a location in the Jurisdiction selectedby the American Arbitration Association ("AAA"); (b) be governed by the Federal Arbitration Act (Title 9 of the United States Code),notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (c) be conducted by theAAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA's commercial disputeresolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costsin which case the arbitration shall be conducted in accordance with the AAA's optional procedures for large, complex commercialdisputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to bereferred to herein, as applicable, as the "Rules"). If there is any inconsistency between the terms hereof and the Rules, the terms andprocedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other partyshall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shallbe deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicablestate law.13.8.3 No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does notlimit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating tocollateral or proceeds of collateral such as setoff or repossession; or (c) obtain provisional or ancillary remedies such as replevin,injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. Thisexclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder,including those arising from the exercise of the actions detailed in sections (a), (b) and (c) of this paragraph.13.8.4 Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversyis $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award ofgreater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority voteof a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. Thearbitrator will be a neutral attorney licensed in the Jurisdiction with a minimum of ten years’ experience in the substantive lawapplicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is14arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator willdecide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions todismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with thesubstantive law of the Jurisdiction and may grant any remedy or relief that a court of such state could order or grant within the scopehereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recoveryof all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judgecould pursuant to the Federal Rules of Civil Procedure, the North Carolina Rules of Civil Procedure or other applicable law. Judgmentupon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an actionfor judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including theplaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.13.8.5 Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. Alldiscovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to finaldetermination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that noalternative means for obtaining information is available.13.8.6 Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputesby or against others in any arbitration, except parties who have executed any of the Loan Documents, or to include in any arbitrationany dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a privateattorney general capacity.13.8.7 Payment of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of thearbitration proceeding.13.8.8 Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall takeall action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator orother party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by aparty required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by orbetween the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the partiesor the subject matter of the dispute shall control. This Agreement may be amended or modified only in writing signed by each partyhereto. