SEC Filing | Asbury Automotive Group, Inc.

BY EXECUTIVE

BY ASBURY AUTOMOTIVE GROUP, INC.

/s/ Philip R. Johnson

/s/ Charles R. Oglesby

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Print Name and Title:

Philip R. Johnson

Charles R. Oglesby

President & CEO

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Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For 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 of incorporation or organization)		(I.R.S. Employer Identification No.)

622 Third Avenue, 37^th Floor New York, New York		10017
(Current address of principal executive offices)		(Zip Code)

(212) 885-2500

(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 registered
Common Stock, par value $.01 per share		New York Stock Exchange

Securities 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 ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate 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 preceding 12 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 ¨

Indicate 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’s knowledge, 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. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).

Large Accelerated Filer x Accelerated filer ¨ Non-Accelerated Filer ¨

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Based on the closing price of the registrant’s common stock as of June 30, 2007, the aggregate market value of the common stock held by non-affiliates of the registrant was $808,957,642.

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 stock outstanding as of February 27, 2008 was 31,915,300 (net of 4,748,750 treasury shares).

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents incorporated by reference and the Part of the Form 10-K into which the document is incorporated:

Portions of the definitive Proxy Statement for the Annual Meeting of Stockholders to be filed within 120 days after the end of the registrant’s fiscal year are incorporated by reference into Part III, Items 10 through 14 of this Form 10-K.

ASBURY AUTOMOTIVE GROUP, INC.

2007 FORM 10-K ANNUAL REPORT


		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	24
Item 4.	Submission of Matters to a Vote of Security Holders	24

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Selected Financial Data	27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 8.	Financial Statements and Supplementary Data	67
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99
Item 9A.	Controls and Procedures	99
Item 9B.	Other Information	99

PART III

Item 10.	Directors and Executive Officers of the Registrant	100
Item 11.	Executive Compensation	100
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	100
Item 13.	Certain Relationships and Related Transactions, and Director Independence	100
Item 14.	Principal Accountant Fees and Services	100

PART IV

Item 15.	Exhibits and Financial Statement Schedules	100

PART I

Forward-Looking Information

Certain statements in this report constitute “forward-looking statements” as such term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this report include statements relating to goals, plans and pending acquisitions, projections regarding our financial position, results of operations, market position, business strategy and expectations of our management with respect to, among other things:

•

our relationships with vehicle manufacturers;

•

our ability to improve our margins;

•

operating cash flows and availability of capital;

•

capital expenditures;

•

our ability to pay future dividends;

•

the completion of future acquisitions and the revenues to be generated by those acquisitions;

•

our ability to mitigate future negative trends in new vehicle sales with the stability of our fixed operations, our variable cost structure and our advantageous brand mix;

•

manufacturer’s willingness to continue to use incentive programs in the near future to drive demand for their product offerings;

•

general economic trends, including consumer confidence levels and interest rates;

•

automotive retail industry trends including (i) the recent industry-wide gain in market share of the luxury and mid-line import brands to continue in the near future (ii) our expectation that 2008 will be a challenging retail environment and the related impact of our ability to maintain our current new vehicle revenue and gross profit levels as well as our current SG&A expense as a percentage of gross profit levels, (iii) our expectation that light vehicle unit sales will outperform industry-wide U.S. light vehicle unit sales, (iv) that the luxury and mid-line import brands will continue to increase market share and (v) that heavy trucks unit sales, revenue and gross profit will continue to decrease in the first half of 2008;

•

our used vehicle expectations including (i) our belief that there is opportunity to improve our used vehicle profitability by offering appropriately priced used vehicle inventory, (ii) the 5% to 8% decline in our used unit sales in 2008 (iii) the improvement in our used vehicle inventory should mitigate the impact of the slower automotive retail selling season and challenging economic environment on our used vehicle performance;

•

our expectation that we will continue to grow our fixed operations revenue;

•

our expectation that we will recognize improved fixed operations gross profit in the future from heavy trucks as a result of the addition of service capacity and as the customers who purchased vehicles prior to the emission law changes begin to bring their vehicles in for maintenance and repairs;

•

our expectation of our 2008 interest expense; and

•

our expectation of our 2008 effective income tax rate

To the extent that statements in this report are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, are based on our current expectations and assumptions and involve significant risks and uncertainties. As a result, there can be no guarantees that our plans for future operations will be successfully implemented or that they will prove to be commercially successful. The following are some but not all of the factors that could cause actual results or events to differ materially from those anticipated, including:

•

our ability to generate sufficient cash flows;

•

market factors and the future economic environment, including consumer confidence, interest rates, the price of oil and gasoline, the level of manufacturer incentives, and the availability of consumer credit;

•

the reputation and financial condition of vehicle manufacturers whose brands we sell, and their ability to design, manufacture, deliver and market their vehicles successfully;

•

the ability of our principal vehicle manufacturers to continue to produce vehicles that are in high demand by our customers;

•

our ability to enter into and/or renew our framework and dealership agreements on favorable terms;

•

the inability of our dealership operations to perform at expected levels or achieve expected targets;

•

our ability to successfully integrate recent and future acquisitions;

•

our relationships with the automotive manufacturers which may affect our ability to complete additional acquisitions;

•

changes in, or failure or inability to comply with, laws and regulations governing the operation of automobile franchises, accounting standards, the environment and taxation requirements;

•

high levels of competition in the automotive retailing industry which may create pricing pressures on the products and services we offer;

•

our inability to minimize operating expenses or adjust our cost structure;

•

the loss of key personnel; and

•

the outcome of any pending or threatened litigation.

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this report. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, whether as a result of new information, future events or otherwise, except as required under federal securities law. Please see the section under “Item 1A. Risk Factors” for a further discussion of the factors that may cause our actual results of operations to differ from our projections.

Moreover, the factors set forth under “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and other cautionary statements made in this report should be read and understood as being applicable to all related forward-looking statements wherever they appear in this report. We urge you to carefully consider those factors.

Additional Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our Internet site at http://www.asburyauto.com on the same day that the information is filed with the Securities and Exchange Commission (the “Commission”). In addition, the proxy statement that will be delivered to our stockholders in connection with our 2008 annual meeting, when filed, will also be available on our web site, at the URL stated in such proxy statement. We also make available on our web site copies of our charter, bylaws and materials that outline our corporate governance policies and practices, including:

•

the respective charters of our audit committee, governance and nominating committee, and compensation committee;

•

our criteria for independence of the members of our board of directors, audit committee and compensation 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 Ethics) by the alternative of 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 Automotive Group, Inc., 622 Third Avenue, 37^th Floor, New York, New York 10017. In addition, the Commission makes available on its web site, free of charge, reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the Commission. The Commission’s web site is http://www.sec.gov. Unless otherwise specified, information contained on our web site, available by hyperlink from our web site or on the Commission’s web site, is not incorporated into this report or other documents we file with, or furnish to, the Commission.

As required by Section 303A.12 of the Listed Company Manual of the New York Stock Exchange (the “NYSE”), our Chief Executive Officer submitted to the NYSE his annual certification on May 21, 2007, stating that he was not aware of any violation by our company of the corporate governance listing standards of the NYSE. In addition, we have filed, as exhibits to our annual report on Form 10-K/A for the year ended December 31, 2006, the certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002 to be filed with 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.

Business

We are one of the largest automotive retailers in the United States, operating 124 franchises at 93 dealership locations as of December 31, 2007. We offer our customers an extensive range of automotive products and services, including:

•

new and used vehicles;

•

vehicle maintenance and repair services;

•

replacement parts;

•

arranging new and used vehicle financing; and

•

arranging the sale of warranty, insurance and extended service contracts.

For the year ended December 31, 2007, our revenues were $5.7 billion and our net income was $51.0 million. Our income from continuing operations and net income during 2007 was impacted by several items (the “Adjusting items”) as detailed in the “Reconciliation of Non-GAAP Financial Information” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. Excluding these adjusting items, adjusted income from continuing operations and adjusted net income for the year ended December 31, 2007 and 2006 was $69.5 million and $66.2 million, respectively.

Asbury Automotive Group, Inc. was incorporated in the State of Delaware on February 15, 2002. On March 13, 2002, we effected an initial public offering of our common stock, and on March 14, 2002, our stock was listed on the NYSE under the ticker symbol “ABG”.

General Description of Our Operations

As of December 31, 2007, we operated dealerships in 22 metropolitan markets throughout the United States. We developed our dealership portfolio through the acquisition of large, locally branded dealership groups operating throughout the United States. We complemented these large dealership groups with the purchase of numerous single point dealerships and small dealership groups in our existing market areas (referred to as “tuck in acquisitions.”) Our retail network is currently organized into principally four regions and includes nine locally branded dealership groups. The following is a detailed breakdown of our markets and dealerships as of December 31, 2007:


Brand Names by Region	Date of Initial Acquisition	Markets	Franchises
South
Nalley Automotive Group	September 1996	Atlanta, GA	Acura, Audi, BMW, Chrysler, Hino(a), Honda, IC Bus, Infiniti(a), International(a), Isuzu Truck, Jaguar, Jeep, Lexus(a), Nissan, Peterbilt, Volvo, Workhorse

Florida
Courtesy Autogroup	September 1998	Tampa, FL	Chrysler, Dodge, Honda, Hyundai, Infiniti, Jeep, Kia, Mercedes-Benz, Nissan, Toyota, Volkswagen(c)
Coggin Automotive Group	October 1998	Jacksonville, FL	Buick, Chevrolet, GMC(a), Honda(a), Kia (a)(b), Nissan(a), Pontiac(a), Toyota
		Orlando, FL	Buick, Chevrolet, Ford, GMC, Honda(a), Lincoln, Mercury, Pontiac
		Fort Pierce, FL	Acura, BMW, Honda, Mercedes-Benz

West
David McDavid Auto Group	April 1998	Dallas/Fort Worth, TX	Acura, Honda(a), Lincoln, Mercury
		Houston, TX	Honda, Nissan
		Austin, TX	Acura


California Dealerships	April 2003	Fresno, CA	Mercedes-Benz, Nissan
		Sacramento, CA	Mercedes-Benz
		Los Angeles, CA	Honda

North Point Auto Group	February 1999	Little Rock, AR	BMW, Ford, Lincoln, Mazda, Mercury, Nissan(a), Toyota, Volkswagen, Volvo

Mid-Atlantic
Crown Automotive Company	December 1998	Princeton, NJ Greensboro, NC	BMW, MINI Acura, BMW, Cadillac, Chevrolet, Chrysler, Dodge, Honda, Nissan, Volvo
		Chapel Hill, NC	Honda, Volvo
		Fayetteville, NC	Dodge, Ford
		Charlotte, NC	Honda
		Richmond, VA	Acura, BMW(a), MINI
		Charlottesville, VA	BMW
		Greenville, SC	Chrysler(b), Jeep(b), Nissan

Gray-Daniels Auto Family	April 2000	Jackson, MS	Buick, Cadillac, Chevrolet(a), Ford, GMC, Lincoln, Mercury, Nissan(a), Pontiac, Toyota

Plaza Motor Company	December 1997	St. Louis, MO	Audi, BMW, Cadillac, Infiniti, Land Rover, Lexus, Mercedes-Benz, Porsche

(a)	This market has two of these franchises.

(b)	Represents pending divestitures as of December 31, 2007, which were sold in the first quarter of 2008.

(c)	Represents pending divestitures as of December 31, 2007.

New Vehicle Sales

Our franchises include a diverse portfolio of 35 American, European and Asian brands. Our new vehicle sales include the sale of new vehicles to individual retail customers (“new retail”) and the sale of new vehicles to commercial customers (“fleet”) (the terms “new retail” and “fleet” being collectively referred to as “new”). In 2007, we retailed 101,871 new vehicles through our dealerships. New vehicle retail sales were 56.4% of our total revenues and 26.6% of our total gross profit for the year ended December 31, 2007. Fleet sales, which provide significantly less gross margins than retail sales, were approximately 2.8% of total revenues for the year ended December 31, 2007. We evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle retailed (“PVR”). We believe we are well-positioned to capitalize on changes in consumer preferences as a result of our strong brand mix, which is heavily weighted towards mid-line import and luxury brands. Please see “Business Strategy—Focus on Premier Brand Mix, Strategic Markets and Diversification” below for a discussion on our diverse offering of brands and products.

Our new vehicle retail sales include new vehicle sales, new vehicle retail lease transactions provided by third parties and other similar agreements arranged by our individual dealerships. As a result of finite lease terms, customers who lease new vehicles generally return to the market more frequently than customers who purchase new vehicles. In addition, because third party lessors frequently give our dealerships the first option to purchase vehicles returned by customers at lease-end, leases provide us with an additional source of late-model vehicles for our used vehicle inventory. Generally, leased vehicles remain under factory warranty for the term of the lease, allowing dealerships to provide repair service to the lessee throughout the lease term.

Used Vehicle Sales

We sell used vehicles at all of our 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” being collectively referred to as “used”). In 2007, we retailed 60,764 used vehicles through our dealerships. Retail sales of used vehicles, which generally have higher gross margins than new vehicles, made up approximately 19.5% of our total revenues and 14.2% of our total gross profit for the year ended December 31, 2007. Used vehicle revenue from wholesale sales was 6.1% of total revenue for the year ended December 31, 2007. Profits from the sales of used vehicles depend primarily on the

ability of our dealerships to obtain a high quality supply of used vehicles and the use of the best available technology to manage our inventory. Our new vehicle operations provide our used vehicle operations with a large supply of high quality trade-ins and off-lease vehicles, which we believe are good sources of attractive used vehicle inventory. We purchase a significant portion of our used vehicle inventory at auctions restricted to new vehicle dealers (offering off-lease, rental and fleet vehicles) and “open” auctions that offer vehicles sold by other dealers and repossessed vehicles. Used vehicle inventory is typically wholesaled after approximately 60 days, except for used vehicles that do not fit within our inventory mix, which are wholesaled almost immediately. The reconditioning of used vehicles also creates profitable service work for our fixed operations departments.

In addition to our high quality supply of used vehicles, we manage our used car sales on a local basis and employ the best available technology to manage our inventory and used car sales on a local basis. We transfer used vehicles among our dealerships to provide a balanced mix of used vehicle inventory at each of our dealerships. We believe that acquisitions of additional dealerships will expand the internal market for the transfer of used vehicles among our dealerships and, therefore, increase the ability of each dealership to offer a balanced mix of used vehicles.

We have taken several steps towards building customer confidence in our used vehicle inventory, including participation in manufacturer certification programs as well as the development of our own used vehicle certification program. The manufacturer programs make certain used vehicles eligible for vehicle benefits such as special finance rates and extended manufacturer warranties. Our used vehicle certification program includes a thorough inspection of used vehicle inventory within the program and allows our customers to return used vehicles for any reason within five days or five hundred miles. We guarantee the operation of the vehicle, subject to certain limitations, for sixty days from the date of purchase. In addition, each dealership offers customers the opportunity to purchase extended warranties, which are provided by third parties, on used car sales.

Over time, we intend to grow our used vehicle sales by:

•

maintaining high quality inventory across all price ranges and all classes of used vehicles, including factory certified as well as traditional non-certified used vehicles:

•

providing competitive prices to our customers;

•

executing our marketing initiatives; and

•

increasing our focus on training.

Parts, Service and Collision Repair

We refer to the parts, service and collision repair area of our business as “fixed operations”. We sell parts and provide maintenance and repair service at all of our franchised dealerships, primarily for the vehicle brands sold at those dealerships. In addition, as of December 31, 2007, we maintained 24 free-standing collision repair centers either on the premises of, or in close proximity to, our dealerships. Our dealerships and collision repair centers collectively operate 2,828 service bays. Parts, service and collision repair centers accounted for approximately 12.3% of our total revenues and 40.8% of our total gross profit as of December 31, 2007.

Historically, fixed operations revenues have been more stable than vehicle sales. Industry-wide, parts and service revenues have consistently increased over time primarily due to the increased cost of maintaining vehicles, the added technical complexity of vehicles and the increased number of vehicles on the road. We believe the variety and quality of extended service plans available for both new and used vehicles in recent years have seen progressive expansion and improvement. Our fixed operations business benefits from the service work generated through the sale of extended service contracts to customers who purchase new and used vehicles from us because customers tend to service their vehicles at the same location where they purchase extended warranty contracts. For the year ended December 31, 2007, warranty work accounted for 19.6% of our parts and service revenue.

Historically, the automotive repair industry has been highly fragmented. We believe, however, that the increased use of advanced technology in vehicles has made it difficult for independent repair shops to have the expertise to perform major or technical repairs, especially as such repairs relate to luxury and mid-line imports which comprise a majority of our new vehicle retail sales. Additionally, all manufacturers require warranty work to be performed only at franchised dealerships. As a result, unlike independent service stations or independent and superstore used car dealerships with service operations, our franchised dealerships are qualified to perform work covered by manufacturer warranties on increasingly technologically complex motor vehicles. We use variable rate compensation structures designed to reflect the difficulty and sophistication of different types of repairs to compensate employees working in parts and service.

One of our major goals is to retain each vehicle purchaser as a long-term customer of our parts and service departments. Currently, we estimate that approximately 30% of customers return to our dealerships for other services after the vehicle warranty expires. Therefore, we believe that significant opportunity for growth exists in our maintenance service business. Each dealership has systems in place to track customer maintenance records and to notify owners of vehicles purchased at the dealership when their vehicles are due for periodic services. In 2006, we implemented additional customer retention initiatives and expanded our service offerings to essentially make the fixed operations business at our stores a “one stop” shop. Service and repair activities are an integral part of our overall approach to customer service. From selling tires to utilizing state-of-the-art diagnostic equipment, our fixed operations business offers our customers all the services needed to maintain their vehicles.

In order to grow our fixed operations business over the years, we have consistently added technicians and other employees to our service centers to ensure that our customers continue to receive excellent service. We maintained growth in this line of our business in 2007 due to initiatives in 2006 and our investment in human capital in past years. In 2007, we continued to execute our business plan of advancing our customer pay business by offering our customers a “one-stop” shopping experience. We continued to train our staff, including service advisors, on menu-selling and customer service skills. We have also added Business Development Centers in some of our stores to drive customer retention. At these Business Development Centers, we have staff dedicated to maintaining periodic contact with our customers. Furthermore, we have continued to add equipment to our service centers that help our technicians identify issues with our customers’ vehicles and promote incremental service sales if those customers decide to resolve such issues at our stores.

We expect our fixed operations sales to continue to grow as we (i) invest in additional service capacity, (ii) upgrade equipment, (iii) expand our product offerings, (iv) capitalize on our regional training programs, and (v) add service advisors and skilled technicians to meet anticipated future demand, especially from the increased market share of the mid-line import and luxury import brands.

Finance and Insurance

We refer to the finance and insurance area of our business as F&I. We arrange for third party financing of the sale or lease of new and used vehicles to customers. We arranged customer financing on approximately 64% of the vehicles we sold during the year ended December 31, 2007. These transactions result in commissions being paid to us by the third party lenders, including manufacturer captive finance subsidiaries. As a general matter, we do not retain liability for the credit risk associated with these purchase and lease transactions after the completion of the transactions. However, we may be required to repay the finance company certain commissions if a customer prepays the retail installment sales contract, typically during a specified time period following the sale. Our finance and insurance business generated approximately 2.8% of our total revenues and 18.2% of our total gross profit for the year ended December 31, 2007.

To date, we have entered into “preferred lender agreements” with 18 lenders. Under the terms of the preferred lender agreements, each lender has agreed to provide a marketing fee to us above the standard commission for each loan that our dealerships place with that lender. Furthermore, many of the insurance products we sell result in additional underwriting profits and investment income based on portfolio performance.

We receive favorable pricing on these products from our vendors as a result of our size and sales volume. We earn sales-based commissions on substantially all of these products and may be charged back (“chargebacks”) for these commissions in the event a finance contract is cancelled within the first 90 days or if a non-finance contract is canceled prior to its maturity. We incur minimal risk related to chargebacks of our commissions; however, we do not bear any risk related to loan payments, insurance payments or investment performance, which are borne by third parties. These commissions are subject to cancellation, in certain circumstances, if the customer were to cancel the contract. In addition, we completed the rollout of a training program in 2007 for the certification all of our F&I managers, sales managers and sales associates in legal and ethical compliance matters. As of December 31, 2007, all of our finance service managers, sales managers and sales associates with an employment history with the company for 12 months or more, were certified, and any such manager or associate who joined the company during 2007 was in the process of being certified.

Recent Developments

During 2007, we were granted two Smart Car franchises. Our Smart Car franchise in St. Louis, Missouri, commenced operations on January 2, 2008 and our Smart Car franchise in Tampa, Florida, is expected to commence operations in the second quarter of 2008.

In January 2008, our board of directors declared a $0.225 per share cash dividend. This was the seventh consecutive quarter that a dividend was paid.

In January 2008, we sold four franchises (three dealership locations) for proceeds of $2.7 million, resulting in a $0.2 million loss on the sales.

Business Strategy

Focus on Premier Brand Mix, Strategic Markets and Diversification

We classify our franchise sales into luxury, mid-line import, mid-line domestic, value, and heavy trucks. Luxury and mid-line imports together accounted for approximately 83% of our new light vehicle retail revenues for the year ended December 31, 2007. Over the last two decades, luxury and mid-line imports have gained market share at the expense of mid-line domestic brands. Luxury and mid-line import vehicles have delivered more desirable vehicle models and have demonstrated greater resilience to downturns in the economy, garnered higher customer loyalty and presented more attractive service and used car opportunities. The mid-line import brands are generally viewed as more fuel efficient and continue to be in higher demand during times when gas prices are high.

The following table reflects the franchises and the share of new retail vehicle revenue represented by each class of franchise as of December 31, 2007:


Class/Franchise	Number of Franchises as of December 31, 2007	% of New Light Vehicle Retail Revenue for the Year Ended December 31, 2007
Light Vehicles
Luxury
BMW	9	8	%
Acura	6	5
Mercedes-Benz	5	9
Lincoln	4	2
Volvo	4	1
Cadillac	3	1
Infiniti	4	4
Lexus	3	7
Audi	2	1
Porsche	1	*
Jaguar	1	*
Land Rover	1	*

Total Luxury	43	38	%

Mid-Line Import
Honda	14	23	%
Nissan	12	13
Toyota	4	8
Mazda	1	*
MINI	2	*
Volkswagen(c)	2	1

Total Mid-Line Import	35	45	%

Mid-Line Domestic
Chevrolet	5	4	%
GMC	4	1
Pontiac	4	1
Chrysler(a)	4	1
Ford	4	6
Mercury	4	1
Buick	3	*
Jeep(a)	3	1
Dodge	3	1

Total Mid-Line Domestic	34	16	%

Value
Hyundai	1	1	%
Kia(b)	3	*

Total Value	4	1	%

Total Light Vehicles	116	100	%


Heavy Trucks
Hino	2
Isuzu	1
International Trucks	2
IC Bus	1
Workhorse	1
Peterbilt	1

Total Heavy Trucks	8

TOTAL	124

*	Franchise accounted for less than 1% of new retail vehicle revenue for the year ended December 31, 2007.

(a)	Includes a pending divestiture as of December 31, 2007, which was sold in the first quarter of 2008.

(b)	Includes two pending divestitures as of December 31, 2007, which were completed in the first quarter of 2008.

(c)	Includes a pending divestiture as of December 31, 2007.

Asbury’s geographic coverage encompassed 22 different metropolitan markets at 93 locations in 11 states as of December 31, 2007, including: Arkansas, California, Florida, Georgia, Mississippi, Missouri, New Jersey, North Carolina, South Carolina, Texas and Virginia. New vehicle sales revenue is diversified among manufacturers and for the year ended December 31, 2007, the following manufacturers represented 79% of our new light vehicle retail revenue: Honda (23%), Nissan (13%), Mercedes-Benz (9%), Toyota (8%), BMW (8%), Lexus (7%), Ford (6%) and Acura (5%). We believe that our broad geographic coverage as well as diversification among manufacturers decreases our exposure to regional economic downturns and manufacturer-specific risks such as warranty issues or production disruption. See “Risk Factors—Risk Factors Related to our Dependence on Vehicle Manufacturers—Adverse conditions affecting the manufacturers may negatively impact our profitability” for a list of such manufacturer-specific risks.

Each of our dealerships maintains a strong local brand that has been enhanced through local advertising over many years. We believe our cultivation of strong local brands is beneficial because consumers prefer to interact with a locally recognized brand. By placing franchises in one geographic location under a single, local brand, we expect to generate advertising synergies and retain customers even as they purchase and service different automobile brands.

Maintain Flexible Cost Structure and Emphasize Expense Control

We continually focus on controlling expenses and expanding margins at our existing dealerships and those that are integrated into our operations upon acquisition. We categorize our cost structure in three groups, which are variable, semi-variable and fixed. Variable costs include incentive-based compensation, vehicle carrying costs, and other variable costs. Salespeople, sales managers, service managers, parts managers, service advisors, service technicians and the majority of other non-clerical dealership personnel are paid a commission. The majority of our general manager compensation and virtually all salesperson compensation is tied to profits of the dealership. In addition the bonus portion of our salaried employee’s compensation is tied to our net income. Fixed costs include rent, utilities and depreciation expense. Semi-variable expenses include base salaries, outside services, travel and entertainment expenses, advertising and loaner vehicle amortization. We believe we can further manage these types of costs by capitalizing on best practices among our dealerships, standardization of compensation plans, controlled oversight and accountability, and centralized processing systems.

Focus on Higher Margin Products and Services

While new vehicle sales are critical to drawing customers to our dealerships, fixed operations, used vehicle retail sales, and finance and insurance generally provide significantly higher profit margins and account for the majority of our profitability. In addition, we have discipline-specific executives at both the corporate and regional levels who focus on increasing the penetration of current services and expanding the breadth of our offerings to customers. While each of our dealership general managers has flexibility to respond effectively to local market conditions, including market specific advertising and management of inventory mix, each pursues an integrated strategy, as directed from our centralized management team at our corporate office, to grow these higher margin businesses to enhance profitability and stimulate organic growth.

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Fixed Operations. We offer parts, perform vehicle service work and operate collision repair centers, all of which provide important sources of recurring revenue with high gross profit margins. We intend to expand this higher-margin business and increase this cost absorption rate by adding new service bays and increasing capacity utilization of existing service bays. To help ensure high levels of customer satisfaction within our parts, service and collision repair operations, we continue to add skilled technicians and service advisors to our operations. In addition, given the increased sophistication of vehicles, our repair operations provide detailed expertise and state-of-the-art diagnostic equipment that we believe independent repair shops cannot adequately provide. Our repair operations also provide manufacturer warranty work that must be done at certified franchise dealerships, rather than through independent dealers.

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Used Vehicles. We sell used vehicles at all of our franchised dealerships. Used vehicle sales include the sale of used vehicles to individual retail customers and the sale of used vehicles to other dealers at auction. We intend to grow our used vehicle business by maintaining high quality inventory across all price ranges, providing competitive prices, continuing to enhance our marketing initiatives by focusing our efforts on marketing new vehicles through the Internet and building customer confidence in our vehicle inventory through our used car certification program.

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Finance and Insurance. In the past two years, we have increased our finance and insurance revenues by offering a broad range of conventional finance and lease alternatives to fund the purchase of new and used vehicles. Moreover, continued in-depth sales training and certification efforts and innovative computer technologies have and will serve as important tools in growing our finance and insurance profitability. We have increased dealership generated finance and insurance revenue per vehicle retailed (“PVR”) to approximately $997 for the year ended December 31, 2007, from $907 for the year ended December 31, 2006. We have successfully increased our dealership generated finance and insurance revenue PVR each year since our inception, with 2007 being another record year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Information.”

Local Management of Dealership Operations and Centralized Administrative and Strategic Functions

We believe that local management of dealership operations enables our retail network to provide market-specific responses to sales, customer service and inventory requirements. Our dealerships are operated as distinct profit centers in which the general managers are responsible for the operations, personnel and financial performance of their dealerships as well as other day-to-day operations. Our local management teams’ familiarity with their markets enables them to effectively run day-to-day operations, market to customers and recruit new employees. The general manager of each dealership is supported by a management team consisting, in most cases, of a new vehicle sales manager, a used vehicle sales manager, a finance and insurance manager, and a fixed operations manager. This management structure is complemented by regionally centralized technology and financial controls, as well as sharing market intelligence throughout the organization. See “Business Strategy—Experienced Corporate and Dealership Management” below for a discussion of the incentive-based pay system for management at our corporate office and at our dealerships.

Our corporate headquarters are located in New York, New York. The corporate office is responsible for the capital structure of the business and its expansion and operating strategy. The implementation of our operational strategy rests with each dealership management team based on the policies and procedures established and promulgated by the corporate office. Furthermore, we employ professional management practices in all aspects of our operations, including information technology and employee training. Our dealership operations are complemented by regionally centralized technology and strategic and financial controls, as well as shared market intelligence throughout the organization. Corporate and dealership management utilize computer-based management information systems to monitor each dealership’s sales, profitability and inventory on a regular basis.

While in the past we have used various companies to provide our dealer management systems, in October 2007, we executed an agreement with DealerTrack Holdings, Inc. (“DealerTrack”), with the intent that the DealerTrack’s Arkona dealer management system will become our sole dealer management system. By moving toward a single dealer management system through which all our dealerships will process information, we expect that the result will be a more efficient retail operation that will, in turn, translate to a better experience for our customers. Moreover, once all of our dealerships convert to, and are running on, the Arkona dealer management system, we expect to achieve a reduction of over $3.7 million of our current annual data processing costs.

We believe the application of professional management practices provides us with a competitive advantage over many independent dealerships. We regularly examine our operations in order to identify areas for improvement and disseminate best practices company-wide.

Investment in Human Capital

We recognize that our ability to control the growth of our new vehicle sales is limited by external factors, including the manufacturers’ ability to develop new vehicle models, manufacturer rebates and incentives, consumer confidence, gas prices, interest rates, the availability of credit for consumers and other economic factors. Growth in our fixed operations business is dependent on our ability to generate long-term customer relationships and having our customers return to our stores for service and repairs. Our finance and insurance business is dependent on our ability to arrange financing for our customers through third party lenders. In each revenue source of our business, our ability to capture the customer and “close the deal” will enable us to generate revenue. In our effort to seek continued growth in all of our revenue sources and set us apart from our competitors, we invest in the education and growth of our employees.

Over the past three years, we have implemented programs to certify our finance and insurance managers, our new and used sales managers and our sales force in the areas of compliance and ethics. These employees either attend classes or seminars on compliance and ethics as such topics relate to the automotive retailing industry, and more specifically, finance and insurance for the finance and insurance managers, and are then required to pass a written examination on these subjects in order to receive certification. The employees are required to maintain their certification annually, which keeps their knowledge of compliance and ethics current. Furthermore, we believe that by certifying these employees, we build the knowledge base of our employees, which improves morale and performance.

In addition, in three of our four regions, we have a regional training program for our fixed operations employees that addresses various aspects of our fixed operations business, including tire sales and oil sales. Our fixed operation employees are trained so that they can offer new car clinics and service clinics to our customers. We believe that by increasing the knowledge base of our fixed operations employees, we not only build their confidence and increase their performance, but also provide better experience for our customers as they interact with those employees. We believe that a customer who has a positive experience with one of our employees will be a repeat customer, which will lead to the continued growth of our business. We will implement similar training programs in our fourth region during 2008.

Our corporate and regional executives have also benefited from attending a management training program to assist them in setting and reaching goals, both personally and professionally, and the effective management of their staff. Through exposure to such training programs, we empower our corporate and regional executive team to work together more efficiently in the management of the business and its employees. We believe that a motivated management team will have a direct, positive effect on its staff. With a highly-motivated and goal-oriented workforce, we believe that we can generate above average corporate performance.

Experienced Corporate and Dealership Management

We have a corporate management team that has served in prominent leadership positions.

Charles R. Oglesby, has served as our President and Chief Executive Officer since May 2007. Prior to serving as President and Chief Executive Officer, Mr. Oglesby served as our Senior Vice President and Chief Operating Officer from September 2006 to May 2007. Mr. Oglesby served as the Chief Executive Officer of our South Region from August 2004 until March 2007. Mr. Oglesby originally joined us as President and Chief Executive Officer of Asbury Automotive Arkansas, L.L.C. in February 2002. Prior to joining our company, Mr. Oglesby served as President of the First America Automotive Group in San Francisco, California.

J. Gordon Smith has served as our Senior Vice President and Chief Financial Officer since September 2003. He joined us following over 26 years with General Electric Company (“GE”). During his last twelve years at GE he served as Chief Financial Officer for three of GE’s commercial finance businesses: Corporate Financial Services, Commercial Equipment Finance and Capital Markets.

We believe that our leadership at the store level represents some of the best talent in the industry. Our regional executives and store general managers are proven leaders in their local markets and have many years of experience in the automotive retail industry. In addition, our continued focus on college recruiting, training, development, and retention is designed to maintain our talented management pool. See “Business Strategy—Investment in Human Capital” above for further description of certain of our training programs.

We tie compensation of our senior dealership management to performance by relying upon an incentive-based pay system. We compensate our general managers based on dealership profitability, and our department managers and salespeople are similarly compensated based upon departmental profitability and individual performance.

Continued Growth Through Targeted Acquisitions

Acquisitions continue to be part of our growth strategy. In the past, we have focused our acquisition strategy on establishing a presence in new markets through the purchase of multiple individual franchises or through the acquisition of large, profitable and well-managed dealership groups with leading market positions. Our present strategy is to become the leader in every market in which we currently operate. As such, we intend to evaluate “tuck-in” acquisitions, or acquisitions in existing regions, that complement our current dealerships.

Tuck-in acquisitions are typically re-branded immediately after acquisition and operate thereafter under our respective local brand name. By focusing on geographic and brand diversity, we seek to manage economic risk and drive growth and profitability. Because we own dealerships of all major brands and avoid significant concentration with one manufacturer, we are well-positioned to respond to changing customer preferences. We believe that these tuck-in acquisitions have facilitated, and will continue to facilitate, our regional operating efficiencies and cost savings. In addition, we have generally been able to improve the gross profit of tuck-in acquisitions within twelve months following the acquisition. We believe this is due to a number of factors respective to the acquisition, including:

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improvements in the number of finance and insurance products sold per vehicle retailed;

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greater utilization of service bays acquired in the acquisition;

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improved management practices; and

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enhanced unit sales volumes related to the strength of our local brand names.