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law such provision shall beineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remainingprovisions of this Agreement. This arbitration provision shall survive termination, amendment or expiration of any of the documents orany relationship between the parties.1513.8.9 Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right topursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputesin which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit ofthe Small Claims Court.13.8.10 Waiver of Jury Trial. The parties hereto hereby acknowledge that by agreeing to binding arbitrationthey have irrevocably waived their respective rights to a jury trial with respect to any action, claim or other proceeding arising out ofany dispute in connection with any of the Loan Documents, any rights or obligations hereunder or thereunder, or the performance ofsuch rights and obligations. This provision is a material inducement for the parties entering into the agreement evidenced by thisAgreement.(Signatures on following page)16IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has caused this Unconditional Guaranty toWells Fargo Bank, National Association to be duly executed under seal.ASBURY AUTOMOTIVE GROUP, INC.,a Delaware corporationBy: /s/ Matthew Pettoni Name: Matthew PettoniTitle: Treasurer and Vice President17EXHIBIT 3.4LITIGATIONNone.EXHIBIT 4.8NON-DEFAULT CERTIFICATEIn accordance with the terms of the Guaranty dated November ______, 2018 by and between Wells Fargo Bank, NationalAssociation and Asbury Automotive Group, Inc. (“Guarantor”), I hereby certify in my capacity as an officer of Guarantor and notindividually that:1. I am an authorized officer of Guarantor.2. The enclosed financial statements were prepared in accordance with generally accepted accounting principles except asotherwise expressly noted therein.3. No Event of Default (as defined in the Loan Documents) or any event which, upon the giving of notice or lapse of time orboth, would constitute such an Event of Default, has occurred[, except as set forth below].4. Attached hereto in detail are the figures and calculations in respect of the financial covenants of Guarantor set forth inSection 6 of the Guaranty.Asbury Automotive Group, Inc.By:_______________________________Name:Title:EXHIBIT 4.11ADVANCE COMPLIANCE CERTIFICATEIn accordance with the terms of the Guaranty dated November _____, 2018 by and between Wells Fargo Bank, NationalAssociation and Asbury Automotive Group, Inc. (“Guarantor”), I hereby certify in my capacity as an officer of Guarantor and notindividually that:1. I am an authorized officer of Guarantor.2. No Event of Default (as defined in the Loan Documents) or any event which, upon the giving of notice or lapse of time orboth, would constitute such an Event of Default, has occurred.3. The representations and warranties contained in the Loan Documents are true and correct in all material respects (except tothe extent relating to an earlier date, in which case such representation and warranty shall be true and correct in all material respects asof such earlier date)s[, except as set forth below].Asbury Automotive Group, Inc.By:_______________________________Name:Title:Exhibit 21Entity Name Domestic State Foreign QualificationAF Motors, L.L.C. DE FLANL, L.P. DE FLArkansas Automotive Services, L.L.C. DE ARAsbury AR Niss L.L.C. DE ARAsbury Atlanta AC L.L.C. DE GAAsbury Atlanta AU L.L.C. DE GAAsbury Atlanta BM L.L.C. DE GAAsbury Atlanta CHEV, LLC DE GAAsbury Atlanta Chevrolet L.L.C. DE GAAsbury Atlanta Ford, LLC DE GAAsbury Atlanta Hon L.L.C. DE GAAsbury Atlanta Hund L.L.C. DE GAAsbury Atlanta Inf L.L.C. DE GAAsbury Atlanta Infiniti L.L.C. DE GAAsbury Atlanta Jaguar L.L.C. DE GAAsbury Atlanta K L.L.C. DE GAAsbury Atlanta Lex L.L.C. DE GAAsbury Atlanta Nis II, LLC DE GAAsbury Atlanta Nis L.L.C. DE GAAsbury Atlanta Toy 2 L.L.C. DE GAAsbury Atlanta Toy L.L.C. DE GAAsbury Atlanta VB L.L.C. DE GAAsbury Atlanta VL L.L.C. DE GAAsbury Automotive Arkansas Dealership Holdings L.L.C. DE AR,MSAsbury Automotive Arkansas L.L.C. DE AR,MSAsbury Automotive Atlanta II L.L.C. DE GAAsbury Automotive Atlanta L.L.C. DE GAAsbury Automotive Brandon, L.P. DE FLAsbury Automotive Central Florida, L.L.C. DE FLAsbury Automotive