We will also continuously examine opportunities to acquire large dealership groups or to enter new markets as such opportunities become available. In 2007, we availed ourselves of such an opportunity by acquiring a BMW franchise in Princeton, New Jersey, which is outside the regions in which we have historically operated.

Commitment to Customer Service

We are focused on providing a high level of customer service to meet the needs of an increasingly sophisticated and demanding automotive consumer. We design our dealership service business to meet the needs of our customers and establish relationships that will result in both repeat business and additional business through customer referrals. Furthermore, we provide our dealership managers with incentives to employ more efficient selling approaches, engage in extensive follow-up to develop long-term relationships with customers and extensively train our sales staff to be able to meet customer needs.

We continually evaluate innovative ways, and implement new technology, to improve the buying experience for our customers, and believe that our ability to share best practices across our dealerships gives us an advantage over independent dealerships. For example, our customer relations management tool facilitates communications with our customers before, during and after the sale. Our “Auto Exchange” system continues to be our Used Car Inventory Management tool. These tools are installed in most of our regions and are designed to drive the performance of our employees and enhance customer service. See also the discussion above under “Business Strategy—Local Management of Dealer Operations and Centralized Administrative and Strategic Functions” for a discussion of our expectation that the use of the Arkona dealer management system will improve the customer experience.

In addition, our dealerships regard service and repair operations as an integral part of the overall approach to customer service, providing an opportunity to foster ongoing relationships and improve customer loyalty. We continue to add skilled technicians and service advisors to our operations to ensure that our customers continue to receive excellent service. We intend to invest in the human capital necessary to ensure that this aspect of our business continues to expand.

Marketing

Our advertising and marketing efforts are focused at the local market level, with the aim of building our business with a broad base of repeat, referral and new customers. Our primary advertising medium is local newspapers, followed by the Internet, radio, television, direct mail, and the yellow pages. In addition, we also use electronic mail to assist our marketing efforts and to stay in contact with our customers.

The automotive retail industry has traditionally used locally produced, largely non-professional materials for advertising, often developed under the direction of each dealership’s general manager. However, we have chosen to create common marketing materials for our brand names using professional advertising agencies. Our corporate sales and marketing department helps oversee and share creative materials and general marketing best

practices across our dealerships. Our total company marketing expense was $49.8 million for the year ended December 31, 2007, which translates into an average of $306 per retail vehicle sold. In addition, manufacturers’ direct advertising spending in support of their brands has historically been a significant component of the total amount spent on new car advertising in the United States.

Management Information Systems

We consolidate financial, accounting and operational data received from our dealerships nationwide through a private communication network. The data from the dealerships is gathered and processed through their individual dealer management system. Currently, each of our dealerships use dealer management system software from ADP, Inc., Reynolds & Reynolds, Co. or DealerTrack. In October 2007, we entered into an agreement with DealerTrack to convert all of our dealerships to the Arkona dealer management system. Pursuant to the terms of such contract, we intend to complete the roll-out of the Arkona dealer management system to all of our dealerships within approximately three years. The information from the dealer systems is aggregated at our corporate headquarters to create a consolidated view of the business using Hyperion financial products.

Our information technology approach enables us to quickly integrate and aggregate the information from a new acquisition. By creating a connection over our private network between the dealer management system and corporate Hyperion financial products, corporate management can quickly view the financial, accounting and operational data of the newly acquired dealership. Hyperion’s products allow us to review operating and financial data at a variety of levels. For example, from our headquarters, management can review the performance of any specific department (e.g., parts and services) at any particular dealership. This system also allows us to quickly compile and monitor our consolidated financial results.

Competition

In new vehicle sales, our dealerships compete primarily with other franchised dealerships in their regions. We do not have any cost advantage in purchasing new vehicles from the manufacturers. Instead, we rely on advertising and merchandising, sales expertise, service reputation, strong local brand names and location of our dealerships to sell new vehicles. Our used vehicle operations compete with other franchised dealers, independent used car dealers, internet-based vehicle brokers and private parties for supply and resale of used vehicles. See “Risk Factors—Risks Related to Competition—Substantial competition in automobile sales may adversely affect our profitability.”

We compete with other franchised dealers to perform warranty repairs and with other automobile dealers and franchised and independent service centers for non-warranty repair and routine maintenance business. We compete with other automobile dealers, service stores and auto parts retailers in our parts operations. We believe that the principal competitive factors in parts and service sales are the use of factory-approved replacement parts, price, the familiarity with a manufacturer’s brands and models, and the quality of customer service. A number of regional and national chains as well as some competing franchised dealers may offer certain parts and services at prices lower than our prices.

In arranging financing for our customers’ vehicle purchases, we compete with a broad range of financial institutions. In addition, financial institutions are now offering finance and insurance products through the Internet, which may reduce our profits on these items. We believe that the principal competitive factors in providing financing are convenience, interest rates and flexibility in contract length.

We compete with other national dealer groups and individual investors for acquisitions. Some of our competitors may have greater financial resources and the market may increase acquisition pricing of target dealerships. See “Risk Factors – Risks Related to our Acquisition Strategy –There is competition to acquire automotive dealerships, and we may not be able to fully implement our growth through acquisition strategy if attractive targets are acquired by competing buyers or if the market drives prices to the point where an acceptable rate of return is not achievable.”

Dealer and Framework Agreements

Each of our dealerships operates pursuant to a dealer agreement between the dealership and the manufacturer (or in some cases the distributor) of each brand of new vehicles sold and/or serviced at the dealership. Our typical dealer agreement specifies the locations at which the dealer has the right and obligation to sell the manufacturer’s vehicles and related parts and products and/or to perform certain approved services. Each dealer agreement also governs the use of the manufacturer’s trademarks and service marks.

The allocation of new vehicles among dealerships is subject to the discretion of the manufacturer, and generally does not guarantee the dealership exclusivity within a given territory. Most dealer agreements impose requirements on virtually every aspect of the dealer’s operations. For example, most of our dealer agreements contain provisions and standards related to:

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inventories of new vehicles and manufacturer replacement parts;

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the maintenance of minimum net working capital and in some cases minimum net worth;

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the achievement of certain sales and customer satisfaction targets;

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advertising and marketing practices;

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facilities, signs, products offered to customers;

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dealership management;

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personnel training;

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information systems; and

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dealership monthly and annual financial reporting.

In addition to requirements under dealer agreements, we are subject to additional provisions contained in supplemental agreements, framework agreements, dealer addenda and manufacturers’ policies, collectively referred to as “framework agreements.” Framework agreements impose additional requirements similar to those discussed above. Such agreements also define other standards and limitations, including:

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company-wide performance criteria;

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capitalization requirements;

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limitations on changes in our ownership or management;

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limitations on the number of a particular manufacturer’s franchises owned by us;

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restrictions or prohibitions on our ability to pledge the stock of certain of our subsidiaries; and

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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 a proposed acquisition.

Some dealer agreements and framework agreements grant the manufacturer the right to purchase its dealerships from us under certain circumstances, including the occurrence of an extraordinary corporate transaction without the manufacturer’s prior consent or a material breach of the framework agreement. Some of our dealer agreements and framework agreements also give the manufacturer a right of first refusal if we propose to sell any dealership representing the manufacturer’s brands to a third party. These agreements may also attempt to limit the protections available under state dealer laws and require us to resolve disputes through binding arbitration.

Provisions for Termination or Non-renewal of Dealer and Framework Agreements. Certain of our dealer agreements expire after a specified period of time, ranging from one year to six years, while other of our agreements have a perpetual term. We expect to renew expiring agreements in the ordinary course of business. However, typical dealer agreements give the manufacturer the right to terminate or the option of non-renewal of the dealer agreements under certain circumstances, including:

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insolvency or bankruptcy of the dealership;

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failure to adequately operate the dealership or to maintain required capitalization levels;

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impairment of the reputation or financial condition of the dealership;

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change of control of the dealership without manufacturer approval;

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failure to complete facility upgrades required by the manufacturer or agreed to by the dealer; or

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material breach of other provisions of a dealer agreement.

See “Risk Factors—Risk Factors Related to Our Dependence on Vehicle Manufacturers—If we fail to obtain renewals of one or more of our dealer agreements on favorable terms, if certain of our franchises are terminated, or if certain manufacturers’ rights under their agreements with us are triggered, our operations may be adversely affected,” for a further discussion of the risks related to the termination or non-renewal of our dealer and framework agreements. While our dealer agreements may be terminated or not renewed for the reasons listed above, it is possible to negotiate a waiver of termination or non-renewal with the manufacturer.

Regulations

We operate in a highly regulated industry. Under various state laws each of our dealerships must obtain a license in order to establish, operate or relocate a dealership or operate an automotive repair service. In addition, we are subject to federal, state and local laws regulating the conduct of our business including advertising; motor vehicle and retail installment sales practices; leasing; sales of finance, insurance and vehicle protection products; truth in lending; deceptive trade practices; consumer protection and disclosure; consumer privacy; money laundering; environmental; land use and zoning; health and safety and employment practices. Our business is also subject to laws and regulations generally relating to corporate entities. We actively make efforts to assure we are in compliance with these laws and related regulations. See “Risk Factors—Risks Related to the Automotive Retail Industry—Our operations are subject to substantial laws and regulation and related claims and proceedings, any of which could adversely affect our business and financial results.”

We benefit from the protection of state dealer laws which limit a manufacturer’s ability to terminate or refuse to renew a franchise agreement; provide dealers with protest rights with respect to the addition of dealerships within proscribed geographic areas; and protect dealers against manufacturers unreasonably withholding consent to proposed changes in ownership of dealerships. However, some framework agreements attempt to limit the protection of state dealer laws. See “Risk Factors—Risks Related to Our Dependence On Vehicle Manufacturers—If state dealer laws that protect automotive retailers are repealed or weakened or superseded by our framework agreements with manufacturers, our dealerships will be more susceptible to termination, non-renewal or renegotiation of their dealer agreements.”

Environmental Matters

We are subject to a wide range of environmental laws and regulations, including those governing discharges into the air and water, the storage of petroleum substances and chemicals, the handling and disposal of wastes and the remediation of contamination. 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 or toxic substances and wastes. Operations involving the management of wastes are subject to requirements of the Federal Resource Conservation and Recovery Act and comparable state statutes. Pursuant to these laws, federal and state environmental agencies have established approved methods for handling, storage, treatment, transportation and disposal of regulated substances and wastes with which we must comply.

Our business also involves the use of above ground and underground storage tanks. Under applicable laws and regulations, we are responsible for the proper use, maintenance and abandonment of our regulated storage tanks and for remediation of subsurface soils and groundwater impacted by releases from existing or abandoned storage tanks. In addition to these regulated tanks, we own, operate, or have otherwise closed in place other underground and above ground devices or containers (such as automotive lifts and service pits) that may not be classified as regulated tanks, but which could or may have released stored materials into the environment, thereby potentially obligating us to clean up any soils or groundwater resulting from such releases.

We are also subject to laws and regulations governing remediation of contamination at or from our facilities or at facilities where we send hazardous or toxic substances or wastes for treatment, recycling or disposal. The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, also known as the “Superfund” law, and similar state statutes, imposes liability for the entire cost of a cleanup, without regard to fault or the legality of the original conduct, on those that are considered to have contributed to the release of a “hazardous substance.” Responsible parties include the owner or operator of the site or sites where the release occurred and companies that disposed or arranged for the disposal of the hazardous substances released at such sites. These responsible parties also may be liable for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances. Currently, we are not aware of any material “Superfund” or other remedial liabilities to which we are subject.

Further, the Federal Clean Water Act and comparable state statutes prohibit discharges of pollutants into regulated waters without the necessary permits, require containment of potential discharges of oil or hazardous substances and require preparation of spill contingency plans. We are not aware of any non-compliance with the wastewater discharge requirements, requirements for the containment of potential discharges and spill contingency planning or other environmental laws applicable to our operations.

Environmental laws and regulations are very complex and it has become difficult for businesses that routinely handle hazardous and non-hazardous wastes to achieve and maintain full compliance with all applicable environmental laws. From time to time we experience incidents and encounter conditions that will not be in compliance with environmental laws and regulations. However, none of our dealerships has been subject to any material environmental liabilities in the past, nor do we know of any fact or condition that would result in any material environmental liabilities being incurred in the future. Nevertheless, environmental laws and regulations and their interpretation and enforcement are changed frequently and we believe that the trend of more expansive and stricter environmental legislation and regulations is likely to continue. As a result, there can be no assurance that compliance with environmental laws or regulations or the future discovery of unknown environmental conditions will not require additional expenditures by us, or that such expenditures would not be material. Our operations are subject to substantial laws and regulations and related claims and proceedings, any of which could adversely affect our business and financial results.”

Employees

As of December 31, 2007, we employed approximately 8,300 people. We believe our relationship with our employees is favorable. We do not have employees that are represented by a labor union. In the future, we may acquire additional businesses that have unionized employees. Certain of our facilities are located in areas of high union concentration, and such facilities are susceptible to union-organizing activity. In addition, because of our dependence on vehicle manufacturers, we may be affected adversely by labor strikes, work slowdowns and walkouts at vehicle manufacturers’ production facilities and transportation modes.

Insurance

Because of their vehicle inventory and the nature of the automotive retail business, automobile retail dealerships generally require significant levels of insurance covering a broad variety of risks. Our insurance program includes multiple umbrella policies with a total per occurrence and aggregate limit of $100.0 million. We also have directors and officers insurance, real property insurance, comprehensive coverage for our vehicle inventory, garage liability and employee dishonesty insurance.

Item 1A.

Risk Factors

In addition to the other information in this report, you should consider carefully the following risk factors when evaluating our business.

RISK FACTORS RELATED TO OUR DEPENDENCE ON VEHICLE MANUFACTURERS

If we fail to obtain renewals of one or more of our dealer agreements on favorable terms, if certain of our franchises are terminated, or if certain manufacturers’ rights under their agreements with us are triggered, our operations may be adversely affected.

Each of our dealerships operates under the terms of a dealer agreement with the manufacturer (or manufacturer-authorized distributor) of each new vehicle brand it carries and/or is authorized to service. Our dealerships may obtain new vehicles from manufacturers, service vehicles, sell new vehicles and display vehicle manufacturers’ trademarks only to the extent permitted under dealer agreements. As a result of the terms of our dealer, framework and related agreements and our dependence on these franchise rights, manufacturers exercise a great deal of control over our day-to-day operations and the terms of these agreements govern key aspects of our operations, acquisition strategy and capital spending.

Our franchise agreements may be terminated or not renewed by manufacturers for a number of reasons, and many of the manufacturers have the right to direct us to divest our dealerships if there is a default under the franchise agreement, an unapproved change of control, or other unapproved events. We cannot assure you we will be able to renew any of our existing dealer agreements or that we will be able to obtain renewals on favorable terms. Most of our dealer agreements also provide the manufacturer with the right of first refusal to

purchase from us any franchise we seek to sell. Our results of operations may be materially and adversely affected to the extent that our franchise rights become compromised or our operations restricted due to the terms of our dealer agreements or if we lose franchises representing a significant source of our revenues.

Our failure to meet manufacturer consumer satisfaction, financial or sales performance requirements may adversely affect our ability to acquire new dealerships and our profitability.

Many manufacturers attempt to measure customers’ satisfaction with their experience in our sales and service departments through rating systems that are generally known in the automotive retailing industry as consumer satisfaction indexes (“CSI”). CSI ratings are in addition to the right of manufacturers to monitor the financial and sales performance of dealerships. At the time we acquire a dealership or enter into a new dealership or framework agreement, several manufacturers establish sales or performance criteria for that dealership, in some cases in the form of a business plan. These criteria have been modified by various manufacturers from time to time in the past, and we cannot assure you that they will not be further modified or replaced by different criteria in the future. Some of our dealerships have had difficulty from time to time meeting these standards. We cannot assure you that we will be able to comply with these standards in the future.

In addition, manufacturers may use these criteria as factors in evaluating applications for acquisitions. A manufacturer may refuse to consent to our acquisition of one of its franchises if it determines our dealerships do not comply with its performance standards. This may impede our ability to execute our acquisition strategy and hinder our ability to grow. See also, “Risk Factors Related to our Dependence on Vehicle Manufacturers—Manufacturers’ restrictions on acquisitions may limit our future growth and impact our profitability.” In addition, we receive payments and incentives from certain manufacturers based, in part, on CSI scores, and future payments may be materially reduced or eliminated if our CSI scores decline.

The reorganization or bankruptcy of one or more of the manufacturers could have a material adverse affect on our operations.

Certain manufacturers have incurred substantial operating losses in recent periods. Sustained periods of poor financial performance by a manufacturer may force it to seek to reorganize or to seek protection from creditors in bankruptcy. A reorganization by a manufacturer may, among other things, result in a delay in the introduction of new or competitive makes or models, an elimination of certain makes or models or dealership locations, a disruption in delivery or availability of service or parts, a delay or failure to reimburse us for warranty work and holdback receivables, or a disruption in vehicle deliveries to our dealerships. If an attempted reorganization proves unsuccessful for the manufacturer, the continued financial distress could result in the cessation of its operations.

In the event of a bankruptcy by a vehicle manufacturer, among other things: (i) the manufacturer could seek to terminate all or certain of our franchises, and we may not receive adequate compensation for them, (ii) we may not be able to collect some or all of our receivables that are due from such manufacturer and we may be subject to preference claims relating to payments to us made by such manufacturer prior to bankruptcy, (iii) it may increase our cost to obtain financing for our new vehicle inventory with such manufacturer’s captive finance subsidiary, which may cause us to finance our new vehicle inventory with alternate finance sources on less favorable terms, and (iv) consumer demand for such manufacturer’s products could be materially adversely affected, especially if costs related to improving such manufacturer’s poor financial condition are imputed to the price of its products.

The occurrence of any one or more of the above-mentioned events could have a material adverse affect on our day-to-day operations. Furthermore, such events could result in a partial write-down of our manufacturer franchise rights (to the extent that we have recorded them) or our receivables, and a partial write-down of our goodwill. See also “Risk Factors—Risk Factors Related to our Dependence on Vehicle Manufacturers—Adverse conditions affecting the manufacturers may negatively impact our revenues and profitability.”

Manufacturers’ restrictions on acquisitions may limit our future growth and impact our profitability.

We are generally required to obtain manufacturer consent before we can acquire any additional dealerships. In addition, many of our dealer and framework agreements require that we meet certain customer service and sales performance standards as a condition to additional dealership acquisitions. We cannot assure you that we will meet these performance standards or that manufacturers will consent to future acquisitions, which may deter us from being able to take advantage of market opportunities and restrict our ability to expand our business. The process of applying for and obtaining manufacturer consents can take a significant amount of time, generally 60 to 90 days or more. Delays in consummating acquisitions caused by this process may negatively affect our ability to acquire dealerships that we believe will produce acquisition synergies and integrate well into our overall growth strategy. In addition, manufacturers typically establish minimum capital requirements for each of their

dealerships on a case-by-case basis. As a condition to granting consent to a proposed acquisition, a manufacturer may require us to remodel and upgrade our facilities and capitalize the subject dealership at levels we would not otherwise choose, causing us to divert our financial resources from uses that management believes may be of higher long-term value to us. Furthermore, the exercise by manufacturers of their right of first refusal to acquire a dealership may prevent us from acquiring dealerships that we have identified as important to our growth, thereby having an adverse affect on our ability to grow through acquisitions.

Many vehicle manufacturers place limits on the total number of franchises that any group of affiliated dealerships may own. Certain manufacturers place limits on the number of franchises or share of total brand vehicle sales maintained by an affiliated dealership group on a national, regional or local basis, as well as limits on store ownership in contiguous markets. If we reach these limits, we may be prevented from making further acquisitions, which could affect our growth.

If state dealer laws that protect automotive retailers are repealed, weakened or superseded by our framework agreements with manufacturers, our dealerships will be more susceptible to termination, non-renewal or renegotiation of their dealer agreements.

Applicable state dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with written notice setting forth “good cause” and stating the grounds for termination or non-renewal. Some state dealer laws allow dealers to file protests or petitions or attempt to comply with the manufacturer’s criteria within the notice period to avoid the termination or non-renewal. Though unsuccessful to date, manufacturers’ lobbying efforts may lead to the repeal or revision of state dealer laws. We have framework agreements with certain of our manufacturers. Among other provisions, these agreements attempt to limit the protections available to dealers under state dealer laws. If dealer laws are repealed in the states in which we operate, manufacturers may be able to terminate our franchises without providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer laws, it may also be more difficult for our dealers to renew their dealer agreements upon expiration. See “Business—Dealer and Framework Agreements—Regulations.”

Our dealerships depend upon vehicle sales and, therefore, their success depends in large part upon customer demand for the particular vehicle lines they carry.

The success of our dealerships depends in large part on the overall success of the vehicle lines they carry. Historically, we have generated most of our revenue through new vehicle sales. New vehicle sales also tend to lead to sales of higher-margin products and services such as finance and insurance products and parts and services. Although we have sought to limit our dependence on any one vehicle brand, we have focused our new vehicle sales operations on mid-line import and luxury brands.

For the year ended December 31, 2007, brands representing 5% or more of our revenues from new vehicle retail sales were as follows:


Brand	% of Total New Light Vehicle Retail Sales
Honda	23	%
Nissan	13	%
Mercedes-Benz	9	%
Toyota	8	%
BMW	8	%
Lexus	7	%
Ford	6	%
Acura	5	%

No other brand accounted for more than 5% of our total new vehicle retail sales revenue for the year ended December 31, 2007.

If we fail to obtain a desirable mix of popular new vehicles from manufacturers, our profitability will be negatively impacted.

We depend on manufacturers to provide us with a desirable mix of popular new vehicles. Typically, popular vehicles produce the highest profit margins but tend to be the most difficult to obtain from manufacturers. Manufacturers generally allocate their vehicles among their franchised dealerships based on the sales history of each dealership and in some instances on the level of capital expenditures. If our dealerships experience prolonged sales slumps, those manufacturers will cut back their allotments of popular vehicles to our dealerships and new vehicle sales and profits may decline.

If automobile manufacturers decrease or discontinue incentive programs, our sales volumes may be adversely affected.

Our dealerships benefit from certain sales incentives, warranties and other programs of our manufacturers that are intended to promote and support new vehicle sales. Some key incentive programs include:

•

customer rebates on new vehicles;

•

dealer incentives on new vehicles;

•

special financing or leasing terms; and

•

warranties on new and used vehicles.

Manufacturers often make many changes to their incentive programs during each year. A reduction or discontinuation of key manufacturers’ incentive programs may reduce our new vehicle unit sales and related revenue.

Adverse conditions affecting the manufacturers of the vehicles that we sell may negatively impact our revenues and profitability.

Our ability to successfully market vehicles to the public depends to a great extent on aspects of our manufacturers’ operations. Conditions which negatively affect our manufacturers in the following areas could similarly have an adverse affect on our revenues and profitability:

•

financial condition;

•

marketing efforts;

•

vehicle design;

•

production capabilities;

•

reputation for quality;

•

management; and

•

labor relations.

Manufacturers’ restrictions regarding a change in our stock ownership may result in the termination or forced sale of our franchises, which may adversely impact the value of our common stock.

Some of our dealer agreements and framework agreements with manufacturers prohibit transfers of any ownership interests of a dealership or, in some cases, its parent, without manufacturer consent. Our agreements with some manufacturers provide that, under certain circumstances, we may lose the franchise (either through termination or forced sale) if a person or entity acquires an ownership interest in us above a specified level or if a person or entity acquires the right to vote a specified level of our common stock without the approval of the applicable manufacturer. Violations by our stockholders of these ownership restrictions are generally outside of our control and may result in the termination or non-renewal of our dealer and framework agreements or forced sale of one or more franchises, which may have a material adverse effect on us. These restrictions may also prevent or deter prospective acquirers from acquiring control of us and, therefore, may adversely impact the value of our common stock.

RISKS RELATED TO COMPETITION

Substantial competition in automobile sales and services may adversely affect our profitability.

The automotive retail and service industry is highly competitive with respect to price, service, location and selection. Our competition includes:

•

franchised automobile dealerships in our markets that sell the same or similar new and used vehicles;

•

privately negotiated sales of used vehicles;

•

Internet-based used vehicle brokers that sell used vehicles to consumers;

•

service center chain stores; and

•

independent service and repair shops.

We do not have any cost advantage in purchasing new vehicles from manufacturers. We typically rely on advertising, merchandising, sales expertise, service reputation and dealership location to sell new and used vehicles. Our dealer agreements do not grant us the exclusive right to sell a manufacturer’s product within a given geographic area. Our revenues or profitability may be materially and adversely affected if competing dealerships expand their market share or additional franchises are awarded in our markets.

RISKS RELATED TO THE AUTOMOTIVE RETAIL INDUSTRY

Our business will be harmed if overall consumer demand suffers from a significant or sustained downturn.

Our business is heavily dependent on consumer demand and preferences. Our revenues will be materially and adversely affected if there is a significant or sustained downturn in overall levels of consumer spending. Retail vehicle sales are cyclical and historically have experienced periodic downturns characterized by oversupply and weak demand. These cycles are often dependent on general economic conditions and consumer confidence, as well as the level of discretionary personal income, credit availability and interest rates. The current economic climate in the United States and future recessions may have a material adverse effect on our retail business, particularly sales of new and used automobiles. In addition, significant or sustained increases in gasoline prices may lead to a reduction in automobile purchases or a shift in buying patterns from luxury or SUV models (which typically provide higher profit margins to retailers) to smaller, more economical vehicles (which typically have lower margins).

Our business may be adversely affected by unfavorable conditions in our local markets, even if those conditions are not prominent nationally.

Our performance is also subject to local economic, competitive and other conditions prevailing in our various geographic areas. Our dealerships currently are located in the Atlanta, Austin, Chapel Hill, Charlotte, Charlottesville, Dallas-Fort Worth, Fayetteville, Fort Pierce, Fresno, Greensboro, Greenville, Houston, Jackson, Jacksonville, Little Rock, Los Angeles, Orlando, Princeton, Richmond, Sacramento, St. Louis and Tampa markets and the results of our operations therefore depend substantially on general economic conditions and consumer spending levels in those areas.

The seasonality of the automobile retail business magnifies the importance of our second and third quarter results.

The automobile industry is subject to seasonal variations in revenues. Demand for automobiles is generally lower during the first and fourth quarters of each year. Accordingly, we expect our revenues and operating results generally to be lower in our first and fourth quarters than in our second and third quarters. If conditions surface during the second or third quarters that weaken automotive sales, such as severe weather in the geographic areas in which our dealerships operate, war, high fuel costs, depressed economic conditions or similar adverse conditions, our revenues for the year will be disproportionately adversely affected.

Our business may be adversely affected by import product restrictions, foreign trade risks and currency valuations that may impair our ability to sell foreign vehicles or parts profitably.

A portion of our new vehicle business involves the sale of vehicles, parts or vehicles composed of parts that are manufactured outside the United States. As a result, our operations are subject to customary risks of importing merchandise, including import duties, exchange rates, trade restrictions, work stoppages and general political and socio-economic conditions in other countries. The United States or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs or other restrictions, or adjust presently prevailing quotas, duties or tariffs, which may affect our operations and our ability to purchase imported vehicles and/or parts at reasonable prices. The relative weakness of the U.S. dollar against foreign currencies may adversely affect our cost of purchase of certain vehicles, which may also result in an increase in the retail price of such vehicles, which could discourage consumers from purchasing such vehicles. This could adversely impact our profitability.

A decline of available financing may adversely affect our sales of vehicles and the results of our finance and insurance business.

The majority of vehicle buyers finance their purchases, particularly those seeking to purchase used vehicles. If there is a decline in the availability of credit or an increase in the cost to consumers for such credit, the ability of consumers to purchase vehicles could be limited, resulting in a decline in our vehicle sales. Retail sales of used vehicles generally have higher gross margins than new vehicles. A decline in our vehicle sales could have a material adverse effect on our revenues and an adverse effect on our profitability.

RISKS RELATED TO OUR ACQUISITION STRATEGY

If we are unable to acquire and successfully integrate additional dealerships, we will be unable to realize desired results from our growth through acquisition strategy and acquired operations will drain resources from comparatively profitable operations.

We believe that the automobile retailing industry is a mature industry whose sales are significantly impacted by the prevailing economic climate in local markets. Accordingly, we believe that our future growth depends in part on our ability to manage expansion, control costs in our operations and acquire and integrate acquired dealerships into our organization. In pursuing our strategy of acquiring other dealerships, we face risks commonly encountered with growth through acquisitions. These risks include, but are not limited to:

•

failing to obtain manufacturers’ consents to acquisitions of additional franchises;

•

incurring significant transaction related costs for both completed and failed acquisitions;

•

incurring significantly higher capital expenditures and operating expenses;

•

failing to integrate the operations and personnel of the acquired dealerships and impairing relationships with employees;

•

incurring undisclosed liabilities at acquired dealerships;

•

disrupting our ongoing business and diverting our management resources to newly acquired dealerships; and

•

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 and reporting control systems, data processing systems and management structure. Moreover, our failure to retain qualified management personnel at any acquired dealership may increase the risk associated with integrating the acquired dealership. If we cannot adequately anticipate and respond to these demands, we may fail to realize acquisition synergies and our resources will be focused on incorporating new operations into our structure rather than on areas that may be more profitable. See also “Risk Factors Related to our Dependence on Vehicle Manufacturers—Manufacturers’ restrictions on acquisitions may limit our future growth and impact our profitability.”

There is competition to acquire automotive dealerships, and we may not be able to fully implement our growth through acquisition strategy if attractive targets are acquired by competing buyers or if the market drives prices to the point where an acceptable rate of return is not achievable.

We believe that the United States automotive retailing market is fragmented and offers many potential acquisition candidates that meet our target criteria. However, we compete with several other national, regional and local dealer groups, and other strategic and financial buyers, some of which may have greater financial resources. Competition for attractive acquisition targets may result in fewer acquisition opportunities for us, and increased acquisition costs. We will have to forego acquisition opportunities to the extent that we cannot negotiate acquisitions on acceptable terms.

OTHER RISKS RELATED TO OUR BUSINESS

Failure to comply with certain covenants in our debt and lease agreements could adversely affect our ability to conduct our business and adversely affect our compliance with our Committee Credit Facility.

We have certain debt service obligations. As of December 31, 2007, we had total debt of $482.3 million, excluding floor plan notes payable and the effects of our fair value hedge on our 8% Notes. In addition, we and our subsidiaries have the ability to obtain additional debt from time to time to finance acquisitions, real property purchases, capital expenditures or for other purposes, subject to the restrictions contained in our Committed Credit Facility and the indentures governing our 8% Notes and our 7.625% Notes. We will have substantial debt service obligations, consisting of required cash payments of principal and interest, for the foreseeable future.

In addition, we have operating and financial restrictions and covenants in our debt instruments, including our Committed Credit Facility and the indentures under our 8% Notes and our 7.625% Notes. These place restrictions on, among other things, our ability to incur additional indebtedness, to create liens or other encumbrances, and to make certain payments (including dividends and repurchases of our shares and investments). Our Committed Credit Facility requires us to maintain certain financial ratios. Our ability to comply with these ratios may be affected by events beyond our control. A breach of any of the covenants in our debt instruments or our inability to comply with the required financial ratios could result in an event of default, which, if not cured or waived, could have a material adverse effect on us. In the event of any default under our Committed Credit Facility, the payment of all outstanding borrowings could be accelerated, together with accrued and unpaid interest and other fees, and we would be required to apply our available cash to repay these borrowings or could be prevented from making debt service payments on our 8% Notes, our 7.625% Notes, and our 3% Notes, any of which would be an event of default under the respective indentures for such Notes. In addition, as a result of entering into a number of sale-leaseback agreements, a number of our dealerships are located on properties that we lease. Each of the leases governing such properties has certain covenants with which we must comply.

The loss of key personnel may adversely affect our business.

Our success depends to a significant degree upon the continued contributions of our management team. Manufacturer dealer or framework agreements may require the prior approval of the applicable manufacturer before any change is made in dealership general managers. The loss of the services of one or more of these key employees may materially impair the profitability of our operations.

In addition, we may need to hire additional managers as we expand. Potential acquisitions are viable to us only if we are able to retain experienced managers or obtain replacement managers should the owner or manager of the acquired dealership not continue to manage the business. The market for qualified employees in the industry and in the regions in which we operate, particularly for general managers and sales and service personnel, is highly competitive and may subject us to increased labor costs during periods of low unemployment. The loss of the services of key employees or the inability to attract additional qualified managers may adversely affect the ability of our dealerships to conduct their operations in accordance with the standards set by us or the manufacturers.

We depend on our executive officers as well as other key personnel. Most of our key personnel not are bound by employment agreements, and those with employment agreements are bound only for a limited period of time. Further, we do not maintain “key man” life insurance policies on any of our executive officers or key personnel. If we are unable to retain our key personnel, we may be unable to successfully develop and implement our business plans.

Our capital costs and our results of operations may be materially and adversely affected by changes in interest rates.

We generally finance our purchases of new vehicle inventory and have the ability to finance the purchase of used vehicle inventory using floor plan credit facilities under which we are charged interest at floating rates. In addition, we have the ability to obtain capital for general corporate purposes, dealership acquisitions and property purchases and improvements under predominantly floating interest rate credit facilities. Therefore, our interest expense from 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 in the interest rate sensitive aspects of our business, particularly new and used vehicle sales, because many of our customers finance their vehicle purchases. As a result, rising interest rates may have the effect of simultaneously increasing our costs and reducing our revenues. Given our debt composition as of December 31, 2007, each one percent increase in market interest rates would increase our total annual interest expense, including floor plan interest, by $5.5 million.

We receive interest credit assistance from certain automobile manufacturers, which is reflected as a reduction in the cost of inventory on the balance sheet and is recognized as a reduction in cost of sales. Although we can provide no assurance as to the amount of future floor plan credits, it is our expectation, based on historical experience that an increase in prevailing interest rates would result in increased interest credit assistance from certain automobile manufacturers. Our operations are subject to substantial laws and regulations and related claims and proceedings, any of which could adversely affect our business and financial results.

We are subject to a wide range of federal, state and local laws and regulations, including local licensing requirements. These laws regulate the conduct of our business, including motor vehicle and retail installment sales practices; leasing; sales of finance, insurance and vehicle protection products; truth in lending; deceptive

trade practices; consumer protection; consumer privacy; money laundering; advertising; land use and zoning; health and safety and employment practices. Environmental laws and regulations govern, among other things, discharges into the air and water, storage of petroleum substances and chemicals, the handling and disposal of wastes and remediation of contamination arising from spills and releases. If we or our employees at the individual dealerships violate or are alleged to violate these laws and regulations, we could be subject to individual or consumer class actions, administrative, civil or criminal actions investigations or actions and adverse publicity. Such actions could expose us to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including suspension or revocation of our licenses and franchises to conduct dealership operations. Some jurisdictions regulate finance fees and administrative or document fees that may be charged in connection with vehicle sales, which could restrict our ability to generate revenue from these activities

Future changes in financial accounting standards or practices or existing taxation rules or practices may affect our reported results of operations.

A change in accounting standards or practices or a change in existing taxation rules or practices can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. New accounting pronouncements and taxation rules and varying interpretations of accounting pronouncements and taxation practices have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, in December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141R “Business Combinations,” to provide greater transparency to the information that a reporting entity provides in its financial reports about a business combination and its effects. A substantial change brought about by SFAS No. 141R is the requirement to expense all acquisition related costs in pre-acquisition periods. SFAS No. 141R is effective for fiscal periods beginning after December 15, 2008. We expect that the adoption of SFAS No. 141R will negatively impact our income before taxes by $0.1 million to $0.3 million per acquisition.

During 2007, the FASB issued, but subsequently repealed, FSP–ABA 14-a, which was a proposal to change the accounting for convertible debt that may be settled in cash upon conversion. Should the FASB decided to issue FSP-ABA 14-a, such proposal would cause an increase to our interest expense by $4.1 million in 2009.

Item 1B.

Unresolved Staff Comments

None

Item 2.

Properties

We lease our corporate headquarters, which is located at 622 Third Avenue, 37^th Floor, New York, New York. In addition, as of December 31, 2007, we had 124 franchises situated in 93 dealership locations throughout eleven states. As of December 31, 2007, we leased 81 of these locations and owned the remainder. We have two locations in North Carolina, one location in Mississippi and one location in St. Louis where we lease the land but own the building facilities. These locations are included in the leased column of the table below. In addition, we operate 24 collision repair centers. We lease 16 of these collision repair centers and own the remainder.


	Dealerships			Collision Repair Centers
	Owned	Leased		Owned	Leased
Coggin Automotive Group	3	17	(a)(b)	3	4
Courtesy Autogroup	1	9	(d)	2	—
Crown Automotive Company	3	16	(c)	—	2
David McDavid Auto Group	—	7		—	5
Gray-Daniels Auto Family	1	6		—	1
Nalley Automotive Group	—	15		3	1
California Dealerships	—	4		—	—
Northpoint Auto Group	—	6		—	2
Plaza Motor Company	4	1		—	1

Total	12	81		8	16

(a)	Includes one dealership that leases a new vehicle facility and operates a separate used vehicle facility that is owned.

(b)	Includes two pending divestitures as of December 31, 2007, which were completed in the first quarter of 2008.

(c)	Includes two pending divestitures as of December 31, 2007.

(d)	Includes one pending divestiture as of December 31, 2007.

Item 3.

Legal Proceedings

From time to time, we and our dealerships are named in claims, including class action claims, involving the manufacture and sale or lease of motor vehicles, including but not limited to the charging of administrative fees, the operation of dealerships, contractual disputes and other matters arising in the ordinary course of our business. With respect to certain of these claims, the manufacturers of motor vehicles or the sellers of dealerships that we have acquired have indemnified us. We do not expect that any potential liability from these claims will materially affect our financial condition, liquidity, results of operations or financial statement disclosures.

As previously reported, we were involved in a breach of contract action in Arkansas state court that commenced on or about February 24, 2004, relating to amounts allegedly due the parties from whom we purchased assets in the pilot “Price 1” program. We discontinued this program in the third quarter of 2003. Patric Brosh, Mark Lunsford, Mel Anderson and their companies, NCAS, L.L.C. and New Century Auto Sales Corporation, sought damages in excess of $23.0 million for purported breach of their Purchase Agreement and Employment Agreements due to discontinuation of the pilot “Price 1” program. On May 14, 2007, we received a jury verdict that we had no liability to the plaintiffs under the agreements and the case was dismissed in its entirety. Plaintiffs did not appeal the judgment against them. We have appealed the court’s denial of our application to recover our attorneys’ fees.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “ABG”. Quarterly information concerning (i) our high and low closing sales price per share of our common stock as reported by the NYSE and (ii) the cash dividends that we paid to our stockholders, in 2007 and 2006, is as follows:


	High		Low		Dividend
					(per share)
Fiscal Year Ended December 31, 2006
First Quarter	$	20.55	$	16.11	$	—
Second Quarter		22.15		19.27		—
Third Quarter		21.37		20.00		0.20
Fourth Quarter		26.08		20.65		0.20
Fiscal Year Ended December 31, 2007
First Quarter	$	28.50	$	22.94	$	0.20
Second Quarter		29.82		24.22		0.20
Third Quarter		25.29		19.01		0.225
Fourth Quarter		21.27		14.84		0.225

On February 27, 2008, the last reported sale price of our common stock on the New York Stock Exchange was $15.00 per share, and there were approximately 81 record holders of our common stock.

On January 31, 2008, our board of directors declared a $0.225 per share cash dividend payable on February 29, 2008 to stockholders of record as of the close of business on February 8, 2008. This was the seventh consecutive quarter that a dividend was paid.

The repurchase of stock and payment of dividends are subject to certain limitations under the terms of our 8% Notes, 7.625% Notes and Committed Credit Facility. Such limits are increased each quarter by 50% of our net income and decreased by any dividend payments or share repurchases during the period. As of December 31, 2007, our ability to repurchase shares of our outstanding common stock or pay cash dividends was limited to $16.1 million under the most restrictive provision. Any future change in our dividend policy will be made at the discretion of our board of directors and will depend on then applicable contractual restrictions contained in our financing credit facilities and other agreements, our results of operations, earnings, capital requirements and other factors considered relevant by our board of directors.


Period	Total Number of Shares Purchases	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Program (1)
10/01/07-10/31/07	382,100	$	19.76	382,100	980,000
11/01/07-11/30/07	—	$	—	—	980,000
12/01/07-12/31/07	—	$	—	—	980,000

Total	382,100	$	19.76	382,100	980,000

(1)

On August 13, 2007, we announced that our board of directors authorized the repurchase of up to 2.0 million shares of the Company’s common stock. This share repurchase program is to be completed by the end of 2008. The 10b5-1 trading plan under which we have been repurchasing our shares of common stock was adopted on August 21, 2007.

PERFORMANCE GRAPH

The following graph furnished by the Company shows the value as of December 31, 2007, of a $100 investment in the Company’s common stock made on March 14, 2002, 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 Peer Group Index composed of the common stock of AutoNation, Inc., Sonic Automotive, Inc., Group 1 Automotive, Inc., Penske Automotive Group, Inc. and Lithia Motors, Inc., in each case on a “total return” basis assuming reinvestment of dividends. The market-weighted Peer Group Index values were calculated from the beginning of the performance period. The stock performance shown below is not necessarily indicative of future performance.

LOGO

Item 6.

Selected Financial Data

The accompanying income statement data for the years ended December 31, 2006, 2005, 2004, and 2003 have been reclassified to reflect the status of our discontinued operations as of December 31, 2007.


	For the Years Ended December 31,
Income Statement Data:	2007			2006			2005			2004			2003
	(in thousands, except per share data)
Revenues:
New vehicle	$	3,385,225		$	3,425,074		$	3,267,935		$	2,945,728		$	2,510,751
Used vehicle		1,462,920			1,443,899			1,315,907			1,151,738			1,030,733
Parts, service and collision repair		702,633			670,520			626,443			556,666			476,624
Finance and insurance, net		162,189			154,894			146,566			128,426			107,922

Total revenues		5,712,967			5,694,387			5,356,851			4,782,558			4,126,030
Cost of sales		4,823,523			4,823,609			4,549,899			4,061,596			3,496,470

Gross profit		889,444			870,778			806,952			720,962			629,560
Selling, general and administrative expenses		(685,632	)		(663,856	)		(627,146	)		(569,921	)		(489,040	)
Depreciation and amortization		(21,492	)		(20,061	)		(19,441	)		(17,989	)		(17,474	)
Other operating (expense) income, net		(958	)		1,485			(552	)		690			1,461

Income from operations		181,362			188,346			159,813			133,742			124,507
Other income (expense):
Floor plan interest expense		(43,107	)		(40,533	)		(27,597	)		(18,372	)		(14,253	)
Other interest expense		(39,245	)		(44,185	)		(40,841	)		(39,053	)		(39,932	)
Interest income		4,336			5,111			966			744			444
Loss on extinguishment of long-term debt		(18,523	)		(1,144	)		—			—			—

Total other expense, net		(96,539	)		(80,751	)		(67,472	)		(56,681	)		(53,741	)

Income before income taxes		84,823			107,595			92,341			77,061			70,766
Income tax expense		30,537			40,506			34,573			28,721			26,891

Income from continuing operations		54,286			67,089			57,768			48,340			43,875
Discontinued operations, net of tax		(3,331	)		(6,340	)		3,313			1,733			(28,688	)

Net income	$	50,955		$	60,749		$	61,081		$	50,073		$	15,187

Income from continuing operations per common share:
Basic	$	1.67		$	2.02		$	1.77		$	1.49		$	1.34

Diluted	$	1.63		$	1.97		$	1.76		$	1.48		$	1.34

Cash dividends declared per common share	$	0.85		$	0.40			—			—			—


	As of December 31,
Balance Sheet Data:	2007		2006		2005		2004		2003
	(in thousands)
Working Capital	$	320,755	$	412,009	$	346,954	$	295,496	$	259,784
Inventories		769,992		775,313		709,791		761,557		650,397
Total assets		2,016,300		2,030,837		1,930,800		1,897,959		1,814,279
Floor plan notes payable		673,951		700,777		614,382		650,948		602,167
Long-term debt		473,851		454,010		472,427		492,536		557,408
Total shareholders’ equity		584,225		611,833		547,766		481,732		434,825

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

We are one of the largest automotive retailers in the United States, operating 124 franchises (93 dealership locations) in 22 metropolitan markets within 11 states as of December 31, 2007. We offer an extensive range of automotive products and services, including new and used vehicles, vehicle maintenance, replacement parts, collision repair services, and financing, insurance and service contracts. We offer 35 domestic and foreign brands of new vehicles, including six heavy truck brands. We also operate 24 collision repair centers that serve our markets.

Our retail network is currently organized into primarily four regions and includes nine locally branded dealership groups: (i) Florida (comprising our Coggin dealerships, operating primarily in Jacksonville, Fort Pierce and Orlando, and our Courtesy dealerships operating in Tampa), (ii) West (comprising our McDavid dealerships operating throughout Texas, our North Point dealerships operating in Little Rock, Arkansas and our California dealerships operating in Los Angeles, Sacramento and Fresno), (iii) Mid-Atlantic (comprising our Crown dealerships operating in New Jersey, North Carolina, South Carolina and Virginia) and (iv) South (comprising our Nalley dealerships operating in Atlanta, Georgia). Our Plaza dealerships operating in St. Louis, Missouri and our Gray Daniels dealerships operating in Jackson, Mississippi remain standalone operations. We will continue to acquire single point dealerships or small dealership groups in our existing market areas, as well as large luxury franchises outside our existing markets, to grow our business, increase the number of vehicle brands we offer and to create a larger gross profit base over which to spread overhead costs,

Our revenues are derived primarily from four offerings: (i) the sale of new vehicles to individual retail customers (“new retail”) and the sale of new vehicles to commercial customers (“fleet”) (the terms “new retail” and “fleet” being collectively referred to as “new”); (ii) 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” being collectively referred to as “used”); (iii) maintenance and collision repair services and the sale of automotive parts at retail and wholesale (collectively referred to as “fixed operations”); and (iv) the arrangement of vehicle financing and the sale of various insurance and warranty products (collectively referred to as “F&I”). We evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle retailed (“PVR”), our fixed operations based on aggregate gross profit, and F&I based on dealership generated F&I PVR. We assess the organic growth of our revenue and gross profit by comparing the year-to-year results of stores that we have operated for at least twelve months.

The organic growth of our company is dependent upon the execution of our balanced automotive retailing and service business strategy as well as our strong brand mix, which is heavily weighted towards luxury and mid-line import brands. Sales of vehicles have historically fluctuated with general macroeconomic conditions, including consumer confidence, availability of consumer credit and fuel prices. We believe that any future negative trends in new vehicle sales will be mitigated by (i) the stability of our fixed operations, (ii) our variable cost structure and (iii) our advantageous brand mix. Historically, our brand mix has been less affected by market volatility than the U.S. automobile industry as a whole. We expect the recent industry-wide gain in market share of the luxury and mid-line import brands to continue in the near future.

Our gross profit margin varies with our revenue mix. The sale of new vehicles generally results in lower gross profit margin than used vehicle sales and revenues generated from our fixed operations business. As a result, when used vehicle and fixed operations revenue increases as a percentage of total revenue, we expect our overall gross profit margin to increase. We continue to implement new initiatives specifically designed to accelerate the growth of our high margin businesses and to leverage our selling, general and administrative (“SG&A”) expense structure.

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 selling expenses is variable (such as sales commissions), or controllable expenses (such as advertising), generally allowing our cost structure to adapt to changes in the retail environment. We evaluate commissions paid to salespeople as a percentage of retail vehicle gross profit and all other SG&A expenses in the aggregate as a percentage of total gross profit.

Our operations are generally subject to seasonal variations as we tend to generate more revenue and operating income in the second and third quarters than in the first and fourth quarters of the calendar year. Generally, the seasonal variations in our operations are caused by factors relating to weather conditions, changes in manufacturer incentive programs, model changeovers and consumer buying patterns, among other things. Over the past several years, certain automobile manufacturers have used a combination of vehicle pricing and financing incentive programs to generate increased customer demand for new vehicles. We anticipate that the manufacturers will continue to use these incentive programs in the near future to drive demand for their product offerings.

RESULTS OF OPERATIONS

Year Ended December 31, 2007, Compared to Year Ended December 31, 2006


	For the Years Ended December 31,
	2007			% of Gross Profit		2006			% of Gross Profit		Increase (Decrease)		% Change
	(In thousands)
REVENUES:
New vehicle	$	3,385,225				$	3,425,074				(39,849	)	(1	)%
Used vehicle		1,462,920					1,443,899				19,021		1	%
Parts, service and collision repair		702,633					670,520				32,113		5	%
Finance and insurance, net		162,189					154,894				7,295		5	%

Total revenues		5,712,967					5,694,387				18,580		—	%

COST OF SALES		4,823,523					4,823,609				(86	)	—	%

GROSS PROFIT		889,444		100	%		870,778		100	%	18,666		2	%
OPERATING EXPENSES:
Selling, general and administrative		(685,632	)	(77	)%		(663,856	)	(76	)%	21,776		3	%
Depreciation and amortization		(21,492	)	(3	)%		(20,061	)	(2	)%	1,431		7	%
Other operating (expense) income, net		(958	)	—	%		1,485		—	%	(2,443	)	(165	)%

Income from operations		181,362		20	%		188,346		22	%	(6,984	)	(4	)%
OTHER INCOME (EXPENSE):
Floor plan interest expense		(43,107	)	(5	)%		(40,533	)	(5	)%	2,574		6	%
Other interest expense		(39,245	)	(4	)%		(44,185	)	(5	)%	(4,940	)	(11	)%
Interest income		4,336		—	%		5,111		—	%	(775	)	(15	)%
Loss on extinguishment of long-term debt		(18,523	)	(2	)%		(1,144	)	—	%	17,379		NM	%

Total other expense, net		(96,539	)	(11	)%		(80,751	)	(10	)%	15,788		20	%

Income before income taxes		84,823		10	%		107,595		12	%	(22,772	)	(21	)%
INCOME TAX EXPENSE		30,537		4	%		40,506		4	%	(9,969	)	(25	)%

INCOME FROM CONTINUING OPERATIONS		54,286		6	%		67,089		8	%	(12,803	)	(19	)%
DISCONTINUED OPERATIONS, net of tax		(3,331	)	—	%		(6,340	)	(1	)%	(3,009	)	(47	)%

NET INCOME	$	50,955		6	%	$	60,749		7	%	(9,794	)	(16	)%

Income from continuing operations per common share—Diluted	$	1.63				$	1.97				(0.34	)	(17	)%

Net income per common share—Diluted	$	1.53				$	1.78				(0.25	)	(14	)%


	For the Years Ended December 31,						Increase (Decrease)			% Change
	2007			2006			Increase (Decrease)			% Change
	(In thousands, except for unit and PVR data)
Revenue:
Light vehicle—same store	$	5,292,834		$	5,271,823		$	21,011		—	%
Acquisitions		115,560			—

Total light vehicle		5,408,394			5,271,823			136,571		3	%
Heavy truck		304,573			422,564			(117,991	)	(28	)%

Total revenue	$	5,712,967		$	5,694,387		$	18,580		—	%

Gross Profit:
Light vehicle—same store	$	840,363		$	836,001		$	4,362		1	%
Acquisitions		17,555			—

Total light vehicle		857,918			836,001			21,917		3	%
Heavy truck		31,526			34,777			(3,251	)	(9	)%

Total gross profit	$	889,444		$	870,778		$	18,666		2	%

Retail Units:
Light vehicle—same store		155,394			159,246			(3,852	)	(2	)%
Acquisitions		3,187			—

Total light vehicle		158,581			159,246			(665	)	—	%
Heavy truck		4,054			5,986			(1,932	)	(32	)%

Total retail units		162,635			165,232			(2,597	)	(2	)%


New light vehicle revenue PVR	$	30,600		$	30,204			396		1	%


New vehicle revenue PVR	$	31,635		$	31,806			(171	)	(1	)%


New light vehicle gross profit PVR	$	2,308		$	2,311			(3	)	—	%


New vehicle gross profit PVR	$	2,326		$	2,315			11		—	%


Used light vehicle revenue PVR	$	18,200		$	17,711			489		3	%


Used vehicle revenue PVR	$	18,330		$	17,841			489		3	%


Used light vehicle gross profit PVR	$	2,098		$	2,162			(64	)	(3	)%


Used vehicle gross profit PVR	$	2,084		$	2,159			(75	)	(3	)%


Light vehicle dealership generated F&I PVR	$	1,017		$	935			82		9	%


Dealership generated F&I PVR	$	997		$	907			90		10	%


New light vehicle retail gross margin		7.5	%		7.7	%		(0.2	)%	(3	)%


New vehicle retail gross margin		7.4	%		7.3	%		0.1	%	1	%


Used light vehicle retail gross margin		11.5	%		12.2	%		(0.7	)%	(6	)%


Used vehicle retail gross margin		11.4	%		12.1	%		(0.7	)%	(6	)%


Light vehicle fixed operations gross margin		53.6	%		52.7	%		0.9	%	2	%


Fixed operations gross margin		51.7	%		50.7	%		1.0	%	2	%


Total light vehicle gross margin		15.9	%		15.9	%		—	%	—	%

Total gross margin		15.6	%		15.3	%		0.3	%	2	%

Net income decreased $9.8 million (16%) during the 2007 period as a result of a $12.8 million (19%) decrease in income from continuing operations, partially offset by a $3.0 million (47%) decrease in net losses from discontinued operations.

Our income from continuing operations during 2007 and 2006 was impacted by several items shown below (collectively referred to as “2007 Adjusting Items”). We believe that an alternative comparison of our income from continuing operations (“adjusted income from continuing operations”), which is not defined by Generally Accepted Accounting Principles (“GAAP”), can be made by adjusting for items that are not core dealership operating items and should not be considered when forecasting our future results. These 2007 Adjusting items are excluded by management when comparing actual results to forecasted results and are generally not included in external financial estimates of our business.

The non-GAAP measure adjusted income from continuing operations contains material limitations. Although we believe that corporate generated F&I gross profit, retirement benefits expenses, abandoned strategic project expenses, secondary stock offering expenses, losses from the extinguishment of long-term debt and legal settlement claims arising in, and before, the year 2003, are infrequent, and although we do not expect to recognize these items in the future, we cannot assure you that we will not recognize them in the future. Our income from continuing operations may not be comparable with income from continuing operations of other companies to the extent that other companies recognize similar items in income from continuing operations and do not provide disclosure of the amounts. In order to compensate for these limitations we also review the related GAAP measures. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from, and therefore may not be comparable to, similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” on page 61 of this report for more information.


	For the Years Ended December 31,					Increase (Decrease)			% Change
	2007		2006			Increase (Decrease)			% Change
	(In thousands)
Income from continuing operations, as reported	$	54,286	$	67,089		$	(12,803	)	(19	)%
Loss on extinguishment of long-term debt, net of tax		11,577		717
Retirement benefits expenses, net of tax		1,844		—
Legal settlements expense		1,569
Secondary stock offering expenses*		270		1,073
Corporate generated F&I gain, net of tax		—		(2,130	)
Gain on sale of a franchise, net of tax		—		(1,565	)
Abandoned strategic project expenses, net of tax		—		1,039

Adjusted income from continuing operations	$	69,546	$	66,223		$	3,323		5	%

*	Secondary offering expenses are not deductible for tax purposes; therefore, no tax benefit has been reflected.

The following discussion excludes the impact of the 2007 Adjusting items as we believe that excluding these items provides a more accurate representation of our year over year core dealership performance. Despite a challenging retail sales and overall weak economic environment in the second half of 2007, our adjusted income from continuing operations increased $3.3 million (5%) as compared to the 2006 period. Contributing to this increase in adjusted income from continuing operations was increased fixed operations and F&I gross profit of $23.0 million (7%) and $7.3 million (5%), respectively, partially offset by (i) our used vehicle operations, which generated $9.1 million (7%) less gross profit during 2007 as compared to 2006, due to a 70 basis point decrease in gross margin, primarily as a result of a softening economic environment in the second half of 2007, and (ii) a 30 basis point increase in our adjusted selling, general and administrative expense (“SG&A”) as a percentage of adjusted gross profit. In addition, our other interest expense decreased $4.9 million (11%) due to a lower average effective interest rate on our long-term debt as a result of our long-term debt refinancing, which was substantially completed during the first quarter of 2007 and finalized in the second quarter of 2007.

The $18.6 million increase in total revenue was primarily a result of a $32.1 million (5%) increase in fixed operations revenue, a $19.0 million (1%) increase in used vehicle revenue and a $7.3 million (5%) increase in F&I, partially offset by a $39.8 million (1%) decrease in new vehicle revenue. The increase in used vehicle revenue includes $30.3 million of used vehicle revenue from dealership acquisitions, a $3.8 million (1%) increase in same store wholesale revenue, partially offset by a $15.1 million (1%) decrease in same store retail revenue.

The $39.8 million (1%) decrease in new vehicle revenue includes a $116.9 million (35%) decrease in heavy truck revenue, an $8.3 million decrease in same store light vehicle retail revenue, partially offset by a $68.6 million increase of new vehicle revenue from dealership acquisitions, and a $16.7 million (11%) increase in same store fleet revenue.

The $18.7 million (2%) increase in total gross profit was primarily a result of a $23.0 million (7%) increase in fixed operations gross profit, and a $7.3 million (5%) increase in F&I gross profit, partially offset by a $9.1 million (7%) decrease in used vehicle gross profit. Our total gross profit margin increased 30 basis points to 15.6%.

New Vehicle—


	For the Years Ended December 31,								Increase (Decrease)		% Change
	2007				2006				Increase (Decrease)		% Change
	(In thousands, except for unit and PVR data)
Revenue:
New retail revenue—same store(1)
Luxury	$	1,093,328	35	%	$	1,064,687	33	%	28,641		3	%
Mid-line import		1,345,433	42	%		1,353,366	41	%	(7,933	)	(1	)%
Mid-line domestic		466,300	15	%		498,627	15	%	(32,327	)	(6	)%
Value		32,624	1	%		29,270	1	%	3,354		11	%

Total light vehicle retail revenue—same store		2,937,685				2,945,950			(8,265	)	—	%
Heavy trucks		216,374	7	%		333,283	10	%	(116,909	)	(35	)%

Total new retail revenue—same store(1)		3,154,059	100	%		3,279,230	100	%	(125,174	)	(4	)%
New retail revenue—acquisitions		68,621				—

Total new retail revenues		3,222,680				3,279,233			(56,553	)	(2	)%

Fleet revenue—same store(1)		162,545				145,841			16,704		11	%
Fleet revenue—acquisitions		—				—

Total fleet revenue		162,545				145,841			16,704		11	%

New vehicle revenue, as reported	$	3,385,225			$	3,425,0743			(39,849	)	(1	)%

New retail units:
New retail units—same store(1)
Luxury		23,169	23	%		23,418	23	%	(249	)	(1	)%
Mid-line import		55,274	55	%		55,380	54	%	(106	)	—	%
Mid-line domestic		16,049	16	%		17,324	17	%	(1,275	)	(7	)%
Value		1,646	2	%		1,412	1	%	234		17	%

Total light vehicle retail units—same store		96,138				97,534			(1,396	)	(1	)%
Heavy trucks		3,625	4	%		5,566	5	%	(1,941	)	(35	)%

Total new retail units— same store(1)		99,763	100	%		103,100	100	%	(3,337	)	(3	)%
New retail units—acquisitions		2,108				—

Retail units—actual		101,871				103,100			(1,229	)	(1	)%
Fleet units—actual		7,756				7,501			255		3	%

Total new units—actual		109,627				110,601			(974	)	(1	)%

Total light vehicle units—same store		103,894				105,035			(1,141	)	(1	)%
Total light vehicle units—acquisitions		2,108				—

Total light vehicle units		106,002				105,035			967		(1	)%

New revenue PVR—same store(1)	$	31,616			$	31,806			(190	)	(1	)%

New revenue PVR—actual	$	31,635			$	31,806			(171	)	(1	)%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.


	For the Years Ended December 31,										Increase (Decrease)		% Change
	2007					2006					Increase (Decrease)		% Change
	(In thousands, except for PVR data)
Gross profit:
New retail gross profit—same store(1)
Luxury	$	85,803		37	%	$	87,233		37	%	(1,430	)	(2	)%
Mid-line import		98,585		43	%		98,050		41	%	535		1	%
Mid-line domestic		35,067		15	%		38,175		16	%	(3,108	)	(8	)%
Value		1,878		1	%		1,913		1	%	(35	)	(2	)%

Total light vehicle retail gross profit—same store		221,333					225,371				(4,038	)	(2	)%
Heavy trucks		10,263		4	%		13,336		5	%	(3,073	)	(23	)%

Total new retail gross profit—same store(1)		231,596		100	%		238,707		100	%	(7,111	)	(3	)%
New retail gross profit—acquisitions		5,405					—

Total new retail gross profit		237,001					238,707				(1,706	)	(1	)%

Fleet gross profit—same store(1)		3,117					4,030				(913	)	(23	)%
Fleet gross profit—acquisitions		—					—

Total fleet gross profit		3,117					4,030				(913	)	(23	)%

New vehicle gross profit, as reported	$	240,118				$	242,737				(2,619	)	(1	)%

New gross profit PVR—same store(1)	$	2,321				$	2,315				6		—	%

New gross profit PVR—actual	$	2,326				$	2,315				11		—	%

New retail gross margin—same store(1)		7.3	%				7.3	%			—	%	—	%

New retail gross margin—actual		7.4	%				7.3	%			0.1	%	1	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $39.8 million (1%) decrease in new vehicle revenue was primarily a result of a $116.9 million (35%) decrease in heavy truck revenue. The decrease in heavy truck revenue was as a result of a 35% decrease in unit sales due to (i) changes in emission laws in January 2007, which pulled forward demand for heavy trucks into 2006 and (ii) a weaker freight hauling market during 2007. Same store light vehicle retail revenue decreased $8.3 million during a challenging retail sales and overall weak economic environment, particularly in the second half of 2007, primarily as a result of a 7% decrease in same store unit sales from mid-line domestic brands as these brands continue to lose market share to mid-line import and luxury brands. In addition, same store retail revenue from our mid-line import brands decreased 1% on flat same store unit sales as manufacturer incentive programs in the prior year resulted in a challenging comparison. However, our same store retail revenue from our luxury brands increased $28.6 million (3%), driven by a 4% increase in revenue PVR as a result of a shift towards higher priced luxury models as luxury brands continue to offer attractive products.

The $2.6 million (1%) decrease in new vehicle gross profit was due to (i) a $3.1 million (8%) decrease in same store gross profit from the sale of mid-line domestic brands, primarily as a result of a 7% decrease in same store unit sales, (ii) a $3.1 million (23%) decrease in heavy truck gross profit as a result of a 35% decrease in heavy truck unit sales and (iii) a $1.4 million (2%) decrease in gross profit from our luxury brands. These decreases in same store gross profit were partially offset by $5.4 million of gross profit from dealerships acquired during 2007.

We expect 2008 to be a challenging retail environment and as a result we expect it to be difficult to maintain our current new vehicle revenue and gross profit levels; however, we expect our light vehicle unit sales to outperform industry-wide U.S. light vehicle unit sales, as we believe the luxury and mid-line import brands will continue to increase market share. In addition, we expect heavy trucks unit sales, revenue and gross profit to continue to decrease in the first half of 2008 as compared to the prior year period, as a result of the adverse impact of the new emission laws on heavy truck demand and a weaker freight hauling market.

Used Vehicle—


	For the Years Ended December 31,						Increase (Decrease)			% Change
	2007			2006			Increase (Decrease)			% Change
	(In thousands, except for unit and PVR data)
Revenue:
Retail revenues—same store(1)
Light vehicle	$	1,077,598		$	1,092,961		$	(15,363	)	(1	)%
Heavy trucks		15,760			15,513			247		2	%

Total used retail revenues—same store(1)		1,093,358			1,108,474			(15,116	)	(1	)%
Retail revenues—acquisitions		20,470			—

Total used retail revenues		1,113,828			1,108,474			5,354		—	%

Wholesale revenues—same store(1)		339,234			335,425			3,809		1	%
Wholesale revenues—acquisitions		9,858			—

Total wholesale revenues		349,092			335,425			13,667		4	%

Used vehicle revenue, as reported	$	1,462,920		$	1,443,899			19,021		1	%

Gross profit:
Retail gross profit—same store(1)
Light vehicle	$	124,408		$	133,424		$	(9,016	)	(7	)%
Heavy trucks		16			693			(677	)	(98	)%

Total used retail gross profit—same store(1)		124,424			134,117			(9,693	)	(7	)%
Retail gross profit—acquisitions		2,201			—

Total used retail gross profit		126,625			134,117			(7,492	)	(6	)%

Wholesale gross profit—same store(1)		(2,487	)		(1,070	)		(1,417	)	(132	)%
Wholesale gross profit—acquisitions		(142	)		—

Total wholesale gross profit		(2,629	)		(1,070	)		(1,559	)	(146	)%

Used vehicle gross profit, as reported	$	123,996		$	133,047			(9,051	)	(7	)%

Used retail units—same store(1)
Light vehicle	$	59,256		$	61,712			(2,456	)	(4	)%
Heavy trucks		429			420			9		2	%

Total used retail units—same store(1)		59,685			62,132			(2,447	)	(4	)%

Used retail units—acquisitions		1,079			—

Used retail units—actual		60,764			62,132			(1,368	)	(2	)%

Used revenue PVR—same store(1)	$	18,319		$	17,841			478		3	%

Used revenue PVR—actual	$	18,330		$	17,841			489		3	%

Used gross profit PVR—same store(1)	$	2,085		$	2,159			(74	)	(3	)%

Used gross profit PVR—actual	$	2,084		$	2,159			(75	)	(3	)%

Used retail gross margin—same store(1)		11.4	%		12.1	%		(0.7	)%	(6	)%

Used retail gross margin—actual		11.4	%		12.1	%		(0.7	)%	(6	)%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $19.0 million (1%) increase in used vehicle revenue includes $30.3 million from dealership acquisitions and a $3.8 million (1%) increase in same store wholesale revenue, partially offset by a $15.1 million (1%) decrease in same store retail revenue. The $9.1 million (7%) decrease in used vehicle gross profit was primarily a result of a $9.7 million (7%) decrease in retail gross profit. Our comparison from the prior year continues to be difficult as we have benefited in recent years from (i) targeted initiatives, including the building of experienced used vehicle teams, (ii) our investments in technology to better value trade-ins and improve inventory management and (iii) strong used vehicle sales in the 2006 period in Houston and Mississippi in the aftermath of hurricane Katrina. In addition, we have experienced reduced used vehicle sales to sub-prime customers as a result of the weakening economy and tighter lending practices, particularly in the second half of 2007. We are closely managing our sub-prime business and continue to believe there is opportunity to improve our used vehicle profitability by offering appropriately priced used vehicle inventory.

The strong used vehicle wholesale environment during the second and third quarters significantly increased the cost to acquire used vehicle inventory, increasing pressure on our used retail margins and used retail unit sales in the second half of 2007. In addition, we believe used vehicle customers were attracted to competitively priced mid-line import and mid-line domestic new vehicles as a result of manufacturer incentive programs.

During the third quarter of 2007, we began a strategic initiative to realign our inventory to (i) serve the broader used vehicle market and (ii) lower our inventory in response to the slower retail environment. Although our same store wholesale losses increased $1.4 million during 2007 and our retail margins decreased 6% while lowering our used vehicle inventory by 13%, we believe our used vehicle inventory is better aligned with customer demand. We expect that this improvement in our used vehicle inventory should mitigate the impact of the slower automotive retail selling season and challenging economic environment on our used vehicle performance. In addition, we continue to focus on the growth of all used vehicle product offerings including factory certified, traditional and cash cars. We expect used vehicle unit sales to decrease by 5% to 8% in 2008 as compared to 2007.