Deland, L.L.C. DE FLAsbury Automotive Fresno L.L.C. DE Asbury Automotive Group L.L.C. DE CTAsbury Automotive Jacksonville GP L.L.C. DE FLAsbury Automotive Jacksonville, L.P. DE FLAsbury Automotive Management L.L.C. DE GAAsbury Automotive Mississippi L.L.C. DE MSAsbury Automotive North Carolina Dealership Holdings L.L.C. DE NCAsbury Automotive North Carolina L.L.C. DE NC,SC,VAAsbury Automotive North Carolina Management L.L.C. DE NCAsbury Automotive North Carolina Real Estate Holdings L.L.C. DE NC,SC,VAAsbury Automotive Oregon L.L.C. DE Asbury Automotive Southern California L.L.C. DE Asbury Automotive St. Louis II L.L.C. DE MOAsbury Automotive St. Louis, L.L.C. DE MOAsbury Automotive Tampa GP L.L.C. DE FLAsbury Automotive Tampa, L.P. DE FLAsbury Automotive Texas L.L.C. DE TXAsbury Automotive Texas Real Estate Holdings L.L.C. DE TXAsbury CH MOTORS L.L.C. DE FLAsbury Deland Hund, LLC DE FLAsbury Deland Imports 2, L.L.C. DE FLAsbury Fresno Imports L.L.C. DE Asbury Ft. Worth Ford, LLC DE TXAsbury Georgia TOY, LLC DE GAAsbury IN CBG, LLC DE INAsbury IN CDJ, LLC DE INAsbury In Chev, LLC DE INAsbury In Ford, LLC DE INAsbury In Hon, LLC DE INAsbury Indy Chev, LLC DE INAsbury Jax AC, LLC DE FLAsbury Jax Ford, LLC DE FLAsbury Jax Holdings, L.P. DE FLAsbury Jax Hon L.L.C. DE FLAsbury Jax K L.L.C. DE FLAsbury Jax Management L.L.C. DE FLAsbury Jax VW L.L.C. DE FLAsbury Management Services, LLC DE AR,AZ,FL,GA,MO,MS,NC,OH,PA,SC,TN,TX,VAAsbury MS CHEV L.L.C. DE IN,MSAsbury MS Gray-Daniels L.L.C. DE MSAsbury No Cal Niss L.L.C. DE Asbury Sacramento Imports L.L.C. DE Asbury SC JPV L.L.C. DE SCAsbury SC Lex L.L.C. DE SCAsbury SC Toy L.L.C. DE SCAsbury So Cal DC L.L.C. DE Asbury So Cal Hon L.L.C. DE Asbury So Cal Niss L.L.C. DE Asbury South Carolina Real Estate Holdings L.L.C. DE SCAsbury St. Louis Cadillac L.L.C. DE MOAsbury St. Louis FSKR, L.L.C. DE MOAsbury St. Louis Lex L.L.C. DE MOAsbury St. Louis LR L.L.C. DE MOAsbury St. Louis M L.L.C. DE MOAsbury Tampa Management L.L.C. DE FLAsbury Texas D FSKR, L.L.C. DE TXAsbury Texas H FSKR, L.L.C. DE TXAsbury-Deland Imports, L.L.C. DE FLAtlanta Real Estate Holdings L.L.C. DE GAAvenues Motors, Ltd. FL Bayway Financial Services, L.P. DE FLBFP Motors L.L.C. DE FLC & O Properties, Ltd. FL Camco Finance II L.L.C. DE NC,SC,VACFP Motors L.L.C. DE FLCH Motors L.L.C. DE FLCHO Partnership, Ltd. FL CK Chevrolet L.L.C. DE FLCK Motors LLC DE FLCN Motors L.L.C. DE FLCoggin Automotive Corp. FL Coggin Cars L.L.C. DE FLCoggin Chevrolet L.L.C. DE FLCoggin Management, L.P. DE FLCP-GMC Motors L.L.C. DE FLCrown Acura/Nissan, LLC NC Crown CHH L.L.C. DE NCCrown CHO L.L.C. DE NCCrown CHV L.L.C. DE NCCrown FDO L.L.C. DE NCCrown FFO Holdings L.L.C. DE NCCrown FFO L.L.C. DE NCCrown GAC L.L.C. DE NCCrown GBM L.L.C. DE NCCrown GCA L.L.C. DE NCCrown GDO L.L.C. DE NCCrown GHO L.L.C. DE NCCrown GNI L.L.C. DE NCCrown GPG L.L.C. DE NCCrown GVO L.L.C. DE NCCrown Honda, LLC NC Crown Motorcar Company L.L.C. DE VACrown PBM L.L.C. DE Crown RIA L.L.C. DE VACrown RIB L.L.C. DE VACrown SJC L.L.C. DE SCCrown SNI L.L.C. DE SCCSA Imports L.L.C. DE FLEscude-NN L.L.C. DE MSEscude-NS L.L.C. DE MSEscude-T L.L.C. DE MSFlorida Automotive Services L.L.C. DE FLHFP Motors L.L.C. DE FLJC Dealer Systems, LLC DE FLKP Motors L.L.C. DE FLMcDavid Austin-Acra L.L.C. DE TXMcDavid Frisco-Hon L.L.C. DE TXMcDavid Grande L.L.C. DE TXMcDavid Houston-Hon, L.L.C. DE TXMcDavid Houston-Niss, L.L.C. DE TXMcDavid Irving-Hon, L.L.C. DE TXMcDavid Outfitters, L.L.C. DE TXMcDavid Plano-Acra, L.L.C. DE TXMid-Atlantic Automotive Services, L.L.C. DE NC,SC,VAMississippi Automotive Services, L.L.C. DE MSMissouri Automotive Services, L.L.C. DE MONP FLM L.L.C. DE ARNP MZD L.L.C. DE ARNP VKW L.L.C. DE ARPlano Lincoln-Mercury, Inc. DE TXPrecision Computer Services, Inc. FL Precision Enterprises Tampa, Inc. FL Precision Infiniti, Inc. FL Precision Motorcars, Inc. FL Precision Nissan, Inc. FL Premier NSN L.L.C. DE ARPremier Pon L.L.C. DE ARPrestige Bay L.L.C. DE ARPrestige Toy L.L.C. DE ARQ Automotive Brandon FL, LLC DE FLQ Automotive Cumming GA, LLC DE