Fixed Operations—


	For the Years Ended December 31,						Increase (Decrease)		% Change
	2007			2006			Increase (Decrease)		% Change
	(In thousands)
Revenue:
Light vehicle—same store(1)	$	625,585		$	608,804		$	16,781	3	%
Heavy trucks		63,095			61,716			1,379	2	%

Total revenue—same store(1)		688,680			670,520			18,160	3	%

Revenues—acquisitions		13,953			—

Parts, service and collision repair revenue, as reported	$	702,633		$	670,520		$	32,113	5	%

Gross profit:
Light vehicle—same store(1)	$	335,390		$	320,541		$	14,849	5	%
Heavy trucks		20,319			19,559			760	4	%

Total gross profit—same store(1)		355,709			340,100			15,609	5	%

Gross profit—acquisitions		7,432			—

Parts, service and collision repair gross profit, as reported	$	363,141		$	340,100		$	23,041	7	%

Parts, service and collision repair gross margin		51.7	%		50.7	%		1.0	2	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $32.1 million (5%) increase in fixed operations revenues and $23.0 million (7%) increase in fixed operations gross profit was primarily due to a 8% and 10% increase in our “customer pay” parts and service revenue and gross profit, respectively. We continue to experience decreases in our warranty business as warranty revenue and gross profit decreased $1.6 million (1%) and $1.0 million (2%), respectively, as a result of improvements in the quality of vehicles produced in recent years, which has decreased our warranty repair work. As a result, we have focused on our customer pay business and expect our fixed operations sales to continue to grow as we (i) continue to invest in additional service capacity, (ii) upgrade equipment, (iii) improve customer retention and customer satisfaction, (iv) capitalize on our regional training programs and (v) add service advisors and skilled technicians to meet anticipated future demand, especially from the increased market share of the luxury import and mid-line import brands. In addition, we expect to recognize improved fixed operations gross profit in the future from heavy trucks as a result of the addition of service capacity and as the customers who purchased vehicles prior to the emission law changes begin to bring their vehicles in for maintenance and repairs.

Finance and Insurance, net—


	For the Years Ended December 31,				Increase (Decrease)		% Change
	2007		2006		Increase (Decrease)		% Change
	(In thousands, except for PVR data)
Dealership generated F&I, net—same store(1)
Light vehicle	$	158,626	$	148,908	$	9,718	7	%
Heavy trucks		905		901		4	—	%

Dealership generated F&I, net—same store(1)		159,531		149,809		9,722	6	%

Dealership generated F&I—acquisitions		2,658		—

Dealership generated F&I, net		162,189		149,809		12,380	8	%
Corporate generated F&I		—		1,685
Corporate generated F&I gain		—		3,400

Finance and insurance, net as reported	$	162,189	$	154,894	$	7,295	5	%

Dealership generated F&I PVR- same store(2)	$	1,001	$	907	$	94	10	%

Dealership generated F&I PVR- actual	$	997	$	907	$	90	10	%

F&I PVR-actual	$	997	$	937	$	60	6	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

(2)	Refer to “Reconciliation of Non-GAAP Financial Information” on page 61 of this report for further discussion regarding dealership generated F&I profit PVR.

We evaluate our F&I performance on a PVR basis by dividing our total F&I gross profit by the number of retail vehicles sold during the period. During 2003, we renegotiated a contract with one of our third-party F&I product providers, which resulted in the recognition of $1.7 million of income in 2006 that was not attributable to retail vehicles sold during that year. In addition, during 2006 we recognized a $3.4 million corporate generated F&I gain (corporate generated F&I and corporate generated F&I gain being collectively referred to as the “2007 Adjusting items”) from the sale of our remaining interest in a pool of extended service contracts, which was the source of our corporate generated F&I. We believe that an alternative comparison of our F&I (“dealership generated F&I”), can be made by adjusting for items that are not core dealership operating items and should not be considered when forecasting our future results. These 2007 Adjusting items are excluded by management when comparing actual results to forecasted results and are generally not included in external financial estimates of our business.

However, this non-GAAP measure has material limitations, including the fact that although we believe the recognition of corporate generated F&I and corporate generated F&I gains are infrequent and that we do not expect to recognize these items in the future, we cannot assure you that we will not recognize similar amounts of F&I in the future. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. In order to compensate for these limitations we also review the related GAAP measures. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” on page 61 of this report for further discussion regarding dealership generated F&I.

F&I increased $7.3 million (5%) during 2007. Included in F&I for the year ended December 31, 2006, was a $3.4 million corporate generated gain related to sale of our remaining interest in a pool of extended service contracts and $1.7 million related to corporate generated F&I.

Dealership generated F&I increased $12.4 million (8%) as a result of a $90 increase in dealership generated F&I PVR, partially offset by a 2% decrease in retail unit sales. The increase in dealership generated F&I PVR was attributable to (i) increased customer acceptance rates on sales of our aftermarket products and services, (ii) lengthening in finance contract terms during 2007, (iii) improved F&I performance of the bottom third of our stores and (iv) the performance of F&I retrospective programs. Overall F&I performance is dependant on retail unit sales and F&I PVR and we anticipate F&I PVR will increase in the future as a result of (a) the improvement of the F&I operations at our lower-performing franchises and (b) as to the continued refinement and enhancement the menu of products we offer our customers.

Selling, General and Administrative—


	For the Year Ended December 31,										% of Gross Profit Increase		% of Gross Profit %
				% of Gross					% of Gross		% of Gross Profit Increase		% of Gross Profit %
	2007			Profit		2006			Profit		(Decrease)		Change
	(Dollars in thousands)
Personnel costs	$	312,769		35.1	%	$	310,470		35.6	%	(0.5	)	(1	)%
Sales compensation		98,316		11.1	%		99,370		11.4	%	(0.3	)	(3	)%
Share-based compensation		5,942		0.7	%		4,955		0.6	%	0.1		17	%
Outside services		62,784		7.1	%		53,854		6.2	%	0.9		15	%
Advertising		49,839		5.6	%		48,345		5.6	%	—		—	%
Rent		57,078		6.4	%		52,682		6.0	%	0.4		7	%
Utilities		18,492		2.1	%		17,855		2.1	%	—		—	%
Insurance		15,039		1.7	%		13,788		1.6	%	0.1		6	%
Other		65,373		7.3	%		62,537		7.1	%	0.2		3	%

Selling, general and administrative	$	685,632		77.1	%	$	663,856		76.2	%	0.9		1	%

Adjustments to SG&A:
Legal settlements expense		(2,511	)				—

Adjusted selling, general and administrative	$	683,121		76.8	%	$	663,856		76.2	%	0.6		1	%


Gross Profit	$	889,444				$	870,778

Adjustments to Gross Profit:
Corporate generated F&I gain		—					(3,400	)

Adjusted gross profit	$	889,444		76.8	%	$	867,378		76.5	%	0.3	%	—	%

SG&A expense as a percentage of gross profit was 77.1% for 2007, as compared to 76.2% for 2006. Included in SG&A expense during 2007 was $2.5 million of legal claims arising in, and before, the year 2003. Included in gross profit during 2006 was a $3.4 million corporate generated F&I gain related to the sale of our remaining interest in a pool of extended service contracts. We believe that an alternative comparison of our selling, general and administrative expense as a percentage of gross profit (“adjusted SG&A as a percentage of adjusted gross profit”), can be made by adjusting for items that are not core dealership operating items and should not be considered when forecasting our future results. These 2007 Adjusting items are excluded by management when comparing actual results to forecasted results and are generally not included in external financial estimates of our business.

However, this non-GAAP measure has material limitations including the fact that although we believe the recognition of legal settlements expense and corporate generated F&I gains are infrequent and that we do not expect to recognize corporate generated F&I gains in the future, we cannot assure you that we will not recognize similar amounts in the future. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. In order to compensate for these limitations we also review the related GAAP measures. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” for further discussion regarding adjusted SG&A expense as a percentage of adjusted gross profit.

Excluding the $2.5 million of legal settlements expense during 2007 and the $3.4 million corporate generated F&I gain during 2006, adjusted SG&A expense as percentage of adjusted gross profit increased 30 basis points to 76.8%. The 30 basis point increase was primarily a result of the de-leveraging impact on our cost structure from the decline in vehicle sales volumes as well as increased outside service expense and a 40 basis point increase in rent expense, partially offset by decreased personnel expense and sales compensation expense. We have implemented several expense control initiatives including more efficient advertising practices, personnel reductions and revised compensation structures. The impact of these initiatives was partially offset by increased

rent expense from dealership acquisitions and the expansion of our service capacity. SG&A expense as a percentage of gross profit is heavily dependent on our retail operations and therefore, we believe it will be difficult to maintain our current SG&A expense as a percentage of gross profit in 2008, in what we expect to be a challenging retail environment.

Other Operating (Expense) Income —

Other Operating (Expense) Income includes amounts that were previously classified as Other Non-Operating Income (Expense) and Selling, General and Administrative on our Consolidated Statements of Income for the year ended December 31, 2006. The amounts include gains and losses from the sale of property and equipment, income derived from sub-lease arrangements and other non-core dealership related items. Included in Other Operating (Expense) Income during 2007 included $3.0 million of retirement benefits expenses associated with the retirement of our former CEO, and $0.3 million associated with a secondary stock offering, for which we did not receive any proceeds. Other Operating Income (Expense) during 2006 included a $2.6 million gain on the sale of a franchise that was not placed into discontinued operations, because we expect that increased cash flows of our current operations will replace those of the sold franchise.

Depreciation and Amortization—

The $1.4 million (7%) increase in depreciation and amortization expense was a result of property and equipment acquired during 2007 and 2006.

Other Income (Expense)—

The $2.6 million (6%) increase in floor plan interest expense was primarily attributable to higher average inventory levels during 2007 and to a lesser extent higher interest rates during 2007 as compared to 2006.

The $4.9 million (11%) decrease in other interest expense was primarily attributable to a lower effective rate on our long-term debt as a result of our long-term debt refinancing, which was substantially completed in the first quarter of 2007 and finalized in the second quarter of 2007.

We recognized an $18.5 million loss in connection with our long-term debt refinancing. The $18.5 million loss includes (i) a $12.9 million premium on the repurchase of the 9% Notes and 8% Notes, (ii) $5.5 million of costs associated with a pro-rata write-off of unamortized debt issuance costs related to our 9% Notes and 8% Notes, and (iii) $0.1 million of costs associated with a pro-rata write-off of the unamortized value of our terminated fair value swap associated with the 8% Notes.

During the 2006 period, we recognized a $1.1 million loss on the extinguishment of $17.6 million of our 8% Notes.

Income Tax Expense—

The $10.0 million (25%) decrease in income tax expense was a result of (i) a $22.8 million (21%) decrease in our income before income taxes, (ii) $0.4 million related to the reversal of a deferred tax asset valuation allowance related to a tax benefit we now expect to realize and (iii) $0.6 million related to tax credits recognized for employing individuals in the areas affected by Hurricane Katrina. We anticipate that our effective tax rate will be between 37.8% and 38.3% in 2008.

Discontinued Operations—


	For the Year Ended December 31, 2007									For the Year Ended December 31, 2006
	Sold			Pending Disposition			Total			Sold(b)			Pending Disposition(a)		Total
	(Dollars in thousands)
Franchises		2			4			6			12			3		15

Net operating losses from sold or closed franchises, net of tax	$	(1,551	)		—		$	(1,551	)	$	(4,661	)	$	—	$	(4,661	)
Net operating income (loss) from franchises held for sale, net of tax		—			(460	)		(460	)		—			60		60
Net divestiture income (expense), including net gain on sale of franchises, net of tax		(1,320	)		—			(1,320	)		(1,739	)		—		(1,739	)

Discontinued operations, net of tax	$	(2,871	)	$	(460	)	$	(3,331	)	$	(6,400	)	$	60	$	(6,340	)

(a)	Businesses were pending disposition as of December 31, 2007.

(b)	Businesses were sold between January 1, 2006 and December 31, 2007.

During the 2007 period, we sold two franchises (two dealership locations), and as of December 31, 2007, we were actively pursuing the sale of five franchises (four franchises are classified as discontinued operations). The $3.3 million, net of tax, loss from discontinued operations for the 2007 period is a result of (i) $1.3 million, net of tax, of divestiture expense associated with the sale of the two franchises mentioned above, (ii) $0.4 million of operating losses associated with franchises held for sale as of December 31, 2007 and (iii) $1.6 million, net of tax, of net operating losses of sold franchises. The $6.3 million, net of tax, loss from discontinued operations for the 2006 period, includes (i) $4.7 million, net of tax, of operating losses of franchises sold or closed in 2007 and 2006, (ii) $0.1 million of net operating income from franchises held for sale as of December 31, 2007 and (iii) $1.7 million, net of tax, of net divestiture expense associated with franchises sold during the 2006 period.

RESULTS OF OPERATIONS

Year Ended December 31, 2006, Compared to Year Ended December 31, 2005


	For the Years Ended December 31,
	2006			% of Gross Profit		2005			% of Gross Profit		Increase (Decrease)			% Change
	(In thousands)
REVENUES:
New vehicle	$	3,425,074				$	3,267,935					157,139		5	%
Used vehicle		1,443,899					1,315,907					127,992		10	%
Parts, service and collision repair		670,520					626,443					44,077		7	%
Finance and insurance, net		154,894					146,566					8,328		6	%

Total revenues		5,694,387					5,356,851					337,536		6	%

COST OF SALES		4,823,609					4,549,899					273,710		6	%

GROSS PROFIT		870,778		100	%		806,952		100	%		63,826		8	%
OPERATING EXPENSES:
Selling, general and administrative		(663,856	)	(76	)%		(627,146	)	(78	)%		36,710		6	%
Depreciation and amortization		(20,061	)	(2	)%		(19,441	)	(2	)%		620		3	%
Other operating income (expense), net.		1,485		—	%		(552	)	—			2,037		369	%

Income from operations		188,346		22	%		159,813		20	%		28,533		18	%
OTHER INCOME (EXPENSE):
Floor plan interest expense		(40,533	)	(5	)%		(27,597	)	(4	)%		12,936		47	%
Other interest expense		(44,185	)	(5	)%		(40,841	)	(5	)%		3,344		8	%
Interest income		5,111		—	%		966		—	%		4,145		429	%
Loss on extinguishment of long-term debt		(1,144	)	—	%		—		—	%		(1,144	)	—	%

Total other expense, net		(80,751	)	(10	)%		(67,472	)	(9	)%		(13,279	)	20	%

Income before income taxes		107,595		12	%		92,341		11	%		15,254		17	%
INCOME TAX EXPENSE		40,506		4	%		34,573		4	%		5,933		17	%

INCOME FROM CONTINUING OPERATIONS		67,089		8	%		57,768		7	%		9,321		16	%
DISCONTINUED OPERATIONS, net of tax		(6,340	)	(1	)%		3,313		1	%		(9,653	)	(291	)%

NET INCOME	$	60,749		7	%	$	61,081		8	%		(332	)	(1	)%

Income from continuing operations per commons share—Diluted	$	1.97				$	1.76				$	0.21		12	%

Net income per common share—Diluted	$	1.78				$	1.86				$	(0.08	)	(4	)%


	For the Years Ended December 31,						Increase (Decrease)			% Change
	2006			2005			Increase (Decrease)			% Change
	(In thousands, except for unit and PVR data)
Revenue:
Light vehicle—same store	$	5,224,140		$	5,041,628		$	182,512		4	%
Acquisitions		47,683			—

Total light vehicle		5,271,823		$	5,041,628			230,195		5	%
Heavy truck		422,564			315,223			107,341		34	%

Total revenue	$	5,694,387		$	5,356,851		$	337,536		6	%

Gross Profit:
Light vehicle—same store	$	829,498		$	778,030		$	51,468		7	%
Acquisitions		6,503			—

Total light vehicle		836,001			778,030			57,971		7	%
Heavy truck		34,777			28,922			5,855		20	%

Total gross profit	$	870,778		$	806,952		$	63,826		8	%

Retail Units:
Light vehicle—same store		157,699			155,216			2,483		2	%
Acquisitions		1,547			—

Total light vehicle		159,246			155,216			4,030		3	%
Heavy truck		5,986			4,567			1,419		31	%

Total retail units		165,232			159,783			5,449		3	%


New light vehicle revenue PVR	$	30,204		$	29,897			307		1	%

New vehicle revenue PVR	$	31,806		$	30,972			834		3	%


New light vehicle gross profit PVR	$	2,310		$	2,215			95		4	%

New vehicle gross profit PVR	$	2,315		$	2,206			109		5	%


Used light vehicle revenue PVR	$	17,711		$	16,861			850		5	%

Used vehicle revenue PVR	$	17,841		$	16,994			847		5	%


Used light vehicle gross profit PVR	$	2,162		$	1,987			175		9	%

Used vehicle gross profit PVR	$	2,159		$	1,988			171		9	%


Light vehicle dealership generated F&I PVR	$	927		$	909			18		2	%

Dealership generated F&I PVR	$	907		$	887			20		2	%


New light vehicle retail gross margin		7.6	%		7.4	%		0.2	%	3	%

New vehicle retail gross margin		7.3	%		7.1	%		0.2	%	3	%


Used light vehicle retail gross margin		12.2	%		11.8	%		0.4	%	3	%

Used vehicle retail gross margin		12.1	%		11.7	%		0.4	%	3	%


Light vehicle fixed operations gross margin		52.7	%		52.6	%		0.1	%	—	%

Fixed operations gross margin		50.7	%		50.7	%		—	%	—	%


Total light vehicle gross margin		15.9	%		15.4	%		0.5	%	3	%

Total gross margin		15.3	%		15.1	%		0.2	%	1	%

Net income decreased $0.3 million (1%) during the 2006 period as a result of a $9.7 million increase in net losses from discontinued operations, partially offset by a $9.3 million increase in income from continuing operations.

Our income from continuing operations during 2006 and 2005 was impacted by several items shown below (collectively referred to as “Adjusting Items”). We believe that an alternative comparison of our income from continuing operations (“adjusted income from continuing operations”), as used by management to compare actual results to budgeted results, can be made by adjusting for these items based on the fact that we believe these items are not core dealership operating items and should not be considered when forecasting our future results.

The non-GAAP measure adjusted income from continuing operations contains material limitations. Although we believe that corporate generated F&I gross profit, abandoned strategic project expenses, secondary stock offering expenses and losses from the extinguishment of long-term debt are infrequent, and although we do not expect to recognize these items in the future, we cannot assure you that we will not recognize them in the future. Our income from continuing operations may not be comparable with income from continuing operations of other companies to the extent that other companies recognize similar items in income from continuing operations and do not provide disclosure of the amounts. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. In order to compensate for these limitations we also review the related GAAP measures. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” for more information.


	For the Years Ended December 31,					Increase (Decrease)		% Change
	2006			2005		Increase (Decrease)		% Change
	(In thousands)
Income from continuing operations, as reported	$	67,089		$	57,768	$	9,321	16	%
Share-based compensation expense, net of tax		3,105			—
Corporate generated F&I gain, net of tax		(2,130	)		—
Gain on sale of a franchise, net of tax		(1,565	)		—
Secondary stock offering expenses*		1,073			—
Abandoned strategic project expenses, net of tax		1,039			—
Loss on extinguishment of long-term debt, net of tax		717			—
Net reorganization expenses, net of tax		—			484

Adjusted income from continuing operations	$	69,328		$	58,252	$	11,076	19	%

*	Secondary offering expenses are not deductible for tax purposes; therefore, no tax benefit has been reflected.

The following discussion excludes the impact of the Adjusting Items as we believe that excluding these items provides a more accurate representation of our year over year core dealership performance. The $11.1 million (19%) increase in adjusted income from continuing operations was a result of several factors, including (i) $22.7 million (7%) increase fixed operations gross profit and a $15.9 million (14%) increase in used vehicle gross profit as a result of our continued focus on our high margin businesses; (ii) the performance of our new retail business, which delivered a $15.6 million (7%) increase in gross profit; and (iii) expense control initiatives that reduced personnel and advertising costs, which together contributed to a 110 basis point of the overall 170 basis point improvement in adjusted SG&A expenses as a percentage of adjusted gross profit. These factors were partially offset by a 47% increase in floor plan interest expense as a result of a 170 basis point increase in short-term interest rates.

The $0.3 billion increase in total revenue was primarily a result of a $0.2 billion (5%) increase in new vehicle revenue and a $0.1 billion (10%) increase in used vehicle revenue. The increase in new vehicle revenue was a result of a $99.8 million (43%) increase in heavy truck revenue and a $57.8 million (4%) increase in same store new retail revenue from our mid-line import brands, partially offset by a $58.3 million (11%) decrease in same store new retail revenue from our mid-line domestic brands. The increase in used vehicle revenue was primarily a result of a $108.2 million (11%) increase in used retail revenue.

The $63.8 million (8%) increase in total gross profit was as a result of a $22.7 million (7%) increase in fixed operations gross profit, a $16.9 million (7%) increase in new vehicle gross profit and a $15.9 million (14%) increase in used vehicle gross profit. Our total gross profit margin increased 20 basis points to 15.3%.

New Vehicle—


	For the Years Ended December 31,								Increase (Decrease)		Change
	2006				2005				Increase (Decrease)		Change
	(In thousands, except for unit and PVR data)
Revenue:
New retail revenue—same store(1)
Luxury	$	1,064,707	33	%	$	1,055,344	34	%	9,363		1	%
Mid-line import		1,345,260	42	%		1,287,430	41	%	57,830		4	%
Mid-line domestic		471,589	15	%		529,868	17	%	(58,279	)	(11	)%
Value		28,459	1	%		26,936	1	%	1,523		6	%

Total light vehicle retail revenue—same store		2,910,015				2,899,578			10,437		—	%
Heavy trucks		333,222	9	%		233,446	7	%	99,776		43	%

Total new retail revenue—same store(1)		3,243,237	100	%		3,133,024	100	%	110,213		4	%
New retail revenue—acquisitions		35,996				—

Total new retail revenues		3,279,233				3,133,024			146,209		5	%

Fleet revenue—same store(1)		144,903				134,911			9,992		7	%
Fleet revenue—acquisitions		938				—

Total fleet revenue		145,841				134,911			10,930		8	%

New vehicle revenue, as reported	$	3,425,074			$	3,267,935			157,139		5	%

New retail units:
New retail units—same store(1)
Luxury		23,418	23	%		23,803	24	%	(385	)	(2	)%
Mid-line import		55,043	54	%		53,216	53	%	1,827		3	%
Mid-line domestic		16,415	16	%		18,582	18	%	(2,167	)	(12	)%
Value		1,376	1	%		1,386	1	%	(10	)	(1	)%

Total light vehicle retail units— same store		96,252				96,987			(735	)	(1	)%
Heavy trucks		5,566	6	%		4,171	4	%	1,395		33	%

Total new retail units—same store(1)		101,818	100	%		101,158	100	%	660		1	%
New retail units—acquisitions		1,282				—

Retail units—actual		103,100				101,158			1,942		2	%
Fleet units—actual		7,501				6,646			855		13	%

Total new units—actual		110,601				107,804			2,797		3	%

Total light vehicle units — same store(1)(2)		103,753				103,633			120		—	%
Total light vehicle units — acquisitions (2)		1,282				—

Total light vehicle units — actual(2)		105,035				103,633			1,402		1	%

New revenue PVR—same store(1)	$	31,853			$	30,972			881		3	%

New revenue PVR—actual	$	31,806			$	30,972			834		3	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.


	For the Years Ended December 31,										Increase (Decrease)		Change
	2006					2005					Increase (Decrease)		Change
	(In thousands, except for PVR data)
Gross profit:
New retail gross profit—same store(1)
Luxury	$	87,224		37	%	$	85,848		39	%	1,376		2	%
Mid-line import		97,659		41	%		88,799		40	%	8,860		10	%
Mid-line domestic		36,244		15	%		38,343		17	%	(2,099	)	(5	)%
Value		1,872		1	%		1,819		1	%	53		3	%

Total light vehicle retail gross profit—same store		222,999					214,809				8,190		4	%
Heavy trucks		13,366		6	%		8,331		3	%	5,035		60	%

Total new retail gross profit—same store(1)		236,365		100	%		223,140		100	%	13,225		6	%
New retail gross profit—acquisitions		2,342					—

Total new retail gross profit		238,707					223,140				15,567		7	%

Fleet gross profit—same store(1)		4,010					2,676				1,334		50	%
Fleet gross profit—acquisitions		20					—

Total fleet gross profit		4,030					2,676				1,354		51	%

New vehicle gross profit, as reported	$	242,737				$	225,816				16,921		7	%

New gross profit PVR—same store(1)	$	2,321				$	2,206				115		5	%

New gross profit PVR—actual	$	2,315				$	2,206				109		5	%

New retail gross margin—same store(1)		7.3	%				7.1	%			0.2	%	3	%

New retail gross margin—actual		7.3	%				7.1	%			0.2	%	3	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $0.2 billion (5%) increase in new vehicle revenue was primarily a result of a $99.8 million (43%) increase in heavy truck revenue. The increase in heavy truck revenue was as a result of a 33% increase in unit sales from changes in emission laws that became effective in January 2007, which pulled forward demand for heavy trucks into 2006. Same store new retail revenue from our mid-line import brands increased $57.8 million (4%), which was offset by a $58.3 million (11%) decrease in new retail revenue from our mid-line domestic brands as these brands continued to lose market share. New vehicle revenues excluding heavy trucks (“light vehicle”) were flat at $2.9 billion during the 2006 period, compared with the 2005 period. Our total same store light vehicle unit sales were flat, outperforming the overall U.S. light vehicle industry, which decreased 3%.

The $16.9 million (7%) increase in new vehicle gross profit was due to (i) an $8.1 million (4%) increase in same store light vehicle retail gross profit and (ii) $5.0 million (60%) increase in heavy truck gross profit. Our same store gross profit from mid-line import brands increased $8.9 million (10%) as a result of a 6% increase in gross profit PVR as we were able to capitalize on manufacturer incentive programs. The increase in heavy truck gross profit was a result of a 33% increase in heavy truck unit sales and a 20% increase in heavy truck gross profit PVR. These increases were partially offset by same store gross profit from our mid-line import brands, which decreased $2.1 million (5%) as these brands continued to lose market share.

Used Vehicle—


	For the Years Ended December 31,						Increase (Decrease)			% Change
	2006			2005			Increase (Decrease)			% Change
	(In thousands, except for unit and PVR data)
Revenue:
Retail revenues—same store(1)
Light vehicle	$	1,088,979		$	981,795		$	107,184		11	%
Heavy trucks		15,513			14,498			1,015		7	%

Total used retail revenues—same store(1)		1,104,492			996,293			108,199		11	%

Retail revenues—acquisitions		3,982			—

Total used retail revenues		1,108,474			996,293			112,181		11	%

Wholesale revenues—same store(1)		334,367			319,614			14,753		5	%
Wholesale revenues—acquisitions		1,058			—

Total wholesale revenues		335,425			319,614			15,811		5	%

Used vehicle revenue, as reported	$	1,443,899		$	1,315,907		$	127,992		10	%

Gross profit:
Retail gross profit—same store(1)
Light vehicle	$	132,863		$	115,709		$	17,154		15	%
Heavy trucks		693			856			(163	)	(19	)%

Total used retail gross profit—same store(1)		133,556			116,565			16,991		15	%

Retail gross profit—acquisitions		561			—

Total used retail gross profit		134,117			116,565			17,552		15	%

Wholesale gross profit—same store(1)		(1,055	)		567			(1,622	)	(286	)%
Wholesale gross profit—acquisitions		(15	)		—

Total wholesale gross profit		(1,070	)		567			(1,637	)	(289	)%

Used vehicle gross profit, as reported	$	133,047		$	117,132		$	15,915		14	%

Used retail units—same store(1)
Light vehicle		61,447			58,229			3,218		6	%
Heavy trucks		420			396			24		6	%

Used retail units—same store		61,867			58,625			3,242		6	%

Used retail units—acquisitions		265			—

Used retail units—actual		62,132			58,625			3,507		6	%

Used revenue PVR—same store(1)	$	17,853		$	16,994		$	859		5	%

Used revenue PVR—actual	$	17,841		$	16,994		$	847		5	%

Used gross profit PVR—same store(1)	$	2,159		$	1,988		$	171		9	%

Used gross profit PVR—actual	$	2,159		$	1,988		$	171		9	%

Used retail gross margin—same store(1)		12.1	%		11.7	%		0.4	%	3	%

Used retail gross margin—actual		12.1	%		11.7	%		0.4	%	3	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $0.1 billion (10%) increase in used vehicle revenue was primarily a result of a $0.1 billion (11%) increase in used retail revenue, while wholesale revenue was flat. The increase in used vehicle revenues was a result of a 6% and 5% increase in used retail unit sales and used revenue PVR, respectively.

The $15.9 million (14%) increase in used vehicle gross profit was a result of a 6% and 9% increase in used retail unit sales and gross profit PVR, respectively. The increases in our used retail units sales and used gross profit PVR were primarily due to (i) our investment in software to better value trade-ins and improve inventory management, (ii) the execution by our regional management teams dedicated to the used vehicle business and (iii) the implementation of a used vehicle certification program.

Fixed Operations—


	For the Years Ended December 31,						Increase (Decrease)			% Change
	2006			2005			Increase (Decrease)			% Change
	(In thousands)
Revenue:
Light vehicle—same store(1)	$	604,514		$	567,923			36,591		6	%
Heavy trucks		61,716			58,520			3,196		5	%

Total revenue—same store(1)		666,230			626,443			39,787		6	%

Revenues—acquisitions		4,290			—

Parts, service and collision repair revenue, as reported	$	670,520		$	626,443		$	44,077		7	%

Gross profit:
Light vehicle—same store(1)	$	318,303		$	298,803			19,500		7	%
Heavy trucks		19,559			18,635			924		5	%

Total gross profit—same store(1)		337,862			317,438			20,424		6	%
Gross profit—acquisitions		2,238			—

Parts, service and collision repair gross profit, as reported	$	340,100		$	317,438		$	22,662		7	%

Parts, service and collision repair gross margin		50.7	%		50.7	%		—	%	—	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

The $44.1 million (7%) increase in fixed operations revenues and $22.7 million (7%) increase in fixed operations gross profit was primarily due to a 10% and 12% increase in our “customer pay” parts and service revenue and gross profit, respectively. Warranty revenues and gross profit were basically flat with prior year.

Finance and Insurance, net—


	For the Years Ended December 31,				Increase (Decrease)			% Change
	2006		2005		Increase (Decrease)			% Change
	(In thousands, except for PVR data)
Dealership generated F&I, net—same store(1)
Light vehicle	$	147,549	$	141,086	$	6,463		5	%
Heavy trucks		901		658		243		37	%

Dealership generated F&I, net—same store(1)		148,450		141,744		6,706		5	%

Dealership generated F&I—acquisitions		1,359		—

Dealership generated F&I, net		149,809		141,744		8,065		6	%
Corporate generated F&I		1,685		4,822		(3,137	)	(65	)%
Corporate generated F&I gain		3,400		—

Finance and insurance, net as reported	$	154,894	$	146,566	$	8,328		6	%

Dealership generated F&I PVR—same store(1)	$	907	$	887		20		2	%

Dealership generated F&I PVR—actual(2)	$	907	$	887		20		2	%

F&I PVR-actual	$	937	$	917		20		2	%

(1)	Same store amounts include the results of dealerships for the identical months for each period presented in the comparison, commencing with the first full month in which the dealership was owned by us.

(2)	Refer to “Reconciliation of Non-GAAP Financial Information” for further discussion regarding dealership generated F&I gross profit PVR.

generated F&I gain from the sale of our remaining interest in a pool of extended service contracts. We believe that dealership generated F&I, which excludes the additional revenue derived from contracts negotiated by our corporate office, provides a measure of our F&I operating performance as used by management to compare actual results to budgeted results and is a better indicator of future performance.

However, this non-GAAP measure has material limitations, including the fact that although we believe the recognition of corporate generated F&I gross profit is infrequent and that we do not expect to recognize corporate generate F&I gross profit in the future, we cannot assure you that we will not recognize similar amounts of F&I gross profit in the future. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. In order to compensate for these limitations we also review the related GAAP measures. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” for further discussion regarding dealership generated F&I profit PVR.

The $8.3 million (6%) increase in F&I included a $3.4 million gain related to sale of our remaining interest in a pool of extended service contracts, partially offset by a $3.1 million (65%) decrease in corporate generated F&I.

Dealership F&I increased $8.1 million (6%) as a result of a $20 increase in dealership generated F&I PVR and a 3% increase in retail unit sales. The increase in dealership generated F&I was primarily a result of the 3% increase in retail units sales and the implementation of a new F&I program in the second quarter of 2006, which increased our upfront warranty commissions. The increase in F&I was partially offset by a $3.7 million decrease in captive finance company revenue as a result of a strategic initiative to reduce our loan portfolio.

Selling, General and Administrative—


	For the Year Ended December 31,									% of Gross Profit Increase (Decrease)		% of Gross Profit % Change
	2006			% of Gross Profit		2005		% of Gross Profit		% of Gross Profit Increase (Decrease)		% of Gross Profit % Change
	(Dollars in thousands)
Personnel costs	$	310,470		35.6	%	$	293,892	36.4	%	(0.8	)%	(2	)%
Sales compensation		99,370		11.4	%		91,865	11.4	%	—	%	—	%
Share-based compensation		4,955		0.6	%		—	—		0.6	%	NM	%
Outside services		53,854		6.2	%		53,124	6.6	%	(0.4	)%	(6	)%
Advertising		48,345		5.6	%		48,902	6.1	%	(0.5	)%	(8	)%
Rent		52,682		6.0	%		46,307	5.7	%	0.3	%	5	%
Utilities		17,855		2.1	%		17,085	2.1	%	—	%	—	%
Insurance		13,788		1.6	%		13,126	1.6	%	—	%	—	%
Other		62,537		7.1	%		62,845	7.8	%	(0.7	)%	(9	)%

Selling, general and administrative	$	663,856		76.2	%	$	627,146	77.7	%	(1.5	)%	(2	)%

Adjustments to SG&A:
Share-based compensation		(4,955	)				—

Adjusted selling, general and administrative	$	658,901		75.7	%	$	627,146	77.7	%	(2.0	)%	(3	)%

Gross Profit	$	870,778				$	806,952

Adjustments to Gross Profit:
Corporate generated F&I gain		(3,400	)				—

Adjusted gross profit		867,378		76.0	%		806,952	77.7	%	(1.7	)%	(2	)%

SG&A expense as a percentage of gross profit was 76.2% for the 2006 period as compared to 77.7% for the 2005 period. We adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R “Share-based Payment” in the first quarter of 2006. As a result of the adoption of SFAS 123R and our decision to issue performance share units and restricted stock, we recorded $5.0 million of share-based compensation expense during the year ended December 31, 2006. We did not record any share-based compensation expense during the

year ended December 31, 2005, as we accounted for share-based awards under the intrinsic value method of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Included in gross profit during 2006 was a $3.4 million corporate generated F&I gain related to the sale of our remaining interest in a pool of extended service contracts.

We believe that adjusted SG&A expenses as percentage of adjusted gross profit, which excludes share-based compensation and the $3.4 million corporate generated F&I gain, provides a measure of our F&I operating performance as used by management to compare actual results to budgeted results and is a better indicator of future performance.

However, this non-GAAP measure has material limitations, including the fact that although we believe the recognition of corporate generated F&I gains are infrequent and that we do not expect to recognize corporate generated F&I gains in the future, we cannot assure you that we will not recognize similar amounts of F&I gross profit in the future. In addition, these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. In order to compensate for these limitations we also review the related GAAP measures. These non-GAAP measures should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Please refer to “Reconciliation of Non-GAAP Financial Information” for further discussion regarding adjusted SG&A expense as a percentage of adjusted gross profit.

Adjusted SG&A expense as a percentage of adjusted gross profit decreased 170 basis points to 76.0% as a result of several expense control initiatives resulting in reduced personnel and advertising costs. These improvements were offset by increased rent resulting from our strategy to reduce our ownership of real estate and certain leasehold improvements through the use of sale-leaseback transactions. During 2005, we sold approximately $33.1 million of real estate in connection with seven sale-leaseback transactions.

Other Operating (Expense) Income —

Other Operating (Expense) Income includes amounts that were previously classified as Other Non-Operating Income (Expense) and Selling, General and Administrative on our Consolidated Statements of Income for the year ended December 31, 2006 and 2005. The amounts include gains and losses from the sale of property and equipment, income derived from sub-lease arrangements and other non-core dealership related items. Included in Other Operating (Expense) Income during 2006 was a $2.6 million gain on the sale of a franchise that was not placed into discontinued operations because we expect the cash flows of the current operations will replace those of the sold franchise. Included in Other Operating (Expense) income during 2005 was reorganization expense, net of a reorganization benefit, of $0.8 million.

Depreciation and Amortization—

The $0.6 million (3%) increase in depreciation and amortization expense was a result of property and equipment acquired during 2006 and 2005.

Other Income (Expense)—

Floor plan interest expense increased $12.9 million (47%) during 2006. Approximately 80% of this increase was the result of a 170 basis point increase in short-term interest rates over last year, approximately 15% of the increase was the result of higher average inventory levels during the year ended December 31, 2006, as compared to the year ended December 31, 2005, and the remaining 5% was the result of terminating two cash flow swaps on our floor plan notes payable during the first quarter of 2006.

Other interest expense increased $3.3 million (8%) during 2006. Approximately $2.0 million of the increase in other interest expense is a result of a higher effective interest rate on our 8% Notes due to the termination of a fair value swap on our 8% Notes. As a result, our 8% Notes, which had a variable rate while the fair value swap was in place in 2005, became fixed at 8% in March 2006. The amortization of the swap termination costs increased other interest expense by $0.9 million during 2006.

During 2006, we recognized a $1.1 million loss on the extinguishment of $17.6 million of our 8% Notes.

Income Tax Expense—

The $5.9 million (17%) increase in income tax expense was a result of a $15.3 million (17%) increase in our income before income taxes.

Discontinued Operations—


	For the Year Ended December 31, 2006								For the Year Ended December 31, 2005
	Sold			Pending Disposition		Total			Sold(b)			Pending Disposition(a)		Total
	(Dollars in thousands)
Franchises		12			3		15			14			2		16

Net loss from sold or closed franchises, net of tax	$	(4,661	)		—	$	(4,661	)	$	(5,003	)	$	—	$	(5,003	)
Net income (loss) from franchises held for sale, net of tax		—			60		60			—			455		455
Net divestiture income (expense), including net gain on sale of franchises, net of tax		(1,739	)		—		(1,739	)		7,861	(c)		—		7,861	(c)

Discontinued operations, net of tax	$	(6,400	)	$	60	$	(6,340	)	$	2,858		$	455	$	3,313	(c)

(a)	Businesses were pending disposition as of December 31, 2007.

(b)	Businesses were sold between January 1, 2005 and December 31, 2006.

(c)	Includes an $8.8 million tax benefit related to the sale of stock of an Oregon business.

During the year ended December 31, 2006, we sold or closed twelve franchises (seven dealership locations), and as of December 31, 2007, we were actively pursuing the sale of five franchises (four franchises are classified as discontinued operations). The $6.3 million net loss from discontinued operations for the year ended December 31, 2006, is a result of (i) $4.7 million of operating losses associated with franchises sold or closed during 2007 and 2006, (ii) $0.1 million of net operating income of franchises classified as discontinued operations and held for sale, and (iii) $1.7 million of divestiture expense of sold or closed franchises during 2006.

The $3.3 million of income from discontinued operations during 2005, includes (i) net losses of franchises sold or closed in 2007, 2006 and 2005 totaling $5.0 million, partially offset by (ii) $0.5 million of net income of franchises classified as discontinued operations and held for sale as of December 31, 2007 and (iii) $7.9 million of net divestiture income during 2005, principally related to the sale of our Thomason franchises in Portland, Oregon. Included in the $7.9 million of net divestiture income is an $8.8 million tax benefit associated with the sale of an Oregon business.

LIQUIDITY AND CAPITAL RESOURCES

We require cash to fund working capital needs, finance acquisitions of new dealerships and fund capital expenditures. We believe that our cash and cash equivalents on hand as of December 31, 2007, the funds that will be generated through future operations, and the funds available for borrowings under our Committed Credit Facility (as defined below), floor plan facilities, mortgage notes payable and proceeds from sale-leaseback transactions will be sufficient to fund our debt service and working capital requirements, commitments and contingencies, acquisitions, capital expenditures, current dividend commitments and any seasonal operating requirements in 2008 and for the foreseeable future.

As of December 31, 2007, we had cash and cash equivalents of approximately $53.4 million and working capital of $320.8 million. In addition, we had (i) $125.0 million available for borrowings under our Committed Credit Facility for working capital, general corporate purposes and acquisitions and (ii) approximately $50.0 million available for borrowings under our Committed Credit Facility using our current used vehicle inventory as collateral.

Long-term Debt Refinancing

During 2007, we completed a refinancing of our long-term debt which included (i) the repurchase of all $250.0 million of our 9% Notes, (ii) the issuance of $115.0 million of our 3% Notes, (iii) the issuance of $150.0 million of our 7.625% Notes and (iv) the repurchase of $3.0 million of our 8% Notes. We expect our annual interest expense will decrease by approximately $7.9 million as a result of the long-term debt refinancing.

We also entered into separate warrant transactions whereby we sold to the Counterparties warrants to acquire, subject to customary anti-dilution adjustments, shares of our common stock at an initial strike price of $45.09 per share, which was a 62.50% premium over the market price of our common stock at the time of pricing. The strike price was adjusted to $45.0385 in the third quarter of 2007 as a result of our decision to increase our quarterly dividend by $0.025 to $0.225.

The convertible note hedge and warrant transactions are separate contracts and are not part of the terms of the 3% Notes, as such, they do not affect the holders’ rights under the 3% Notes. Holders of the 3% Notes will not have any rights with respect to the convertible note hedge and warrant transactions. The convertible hedge and warrant transactions will essentially have the effect of increasing the conversion price of the 3% Notes to $45.0385. The convertible note hedge and warrant transactions are expected to offset the potential dilution upon conversion of the 3% Notes in the event that the market value per share of our common stock at the time of exercise is between $33.99 and $45.0385.

3% Senior Subordinated Convertible Notes due 2012—

In March 2007, we issued $115.0 million in aggregate principal amount of our 3% Notes, receiving net proceeds of $111.1 million. The sale of the 3% Notes was exempt from registration pursuant to Rule 144A under the Securities Act. During the third quarter of 2007, we filed a shelf registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the 3% Notes and the underlying common stock into which the 3% Notes are convertible. The costs related to the issuance of the 3% Notes were capitalized and are being amortized to other interest expense over the term of the Notes using the effective interest method. We pay interest on the 3% Notes on March 15 and September 15 of each year until their maturity on September 15, 2012. If and when the 3% Notes are converted, we will pay cash for the principal amount of each Note and, if applicable, shares of our common stock based on a daily conversion value calculated on a proportionate basis for each volume weighted average price (“VWAP”) trading day (as defined in the indenture governing the 3% Notes)

in the relevant 30 VWAP trading day observation period. The initial conversion rate for the 3% Notes is 29.4172 shares of common stock per $1,000 principal amount of 3% Notes, which is equivalent to an initial conversion price of $33.99 per share. The conversion rate is subject to adjustment in some events but will not be adjusted for accrued interest.

Our 3% Notes are fully and unconditionally guaranteed, on a joint-and-several basis, by all of our current wholly-owned subsidiaries and will be so guaranteed by all of our future domestic subsidiaries that have outstanding, incur or guarantee any other indebtedness. We are a holding company that has no independent assets or operations. Any subsidiary of the Company other than the subsidiary guarantors are minor. In addition, there are no restrictions on the ability of our consolidated subsidiaries to transfer funds to us. The terms of our 3% Notes, in certain circumstances, restrict our ability to, among other things, enter into merger transactions or sell all or substantially all of our assets.

7.625% Senior Subordinated Notes due 2017—

In March 2007, we issued $150.0 million of our 7.625% Notes, receiving net proceeds of $146.0 million. The sale of the 7.625% Notes was exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. During the third quarter of 2007, we filed a registration statement with the SEC in connection with an exchange offer to exchange the 7.625% Notes for new notes with substantially identical terms that are registered under the Securities Act. The costs related to the issuance of the 7.625% Notes were capitalized and are being amortized to other interest expense over the term of the 7.625% Notes using the effective interest method. We pay interest on the 7.625% Notes on March 15 and September 15 of each year until their maturity on March 15, 2017. At any time during the term of the 7.625% Notes, we may choose to redeem all or a portion of the 7.625% Notes at a price equal to 100% of their principal amount plus the make-whole premium set forth in the 7.625% Notes indenture. At any time on or after March 15, 2012, we may, at our option, choose to redeem all or a portion of these notes at a redemption price that begins at 103.813% of the aggregate principal amount of the 7.625% Notes and reduces on each subsequent March 15 by approximately 1.3% until the price reaches 100% of the aggregate principal amount on March 15, 2015 and thereafter. On or before March 15, 2010, we may, at our option, use the net proceeds of one or more equity offerings to redeem up to 35% of the aggregate principal amount of the 7.625% Notes at a redemption price equal to 107.625% of such principal amount plus accrued and unpaid interest thereon.

Our 7.625% Notes are fully and unconditionally guaranteed, on a joint-and-several basis, by all of our current wholly-owned subsidiaries and will be so guaranteed by all of our future domestic subsidiaries that have outstanding, incur or guarantee any other indebtedness. We are a holding company that has no independent assets or operations. Any subsidiary of the Company other than the subsidiary guarantors are minor. In addition, there are no restrictions on the ability of our consolidated subsidiaries to transfer funds to us. The terms of our 7.625% Notes, in certain circumstances, restrict our ability to, among other things, incur additional indebtedness, pay dividends, repurchase our common stock and merge or sell all or substantially all our assets.

8% Senior Subordinated Notes due 2014—

We had $179.4 million in aggregate principal amount of our 8% Notes outstanding as of December 31, 2007. We pay interest on March 15 and September 15 of each year until maturity of the 8% Notes on March 15, 2014. At any time on or after March 15, 2009, we may, at our option, choose to redeem all or a portion of these notes at a redemption price that begins at 104.0% of the aggregate principal amount of the 8% Notes and reduces on each subsequent March 15 by approximately 1.3% until the price reaches 100% of the aggregate principal amount on March 15, 2012 and thereafter. At any time before March 15, 2009, we may choose to redeem all or a portion of these notes at a price equal to 100% of their principal amount plus the make-whole premium set forth in the 8% Notes indenture.

Our 8% Notes are fully and unconditionally guaranteed, on a joint-and-several basis, by all of our current wholly-owned subsidiaries and will be so guaranteed by all of our future domestic subsidiaries that have outstanding, incur or guarantee any other indebtedness. We are a holding company that has no independent assets or operations. Any subsidiary of the Company other than the subsidiary guarantors are minor. In addition, there are no restrictions on the ability of our consolidated subsidiaries to transfer funds to us. The terms of our 8% Notes, in certain circumstances, restrict our ability to, among other things, incur additional indebtedness, pay dividends, repurchase our common stock and merge or sell all or substantially all our assets.

As of December 31, 2007, we had repurchased a total of $20.6 million of our 8% Notes. Our board of directors has authorized us to repurchase up to an additional $19.4 million of our 8% Notes.

Credit Facility—

In March 2005, we entered into a committed credit facility (the “Committed Credit Facility”) with JPMorgan Chase Bank, N.A. and 18 other financial institutions (the “Syndicate”). The Committed Credit Facility provides us with $425.0 million of borrowing capacity for the purchase of new and used inventory at all of our dealerships except at our Ford, Lincoln, Mercury, Mazda, Volvo and Land Rover dealerships (“Ford dealerships”), our General Motors (“GM”) dealerships, and our Chrysler, Dodge and Jeep dealerships (“Chrysler dealerships”) and our Mercedes-Benz dealerships. In addition, Ford Motor Credit Corporation (“FMCC”) provides us with $150.0 million of borrowing capacity for the purchase of new vehicle inventory at our Ford Dealerships, General Motors Acceptance Corporation (“GMAC”) provides us with $100.0 million of borrowing capacity for the purchase of new vehicle inventory at our GM dealerships, DCFS USA LLC (“DCFS USA”) provides us with $98.3 million of borrowing capacity for the purchase of new vehicle inventory at our Mercedes-Benz dealerships and DaimlerChrysler Financial Services Americas LLC (“DCFSA”) provides us with $50.0 million of borrowing capacity for the purchase of new vehicle inventory at our Chrysler dealerships and dealerships. In total, these commitments give us $823.3 million of floor plan borrowing capacity. In addition, we have total availability of $81.0 million under ancillary floor plan facilities with Comerica Bank and Navistar Financial for our heavy trucks business in Atlanta, Georgia. Collectively we refer to these facilities as our “Floor Plan Facilities.”

The Committed Credit Facility provides us with $125.0 million of working capital borrowing capacity (the “Revolver”), accrues interest at a rate based on LIBOR and matures in March 2009. All future extensions must be approved by the Syndicate. We believe such approval would be obtained. The GMAC, DCFS USA, DCFSA, FMCC, Comerica and Navistar facilities have no stated termination date. Borrowings from the Committed Credit Facility, GMAC, DCFS USA and DCFSA facilities accrue interest based on LIBOR and borrowings from FMCC accrue interest based on the Prime Rate. The weighted average interest rate on our floor plan notes payable from continuing operations was 6.5% and 6.6% for the years ended December 31, 2007 and 2006, respectively.

Amounts borrowed under the Committed Credit Facility are secured by our tangible and intangible assets and the guarantees of each of our subsidiaries. The terms of the Committed Credit Facility require us on an ongoing basis to meet certain financial ratios, as defined in our Committed Credit Facility, including a Current Ratio of at least 1.2 to 1, a Fixed Charge Coverage Ratio of not less than 1.2 to 1, a Total Leverage Ratio of not greater than 4.5 to 1 and an Adjusted Net Worth of not less than $350.0 million. It also includes customary conditions with respect to incurring new indebtedness and places limitations on our ability to pay cash dividends and repurchase shares of our common stock.

The Committed Credit Facility also contains customary events of default, including change of control, non-payment of obligations and cross-defaults to our other indebtedness. Payments under the Committed Credit Facility may be accelerated upon the occurrence of an event of default that is not otherwise waived or cured, subject to certain provisions. As of December 31, 2007, we were in compliance with all of the covenants of the Committed Credit Facility.

Floor Plan Financing—

We finance substantially all of our new vehicle inventory and, at our option, have the ability to finance a portion of our used vehicle inventory. We consider floor plan notes payable to a party that is affiliated with vehicle manufacturers from which we purchase new vehicle inventory “Floor plan notes payable—manufacturer affiliated” and all other floor plan notes payable “Floor plan notes payable—non-manufacturer affiliated.” As of December 31, 2007, we had $683.8 million of total floor plan notes payable outstanding including $9.9 million classified as Liabilities Associated with Assets Held for Sale. As of December 31, 2007, we had $220.5 million available for future borrowings from our Floor Plan Facilities for the purchase of new and used vehicles including $46.9 million available for borrowings using current used vehicle inventory as collateral.

We are required to make monthly interest payments on our floor plan facilities, but generally we are not required to repay the principal prior to the sale of the vehicle. The terms of certain floor plan arrangements impose upon us and our subsidiaries ongoing covenants including financial ratio requirements. As of December 31, 2007, we were in compliance with these financial covenants. Historically, certain vehicle manufacturers have offered floor plan assistance, a portion of which increase or decrease in conjunction with changes in prevailing interest rates.

In November 2006, we entered into an interest rate swap agreement that fixed $150.0 million of our floor plan notes payable for a period of two years. The weighted average annualized interest rate on our floor plan facilities was 6.5 % during the year ended December 31, 2007.

In November 2006, General Motors sold 51% of their financing subsidiary GMAC to an investment consortium led by Cerberus FIM Investors, LLC. Prior to this transaction, floor plan notes payable to GMAC were classified as Floor plan notes payable—manufacturer affiliated on the accompanying Consolidated Balance Sheets as these amounts were payable to a manufacturer affiliated lender. Following the sale of GMAC, General Motors no longer has a majority ownership of or controls GMAC and therefore beginning in December 2006, floor plan notes payable related to General Motors vehicles financed after this change in control were classified as Floorplan notes payable—non-manufacturer affiliated on the accompanying Consolidated Balance Sheets.

In March 2006, while DaimlerChrysler owned Chrysler and DCFSA, we decided to include our DaimlerChrysler dealerships in our Committed Credit Facility and as a result repaid the $85.4 million of floor plan notes payable—non-manufacturer affiliated at our then DaimlerChrysler dealerships with borrowings from DCFS USA and DCFSA, manufacturer affiliated lenders. As a result, beginning in March 2006, floor plan notes payable at our DaimlerChrysler dealerships are included in Floor plan notes payable—manufacturer affiliated on the accompanying Consolidated Balance Sheets. During the year ended December 31, 2006, our Floor plan repayments—non-manufacturer affiliated and Floor plan notes payable—manufacturer affiliated each increased by $85.4 million on the accompanying Consolidated Statements of Cash Flows.

In March 2005, in connection with entering into our Committed Credit Facility, we repaid $334.7 million of floor plan notes payable—non-manufacturer affiliated and $93.4 million of floor plan notes payable—manufacturer affiliated with borrowings from our Committed Credit Facility. As a result, during the year ended December 31, 2005, Floor plan notes payable—manufacturer affiliated decreased by $93.4 million and Floor plan notes payable—non-manufacturer affiliated increased by $93.4 million. In addition, during the year ended December 31, 2005 our Floor plan borrowings—non-manufacturer affiliated and Floor plan repayments—non-manufacturer affiliated increased by $334.7 million.

Mortgage Notes Payable—

As of December 31, 2007, we had two real estate mortgage notes payable outstanding totaling $25.8 million. The mortgage notes payable bear interest at fixed and variable rates, including the effects of an interest rate swap (the weighted average interest rate was 6.5% for the year ended December 31, 2007). The mortgage notes payable are collateralized by the related real estate with a carrying value of $39.4 million as of December 31, 2007, and mature in 2011. The terms of our mortgage notes payable require our subsidiaries to comply with specific financial ratio requirements and other ongoing covenants. As of December 31, 2007, we were in compliance with financial ratios and other ongoing covenants required by the terms of our mortgage notes payable.

Bridge Loans—

In October 2007, we entered into two unsecured bridge loans for a total of $8.3 million to finance the purchase of real estate included in a dealership acquisition. These bridge loans mature in February 2008; however, we refinanced these loans in January 2008 into two mortgage notes payable using the related property as collateral.

Share Repurchase and Dividends

During 2007, we paid two $0.20 per share cash dividends and two $0.225 per share cash dividends totaling $28.0 million.

In February 2007, our board of directors approved a 1.3 million share repurchase program with the objective of offsetting earnings per share dilution resulting from employee share-based compensation programs. We elected to purchase all of the 1.3 million shares at $27.75 per share for $36.1 million in a single transaction.

In August 2007, our board of directors approved an additional 2.0 million share repurchase program. We purchased a total of 1.0 million shares at an average price per share of $20.59 totaling $21.0 million under a Rule 10b5-1 plan whereby we authorized the repurchase of shares of our common stock subject to certain parameters.

During 2007, we repurchased 0.1 million shares from employees for $0.8 million, which was equal to the employees’ tax liability from the exercise or vesting of share-based payment arrangements.

Covenants—

We are subject to certain financial covenants in connection with our debt and lease agreements, including the financial covenants described below. Our Committed Credit Facility includes certain financial ratios with the following requirements: (i) a Current Ratio of at least 1.2 to 1, of which our ratio was approximately 1.5 to 1 as of December 31, 2007; (ii) a Fixed Charge Coverage Ratio of at least 1.2 to 1, of which our ratio was approximately 1.7 to 1 as of December 31, 2007; (iii) a Total Leverage Ratio of not more than 4.5 to 1, of which our ratio was approximately 2.8 to 1 as of December 31, 2007 and (iv) an Adjusted Net Worth of $350.0 million, of which our adjusted net worth was approximately $455.1 million as of December 31, 2007. A breach of these covenants could cause an acceleration of repayment of our Committed Credit Facility if not otherwise waived or cured. Certain of our lease agreements include financial ratios with the following requirements: (i) a Liquidity Ratio of at least 1.2 to 1, of which our ratio was approximately 1.4 to 1 as of December 31, 2007, and (ii) an EBITDA plus rent expense (“EBITDAR”) Ratio of at least 1.5 to 1, of which our ratio was approximately 3.1 to 1 as of December 31, 2007. A breach of these covenants would give rise to certain lessor remedies under our various lease agreements, the most severe of which include the following: (a) termination of the applicable lease, (b) termination of certain of the tenant’s lease rights, such as renewal rights and rights of first offer or negotiation relating to the purchase of the premises, and/or (c) a liquidated damages claim equal to the extent to which the accelerated rents under the applicable lease for the remainder of the lease term exceed the fair market rent over the same periods. As of December 31, 2007, we were in compliance with all our debt and lease agreement covenants.

Contractual Obligations—

As of December 31, 2007, we had the following contractual obligations (in thousands):


	2008		2009		2010		2011		2012		Thereafter		Total
Floor plan notes payable	$	683,810	$	—	$	—	$	—	$	—	$	—	$	683,810
Operating leases		60,570		58,298		55,806		55,629		54,343		314,095		598,741
Long-term debt, including capital lease obligations(a)		1,736		1,349		1,352		22,712		115,181		333,257		475,587
Interest on long-term debt (b)		31,345		31,237		31,152		30,490		29,434		76,310		229,968
Employee compensation obligations		1,075		1,075		335		—		—		9,410		11,895

Total	$	778,536	$	91,959	$	88,645	$	108,831	$	198,958	$	733,072	$	2,000,001

(a)	Does not include $6.7 million of fair value hedge which reduces the book value of our 8% Notes

(b)	Includes variable interest calculated using a 4.7% estimate of LIBOR

As of December 31, 2007, we had a $3.6 million liability for unrecognized tax benefits. We have not included this amount in the table above as we are not able to determine with any certainty which year such liability would be paid.

Cash Flow

Borrowings and repayments of floor plan notes payable to a party unaffiliated with the manufacturer of a particular new vehicle, and all floor plan notes payable relating to pre-owned vehicles, are classified as financing activities on the accompanying Consolidated Statements of Cash Flows with borrowings reflected separately from repayments. The net change in floor plan notes payable to a party affiliated with the manufacturer from which we purchase new vehicles is classified as an operating activity on the Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions are classified as a financing activity. Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are cash flows related to amounts payable to a lender affiliated with the manufacturer from which we purchased the related inventory while the latter are cash flows related to amounts payable to a lender not affiliated with the manufacturer from which we purchased the related inventory.

Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan providers require amounts borrowed for the purchase of a vehicle to be repaid immediately after that vehicle is sold. As a result, we believe that it is important to understand the relationship between the cash flows of all of our floor plan notes payable and inventory in order to understand our working capital and operating cash 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 manufacturer affiliated and non-manufacturer affiliated floor plan as compared to us). In addition, we include all floor plan borrowings and repayments in our operating cash flow forecasts. As a result, we use adjusted cash flow from operating activities to compare our results to forecasts. We believe that by splitting the cash flows of floor plan notes payable between operating activities and financing activities while all inventory activity is included in operating activities results in significantly different operating cash flow than when all the cash flows of floor plan notes payable are classified together in operating activities.

The non-GAAP measure “cash provided by operating activities, as adjusted” have material limitations. Cash provided by operating activities, as adjusted includes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer of the related vehicle and conversely cash (used in) provided by financing activities, as adjusted, excludes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer of the related vehicle. In addition, the non-GAAP measures cash provided by operating activities, as adjusted may not be comparable to similarly titled measures of other companies. In order to compensate for these limitations we also review the related GAAP measures.

Cash (used in) provided by financing activities, as adjusted, is not presented as a measure of our performance, financial position or cash flows. We present this figure solely to show the source of the amount stated as “Floor plan notes payable – non-manufacturer affiliated” in our reconciliation of adjusted cash provided by (used in) operating activities.

We have provided a reconciliation of cash flow from operating activities and financing activities, as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory, were classified as an operating activity.


	For the Year Ended December 31,
	2007			2006			2005
	(In thousands)
Reconciliation of Cash provided by (used in) Operating Activities to Adjusted Cash provided by Operating Activities
Cash provided by (used in) operating activities, as reported	$	69,336		$	128,581		$	(40,457	)
New vehicle floor plan (repayments) borrowings—non-manufacturer affiliated, net		77,562			(29,026	)		106,618
Floor plan notes payable—manufacturer affiliated divestitures		—			13,996			16,534

Cash provided by operating activities, as adjusted	$	146,898		$	113,551		$	82,695

Reconciliation of Cash provided by (used in) Financing Activities to Adjusted Cash used in Financing Activities
Cash provided by (used in) financing activities, as reported	$	9,744		$	(65,432	)	$	100,708
New vehicle floor plan (repayments) borrowings—non-manufacturer affiliated, net		(77,562	)		29,026			(106,618	)

Cash used in financing activities, as adjusted	$	(67,818	)	$	(36,406	)	$	(5,910	)

Operating Activities—

Net cash provided by operating activities totaled $69.3 million and $128.6 million for the years ended December 31, 2007 and 2006, respectively. Net cash used in operating activities totaled $40.5 million for the year ended December 31, 2005. Net cash provided by operating activities, as adjusted, totaled $146.9 million, $113.6 million and $82.7 million for the years ended December 31, 2007, 2006 and 2005, respectively. Cash provided by operating activities, as adjusted, includes net income adjusted for non-cash items and changes in working capital, including changes in floor plan notes payable and inventory. The increase in our cash provided by operating activities, as adjusted, for the year ended December 31, 2007, compared to the year ended December 31, 2006, was a result of (i) $48.9 million related to the timing of collection of accounts receivable and contracts-in-transit, (ii) a $15.4 million increase in net income adjusted for non-cash items, partially offset by (iii) $21.0 million related to timing of sale of inventory and repayment of the related floor plan notes payable.

Investing Activities—

Net cash used in by investing activities totaled $154.9 million and $31.2 million for the years ended December 31, 2007 and 2005, respectively. Net cash provided by investing activities totaled $8.8 million for the year ended December 31, 2006. Cash flows from investing activities relate primarily to capital expenditures, acquisition and divestiture activity, sale of property and equipment, and construction reimbursements from lessors in connection with our sale-leaseback agreements.

Capital expenditures were $57.1 million, $45.3 million and $78.1 million for the years ended December 31, 2007, 2006 and 2005, respectively, of which $22.5 million, $15.0 million and $41.9 million, were financed or were pending financing through sale-leaseback agreements or mortgage notes payable for the years ended December 31, 2007, 2006 and 2005, respectively. Our capital investments consisted of upgrades of our existing facilities, equipment purchases and construction of new facilities. We received $11.4 million, $3.4 million and $14.6 million in construction reimbursements from lessors in connection with our sale-leaseback agreements during the years ended December 31, 2007, 2006 and 2005, respectively. We anticipate that future capital expenditures will relate primarily to upgrading and expanding existing dealership facilities. We expect that capital expenditures during 2008 will total between $55.0 million and $65.0 million. We expect capital expenditures for 2008 to include $40.0 million to $50.0 million related to upgrades or expansion of our current facilities, of which we intend to finance approximately 60% to 70% principally through sale-leaseback agreements.

Acquisitions totaled $117.1 million for nine franchises and $24.6 million for three franchises during the years ended December 31, 2007 and 2005, respectively. We did not complete any acquisitions during the year ended December 31, 2006. Included in acquisitions for the years ended December 31, 2007 and 2005, is the purchase of new vehicle inventory, which was financed through floor plan borrowings of $27.9 million and $15.3 million, respectively, of from our Floor Plan Facilities.

During 2005, we exercised an option to purchase certain real estate in Texas on which we operate dealerships and previously leased for $57.0 million. Upon such acquisition, we immediately sold a portion of such real estate to a third party for $44.7 million and entered into a long-term operating lease with the buyer. We do not expect our rent expense on the $44.7 million of previously leased real estate to materially change.

Proceeds from the sale of assets totaled $11.7 million, $52.8 million and $102.6 million for the years ended December 31, 2007, 2006 and 2005, respectively. Included in the proceeds from the sale of assets for the years ended December 31, 2007, 2006 and 2005, were $5.7 million, $25.2 million and $24.9 million, respectively, associated with the sale of inventory in connection with dealership divestitures. Included in proceeds from the sale of assets for the year ended December 31, 2005, was $44.7 million associated with the sale-leaseback of the real estate that we purchased in Texas upon the exercise of the option described above. We continuously monitor the profitability and market value of our dealerships and, under certain conditions, may strategically divest non-profitable dealerships.

Financing Activities—

Net cash provided by financing activities totaled $9.7 million and $100.7 million during 2007 and 2005, respectively. Net cash used in financing activities totaled $65.4 million during 2006. Net cash used in financing activities, as adjusted, totaled $67.8 million, $36.4 million and $5.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.

During 2007, 2006 and 2005, proceeds from borrowings amounted to $283.3 million, $1.0 million and $24.5 million. The proceeds borrowings during 2007, include the issuance of $115.0 million of our 3% Notes and the

issuance of our $150.0 million of our 7.625% Notes, which were used to repay all of our $250.0 million of 9% Notes. The proceeds from borrowings during 2006 and 2005, were used primarily to finance construction on our dealership facilities and general corporate purposes. In addition, during 2007 we incurred $7.9 million of debt issuance costs associated with issuances of our 3% Notes and 7.625% Notes.

During 2007, 2006 and 2005, repayments of borrowings totaled $277.8 million, $20.6 million and $50.1 million, respectively. Repayments of borrowings during 2007 was primarily a result of our decision to repay $250.0 million of our 9% Notes, including a $12.9 million premium. Repayments of borrowings during 2006 was primarily a result of our decision to repay $17.6 million of our 8% Notes. Repayments of borrowings during 2005, was primarily a result of our decision to repay certain mortgage notes payable.

During 2007 and 2005, we received net proceeds of $3.2 million and $15.1 million, respectively, from sale-leaseback transactions, where we owned real estate with substantial equity. We consider these particular transactions financing activities as we owned the real estate and related improvements prior to the sale-leaseback transaction and continue to use the dealership facilities and related real estate in our operations. We have entered into long-term lease agreements for use of the dealership facilities with the lessors.

We borrowed $27.9 million and $15.3 million, from our Floor Plan Facilities for the purchase of inventory in connection with seven and three dealership acquisitions during 2007 and 2005, respectively. We did not acquire any dealerships during 2006. We repaid $5.4 million, $11.3 million and $9.2 million of non-manufacturer affiliated floor plan notes payable associated with sale of two, four and three dealerships during 2007 and 2006, respectively.

During 2007, in connection with the issuance of our 3% Notes, we paid $19.3 million for a convertible bond hedge and sold warrants to purchase shares of our common stock at an initial price of $45.09 per share for proceeds of $8.9 million.

During 2007, we declared two $0.20 per share dividends and two $0.225 per share dividend totaling $28.0 million. During 2007, we purchased 2.3 million shares of our common stock for $57.1 million.

During 2007, 2006 and 2005 we received proceeds from the exercise of stock options totaling $3.3 million, $8.1 million and $3.6 million, respectively. In connection with the exercise and vesting of share-based awards during 2007, we repurchased 131,629 shares of common stock from employees for $0.8 million, which was equal to the employees’ tax liability from the exercise or vesting of share-based payment arrangements. In addition, we recognized $1.7 million and $2.1 million of excess tax benefits from the exercise and vesting of share-based awards during 2007 and 2006, respectively.

Sale-Leaseback Transactions

During 2007, we completed four sale-leaseback transactions resulting in the sale of $14.6 million of assets to a third party and the commencement of long-term operating leases with the buyer. We estimate the incremental annualized rent expense from these four sale-leaseback transactions is approximately $1.2 million. In addition, we had $9.2 million of completed construction projects associated with pending sale-leaseback transactions and $14.9 million of ongoing construction projects, which are included in Assets Held for Sale and Other Current Assets, respectively, on our Consolidated Balance Sheet as of December 31, 2007. We expect to complete these construction projects and commence the related long-term operating leases in 2008.