GAQ Automotive Ft. Myers FL, LLC DE FLQ Automotive Group L.L.C. DE FLQ Automotive Holiday FL, LLC DE FLQ Automotive Jacksonville FL, LLC DE FLQ Automotive Kennesaw GA, LLC DE GAQ Automotive Orlando FL, LLC DE FLQ Automotive Tampa FL, LLC DE FLSouthern Atlantic Automotive Services, L.L.C. DE GA,SCTampa Hund, L.P. DE FLTampa Kia, L.P. DE FLTampa LM, L.P. DE Tampa Mit, L.P. DE Texas Automotive Services, L.L.C. DE TXThomason Auto Credit Northwest, Inc. OR Thomason Dam L.L.C. DE Thomason Frd L.L.C. DE Thomason Hund L.L.C. DE Thomason Pontiac-GMC L.L.C. DE WMZ Motors, L.P. DE WTY Motors, L.P. DE FLExhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:1)Registration Statement (Form S-8 No. 333-221146) of Asbury Automotive Group, Inc.,2)Registration Statement (Form S-8 No. 333-180980) of Asbury Automotive Group, Inc.,3)Registration Statement (Form S-8 No. 333-165136) of Asbury Automotive Group, Inc.,4)Registration Statement (Form S-8 No. 333-105450) of Asbury Automotive Group, Inc.,5)Registration Statement (Form S-8 No. 333-84646) of Asbury Automotive Group, Inc., and6)Registration Statement (Form S-3 No. 333-123505) of Asbury Automotive Group, Inc.;of our reports dated February 28, 2019, with respect to the consolidated financial statements of Asbury Automotive Group, Inc. and the effectiveness ofinternal control over financial reporting of Asbury Automotive Group, Inc. included in this Annual Report (Form 10-K) of Asbury Automotive Group, Inc. forthe year ended December 31, 2018./s/ Ernst & Young LLPAtlanta, GeorgiaFebruary 28, 2019Exhibit 31.1CERTIFICATION PURSUANT TORULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES‑OXLEY ACT OF 2002I, David W. Hult, certify that:1.I have reviewed this Annual Report on Form 10-K of Asbury Automotive Group, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and we have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant'smost recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant's internal control over financial reporting;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalentfunctions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant'sinternal control over financial reporting./s/ David W. Hult David W. HultChief Executive OfficerFebruary 28, 2019 Exhibit 31.2CERTIFICATION PURSUANT TORULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES‑OXLEY ACT OF 2002I, Sean D. Goodman, certify that:1.I have reviewed this Annual Report on Form 10-K of Asbury Automotive Group, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and we have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant'smost recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant's internal control over financial reporting;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalentfunctions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(a)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant'sinternal control over financial reporting./s/ Sean D. Goodman Sean D. GoodmanChief Financial OfficerFebruary 28, 2019 Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002In connection with the Annual Report of Asbury Automotive Group, Inc. (the "Company") on Form 10-K for the year ended December 31, 2018, asfiled with the Securities and Exchange Commission on the date hereof (the "Report"), I, David W. Hult, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that, to the best of my knowledge:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany./s/ David W. Hult David W. HultChief Executive OfficerFebruary 28, 2019 Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002In connection with the Annual Report of Asbury Automotive Group, Inc. (the "Company") on Form 10-K for the year ended December 31, 2018, asfiled with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sean D. Goodman, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that, to the best of my knowledge:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany./s/ Sean D. Goodman Sean D. GoodmanChief Financial OfficerFebruary 28, 2019

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