Acquisitions and Divestitures

During 2007, we acquired nine franchises (seven dealership locations), including two heavy truck franchises, for an aggregate purchase price of $117.1 million. We are actively pursuing the sale of one franchise (one dealership location) that we acquired in the third quarter of 2007. In connection with the purchase of one franchise, additional consideration may be paid to the seller if the franchise achieves specified net income levels in future periods. The additional consideration is distributable annually beginning January 1, 2009 through January 1, 2015, and we estimate the additional consideration to total approximately $2.5 million. We financed these acquisitions through the use of (i) $79.4 million of cash, (ii) $27.7 million of floor plan borrowings from our Committed Credit Facility for the purchase of new vehicle inventory, (iii) $8.3 million in bridge loans and (iv) $1.7 million of loaner vehicle financing.

During 2007, we sold two franchises (two dealership locations), which were placed into discontinued operations in 2006.

Pending Acquisitions and Divestitures

During the year ended December 31, 2007, we placed four franchises (three dealership locations) into discontinued operations, and as of December 31, 2007, five franchises (four dealership locations) were pending disposition, including one dealership location, which was not placed into discontinued operations because the cash flows will be replaced by our existing operations.

We are currently under contract to purchase one franchise (one dealership locations) for approximately $28.0 million, which we anticipate will contribute approximately $110.0 million of annual revenues. We expect to spend between $60.0 million and $90.0 million on acquisitions during 2008 that we expect will add between $200.0 million and $300.0 million of annual revenues; however, our estimates may change based on the availability of dealerships that would provide an acceptable return on our investment.

Stock Repurchase and Dividend Restrictions

Pursuant to the indentures governing our 8% Notes, our 7.625% Notes and our Committed Credit Facility, our ability to repurchase shares of our common stock and pay cash dividends is limited. As of December 31, 2007, our ability to repurchase shares of our outstanding common stock or pay cash dividends was limited to $16.1 under the most restrictive provision. Such limits are increased each quarter by 50% of net income and decreased by any dividend payments or share repurchases during the period. We paid $27.7 million in dividends during the year ended December 31, 2007.

During 2007, we declared two $0.20 per share cash dividends and two $0.225 per share cash dividends totaling $28.0 million.

In August 2007, our board of directors approved an additional 2.0 million share repurchase program. We purchased a total of 1.0 million shares for $21.0 million under a Rule 10b5-1 plan whereby we authorized the repurchase of shares of our common stock subject to certain parameters.

During 2007, we repurchased 0.1 million shares from employees for $0.8 million, which was equal to the employees’ tax liability from the exercise or vesting of share-based payment arrangements.

Off Balance Sheet Transactions

We had no off balance sheet transactions during the years presented other than those disclosed in Notes 20 and 21 of our consolidated financial statements.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual amounts could differ from those estimates. On an ongoing basis, management evaluates its estimates and assumptions and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary. The accounting estimates described below are those that require management judgments, and therefore are critical to understanding our results of operations. Senior management has discussed the development and selection of these accounting estimates and the related disclosures with the audit committee of our board of directors.

F&I Chargeback Reserve—

We receive commissions from the sale of vehicle service contracts, credit life insurance and disability insurance to customers. In addition, we receive commissions from financing institutions for arranging customer financing. We may be charged back (“chargebacks”) for finance, insurance or vehicle service contract commissions in the event a contract is terminated. The revenues from financing fees and commissions are recorded at the time the vehicles are sold and a reserve for future chargebacks is established based on historical operating results and the termination provisions of the applicable contracts. This data is evaluated on a product-by-product basis. Our loss histories vary depending on the product but generally range between 7% and 21%. Our F&I chargebacks for the years ending December 31, 2007, 2006 and 2005 were $20.8 million, 17.1 million and 14.6 million, respectfully. Our chargeback reserves were $16.1 million and $14.1 million as of December 31, 2007 and 2006, respectively. A 1% change in our estimate for all our products would have changed our finance and insurance, net by approximately $0.9 million

Used Vehicle Inventory Lower of Cost or Market Reserve—

Our used vehicle inventory is stated at the lower of cost or market. We use the specific identification method to value our vehicle inventories. We maintain a reserve for specific inventory units where cost basis exceeds fair value. In assessing lower of cost or market for used vehicles, we consider (i) the aging of used vehicles, (ii) loss histories of used vehicles and (iii) current market conditions.

Our used vehicle loss histories have indicated that our losses range between 2-4% of our used vehicle inventory. Our used vehicle losses for the years ending December 31, 2007, 2006 and 2005 were $13.6 million, 12.5 million and 13.4 million, respectively. As of December 31, 2007, our used vehicle loss reserve was $3.4 million or 3.4% of used vehicle inventory. Each 1% change in our estimate would change our used vehicle reserve approximately $1.0 million.

Insurance Reserves—

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 for workers compensation, property and general liability claims. We maintain and review at least monthly our claim and loss history to assist in assessing our future liability for these claims. We also use professional service providers such as account administrators and actuaries to help us accumulate and assess this information. As of December 31, 2007 and 2006, we had $8.4 million and $5.9 million, respectively, of insurance reserves for both known and unknown employee medical, workers compensation, property and general liability claims. Insurance losses for the years ended December 31, 2007, 2006 and 2005 totaled $22.7 million, $22.3 million and $19.9 million, respectively.

Goodwill and Manufacturer Franchise Rights—

Goodwill represents the excess cost of the businesses acquired over the fair market value of the identifiable net assets. 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 the fact that all components are economically similar, we qualify as a single reporting unit for purposes of testing goodwill for impairment. Our dealership general managers are responsible for customer facing activities, including inventory management and advertising and personnel decisions; and have the flexibility to respond to local market conditions. The corporate management team, with input from the regional management teams, is responsible for infrastructure and general strategy decisions.

lives and they are expected to generate cash flows indefinitely due to the historically long lives of the manufacturers’ brand names. Due to the fact that manufacturer franchise rights are specific to the location in which we acquire a dealership, we have determined that the dealership is the reporting unit for purposes of testing franchise rights for impairment.

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” we do not amortize goodwill and other intangible assets that are deemed to have indefinite lives. We review goodwill and indefinite lived manufacturer franchise rights for impairment annually on October 1^st of each year, or more often if events or circumstances indicate that impairment may have occurred. We are subject to financial statement risk to the extent that manufacturer franchise rights become impaired due to decreases in fair market value of our individual franchises or to the extent that goodwill becomes impaired due to decreases in the fair market value of our automotive retail business.

The significant estimates and assumptions used by management in assessing the recoverability of goodwill and other intangible assets are estimated future cash flows, present value discount rate, and other factors. Any changes in these estimates or assumptions could result in an impairment charge. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluations of long-lived assets can vary within a range of outcomes.

In addition to the testing above, which is done on an annual basis, management uses certain indicators to evaluate whether the carrying value of goodwill and other intangible assets may not be recoverable, such as (i) current-period operating or cash flow declines combined with a history of operating or cash flow declines or a forecast that demonstrates continuing declines in the cash flow of an entity or inability of an entity to improve its operations to forecasted levels and (ii) a significant adverse change in the business climate, whether structural or technological, that could affect the value of an entity.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the Financial Accounting Standards Board (“FASB’) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, commonly referred to as minority interest. Among other matters, SFAS 160 requires (a) the noncontrolling interest be reported within equity in the balance sheet and (b) the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly presented in the statement of income. SFAS 160 is effective for the Company’s 2009 fiscal year. SFAS 160 is to be applied prospectively, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The adoption of SFAS No. 160 will not impact our consolidated financial statements as we do not have any minority interests in our subsidiaries.

In December 2007, the FASB issued SFAS No. 141R “Business Combinations,” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination, recognizing assets acquired and liabilities assumed arising from contingencies, and determining what information to disclose to enable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for fiscal years beginning after December 15, 2008. We expect the adoption of SFAS 141R to decrease our Other Operating Income (Expense), net by approximately $0.1 million to $0.3 million per acquisition.

In June 2007, the Emerging Issues Task Force (“EITF”) issued EITF Issue No. 06-11 “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.” EITF Issue No. 06-11 requires the recognition of a realized tax benefit associated with the dividends on affected securities charged to retained earnings as an increase in additional paid-in capital (“APIC”). The amount recognized in APIC should be included in the APIC pool. When an entity’s estimate of forfeitures increases or actual forfeitures exceed its estimates, the amount of tax benefits previously recognized in APIC should be reclassified into the income statement; however, the amount reclassified is limited to the APIC pool balance on the reclassification date. EITF Issue No. 06-11 is effective for fiscal periods beginning after December 31, 2007. We do not expect the adoption of EITF Issue No. 06-11 to have a material financial impact to our financial statements.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements.” SFAS No. 157 provides guidance for, among other things, the definition of fair value and the methods used to measure fair value. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. We do not expect the adoption of SFAS No. 157 to have a material impact on our consolidated financial statements and disclosures.

In June 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income taxes recognized under SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on various related matters such as derecognition, interest and penalties and disclosure. On January 1, 2007, we adopted FIN 48. The initial application of FIN 48 to our tax positions had no impact on Shareholders’ Equity. We did not record a cumulative effect adjustment related to the adoption of FIN 48.

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

The following operating performance measures (i) cash provided by operating activities, as adjusted, (ii) dealership generated F&I gross profit PVR, (iii) adjusted SG&A expenses as a percentage of adjusted gross profit and (iv) adjusted income from continuing operations, are not measures of operating performance under U.S. generally accepted accounting principles (“GAAP”) and should not be considered as an alternative or substitute for GAAP profitability measures such as cash provided by operating activities, F&I gross profit PVR, SG&A as percentage of gross profit and income from continuing operations. These non-GAAP operating performance measures have material limitations and as a result should be evaluated in conjunction with the directly comparable GAAP measure. One limitation is that these non-GAAP measures are not defined by GAAP and our definition of each measure may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Other limitations of these non-GAAP measures are discussed below. In order to compensate for these limitations we also review the related GAAP measures. Investors should not consider the non-GAAP measures in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

Adjusted cash provided by (used in) operating

The non-GAAP measure “cash provided by operating activities, as adjusted” have material limitations. Cash provided by operating activities, as adjusted includes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer of the related vehicle and conversely cash (used in) provided by financing activities, as adjusted, excludes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer of the related vehicle. In addition, the non-GAAP measure cash provided by operating activities, as adjusted may not be comparable to similarly titled measures of other companies. In order to compensate for these limitations we also review the related GAAP measures.


	2007			2006			2005
	(In thousands)
Reconciliation of Cash provided by (used in) Operating Activities to Adjusted Cash provided by Operating Activities
Cash provided by (used in) operating activities, as reported	$	69,336		$	128,581		$	(40,457	)
New vehicle floor plan (repayments) borrowings—non-manufacturer affiliated, net		77,562			(29,026	)		106,618
Floor plan notes payable—manufacturer affiliated divestitures		—			13,996			16,534

Cash provided by operating activities, as adjusted	$	146,898		$	113,551		$	82,695

Reconciliation of Cash provided by (used in) Financing Activities to Adjusted Cash used in Financing Activities
Cash provided by (used in) financing activities, as reported	$	9,744		$	(65,432	)	$	100,708
New vehicle floor plan (repayments) borrowings—non-manufacturer affiliated, net		(77,562	)		29,026			(106,618	)

Cash used in financing activities, as adjusted	$	(67,818	)	$	(36,406	)	$	(5,910	)

Dealership Generated F&I Gross Profit PVR—

We evaluate our F&I performance on a PVR basis by dividing our total F&I gross profit by the number of retail vehicles sold during the period. During 2003, we renegotiated a contract with one of our third-party F&I product providers, which resulted in the recognition of income that was not attributable to retail vehicles sold during the year. We believe that dealership generated F&I, which excludes the additional revenue derived from contracts negotiated by our corporate office, provides a measure of our F&I operating performance as used by management to operate the business. However, this non-GAAP measure has material limitations including the fact that although we believe the recognition of corporate generated F&I gross profit is infrequent and that we do not expect to recognize corporate generate F&I gross profit in the future, we cannot assure you that we will not recognize similar amounts of F&I gross profit in the future. In order to compensate for these limitations we also review the related GAAP measures.

The following table reconciles F&I, net to dealership generated F&I, and provides the necessary components to calculate dealership generated F&I PVR (in thousands, except for unit and per vehicle data):


	For the Years Ended December 31,
	2007		2006			2005
	(In thousands)
F&I, net (as reported)	$	162,189	$	154,894		$	146,566
Less: corporate generated F&I gross profit		—		(1,685	)		(4,822	)
Less: corporate generated F&I gain		—		(3,400	)		—

Dealership generated F&I	$	162,189	$	149,809		$	141,744

Retail units sold:
New retail units		101,871		103,100			101,158
Used retail units		60,764		62,132			58,625

Total		162,635		165,232			159,783

SG&A Expenses as a percentage of adjusted gross profit

Our operations during the twelve months ended December 31, 2007 were impacted by legal claims arising in, and before, the year 2003. Our operations during the twelve months ended December 31, 2006 were impacted

by the sale of our remaining interest in a pool of extended service contracts. We believe that an alternative comparison, as used by management to compare actual results to forecasted results, of our SG&A as a percentage of adjusted gross profit can be made by adjusting for these items based on the fact that we believe these items are not core dealership operating items and should not be considered when forecasting our future results.

The non-GAAP measures “adjusted gross profit” contains material limitations. Although we believe that corporate generated F&I gross profit is infrequent and although we do not expect to recognize this item in the future we cannot assure you that this type of item will not recur in the future. In addition, our gross profit may not be comparable with gross profit of other companies to the extent that other companies recognize similar items in gross profit and do not provide disclosure of the amounts. In order to compensate for these limitations we also review the related GAAP measures.

The following table reconciles gross profit to adjusted gross profit, and provides the necessary components to calculate SG&A expenses as a percentage of adjusted gross profit:


	For the Years Ended December 31
	2007			2006
	(In thousands)
SG&A expenses	$	685,632		$	663,856
Legal settlements expense		(2,511	)		—

Adjusted SG&A expense	$	683,121		$	663,856

Gross profit	$	889,444		$	870,778
Corporate generated F&I gain		—			(3,400	)

Adjusted gross profit	$	889,444		$	867,378

Adjusted SG&A expenses as a percentage of adjusted gross profit		76.8	%		76.5	%


	For the Years Ended December 31
	2006			2005
	(In thousands)
SG&A expenses	$	663,856		$	627,146
Share-based compensation		(4,955	)		—

Adjusted SG&A expense	$	658,901		$	627,146

Gross profit	$	870,778		$	806,952
Corporate generated F&I gain		(3,400	)		—

Adjusted gross profit	$	867,378		$	806,952

Adjusted SG&A expenses as a percentage of adjusted gross profit		76.0	%		77.7	%

Adjusted income from continuing operations

Our income from continuing operations during 2007 was impacted by (i) retirement benefits expense associated with the retirement of our former CEO, (ii) expenses related to a secondary offering for which we did not receive any proceeds, (iii) a loss on extinguishment of long-term debt, and (iv) legal claims arising in, and before, the year 2003. Our income from continuing operations during 2006 was impacted by (i) the sale of our remaining interest in a pool of extended service contracts, (ii) a gain recognized on the sale of a franchise in which the dealership facility was retained, (iii) our decision to abandon certain strategic projects, (iv) expenses related to the extinguishment of long-term debt and (v) expenses related to two secondary stock offerings. We believe that an alternative comparison of our income from continuing operations, as used by management to compare actual results to forecasted results, can be made by adjusting for these items based on the fact that we believe these items are not core dealership operating items and should not be considered when forecasting our future results.

The non-GAAP measures “adjusted income from continuing operations” contain material limitations. Although we believe that retirement benefits expense, corporate generated F&I gross profit, reorganization benefits (expenses), abandoned strategic project expenses, secondary stock offering expenses and losses from the extinguishment of long-term debt are infrequent and although we do not expect to recognize these items in the future we cannot assure you that we will not recognize them in the future. In addition, our income from continuing operations may not be comparable with income from continuing operations of other companies to the

extent that other companies recognize similar items in income from continuing operations and do not provide disclosure of the amounts. In order to compensate for these limitations we also review the related GAAP measures.


	For the Years Ended December 31,
	2007		2006
	(In thousands)
Net income	$	50,955	$	60,749
Discontinued operations, net of tax		3,331		6,340

Income from continuing operations		54,286		67,089
Adjusting items:
Loss on extinguishment of long-term debt, net of tax		11,577		717
Retirement benefits expense, net of tax		1,844		—
Legal settlement expense, net of tax		1,569		—
Secondary stock offering expenses *		270		1,073
Corporate generated F&I gain, net of tax		—		(2,130	)
Gain on sale of franchise, net of tax		—		(1,565	)
Abandoned strategic project expenses, net of tax		—		1,039

Adjusted income from continuing operations	$	69,546	$	66,223

*	Secondary offering expenses are not deductible for tax purposes; therefore, no tax benefit has been reflected.

In addition to the items discussed above, effective January 1, 2006, we adopted SFAS No. 123R under the modified prospective transition method and therefore recorded share-based compensation expense under the fair value method for the year ended December 31, 2006. Prior to January 1, 2006, share-based compensation expense was recorded under the intrinsic value method and therefore we did not recognize any share-based compensation expense. As a result, we believe that an alternative comparison of our income from continuing operations, as used by management to compare actual results to budgeted results, can be made by adjusting for these items based on the fact that we believe these items are not core dealership operating items and should not be considered when forecasting our future results.


	For the Years Ended December 31,
	2006			2005
	(In thousands)
Net income	$	60,749		$	61,081
Discontinued operations, net of tax		6,340			(3,313	)

Income from continuing operations		67,089			57,768
Adjusting items:
Share-based compensation, net of tax		3,105			—
Corporate generated F&I gain, net of tax		(2,130	)		—
Gain on sale of franchise, net of tax		(1,565	)		—
Secondary stock offering expenses *		1,073			—
Abandoned strategic project expenses, net of tax		1,039			—
Loss on extinguishment of long-term debt, net of tax		717			—
Reorganization expenses, net of tax		—			2,598
Reorganization benefit, net of tax		—			(2,114	)

Adjusted income from continuing operations	$	69,328		$	58,252

*	Secondary offering expenses are not deductible for tax purposes; therefore, no tax benefit has been reflected.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to market risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on $554.5 million of total variable rate debt (including floor plan notes payable) outstanding as of December 31, 2007, a 1% change in interest rates would result in a change of approximately $5.5 million to our annual other interest expense.

We received $26.1 million of interest credit assistance from certain automobile manufacturers during the year ended December 31, 2007. Interest credit assistance reduced cost of sales (including amounts classified as discontinuing operations) for the year ended December 31, 2007 by $22.3 million and reduced new vehicle inventory by $7.8 million and $4.1 million as of December 31, 2007 and 2006, respectively. Although we can provide no assurance as to the amount of future floor plan credits, it is our expectation, based on historical data that an increase in prevailing interest rates would result in increased interest credit assistance from certain automobile manufacturers.

Hedging Risk

In November 2006, we entered into an interest rate swap agreement with a notional principal amount of $150.0 million as a hedge against the changes in interest rates of our variable rate floor plan notes payable for a period of two years beginning in November 2006. The swap agreement was designated and qualifies as a cash flow hedge of future changes in interest rates of our variable rate floor plan notes payable and is not expected to contain any ineffectiveness. As of December 31, 2007 and 2006, the swap agreement had a fair value of $1.5 million and $0.2 million, respectively, which was included in Other Long-Term Liabilities on the accompanying Consolidated Balance Sheets.

We have an interest rate swap with a current notional principal amount of $13.5 million. The swap was designed to provide a hedge against changes in interest rates of our variable rate mortgage notes payable through maturity in June 2011. This interest rate swap qualifies for cash flow hedge accounting treatment and will contain minor ineffectiveness. Under the terms of the swap agreement, we make payments based on a fixed rate of 6.08% and receive a variable rate cash flows based on one-month LIBOR. As of December 31, 2007 the swap agreement had a fair value of $0.2 million and is included in Other Long-Term Liabilities on the accompanying Consolidated Balance Sheets. As of December 31, 2006 the swap agreement had a fair value of $0.3 million and is included in Other Long-Term Assets on the accompanying Consolidated Balance Sheets.

Three of our interest rate swap agreements terminated in March 2006, which resulted in a cash payment of $13.7 million, which equaled the fair market value of the swap agreements. Included in Accumulated Other Comprehensive Loss on our Consolidated Balance Sheet as of December 31, 2007, was $2.5 million ($1.5 million, net of tax) of unrecognized amortization related to our two terminated cash flow swaps, which are being amortized through March 2014 as a component of Floor Plan Interest Expense on the accompanying Consolidated Statements of Income. Amortization of these terminated cash flow swaps totaled $0.9 million for the year ended December 31, 2007. In addition, included as a reduction to our 8% Notes as of December 31, 2007, was $6.7 million of unrecognized amortization related to our terminated fair value swap, which is being amortized through March 2014 as a component of Other Interest Expense on the accompanying Consolidated Statements of Income. Amortization of this terminated fair value swap totaled $1.1 million for the year ended December 31, 2007 and will total $1.1 million for the year ended December 31, 2008.

In connection with the sale of our 3% Notes, we entered into convertible note hedge transactions with respect to our common stock with Goldman, Sachs & Co. and Deutsche Bank AG, London Branch (collectively, the “Counterparties”). The convertible note hedge transaction requires the Counterparties to deliver to us, subject to customary anti-dilution adjustments, all shares issuable upon conversion of the 3% Notes. The effect of the convertible note hedge transactions is to unwind the conversion feature of the 3% Notes. Under the terms of the convertible note hedge transactions we will receive shares from the Counterparties in the event of a conversion of our 3% Notes.

The convertible note hedge and warrant transactions are expected to offset the potential dilution upon conversion of the 3% Notes in the event that the market value per share of our common stock at the time of conversion is between $33.99 and $45.0385.

Item 8.

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


		Page
Report of Independent Registered Public Accounting Firm		68

Consolidated Balance Sheets as of December 31, 2007 and 2006		69

Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005		70

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2007, 2006 and 2005		71

Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005		72

Notes to Consolidated Financial Statements		73

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Asbury Automotive Group, Inc.

New York, New York

We have audited the accompanying consolidated balance sheets of Asbury Automotive Group, Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2007. We also have audited the Company’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Asbury Automotive Group, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in Note 16 to the consolidated financial statements, effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”.

/s/ DELOITTE & TOUCHE LLP

New York, New York

February 29, 2008

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	December 31,
	2007			2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	53,354		$	129,170
Contracts-in-transit		116,135			126,012
Accounts receivable (net of allowance of $678 and $648, respectively)		132,830			167,562
Inventories		769,992			775,313
Deferred income taxes		12,291			13,961
Assets held for sale		34,075			25,947
Other current assets		73,745			55,099

Total current assets		1,192,422			1,293,064
PROPERTY AND EQUIPMENT, net		238,581			202,584
GOODWILL		483,301			447,996
OTHER LONG-TERM ASSETS		101,996			87,193

Total assets	$	2,016,300		$	2,030,837

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—manufacturer affiliated	$	193,748		$	319,896
Floor plan notes payable—non-manufacturer affiliated		480,203			380,881
Current maturities of long-term debt		1,736			1,865
Accounts payable and accrued liabilities		186,121			174,526
Liabilities associated with assets held for sale		9,859			3,887

Total current liabilities		871,667			881,055
LONG-TERM DEBT		473,851			454,010
DEFERRED INCOME TAXES		51,741			53,991
OTHER LONG-TERM LIABILITIES		34,816			29,948
COMMITMENTS AND CONTINGENCIES (Notes 20 and 21)

SHAREHOLDERS’ EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized		—			—
Common stock, $.01 par value, 90,000,000 shares authorized 36,258,961 and 35,071,401 shares issued, including shares held in treasury, respectively		363			351
Additional paid-in capital		440,434			431,725
Retained earnings		219,356			196,393
Treasury stock, at cost; 4,677,261 and 1,536,706 shares held, respectively		(73,319	)		(14,559	)
Accumulated other comprehensive loss		(2,609	)		(2,077	)

Total shareholders’ equity		584,225			611,833

Total liabilities and shareholders’ equity	$	2,016,300		$	2,030,837

See accompanying Notes to Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)


	For the Years Ended December 31,
	2007			2006			2005
REVENUES:
New vehicle	$	3,385,225		$	3,425,074		$	3,267,935
Used vehicle		1,462,920			1,443,899			1,315,907
Parts, service and collision repair		702,633			670,520			626,443
Finance and insurance, net		162,189			154,894			146,566

Total revenues		5,712,967			5,694,387			5,356,851
COST OF SALES:
New vehicle		3,145,107			3,182,337			3,042,120
Used vehicle		1,338,924			1,310,852			1,198,774
Parts, service and collision repair		339,492			330,420			309,005

Total cost of sales		4,823,523			4,823,609			4,549,899

GROSS PROFIT		889,444			870,778			806,952
OPERATING EXPENSES:
Selling, general and administrative		(685,632	)		(663,856	)		(627,146	)
Depreciation and amortization		(21,492	)		(20,061	)		(19,441	)
Other operating (expense) income, net		(958	)		1,485			(552	)

Income from operations		181,362			188,346			159,813
OTHER INCOME (EXPENSE):
Floor plan interest expense		(43,107	)		(40,533	)		(27,597	)
Other interest expense		(39,245	)		(44,185	)		(40,841	)
Interest income		4,336			5,111			966
Loss on extinguishment of long-term debt		(18,523	)		(1,144	)		—

Total other expense, net		(96,539	)		(80,751	)		(67,472	)

Income before income taxes		84,823			107,595			92,341
INCOME TAX EXPENSE		30,537			40,506			34,573

INCOME FROM CONTINUING OPERATIONS		54,286			67,089			57,768
DISCONTINUED OPERATIONS, net of tax		(3,331	)		(6,340	)		3,313

NET INCOME	$	50,955		$	60,749		$	61,081

EARNINGS PER COMMON SHARE:
Basic—
Continuing operations	$	1.67		$	2.02		$	1.77
Discontinued operations		(0.10	)		(0.19	)		0.10

Net income	$	1.57		$	1.83		$	1.87

Diluted—
Continuing operations	$	1.63		$	1.97		$	1.76
Discontinued operations		(0.10	)		(0.19	)		0.10

Net income	$	1.53		$	1.78		$	1.86

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		32,463			33,187			32,691
Stock options		425			673			205
Performance share units		452			207			—

Diluted		33,340			34,067			32,896

See accompanying Notes to Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)


	Common Stock			Additional Paid-in Capital			Retained Earnings			Treasury Stock					Accumulated Other Comprehensive Loss			Total
	Shares	Amount								Shares		Amount
Balances, December 31, 2004	34,163,759	$	342	$	413,094		$	87,905		1,586,587		$	(15,032	)	$	(4,577	)	$	481,732
Comprehensive Income:
Net income	—		—		—			61,081		—			—			—			61,081
Change in fair value of cash flow swaps, net of $(594) tax expense	—		—		—			—		—			—			990			990

Comprehensive income	—		—		—			61,081		—			—			990			62,071

Issuance of common stock in connection with the exercise of stock options, including $381 tax benefit	271,493		2		3,960			—		—			—			—			3,962
Shared-based compensation	—		—		1			—		—			—			—			1

Balances, December 31, 2005	34,435,252	$	344	$	417,055		$	148,986		1,586,587		$	(15,032	)	$	(3,587	)	$	547,766
Comprehensive income:
Net income	—		—		—			60,749		—			—			—			60,749
Change in fair value of cash flow swaps, net of ($659) tax expense	—		—		—			—		—			—			1,022			1,022
Amortization of terminated cash flow swaps, net of $(308) tax expense	—		—		—			—		—			—			488			488

Comprehensive income	—		—		—			60,749		—			—			1,510			62,259

Dividends	—		—		—			(13,342	)	—			—			—			(13,342	)
Issuance of common stock in connection with the exercise of stock options, including $2,117 tax benefit	636,149		7		9,715			—		(49,881	)		473			—			10,195
Share-based compensation	—		—		4,955			—		—			—			—			4,955

Balances, December 31, 2006	35,071,401	$	351	$	431,725		$	196,393		1,536,706		$	(14,559	)	$	(2,077	)	$	611,833
Comprehensive Income:
Net income	—		—		—			50,955		—			—			—			50,955
Change in fair value of cash flow swaps, net of $708 tax benefit	—		—		—			—		—			—			(1,105	)		(1,105	)
Amortization of terminated cash flow swaps, net of $(320) tax expense	—		—		—			—		—			—			573			573

Comprehensive income	—		—		—			50,955		—			—			(532	)		50,423

Dividends	—		—		—			(27,992	)	—			—			—			(27,992	)
Share-based compensation	—		—		5,942			—		—			—			—			5,942
Issuance of common stock in connection share-based payment arrangements, including $1,687 tax benefit	1,187,560		12		5,815			—		—			—			—			5,827

Repurchase of common stock associated with net share settlement of employee share-based awards	—		—		—			—		820,555			(1,704	)		—			(1,704	)
Purchases of treasury shares . . .	—		—		—			—		2,320,000			(57,056	)		—			(57,056	)
Purchase of equity call option . .	—		—		(19,309	)		—		—			—			—			(19,309	)
Sale of equity warrants. . . . . . .	—		—		8,924			—		—			—			—			8,924
Deferred income tax benefit associated with equity call option. .	—		—		7,337			—		—			—			—			7,337

Balances, December 31, 2007	36,258,961	$	363	$	440,434		$	219,356		4,677,261		$	(73,319	)	$	(2,609	)	$	584,225

See accompanying Notes to Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	For the Years Ended December 31,
	2007			2006			2005
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	50,955		$	60,749		$	61,081
Adjustments to reconcile net income to net cash provided by (used in) operating activities—
Depreciation and amortization		21,492			20,061			19,441
Share-based compensation		5,942			4,955			1
Deferred income taxes		6,864			7,198			(916	)
Loss on extinguishment of long-term debt		18,523			1,144			—
Loaner vehicle amortization		6,991			6,274			5,229
Other adjustments		9,244			4,255			7,113
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit		9,877			(3,762	)		(16,890	)
Accounts receivable		14,418			(20,190	)		(35,129	)
Proceeds from the sale of accounts receivable		20,284			19,591			16,867
Inventories		59,770			(47,010	)		56,541
Other current assets		(44,706	)		(34,814	)		(35,917	)
Floor plan notes payable—manufacturer affiliated		(120,532	)		129,781			(123,247	)
Floor plan notes payable—manufacturer affiliated divestitures		—			(13,996	)		(16,534	)
Accounts payable and accrued liabilities		11,681			(8,594	)		25,823
Excess tax benefits from share-based payment arrangements		(1,687	)		(2,117	)		—
Other long-term assets and liabilities, net		220			5,056			(3,920	)

Net cash provided by (used in) operating activities		69,336			128,581			(40,457	)

CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—internally financed		(34,663	)		(30,307	)		(36,123	)
Capital expenditures—externally financed		(22,471	)		(14,969	)		(41,940	)
Construction reimbursements associated with sale-leaseback agreements		11,405			3,383			14,630
Acquisitions		(117,123	)		—			(24,613	)
Purchase of previously leased real estate		—			—			(44,701	)
Proceeds from the sale of assets		11,650			52,797			102,589
Other investing activities		(3,694	)		(2,077	)		(992	)

Net cash (used in) provided by investing activities		(154,896	)		8,827			(31,150	)

CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-manufacturer affiliated		2,736,136			2,476,160			3,145,343
Floor plan borrowings—acquisitions		27,866			—			15,339
Floor plan repayments—non-manufacturer affiliated		(2,658,613	)		(2,507,186	)		(3,038,939	)
Floor plan repayments— non-manufacturer affiliated divestitures		(5,384	)		(11,252	)		(9,208	)
Payments of dividends		(27,663	)		(13,342	)		—
Proceeds from borrowings		283,320			987			24,531
Repayments of borrowings		(277,832	)		(20,634	)		(50,096	)
Payments of debt issuance costs		(7,949	)		(360	)		(4,975	)
Proceeds from the sale of warrants		8,924			—			—
Purchase of equity call option		(19,309	)		—			—
Purchases of treasury stock		(57,056	)		—			—
Proceeds from the sale of assets associated with sale-leaseback agreements		3,181			—			15,132
Excess tax benefits from share-based payment arrangements		1,687			2,117			—
Repurchase of common stock associated with net share settlement of employee share-based awards		(820	)		—			—
Proceeds from the exercise of stock options		3,256			8,078			3,581

Net cash provided (used) by financing activities		9,744			(65,432	)		100,708

Net (decrease) increase in cash and cash equivalents		(75,816	)		71,976			29,101
CASH AND CASH EQUIVALENTS, beginning of year		129,170			57,194			28,093

CASH AND CASH EQUIVALENTS, end of year	$	53,354		$	129,170		$	57,194

See Note 19 for supplemental cash flow information

See accompanying Notes to Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(December 31, 2007, 2006 and 2005)

1.	DESCRIPTION OF BUSINESS

We developed our dealership portfolio through the acquisition of large, locally branded dealership groups operating throughout the United States. We complemented these large dealership groups with the purchase of numerous single point dealerships and small dealership groups in our existing market areas (referred to as “tuck-in acquisitions.”) We continue to use tuck-in acquisitions to increase the number of vehicle brands we offer in a particular market area and to create a larger gross profit base over which to spread overhead costs. Our retail network is currently organized into primarily four regions and includes nine dealership groups: (i) Florida (comprising our Coggin dealerships, operating primarily in Jacksonville, Fort Pierce and Orlando, and our Courtesy dealerships operating in Tampa), (ii) West (comprising our McDavid dealerships operating throughout Texas, our North Point dealerships operating in Little Rock, Arkansas and our California dealerships operating in Los Angeles, Sacramento and Fresno), (iii) Mid-Atlantic (comprising our Crown dealerships operating in New Jersey, North Carolina, South Carolina and Virginia) and (iv) South (comprising our Nalley dealerships operating in Atlanta, Georgia). Our Plaza dealerships operating in St. Louis, Missouri and our Gray Daniels dealerships operating in Jackson, Mississippi remain standalone operations.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and reflect the consolidated accounts of Asbury Automotive Group, Inc. and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. In addition, certain items have been reclassified to conform to current presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed quarterly and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying Consolidated Financial Statements include, but are not limited to, inventory valuation reserves, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, certain assumptions related to intangible and long-lived assets, reserves for self-insurance programs, reserves for certain legal proceedings, and reserves for estimated tax liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments in money market accounts.

Contracts-In-Transit

Contracts-in-transit represent receivables from unrelated finance companies for the portion of the vehicle purchase price financed by customers through sources arranged by us. These contracts-in-transit are collected within the first week following the sale of the related vehicles but not usually longer than 30 days.

Inventories

Inventories are stated at the lower of cost or market. We use the specific identification method to value vehicle inventories and the “first-in, first-out” method (“FIFO”) to account for our parts inventories. We maintain a reserve for specific inventory units where cost basis exceeds fair value. In assessing lower of cost or market for

new and used vehicles, we consider (i) the aging of new and used vehicles, (ii) loss histories of new and used vehicles, (iii) the timing of annual and model changeovers of new vehicles and (iv) current market conditions. Our new vehicle loss histories have indicated that our losses range between 1% to 3% of our new vehicle inventory greater than 300 days old, as we very rarely sell a new vehicle that is less than 300 days old for a loss. Additionally, we receive advertising and interest credit assistance from certain automobile manufacturers. In accordance with Emerging Issues Task Force (“EITF”) 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor,” manufacturer advertising credits that are reimbursements of costs associated with specific advertising programs are recognized as a reduction of advertising expense in the period they are earned. All other manufacturer advertising and interest credits are accounted for as purchase discounts and are recorded as a reduction of inventory and recognized in New Vehicle Cost of Sales in the accompanying Consolidated Statements of Income in the period the related inventory is sold.

Sale-Leaseback Transactions

We utilize sale-leaseback transactions to (i) finance the construction of new dealership facilities and upgrades to our existing facilities and (ii) to generate liquidity when owned real estate has substantial equity (i.e., a relatively small mortgage liability as compared to the sale value of the real estate).

We enter into definitive sale-leaseback agreements to finance the construction of new dealership facilities and upgrades to our existing facilities with unaffiliated third parties prior to the commencement of construction. The agreements include the lease rate and lease term among other customary conditions. During the construction period we capitalize the costs of construction in Other Current Assets on the accompanying Consolidated Balance Sheets, to the extent that we expect to receive the related reimbursements within one year from the balance sheet date. We record construction reimbursements during construction from unaffiliated third parties in Accrued Liabilities on the accompanying Consolidated Balance Sheets. Upon completion of construction, we reclassify all construction costs to Assets Held for Sale and any construction reimbursements to Liabilities Associated with Assets Held for Sale on the accompanying Consolidated Balance sheets until receipt of the final reimbursement, which is typically within the quarter following the completion of construction. Upon receipt of the final reimbursement we remove the related assets and any related construction reimbursements from our Consolidated Balance Sheets and commence long-term operating leases with the unaffiliated third party.

When entering into sale-leaseback transactions to generate liquidity, we remove the assets (i.e., real estate and dealership facilities) from our books and enter into a lease agreement for assets sold from the third-party. In accordance with paragraph 33 of SFAS 13, any profit on the sale is deferred and amortized on a straight-line basis over the lease term and any loss is recognized immediately.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. All depreciation is included in Depreciation and Amortization on the accompanying Consolidated Statements of Income. Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the useful life of the related asset. The range of estimated useful lives is as follows (in years):


Buildings and improvements		10-40
Machinery and equipment		5-10
Furniture and fixtures		3-10
Company vehicles		3-5

Expenditures 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 review property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” When we conduct our annual impairment test of our long-lived assets, we first compare the carrying amount of the underlying assets to their net recoverable value by reviewing the undiscounted cash flows expected to result from the use and eventual disposition of the underlying assets. If the carrying amount of the underlying assets is less than their net recoverable value, then we calculate the impairment to be, if any, the excess of the carrying amount over the fair market value and the impairment loss would be charged to operations in the period identified.

We capitalize interest on borrowings during the active construction period of capital projects. Capitalized interest is added to the cost of the assets and is depreciated over the estimated useful lives of the assets.

Acquisitions

Acquisitions are accounted for under the purchase method of accounting and the assets acquired and liabilities assumed are recorded at their fair value as of the acquisition dates. The operations of the acquired dealerships are included in the accompanying Consolidated Statements of Income commencing on the date of acquisition.

Goodwill and Other Intangible Assets

The fair market value of our manufacturer franchise rights is determined at the acquisition date through discounting the projected cash flows specific to each franchise. We have determined that manufacturer franchise rights have an indefinite life as there are no legal, contractual, economic or other factors that limit their useful lives and they are expected to generate cash flows indefinitely due to the historically long lives of the manufacturers’ brand names. Due to the fact that manufacturer franchise rights are specific to the location in which we acquire a dealership, we have determined that the dealership is the reporting unit for purposes of testing franchise rights for impairment.

All other intangible assets are deemed to have definite lives and are amortized on a straight-line basis over the life of the asset ranging from 3 to 15 years and are tested for impairment when circumstances indicate that the carrying value of the asset might be impaired.

Fair Value of Financial Instruments

Financial instruments consist primarily of cash, contracts-in-transit, accounts receivable, notes receivable, cash surrender value of corporate-owner life insurance policies, accounts payable, floor plan notes payable, long-term debt and interest rate swap agreements. The carrying amounts of our accounts receivable, notes receivable, restricted investments, accounts payable, floor plan notes payable and interest rate swap agreements approximate fair value due either to length of maturity or existence of variable interest rates, which approximate market rates. As of December 31, 2007, our 8% Senior Subordinated Notes due 2012 (“8% Notes”), 7.625% Senior Subordinated Notes due 2017 (7.625% Notes”) and our 3% Convertible Notes due 2014 (“3% Notes”) had a carrying value of $179.4 million (excluding the effects of our fair value hedge), $150.0 million, and $115.0 million, respectively, and a fair market value, based on current market prices, of $169.6 million, $132.8 million, and $89.7 million, respectively.

Derivative Instruments and Hedging Activities

We utilize derivative financial instruments to manage our capital structure and interest rate risk. The types of risks hedged are those relating to the variability of cash flows and changes in the fair value of our financial instruments caused by movements in interest rates. We document our risk management strategy and assess hedge effectiveness at the inception and during the term of each hedge. Derivatives are reported at fair value on the accompanying Condensed Consolidated Balance Sheets.

The changes in fair value of the effective portion of “cash flow” hedges are reported as a component of accumulated other comprehensive loss. Amounts in accumulated other comprehensive loss are reclassified to

interest expense to the extent the hedge becomes ineffective. The change in fair value of “fair value” hedges are recorded as a component of interest expense. Changes in the fair value of the associated hedged exposures are also recorded as a component of interest expense.

Measurements of hedge effectiveness are based on comparisons between the gains or losses of the actual interest rate swaps and the gains or losses of hypothetical interest rate swaps, which are designed to reflect the critical terms of the defined hedged exposures. Ineffective portions of these interest rate swaps are reported as a component of interest expense in the accompanying Consolidated Statements of Income. We recognized minor ineffectiveness during the years ended December 31, 2007, 2006, and 2005.

Insurance

We are self insured for employee medical claims and maintain stop loss insurance for individual claims. We have large deductible insurance programs for workers compensation, property and general liability claims. We maintain and review monthly our claim and loss history to assist in assessing our future liability for these claims. We also use professional service providers such as account administrators and actuaries to help us accumulate and assess this information.

Revenue Recognition

Revenue from the sale of new and used vehicles is recognized upon delivery, passage of title, signing of the sales contract and approval of financing. Revenue from the sale of parts, service and collision repair is recognized upon delivery of parts to the customer or at the time vehicle service or repair work is completed. Manufacturer incentives and rebates, including manufacturer holdbacks, floor plan interest assistance and certain advertising assistance, are recognized as a component of new vehicle cost of sales when earned, generally at the time the related vehicles are sold.

We receive commissions from third party lending and insurance institutions for arranging customer financing and for the sale of vehicle service contracts, credit life insurance and disability insurance to customers (collectively “F&I”). We may be charged back (“chargebacks”) for F&I commissions in the event a contract is terminated prior to maturity. F&I commissions are recorded at the time the vehicles are sold and a reserve for future chargebacks is established based on historical operating results and the termination provisions of the applicable contracts. F&I commissions, net of estimated chargebacks, are included in Finance and Insurance, net in the accompanying Condensed Consolidated Statements of Income.

In addition to the commissions we receive on the sale of third-party warranty and insurance products, we also have contingent revenue arrangements with third-party administrators whereby we will potentially receive retrospective payments in the future. These payments, if any, represent the amount of funds available to pay future claims in excess of what is actually used to pay claims on the related policies. These payments are determined by the third-party administrator when they believe that the pool of contracts have matured enough to determine that excess funds exist. The amount of retrospective payments is contingent on the claim performance (i.e. the amount of the funds used to pay customer claims). If the claim performance is such that no excess funds are predicted to exist at the maturity of the related contract, then no retrospective commissions are paid. As a result, we do not record retrospective commissions until such a time that the payment has been confirmed by the third-party administrator to the contracts, because that is the first time that the amount is fixed and determinable.

Internal Profit

Revenues and expenses associated with the internal work performed by our service department on new and used vehicles are eliminated in consolidation. The gross profit earned by our service departments for internal work performed is included as a reduction of Parts, Service and Collision Repair Cost of Sales on the accompanying Consolidated Statements of Income. The costs incurred by our new and used departments for work performed by our service departments is included in New Vehicle Cost of Sales and Used Vehicle Costs of Sales on the accompanying Consolidated Statements of Income, depending on the type of vehicle serviced. We maintain an internal profit reserve for internal profit on vehicles that have not been sold.

Share-Based Compensation

We record share-based compensation expense under the fair value method of SFAS No. 123R “Share-Based Payment” on a straight-line basis over the vesting period. We adopted SFAS 123R effective January 2006, under the modified prospective transition method and therefore, our consolidated financial statements as of and for the year ended December 31, 2005 have not been restated. Prior to January 2006, including the years ended December 31, 2005, we recorded share-based compensation expense in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” APB Opinion No. 25 required the use of the intrinsic value method, which measures compensation cost as the excess, if any, of the quoted market price of the stock at the measurement date over the amount an employee must pay to acquire the stock.

Earnings Per Share

Basic earnings per share is computed by dividing net income by our weighted-average common shares outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the year. There were no adjustments to the numerator necessary to compute diluted earnings per share. During 2007, we issued warrants that upon exercise, may result in the issuance of between 3,382,978 and 6,765,957 shares of our common stock. In addition, during 2007, we issued $115.0 million of 3% Notes, which are convertible into our common stock at an initial exercise price of $33.99. The shares issuable upon exercise of warrants and 3% Notes could potentially dilute basic earnings per share in the future; however, were not included in the computation of diluted earnings per share, because they are currently anti-dilutive.

Advertising

We expense production and other costs of advertising as incurred and media when the advertising initially takes place, net of certain advertising credits and other discounts. Advertising expense from continuing operations totaled $49.8 million, $48.3 million and $48.9 million for the years ended December 31, 2007, 2006 and 2005, net of earned advertising credits and volume discounts of $7.6 million, $7.6 million and $7.0 million, respectively, and is included in Selling, General and Administrative expense in the accompanying Consolidated Statements of Income.

Construction Period Rent

In accordance with FASB Staff Position FAS13-1 “Accounting for Rental Costs Incurred during a Construction Period,” beginning in January 2006, we began expensing all construction period rent as incurred. Prior to January 1, 2006, we capitalized rent associated with real estate under construction and, upon completion of the construction, we began amortizing the construction period rent over the remaining life of the lease.

Income Taxes

We use the liability method to account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates. The effect on deferred 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 reduced by a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. In addition, we record liabilities for unrecognized tax benefits in accordance with FIN 48.

Discontinued Operations

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” certain amounts reflected in the accompanying Consolidated Balance Sheets as of December 31, 2007 and 2006, have been classified to Assets Held for Sale and Liabilities Associated with Assets Held for Sale, to the extent that they were held for sale at each balance sheet date. The accompanying Consolidated Statements of Income for the years ended December 31, 2006 and 2005 have been reclassified to reflect the results of franchises sold during 2007 or held for sale as of December 31, 2007 as if we had classified those franchises as discontinued operations during the respective years presented.

We include franchises as discontinued operations when it is evident that the operations and cash flows of a franchise being sold will be eliminated from our on-going operations and that we will not have any significant continuing involvement in its operations. We do not classify franchises as discontinued operations if we believe that the cash flows generated by the franchise will be replaced by expanded operations of the remaining franchises in the local market area.

Statements of Cash Flows

In November 2006, General Motors sold 51% of their financing subsidiary General Motors Acceptance Corporation (“GMAC”) to an investment consortium led by Cerberus FIM Investors, LLC. Prior to this transaction, the net change in floor plan notes payable to GMAC was classified as an operating activity on the accompanying Consolidated Statements of Cash Flows as borrowings and repayments of floor plan notes payable at our General Motors dealerships were with a manufacturer affiliated lender. Floor plan notes payable related to vehicles financed prior to this change in control were classified as Floor plan notes payable—manufacturer affiliated on the accompanying Consolidated Balance Sheets, with subsequent repayments classified as an operating activity, since these GMAC borrowings occurred while General Motors had control of GMAC. Following the sale of GMAC, GM no longer has a majority ownership of or controls GMAC, and therefore, beginning in December 2006, floor plan notes payable related to vehicles financed after this change in control are classified as Floor plan notes payable—non-manufacturer affiliated on the accompanying Consolidated Balance Sheets, with the related borrowings and repayments presented separately as financing activities on the accompanying Consolidated Statements of Cash Flows.

Loaner vehicle activity accounts for a significant portion of Other Current Assets on the accompanying Consolidated Statements of Cash Flows. We acquire loaner vehicles either with available cash or through borrowings from manufacturer affiliated lenders. While loaner vehicles are initially used by our service department for use in our business, these vehicles are used in such capacity for a short period of time (typically six to twelve months) before we sell them. Therefore we classify the acquisition of loaner vehicles and the related borrowings and repayments as operating activities in the accompanying Consolidated Statements of Cash Flows. The cash outflow to acquire loaner vehicles is presented in Other Current Assets in the accompanying Consolidated Statements of Cash Flows. Borrowings and repayments of loaner vehicle notes payable are presented in Accounts Payable and Accrued Liabilities in the accompanying Consolidated Statements of Cash Flows. When loaner vehicles are taken out of loaner status they are transferred to used vehicle inventory, which is reflected as a non-cash transfer in the accompanying Consolidated Statements of Cash Flows. The cash inflow from the sale of loaner vehicles is reflected in Inventory on the accompanying Consolidated Statements of Cash Flows.

Construction reimbursements from third parties in connection with sale-leaseback agreements for the construction of new dealership facilities or leasehold improvements on our dealership facilities are included in investing activities in the accompanying Consolidated Statements of Cash Flows.

Proceeds from the sale of dealership facilities and the related real estate previously owned and subsequently leased back in connection with sale-leaseback agreements are reflected as financing activities in the accompanying Consolidated Statements of Cash Flows.

Externally financed capital expenditures include all expenditures that we have financed or sold during the reporting period or intend to finance or sell in future reporting periods through sale-leaseback transactions or mortgage financing. Internally financed capital expenditures include all capital expenditures not included in externally financed capital expenditures.

Tax benefits related to share-based awards that are fully vested prior to the adoption of SFAS No. 123R are included as cash inflows from financing activities on the accompanying Consolidated Statements of Cash Flows. Excess tax benefits related to share-based awards that are partially vested upon or granted after the adoption of SFAS No. 123R are included as cash inflows from financing activities on the accompanying Consolidated Statements of Cash Flows.

Concentration of Credit Risk

Financial instruments, which potentially subject us to concentration of credit risk, consist principally of cash deposits. We maintain cash balances in financial institutions with strong credit ratings. Generally, amounts invested with financial institutions are in excess of FDIC insurance limits.

Concentrations of credit risk with respect to contracts-in-transit and accounts receivable are limited primarily to automotive manufacturers and financial institutions. Credit risk arising from receivables from commercial customers is minimal due to the large number of customers comprising our customer base.

For the year ended December 31, 2007, Honda, Nissan, Mercedes-Benz, Toyota, BMW, Lexus, Ford, and Acura accounted for 23%, 13%, 9%, 8%, 8%, 7%, 6% and 5% of our new vehicle retail revenue, respectively. No other franchise accounted for more than 5% of our total new vehicle retail revenues in 2007.

Segment Reporting

We have determined based on the provisions of SFAS No. 131 “Disclosures about the Segments of an Enterprise and Related Information”, that as a result of how we internally view our business, regularly review our

financial data and operating metrics and allocate resources that we operate in one segment, automotive retail. Our Chief Operating Decision Maker is our Chief Executive Officer who manages the business, regularly reviews financial information and allocates resources on a consolidated basis. Our dealerships are components of our automotive retail segment and therefore are not segments themselves. Additionally, it should be noted that we have no international operations.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, commonly referred to as minority interest. Among other matters, SFAS 160 requires (a) the noncontrolling interest be reported within equity in the balance sheet and (b) the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly presented in the statement of income. SFAS 160 is effective for the Company’s 2009 fiscal year. SFAS 160 is to be applied prospectively, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The adoption of SFAS No. 160 will not impact our consolidated financial statements as we do not have any minority interests in our subsidiaries.

In June 2007, the EITF issued EITF Issue No. 06-11 “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.” EITF Issue No. 06-11 requires the recognition of a realized tax benefit associated with the dividends on affected securities charged to retained earnings as an increase in additional paid-in capital (“APIC”). The amount recognized in APIC should be included in the APIC pool. When an entity’s estimate of forfeitures increases or actual forfeitures exceed its estimates, the amount of tax benefits previously recognized in APIC should be reclassified into the income statement; however, the amount reclassified is limited to the APIC pool balance on the reclassification date. EITF Issue No. 06-11 is effective for fiscal periods beginning after December 31, 2007. We do not expect the adoption of EITF Issue No. 06-11 to have a material financial impact to our financial statements.

3.	RECLASSIFICATION OF PRIOR YEAR FINANCIAL STATEMENTS

We have previously presented Other Income (Expense), net after Income from Operations on our Consolidated Statements of Income. Included in Other Income (Expense), net was (i) gains and losses from the sale of dealerships that were not classified as discontinued operations, (ii) rental income from owned real estate and (iii) gains and losses from the sale of property and equipment. After a review of paragraph 45 of SFAS 144, we determined that these items should be presented before Income from Operations on our Consolidated Statements of Income; therefore, we are adjusting Income for Operations for the years ended December 31, 2006 and 2005, to include Other Income (Expense), net in Income from Operations.

In addition, we have historically presented non-core dealership expenses as a component of Selling, General and Administrative on our Consolidated Statements of Income. In connection with the creation of Other Operating Income (Expense), net we have decided to reclassify non-core dealership expenses from Selling, General and Administrative to Other Operating Income (Expense), net.

These reclassifications do not have any impact on income from continuing operations, earnings per share or retained earnings. In addition, we have reclassified our Consolidated Statements of Income for 2006 and 2005 to reflect the current status of our discontinued operations. Below is reconciliation between Income from Operations as previously reported and Income from Operations.


	For the Year Ended December 31,
(In thousands)	2006			2005
Income from operations, previously reported	$	184,755		$	160,703
Other income, net		4,216			223
Income from operations of franchises placed into discontinued operations in 2007		(625	)		(1,113	)

Income from operations	$	188,346		$	159,813



	For the Year Ended December 31,
(In thousands)	2006			2005
Selling general and administrative, previously reported	$	672,897		$	634,461
Non-core operating expenses, net		(2,731	)		(775	)
Selling, general and administrative of franchises placed into discontinued operations in 2007		(6,310	)		(6,540	)

Selling, general and administrative	$	663,856		$	627,146


	For the Year Ended December 31,
(In thousands)	2006			2005
Other operating income (expense), net, previously reported	$	—		$	—
Other income, net		4,216			223
Non-core operating expenses, net		(2,731	)		(775	)

Other operating income (expense), net	$	1,485		$	(552	)

4.	ACQUISITIONS

During the year ended December 31, 2007, we acquired nine franchises (seven dealership locations) including two heavy truck franchises, for an aggregate purchase price of $117.1 million. We are actively pursuing the sale of one franchise (one dealership location) that we acquired in the third quarter of 2007. In connection with the purchase of one franchise, additional consideration may be paid to the seller if the franchise achieves specified net income levels in future periods. The additional consideration is distributable annually beginning January 1, 2009 through January 1, 2015 and we estimate the additional consideration will total approximately $2.5 million. We financed these acquisitions through the use of (i) $79.2 million of cash, (ii) $27.9 million of floor plan borrowings from our Committed Credit Facility for the purchase of new vehicle inventory, (iii) $8.3 million of bridge loans and (iv) $1.7 million of loaner vehicle financing. During the year ended December 31, 2006 we did not acquire any franchises. During the year ended December 31, 2005, we acquired three franchises (one dealership location) in exchange for (i) $9.3 million of cash and (ii) $15.3 million from borrowings under our floor plan facilities (iii) two of our franchises valued at $1.5 million and (iv) $0.7 million of future payments. The allocation of purchase price for acquisitions is as follows:


	For the Years Ended December 31,
	2007		2006		2005
	(In thousands)
Inventory	$	33,896	$	—	$	17,156
Property and Equipment		25,769		—		344
Goodwill		39,510		—		6,621
Franchise rights		16,950		—		2,629
Other		998		—		1

Total purchase price	$	117,123	$	—	$	26,751

5.	ACCOUNTS AND NOTES RECEIVABLE

Accounts Receivable

We have agreements to sell certain of our trade receivables, without recourse as to credit risk, in an amount not to exceed $25.0 million per year. The receivables are sold at a discount, which is included in Selling, General and Administrative expense in the accompanying Consolidated Statements of Income. The discounts totaled $0.5 million, $0.5 million and $0.4 million for the years ended December 31, 2007, 2006 and 2005, respectively. During the years ended December 31, 2007, 2006 and 2005, $20.8 million, $20.1 million and $17.3 million of receivables, respectively, were sold under these agreements and were reflected as reductions of trade accounts receivable.

Notes Receivable—Finance Contracts

Notes receivable resulting from the issuance of finance contracts primarily in connection with the sale of used vehicles is included in Other Current Assets and Other Long-term Assets on the accompanying Consolidated Balance Sheets. Notes receivable have initial terms ranging from 12 to 60 months bearing interest at rates ranging from 6% to 29% and are collateralized by the related vehicles. Notes receivable from finance contracts consists of the following:


	As of December 31,
	2007			2006
	(In thousands)
Notes receivable—finance contracts, current	$	6,625		$	8,189
Notes receivable—finance contracts, long-term		11,051			12,875

Total notes receivable		17,676			21,064
Less—Allowance for credit losses		(2,630	)		(3,119	)

Total notes receivable—finance contracts, net	$	15,046		$	17,945

Notes receivable—finance contracts, current, net		(4,918	)		(6,195	)

Notes receivable—finance contracts, long-term, net	$	10,128		$	11,750

Contractual maturities of gross notes receivable-finance contracts as of December 31, 2007 are as follows (in thousands):


2008	$	6,625
2009		5,235
2010		4,076
2011		1,710
2012		30

	$	17,676

6.	INVENTORIES

Inventories consist of the following:


	As of December 31,
	2007		2006
	(In thousands)
New vehicles	$	622,630	$	616,275
Used vehicles		101,131		115,927
Parts and accessories		46,231		43,111

Total inventories	$	769,992	$	775,313

The lower of cost or market reserves reduced total inventory cost by $4.5 million and $4.8 million as of December 31, 2007 and 2006, respectively. In addition to the inventories shown above, we have $12.8 million and $4.8 million of inventory as of December 31, 2007 and 2006, respectively, classified as Assets Held for Sale on the accompanying Consolidated Balance Sheets as they are associated with franchises held for sale. As of December 31, 2007 and 2006, advertising and interest credits from automobile manufacturers reduced new vehicle inventory cost by $9.5 million and $5.4 million, respectively; and reduced new vehicle cost of sales from continuing operations for the years ended December 31, 2007, 2006 and 2005, by $38.0 million, $35.7 million and $33.9 million, respectively.

7.	OTHER CURRENT ASSETS

Other current assets consist of the following:


	As of December 31,
	2007		2006
	(In thousands)
Service loaner vehicles	$	39,927	$	32,198
Ongoing sale-leaseback construction		14,947		4,380
Prepaid taxes		9,276		7,394
Notes receivable—finance contracts, current, net		4,918		6,195
Other		4,677		4,932

Other current assets	$	73,745	$	55,099

8.	ASSETS AND LIABILITIES HELD FOR SALE

Assets and liabilities classified as held for sale include (i) assets and liabilities associated with discontinued operations held for sale at each balance sheet date, and (ii) costs of completed construction projects associated with pending sale-leaseback transactions.

Assets and liabilities held for sale include five franchises (four dealership locations, as of December 31, 2007, of which four franchises were classified as discontinued operations. As of December 31, 2006 assets and liabilities associated with discontinued operations included two franchises (two dealership locations). During the year ended December 31, 2007, we sold two franchises (two dealership locations) that had been held for sale as of December 31, 2006. Assets associated with discontinued operations totaled $24.9 million, and $5.1 million. Liabilities associated with discontinued operations totaled $9.9 million, and $3.9 million as of December 31, 2007, and 2006 respectively.

Assets associated with pending sale-leaseback transactions as of December 31, 2007 include $9.2 million related to three completed construction projects. We expect final reimbursement of these pending sale-leaseback transactions in the first quarter of 2008. As of December 31, 2006, two sale-leaseback transactions totaling $9.7 million were completed and pending final reimbursement. During 2007, we incurred an additional $0.2 million associated with these two sale-leaseback transactions, received the final reimbursement of $9.9 million and completed the related sale-leaseback transactions. In addition, we completed one additional sale-leaseback transaction during 2007 and received a final reimbursement of $1.5 million.

Assets held for sale include real estate not currently used in our operations totaling $11.1 million as of December 31, 2006. We removed these assets from Assets Held for Sale as of December 31, 2007, as circumstances have changed and we no longer expect to sell these assets in 2008.

A summary of assets held for sale and liabilities associated with assets held for sale are as follows:


	As of December 31,
	2007		2006
	(In thousands)
Assets:
Inventories	$	12,754	$	4,808
Completed construction projects		9,158		—
Property and equipment, net		7,933		21,139
Manufacturer Franchise rights		1,000		—
Goodwill		3,230		—

Total assets		34,075		25,947
Liabilities:
Floor plan notes payable		9,859		3,887

Total liabilities		9,859		3,887

Net assets held for sale	$	24,216	$	22,060

Included in Other Current Assets on the accompanying Consolidated Balance Sheets are costs associated with ongoing construction projects, which we expect to complete within one year from each balance sheet date. In connection with these construction projects, we have entered into sale-leaseback agreements whereby an unaffiliated third party purchased the land and is either reimbursing us for the cost of construction of dealership facilities being constructed on the land or has agreed to purchase the assets from us upon completion of the project. We capitalize the cost of the construction during the construction period and upon completion of the construction and receipt of the final reimbursement we remove the cost of construction from our Consolidated Balance Sheets and commence operating leases. As of December 31, 2007, and 2006, the book value of assets associated with ongoing construction projects to be completed during 2008 and 2007, totaled $14.9 million, $4.4 million, respectively.

9.	PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:


	As of December 31,
	2007			2006
	(In thousands)
Land	$	57,168		$	41,955
Buildings and leasehold improvements		168,893			141,041
Machinery and equipment		68,393			64,823
Furniture and fixtures		32,097			30,632
Company vehicles		10,369			9,276

Total		336,920			287,727
Less—Accumulated depreciation		(98,339	)		(85,143	)

Property and equipment, net	$	238,581		$	202,584

During the years ended December 31, 2007, 2006 and 2005, we capitalized $0.2 million, $0.6 million and $0.8 million, respectively of interest in connection with various capital projects to upgrade or remodel our facilities. Depreciation expense from continuing operations was $21.5 million, $20.1 million and $19.4 million for the years ended December 31, 2007, 2006 and 2005, respectively.

We had two real estate mortgage notes payable outstanding totaling $25.8 million and $26.8 million as of December 31, 2007 and 2006, respectively. These obligations mature between 2008 and 2011.

In October 2007, we entered into an unsecured two bridge loans for a total of $8.3 million to finance the purchase of real estate included in a dealership acquisition. These bridge loans were refinanced in January 2008 into two mortgage notes payable using the related property as collateral.

We included real estate not currently used in our operations totaling $11.1 million in Assets Held for Sale in the accompanying Consolidated Balance Sheet as of December 31, 2006. We reclassified these assets from Assets Held for Sale to Land and Buildings as of December 31, 2007, as circumstances have changed and we no longer expect to sell these assets in 2008.

10.

GOODWILL AND MANUFACTURER FRANCHISE RIGHTS

The changes in the carrying amount of goodwill for the years ended December 31, 2007 and 2006 are as follows (in thousands):


Balance as of December 31, 2005	$	457,405
Divestitures		(9,279	)
Adjustments of purchase price allocation		(130	)

Balance as of December 31, 2006		447,996
Acquisitions		39,510
Divestitures		(975	)
Goodwill held for sale		(3,230	)

Balance as of December 31, 2007	$	483,301

The allocation of purchase price to assets acquired in 2007 is based on preliminary estimates of fair value and may be revised as additional information concerning valuation of such assets and liabilities becomes available, including the payment of additional consideration resulting from earnings participation arrangements.

Upon completion of our goodwill impairment test on October 1, 2007, the fair value of our tangible and intangible assets exceeded the carrying value of our goodwill and therefore we did not record an impairment of goodwill. Upon completion of our franchise rights impairment test on October 1, 2007, the fair value of each of our dealerships’ tangible and intangible assets exceeded the carrying value of each of the dealerships’ manufacturer franchise rights, and therefore we did not record an impairment of our manufacturer franchise rights.

The fair market value of our manufacturer franchise rights is determined at the acquisition date through discounting the projected cash flows attributable to each franchise. Manufacturer franchise rights are included in Other Long-term Assets on the accompanying Consolidated Balance Sheets. The changes in the carrying amount of manufacturer franchise rights for the years ended December 31, 2007 and 2006 are as follows (in thousands):


Balance as of December 31, 2005	$	41,803
Divestitures		(500	)
Write-down of certain franchise rights prior to sale		(1,785	)

Balance as of December 31, 2006		39,518
Acquisitions		16,950
Divestitures		(2,300	)
Franchise rights held for sale		(1,000	)

Balance as of December 31, 2007	$	53,168

11.

OTHER LONG-TERM ASSETS


	As of December 31,
	2007		2006
	(In thousands)
Manufacturer franchise rights	$	53,168	$	39,518
Notes receivable-finance contracts, long-term, net		10,128		11,750
Deferred financing costs		14,432		14,204
Cash surrender value of corporate-owned life insurance policies		10,966		7,270
Other		13,302		14,451

Total other long-term assets	$	101,996	$	87,193

12.

FLOOR PLAN NOTES PAYABLE

In March 2005, we entered into a committed credit facility (the “Committed Credit Facility”) with JPMorgan Chase Bank, N.A. and 18 other financial institutions (the “Syndicate”). The Committed Credit Facility provides us with $425.0 million of borrowing capacity for the purchase of new and used inventory at all of our dealerships except at our Ford, Lincoln, Mercury, Mazda, Volvo and Land Rover dealerships (“Ford dealerships”), our General Motors (“GM”) dealerships, and our Chrysler, Dodge and Jeep dealerships (“Chrysler dealerships”) and our Mercedes-Benz dealerships. In addition, Ford Motor Credit Corporation (“FMCC”) provides us with $150.0 million of borrowing capacity for the purchase of new vehicle inventory at our Ford Dealerships, GMAC provides us with $100.0 million of borrowing capacity for the purchase of new vehicle inventory at our GM dealerships, DCFS USA LLC (“DCFS USA”) provides us with $98.3 million of borrowing capacity for the purchase of new vehicle inventory at our Mercedes-Benz dealerships and DaimlerChrysler Financial Services Americas LLC (“DCFSA”) provides us with $50.0 million of borrowing capacity for the purchase of new vehicle inventory at our Chrysler dealerships and dealerships. Collectively we refer to these three facilities as our “Floor Plan Facilities.” In total, these commitments give us $823.3 million of floor plan borrowing capacity. In addition, we have total availability of $81.0 million under ancillary floor plan facilities with Comerica Bank and Navistar Financial for our heavy trucks business in Atlanta, Georgia.

The Committed Credit Facility matures in March 2009. All future extensions must be approved by the Syndicate. We believe such approval would be obtained. The GMAC, DCFS USA, DCFSA, FMCC, Comerica and Navistar facilities have no stated termination date. Borrowings from the Committed Credit Facility, GMAC, DCFS USA and DCFSA facilities accrue interest based on LIBOR and borrowings from FMCC accrue interest based on the Prime Rate. The weighted average interest rate on our floor plan notes payable from continuing operations was 6.7% and 6.4% for the years ended December 31, 2007 and 2006, respectively.

We consider floor plan notes payable to a party that is affiliated with vehicle manufacturers from which we purchase new vehicle inventory “Floor plan notes payable—manufacturer affiliated” and all other floor plan notes payable “Floor plan notes payable—non-manufacturer affiliated.”

In November 2006, General Motors sold 51% of their financing subsidiary GMAC to an investment consortium led by Cerberus FIM Investors, LLC. Prior to this transaction, floor plan notes payable to GMAC were classified as Floor plan notes payable—manufacturer affiliated on the accompanying Consolidated Balance Sheets as these amounts were payable to a manufacturer affiliated lender. Following the sale of GMAC, General Motors no longer has a majority ownership of or controls GMAC and therefore beginning in December 2006, floor plan notes payable related to vehicles financed after this change in control were classified as Floorplan notes payable—non-manufacturer affiliated on the accompanying Consolidated Balance Sheets.

In March 2006, while DaimlerChrysler still owned Chrysler and DCFSA we decided to include our Chrysler and Mercedes Benz dealerships in our Committed Credit Facility and as a result repaid the $85.4 million of floor plan notes payable—non-manufacturer affiliated at our Chrysler and Mercedes Benz dealerships with borrowings from DCFS USA and DCFSA, manufacturer affiliated lenders. As a result, beginning in March 2006, floor plan notes payable at our Chrysler and Mercedes Benz dealerships are included in Floor plan notes payable—manufacturer affiliated on the accompanying Consolidated Balance Sheets. During the year ended December 31, 2006, our Floor plan repayments—non-manufacturer affiliated and Floor plan notes payable—manufacturer affiliated each increased by $85.4 million on the accompanying Consolidated Statements of Cash Flows.

In March 2005, in connection with entering into our Committed Credit Facility, we repaid of $334.7 million of floor plan notes payable—non-manufacturer affiliated and $93.4 million of floor plan notes payable—manufacturer affiliated with borrowings from our Committed Credit Facility. As a result, during the year ended December 31, 2005, Floor plan notes payable—manufacturer affiliated decreased by $93.4 million and Floor plan notes payable—non-manufacturer affiliated increased by $93.4 million. In addition, during the year ended December 31, 2005 our Floor plan borrowings—non-manufacturer affiliated and Floor plan repayments—non-manufacturer affiliated increased by $334.7 million.

As of December 31, 2007 and 2006, we had $683.8 million and $704.7 million of floor plan notes payable outstanding, respectively, including $9.9 million and $3.9 million classified as Liabilities Associated with Assets Held for Sale.

13.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accrued liabilities consist of the following:


	As of December 31,
	2007		2006
	(In thousands)
Accounts payable	$	72,113	$	63,951
Loaner vehicle notes payable		27,198		21,279
Accrued compensation		20,128		29,905
Taxes payable (non-income tax)		15,729		16,722
Accrued interest		11,990		9,016
Accrued finance and insurance chargebacks		10,704		9,276
Accrued insurance		8,328		6,916
Other		19,931		17,461

Accrued liabilities	$	186,121	$	174,526

14.

LONG-TERM DEBT

Long-term debt consists of the following:


	As of December 31,
	2007			2006
	(In thousands)
9% Senior Subordinated Notes due 2012	$	—		$	250,000
8% Senior Subordinated Notes due 2014 ($179.4 million and $182.4 million face value, respectively, net of hedging activity of $6.7 million and $7.8 million, respectively)		172,767			174,582
7.625% Senior Subordinated Notes due 2017		150,000			—
3% Senior Subordinated Convertible Notes Due 2012		115,000			—
Mortgage notes payable bearing interest at fixed and variable rates (the weighted average interest rates were 6.5% and 6.6% for years ended December 31, 2007 and 2006, respectively)		25,837			26,837
Bridge loans		8,320			—
Other		3,663			4,456

		475,587			455,875
Less: current portion		(1,736	)		(1,865	)

Long-term debt	$	473,851		$	454,010

The aggregate maturities of long-term debt as of December 31, 2007, are as follows (in thousands):


2008	$	1,736
2009		1,349
2010		1,352
2011		22,712
2012		115,181
Thereafter		339,920	*

	$	482,250	*

*	Does not include $6.7 million fair value hedge which reduces the book value of our 8% Subordinated Notes due 2014.

During the year ended December 31, 2007, we completed a refinancing of our long-term debt, which included (i) a repurchase of all of our $250.0 million 9% Senior Subordinated Notes due 2012 (the “9% Notes”), (ii) the issuance of $115.0 million of 3% Senior Subordinated Convertible Notes due 2012 (the “3% Notes”), (iii) the issuance of $150.0 million of 7.625% Senior Subordinated Notes due 2017 (the “7.625% Notes”) and (iv) the repurchase of $3.0 million of our 8% Senior Subordinated Notes due 2014 (the “8% Notes”).

We recognized an $18.5 million loss in connection with our long-term debt refinancing, which consisted of (i) a $12.9 million premium on the repurchase of the 9% Notes and 8% Notes, (ii) $5.5 million of costs for the pro-rata write-off of unamortized debt issuance costs associated with the 9% Notes and 8% Notes, and (iii) $0.1 million of costs for the pro-rata write-off of the unamortized value of our terminated fair value swap associated with the 8% Notes.

The convertible note hedge and warrant transactions are separate contracts and are not part of the terms of the 3% Notes and will not affect the holders’ rights under the 3% Notes. Holders of the 3% Notes will not have any rights with respect to the convertible note hedge and warrant transactions. The convertible hedge and warrant transactions will generally have the effect of increasing the conversion price of the 3% Notes to $45.0385. The convertible note hedge and warrant transactions are expected to offset the potential dilution upon conversion of the 3% Notes in the event that the market value per share of our common stock at the time of exercise is between $33.99 and $45.0385.

The convertible note hedge transactions represent purchase options of our common stock. At the issuance, there were 3,382,978 shares of our common stock underlying the convertible note hedge transactions, with 4,144,140 shares representing the maximum number of shares that we could receive thereunder. The initial exercise price of the convertible note hedge contracts was $33.99. The exercise price is subject to certain adjustments which mirror the adjustments to the conversion price of the 3% Notes (including for subsequent changes in our dividend). In connection with entering into the convertible note hedge transactions, we paid a premium of $167.90 per option (or $19,308,500 in total for the 115,000 options that we purchased). A portion of the options will be exercised upon the conversion of our 3% Notes and each such exercise will be settled in shares of our common stock. The convertible note hedge transactions will expire on the earlier of (i) the last day on which any convertible notes remain outstanding and (ii) the third scheduled trading day immediately preceding September 15, 2012.

The warrant transactions represent net call options. On exercise of the warrants, we are obligated to deliver a number of shares of our common stock to the Counterparties in an amount based on the excess of the market value per share of our common stock over the strike price of the warrants. At issuance, there were 3,382,978 shares of our common stock underlying the warrant transactions, with 6,765,957 shares representing the maximum number of shares of our common stock required to be issued to the Counterparties. In connection with the warrant transactions, we received a premium of $77.60 per option (or $8,924,000 in total for the 115,000 options that we sold.) The warrant transactions are divided into 80 components that expire at various dates from December 14, 2012 through April 11, 2013.

3% Senior Subordinated Convertible Notes due 2012—

In March 2007, we issued $115.0 million in aggregate principal amount of our 3% Notes, receiving net proceeds of $111.1 million. The sale of the 3% Notes was exempt from registration pursuant to Rule 144A under the Securities Act. During the third quarter of 2007, we filed a shelf registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the 3% Notes and the underlying common stock into which the 3% Notes are convertible. The costs related to the issuance of the 3% Notes were capitalized and are being amortized to other interest expense over the term of the Notes using the effective interest basis. We pay interest on the 3% Notes on March 15 and September 15 of each year until their maturity on September 15, 2012. If and when the 3% Notes are converted, we will pay cash for the principal amount of each Note and, if applicable, shares of our common stock based on a daily conversion value calculated on a proportionate basis for each volume weighted average price (“VWAP”) trading day (as defined in the indenture governing the 3% Notes) in the relevant 30 VWAP trading day observation period. The initial conversion rate for the 3% Notes is 29.4172 shares of common stock per $1,000 principal amount of 3% Notes, which is equivalent to an initial conversion price of $33.99 per share. The conversion rate is subject to adjustment in some events but will not be adjusted for accrued interest.

7.625% Senior Subordinated Notes due 2017—

In March 2007, we issued $150.0 million of our 7.625% Notes, receiving net proceeds of $146.0 million. The sale of the 7.625% Notes was exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. During the third quarter of 2007, we filed a registration statement with the SEC in connection with an exchange offer to exchange the 7.625% Notes for new notes with substantially identical terms that are registered under the Securities Act. The costs related to the issuance of the 7.625% Notes were capitalized and are being amortized to other interest expense over the term of the 7.625% Notes. We pay interest on the 7.625% Notes on March 15 and September 15 of each year until their maturity on March 15, 2017. At any time during the term of the 7.625% Notes, we may choose to redeem all or a portion of the 7.625% Notes at a price equal to 100% of their principal amount plus the make-whole premium set forth in the 7.625% Notes indenture. At any time on or after March 15, 2012, we may, at our option, choose to redeem all or a portion of these notes at a redemption price that begins at 103.813% of the aggregate principal amount of the 7.625% Notes and reduces on each subsequent March 15 by approximately 1.3% until the price reaches 100% of the aggregate principal amount on March 15, 2015 and thereafter. On or before March 15, 2010, we may, at our option, use the net proceeds of one or more equity offerings to redeem up to 35% of the aggregate principal amount of the 7.625% Notes at a redemption price equal to 107.625% of such principal amount plus accrued and unpaid interest thereon.

8% Senior Subordinated Notes due 2014—

As of December 31, 2007, we had repurchased a total of $20.6 million of our 8% Notes. Our board of directors has authorized us to repurchase up to an additional $19.4 million of our 8% Notes.

Committed Credit Facility—

In March 2005, we entered into our Committed Credit Facility with the Lenders. The Committed Credit Facility provides us with $125.0 million of working capital borrowing capacity (the “Revolver”) and accrues interest at a rate based on LIBOR. The Committed Credit Facility matures in March 2009, but provides for an indefinite series of one-year extensions at our request, if approved by the Lenders. We believe such approval would be obtained.

The terms of the Committed Credit Facility require us to meet certain financial ratios, as defined in our Committed Credit Facility, including a Current Ratio of at least 1.2 to 1, a Fixed Charge Coverage Ratio of not less than 1.2 to 1, a Total Leverage Ratio of not greater than 4.5 to 1, and an Adjusted Net Worth of not less than $350.0 million. It also includes customary conditions with respect to incurring new indebtedness and places limitations on our ability to pay cash dividends and repurchase shares of our common stock.

Mortgage Notes Payable—

As of December 31, 2007, we had two real estate mortgage notes payable outstanding. These obligations are collateralized by the related real estate with a carrying value of $39.4 million as of December 31, 2007, and mature in 2011. The terms of our mortgage notes payable require us on an ongoing basis to meet certain financial ratios and covenants. As of December 31, 2007, we were in compliance with financial ratios and other ongoing covenants required by the terms of our mortgage notes payable.

Bridge Loans—

In October 2007 we entered into two unsecured bridge loans for a total of $8.3 million to finance the purchase of real estate included in a dealership acquisition. These bridge loans mature in February 2008; however, we refinanced these loans in January 2008 into two mortgage notes payable using the related property as collateral.

Our ability to repurchase shares and pay cash dividends is restricted by our 8% Notes, our 7.625% Notes and our Committed Credit Facility. The most restrictive limit is under the terms of our 8% Notes. As of December 31, 2007, our ability to repurchase shares of our outstanding common stock or pay cash dividends was limited to $16.1 million. Such limits are increased each quarter by 50% of net income and decreased by any dividend payments or share repurchases during the period.

15.

FINANCIAL INSTRUMENTS

Three of our interest rate swap agreements terminated in March 2006, which resulted in a cash payment of $13.7 million, which equaled the fair market value of the swap agreements. Included in Accumulated Other Comprehensive Loss on our Consolidated Balance Sheet as of December 31, 2007, was $2.5 million ($1.5 million, net of tax) of unrecognized amortization related to our two terminated cash flow swaps, which are being amortized through March 2014 as a component of Floor Plan Interest Expense on the accompanying Consolidated Statements of Income. Amortization of these terminated cash flow swaps totaled $0.9 million for the year ended December 31, 2007 and will total $0.6 million for the year ended December 31, 2008. In addition, included as a reduction to our 8% Notes as of December 31, 2007, was $6.7 million of unrecognized amortization related to our terminated fair value swap, which is being amortized through March 2014 as a component of Other Interest Expense on the accompanying Consolidated Statements of Income. Amortization of this terminated fair value swap totaled $1.1 million for the year ended December 31, 2007 and will total $1.1 million for the year ended December 31, 2008.

16.

INCOME TAXES

The components of our income tax provisions from continuing operations are as follows:


	For the Years Ended December 31,
	2007		2006		2005
	(In thousands)
Current:
Federal	$	23,062	$	31,145	$	33,709
State		611		2,163		1,780

Subtotal		23,673		33,308		35,489
Deferred:
Federal		5,060		6,029		(2,162	)
State		1,804		1,169		1,246

Subtotal		6,864		7,198		(916	)

Total	$	30,537	$	40,506	$	34,573

A reconciliation of the statutory federal rate to the effective tax rate from continuing operations is as follows:


	For the Years Ended December 31,
	2007			2006			2005
	(In thousands)
Provision at the statutory rate	$	29,688		$	37,658		$	32,319
Increase (decrease) resulting from:
State income tax, net		2,031			2,134			1,958
Non deductible secondary offering expenses		94			401			—
Book goodwill in excess of tax associated with divestitures		—			80			—
Gains on corporate owned life insurance policies		(48	)		(161	)		—
Tax credits received		(620	)		—			—
Net operating loss carryforward benefit		(406	)		—			—
Other		(202	)		394			296

Provision for income taxes	$	30,537		$	40,506		$	34,573

The tax effects of temporary differences representing deferred tax assets (liabilities) result principally from the following:


	December 31,
	2007			2006
	(In thousands)
Reserves and accruals	$	23,129		$	21,767
Valuation allowance on reserves and accruals		(109	)		—
Net operating loss and alternative minimum tax credit carryforwards		1,196			1,229
Tax goodwill amortization		(61,663	)		(44,239	)
Depreciation		(9,476	)		(18,783	)
Accumulated other comprehensive income		1,613			1,225
Equity call option		7,056			—
Valuation allowance on NOLs		(1,196	)		(1,229	)

Net deferred tax liability	$	(39,450	)	$	(40,030	)


	December 31,
	2007			2006
	(In thousands)
Balance sheet classification:
Deferred tax assets:
Current	$	13,401		$	15,313
Long term		20,638			10,302
Deferred tax liabilities:
Current		(1,110	)		(1,352	)
Long term		(72,379	)		(64,293	)

Net deferred tax liability	$	(39,450	)	$	(40,030	)

We have state net operating loss (“NOL”) carryforwards of $30.2 million that are attributable to certain of our “C” corporation subsidiaries. The state NOL carryforwards begin to expire in 2019. Pursuant to our accounting policy, a valuation allowance was recorded on these carryforwards as we do not expect these entities to have taxable income in the foreseeable future. In addition, we have established a $0.2 million valuation reserve on certain deferred tax assets related to entities that we do not expect to have taxable income in the foreseeable future.

We adopted the provisions of FIN 48 on January 1, 2007. As a result of adoption, current income taxes receivable increased by $3.2 million, current income taxes payable and deferred income tax liabilities were unaffected, and the liability for unrecognized tax benefits increased by $3.2 million. There was no effect on Shareholders’ Equity upon the adoption of FIN 48. As of December 31, 2007, the total amount of our unrecognized tax benefits was $3.6 million, all of which, if recognized, would affect our effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


In Thousands	Gross Liability for Unrecognized Tax Benefits			Gross Asset for Unrecognized Tax Benefits			Net Liability for Unrecognized Tax Benefits
Balance at January 1, 2007	$	3,576		$	(360	)	$	3,216
Additions for Tax Positions of Current Period		1,488			(154	)		1,334
Additions for Tax Positions of Prior Years		499			(131	)		368
Reduction for Lapse of 2003 Federal Statute of Limitations		(966	)		—			(966	)
Effective Settlements		(307	)		—			(307	)

Balance at December 31, 2007	$	4,290		$	(645	)	$	3,645

We recognize interest related to unrecognized tax benefits in income tax expense. The liability for unrecognized tax benefits included accrued interest of $0.5 million and $0.7 million and no amount for penalties, on at December 31, 2007 and January 1, 2007, respectively.

The statute of limitations related to the consolidated Federal income tax return is closed for all tax years up to and including 2003, with the exception of a sub-consolidation tax return with no unrecognized tax benefits. In addition, the IRS has conducted and closed a Joint Committee Audit for Federal consolidated tax return years 2004-2005.

The expiration of the statute of limitations related to the various state income tax returns that the Company and subsidiaries file varies by state. The 2004 through 2007 tax years generally remain subject to examination by most state tax authorities. With each year our tax exposure rolls forward with incremental increases expected based on continued growth, and no changes are foreseen to this trend at present. The company does not anticipate any material change in the total amount of unrecognized tax benefits, individually or in the aggregate, to occur within the next twelve months.

17.

OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of the following:


	As of December 31,
	2007		2006
	(In thousands)
Deferred compensation liability	$	9,410	$	7,550
Deferred gains from sale-leaseback transactions		8,973		9,764
Accrued finance and insurance chargebacks		5,400		4,839
FIN 48 liability		3,645		—
Deferred rent		2,709		2,029
Interest rate swap liabilities		1,665		172
Other		3,014		5,594

Other long-term liabilities	$	34,816	$	29,948

18.

DISCONTINUED OPERATIONS AND DIVESTITURES

During the year ended December 31, 2007, we placed four franchises (four dealership locations) into discontinued operations and sold two franchises (two dealership locations) that had been held for sale as of December 31, 2006. The accompanying Consolidated Statements of Income for the years ended December 31, 2006 and 2005 have been reclassified to reflect the status of our discontinued operations as of December 31, 2007. The following table provides further information regarding our discontinued operations as of December 31,

2007, and includes the results of businesses sold prior to December 31, 2007, and businesses pending disposition as of December 31, 2007.


	For the Year Ended December 31, 2007									For the Year Ended December 31, 2006									For the Year Ended December 31, 2005
	Sold			Pending Disposition			Total			Sold(c)			Pending Disposition (a)			Total			Sold(b)			Pending Disposition (a)			Total
	(Dollars in thousands)
Franchises:
Mid-line Domestic		—			2			2			6			2			8			14			2			16
Mid-line Import		—			1			1			2			—			2			3			—			3
Value		2			1			3			3			1			4			4			1			5
Luxury		—			—			—			1			—			1			1			—			1

Total		2			4			6			12			3			15			22			3			25

Revenues	$	1,514		$	61,383		$	62,897		$	114,812		$	53,932		$	168,744		$	461,026		$	56,342		$	517,368
Cost of sales		1,478			54,036			55,514			96,945			46,848			143,793			389,372			48,549			437,921

Gross profit		36			7,347			7,383			17,867			7,084			24,951			71,654			7,793			79,447
Operating expenses		1,659			7,564			9,223			25,738			6,459			32,197			76,003			6,680			82,683

Income (loss) from operations		(1,623	)		(217	)		(1,840	)		(7,871	)		625			(7,246	)		(4,349	)		1,113			(3,236	)
Other expense, net		(863	)		(520	)		(1,383	)		(3,254	)		(521	)		(3,775	)		(5,084	)		(369	)		(5,453	)
Gain/(loss) on disposition of discontinued operations		(2,001	)		—			(2,001	)		1,508			—			1,508			637			—			637

Income (loss) before income taxes		(4,487	)		(737	)		(5,224	)		(9,617	)		104			(9,513	)		(8,796	)		744			(8,052	)
Income tax benefit (expense)		1,616			277			1,893			3,216			(43	)		3,173			11,654	(d)		(289	)		11,365

Discontinued operations, net of tax	$	(2,871	)	$	(460	)	$	(3,331	)	$	(6,401	)	$	61		$	(6,340	)	$	2,858		$	455		$	3,313

(a)	Franchises placed into discontinued operations in 2007 and pending disposition as of December 31, 2007

(b)	Franchises were sold between January 1, 2005 and December 31, 2007

(c)	Franchises were sold between January 1, 2006 and December 31, 2007

(d)	Includes an $8.8 million tax benefit from the stock sale of an Oregon dealership

19.

SUPPLEMENTAL CASH FLOW INFORMATION

During the years ended December 31, 2007, 2006 and 2005, we made interest payments, net of amounts capitalized, totaling $78.0 million, $73.3 million and $75.9 million, respectively. During the year ended December 31, 2005, we received $4.9 million of proceeds associated with our interest rate swap agreement that was entered into in December 2003 in connection with the issuance of our 8% Notes. We received immaterial amounts of proceeds during the years ended December 31, 2007 and 2006 associated with our 8% Notes, floor plan notes payable and mortgage notes payable interest rate swap agreements.

During the years ended December 31, 2007, 2006 and 2005, we made income tax payments totaling $19.1 million, $24.9 million and $25.5 million, respectively.

During the years ended December 31, 2007, 2006 and 2005, we transferred loaner vehicles totaling $33.1 million, $29.6 million, $25.8 million, respectively from Other Current Assets to Inventory on the accompanying Consolidated Balance Sheets.

The following items are included in Other Adjustments to reconcile net income to cash flow from operating activities:


	For the Years Ended December 31,
	2007		2006			2005
Amortization of deferred financing fees	$	2,583	$	2,359		$	2,192
(Gain) loss on sale of franchises		2,001		(4,144	)		(637	)
Swap amortization		1,869		1,737			—
Deferred compensation expense		1,860		2,897			3,125
Depreciation and amortization from discontinued operations		35		460			1,733
Write-down of franchise rights		—		1,785			—
Other individually immaterial items		896		(839	)		700

Total	$	9,244	$	4,255		$	7,113

20.

LEASE OBLIGATIONS

We lease various facilities, real estate and equipment under operating lease agreements. We record rent expense on a straight-line basis over the life of the lease for lease agreements where the rent escalates at fixed rates over time. Rent expense from continuing operations totaled $57.1 million, $52.7 million and $46.3 million for the years ended December 31, 2007, 2006 and 2005, respectively.

During the year ended December 31, 2007, we completed four sale-leaseback transactions resulting in the sale of $14.6 million of assets to a third party and the commencement of operating leases with the buyer. In addition, we had $9.2 million of completed construction projects and $14.9 million of ongoing construction projects, which were included in Assets Held for Sale and Other Current Assets, respectively, on our Consolidated Balance Sheet as of December 31, 2007. We expect to complete these construction projects and receive the final reimbursements in 2008.

Future minimum payments under long-term, non-cancelable leases as of December 31, 2006, are as follows:


	Operating		Capital			Total
	(In thousands)
2008	$	60,570	$	642		$	61,212
2009		58,298		415			58,713
2010		55,806		342			56,148
2011		55,629		287			55,916
2012		54,343		292			54,635
Thereafter		314,095		3,353			317,448

Total minimum lease payments	$	598,741		5,331		$	604,072

Less: amount representing interest				(2,231	)

Present value of net minimum lease payments				3,100
Less: current portion				(409	)

Total long-term capital lease obligation			$	2,691

21.

COMMITMENTS AND CONTINGENCIES

A significant portion of our vehicle business involves the sale of vehicles, parts or vehicles composed of parts that are manufactured outside the United States of America. As a 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 of America or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs or other restrictions, or adjust presently prevailing quotas, duties or tariffs, which may affect our operations and our ability to purchase imported vehicles and/or parts at reasonable prices.

Manufacturers may direct us to implement costly capital improvements to dealerships as a condition upon entering into franchise agreements with them. Manufacturers also typically require that their franchises meet specific standards of appearance. These factors, either alone or in combination, could cause us to divert our financial resources to capital projects from uses that management believes may be of higher long-term value, such as acquisitions.

Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment. Compliance with these provisions has not had, nor do we expect such compliance to have, any material effect upon our capital expenditures, net earnings, financial condition, liquidity or competitive position. We believe that our current practices and procedures for the control and disposition of such materials comply with applicable federal, state and local requirements.

From time to time, we and our dealerships are named in claims, including class action claims, involving the manufacture and sale of motor vehicles, including but not limited to the charging of administrative fees, the operation of dealerships, contractual disputes and other matters arising in the ordinary course of our business. With respect to certain of these claims, the sellers of dealerships we have acquired have indemnified us. We do not expect that any potential liability from these claims will materially affect our financial condition, liquidity, results of operations or financial statement disclosures.

Our dealerships hold dealer agreements with a number of vehicle manufacturers. In accordance with the individual dealer agreements, each dealership is subject to certain rights and restrictions typical of the industry.

The ability of the manufacturers to influence the operations of the dealerships or the loss of a dealer agreement could have a negative impact on our operating results.

In connection with the purchase of one franchise, additional consideration may be paid to the seller if the franchise achieves specified net income levels in future periods. The additional consideration is distributable annually beginning January 1, 2009 through January 1, 2015 and we estimate the additional consideration to total approximately $2.5 million.

22.

RELATED PARTY TRANSACTIONS

Certain of our directors, shareholders and their affiliates, and regional management, have engaged in transactions with us. These transactions primarily relate to long-term operating leases of our facilities. We believe that these transactions and our other related party transactions involve terms comparable to what would be obtained from unaffiliated third parties.

For the years ended December 31, 2007, 2006 and 2005, we made rental payments totaling $6.9 million, $7.6 million and $13.4 million, respectively, to entities controlled by our directors, shareholders or employees.

In October 2006, we paid $0.8 million in connection with an agreement with an automotive manufacturer to close a dealership in one of our market areas in which a former member of our board of directors had a partial ownership interest. This member resigned from our board of directors effective July 12, 2006.

In 2007 and 2006, we purchased land from one of our regional executives for $3.0 million and $1.3 million, respectively. We used this land to construct a new facility for one of our existing dealerships.

23.

SHARE-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

We have established two share-based compensation plans (the “Plans”) under which we have granted non-qualified stock options, performance share units and restricted stock to our directors, officers and employees at fair market value on the date of the grant. Stock options generally vest ratably over three years from the date of grant and expire ten years from the date of grant. Performance share units generally vest after two to three years from the date of grant and provide the holder the opportunity to receive additional shares of common stock if certain performance criteria are achieved. The actual number of shares earned by a holder of performance share units may range from 0% to 180% of the target number of shares to be granted to the holder, depending on the achievement of certain performance criteria over a defined period of time. Restricted stock vests ratably over two to three years from the date of grant and have voting and dividends rights prior to vesting. We have granted a total of 4,310,954 non-qualified stock options and 591,500 performance share units to certain of our employees and officers and 97,251 shares of restricted stock to certain of our employees and members of our board of directors. As of December 31, 2007, there were 1,100,804 non-qualified stock options, 576,250 performance share units (excluding performance estimates) and 72,525 restricted share units outstanding. In addition, there were approximately 1,739,000 share-based awards available for grant under our share-based compensation plans as of December 31, 2007. We expect to continue to issue performance share units and restricted share units in lieu of non-qualified stock options.

The fair value of each option award was estimated on the date of grant using the Black Scholes option valuation model. The fair value of each performance share unit and restricted stock was calculated using the closing market price of our common stock on the date of grant. Expected volatilities are based on the historical volatility of our common stock. We use historical data to estimate the rate of option exercises and employee turnover within the valuation model. The expected term of options granted represents the period of time that the related options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

We have recognized $5.9 million ($2.2 million tax benefit) and $5.0 million ($1.9 million tax benefit) in stock-based compensation expense, for the years ended December 31, 2007 and 2006, respectively. We did not recognize material stock-based compensation expense or an associated tax benefit during the year ended December 31, 2005. As of December 31, 2007, there was $7.1 million of total unrecognized share-based compensation expense related to non-vested share-based awards granted under the Plans. That cost is expected to be recognized over a weighted average period of less than a year. The following table illustrates the effect on net income and net income per share had our share-based awards been recorded using the fair value method of SFAS No. 123R for the year ended December 31, 2005:


	For the Years Ended December 31
(In thousands, except per share data)	2005
Net income	$	61,081
Adjustments to net income:
Share-based compensation expense included in net income, net of tax		1
Pro forma share-based compensation expense, net of tax		(2,224	)

Pro forma net income	$	58,858

Net income per common share—basic (as reported)	$	1.87

Net income per common share—diluted (as reported)	$	1.86

Pro forma net income per common share—basic	$	1.80

Pro forma net income per common share—diluted	$	1.79

A summary of options outstanding and exercisable under the Plans as of December 31, 2007, changes during the year then ended and changes during the years ended December 31, 2006 and 2005 is presented below:


	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value*
Options outstanding—December 31, 2004	3,402,997		$	15.11
Granted	60,000		$	14.72
Exercised	(271,493	)	$	13.19
Expired / Forfeited	(250,242	)	$	14.25

Options outstanding—December 31, 2005	2,941,262		$	15.35
Granted	—		$	—
Exercised	(1,366,702	)	$	16.14
Expired / Forfeited	(46,381	)	$	15.02

Options outstanding—December 31, 2006	1,528,179		$	14.57
Granted	—		$	—
Exercised	(412,137	)	$	15.10
Expired / Forfeited	(15,238	)	$	14.15

Options outstanding—December 31, 2007	1,100,804		$	14.37	5.6	$	748,547

Options exercisable—December 31, 2007	1,091,968			14.37	5.6		742,538

*	Based on the closing price of our common stock on December 31, 2007 which was $15.05 per share.

Net cash received from option exercises for the year ended December 31, 2007 was $3.3 million. The actual intrinsic value of options exercised during the year ended December 31, 2007, was $5.3 million. The actual tax benefit realized for the tax deductions from option exercises totaled $2.0 million for the year ended December 31, 2007.

A summary of performance share units and restricted share units as of December 31, 2007, and changes during the year then ended is presented below:


	Shares		Weighted Average Grant Date Fair Value
Performance Share Units—December 31, 2005	—		$	—
Granted	376,500		$	20.14
Performance estimate	93,625		$	20.14
Vested	—		$	—
Forfeited	(2,000	)	$	18.39

Performance Share Units—December 31, 2006*	468,125		$	20.15
Granted	215,000		$	27.11
Performance estimate	(91,294	)	$	24.85
Vested	—		$	—
Forfeited (including 2,813 of performance estimates)	(16,063	)	$	20.91

Performance Share Units—December 31, 2007**	575,768		$	21.92

*	Maximum of 674,100 issuable upon attaining certain performance metrics.

**	Maximum of 1,037,250 issuable upon attaining certain performance metrics.

Each performance share unit provides an opportunity for the employee to receive a number of shares of our common stock based on our performance during a three year period as measured against objective performance goals as determined by the compensation committee of our board of directors. The actual number of shares earned may range from 0% to 180% of the target number of shares depending upon achievement of the performance goals.


	Shares		Weighted Average Grant Date Fair Value
Restricted Stock—December 31, 2005	—		$	—
Granted	38,342		$	21.95
Vested	(8,614	)	$	22.98
Forfeited	—		$	—

Restricted Stock—December 31, 2006	29,728		$	21.65
Granted	58,909		$	28.07
Vested	(13,612	)	$	22.20
Forfeited	(2,500	)	$	19.81

Restricted Stock—December 31, 2007	72,525		$	26.83

Employee Retirement Plan

We sponsor the Asbury Automotive Retirement Savings Plan (the “Plan”), a 401(k) plan, for eligible employees except for the employees of one of our dealer groups, which maintains a separate retirement plan. Employees are eligible to participate in the Plan after ninety days of service. Employees electing to participate in the Plan may contribute up to 40% of their annual compensation. IRS rules limit total participant contributions during 2007 to $15,500; however, we limit participant contributions for employees with an annual salary of greater than $100,000 to $10,000 per year. We match 50% of employees’ contributions up to 4% of their base compensation, with a maximum match of $4,500 per participant. Employer contributions vest ratably over four years after date of hire. Expenses from continuing operations related to employer matching contributions totaled $3.6 million, $3.3 million and $2.8 million for the years ended December 31, 2007, 2006 and 2005, respectively.

Deferred Compensation Plan

We sponsor the Asbury Automotive Wealth Accumulation Plan (the “Deferred Compensation Plan”) wherein eligible employees, generally those at senior levels, may elect to defer a portion of their annual compensation. We have established a rabbi trust to finance obligations under the Deferred Compensation Plan with corporate-owned variable life insurance contracts. Participants are 100% vested in their respective deferrals and the earnings thereon. Annually, we may elect to match a portion of certain eligible employee’s contributions. The employee deferral match expense totaled $0.3 million and $0.4 million for each year ended December 31, 2007 and 2006, respectively. Each annual employer match vests in full three years from the date on which the employee deferral match is funded. The total deferred compensation liability was $9.4 million and $7.6 million as

of December 31, 2007 and 2006, respectively. The related cash surrender value on such contracts included in Other Long-Term Assets on our Consolidated Balance Sheets, which totaled $11.0 million and $7.3 million as of December 31, 2007 and 2006, respectively.

24.

CONDENSED QUARTERLY REVENUES AND EARNINGS (UNAUDITED):


	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	(In thousands, except per share data)
Year Ended December 31, 2006
Revenues(2)	1,352,198		1,484,967	(5)	1,485,883		1,371,339

Gross profit(2)	207,122		224,527	(5)	225,374		213,755

Net income(2)	12,553		19,004	(6)	17,179	(7)	12,013	(8)

Net income per common share:
Basic	0.38		0.57		0.52		0.36

Diluted(1)	0.37		0.56		0.51		0.35

Year Ended December 31, 2007
Revenues(2)	1,400,135		1,491,541		1,475,094		1,346,197

Gross profit(2)	222,011		230,403		226,672		210,358

Net income(2)	433	(3)	20,559	(4)	19,010		10,953

Net income per common share:
Basic	0.01		0.63		0.59		0.35

Diluted(1)	0.01		0.62		0.57		0.34

(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 of shares outstanding during the respective periods.

(2)	Quarterly revenues, gross profit and net income do not agree to previously reported amounts on Form 10-Q as a result of subsequent discontinued operations.

(3)	Includes (i) an $11.1 million, net of tax, loss on the extinguishment of long-term debt, (ii) $1.8 million, net of tax of retirement benefits expense associated with the retirement of our former CEO and (iii) a $1.3 million loss on the sale of two franchises (two dealership locations).

(4)	Includes $0.6 million, net of tax, of a loss on the extinguishment of long-term debt and $0.3 million of costs associated with a secondary offering of our common stock for which we did not receive any proceeds.

(5)	Includes $3.4 million of a corporate generated F&I gain associated with the sale of our remaining interest in a pool of extended service contracts.

(6)	Includes $2.1 million, net of tax, of a corporate generated F&I gain associated with the sale of our remaining interest in a pool of extended service contracts and $0.9 million, net of tax, of abandoned strategic project expenses.

(7)	Includes $0.8 million of costs associated with a secondary offering of our common stock for which we did not receive any proceeds and $0.6 million, net of tax, of a loss on the extinguishment of long-term debt.

(8)	Includes $1.6 million, net of tax, gain on the sale of one franchise and $0.1 million, net of tax, of a loss on the extinguishment of long-term debt.

25.

SUBSEQUENT EVENTS

In January 2008, we sold four franchises (three dealership locations) for $2.7 million and recognized a loss on the sale of $0.2 million. One of these franchises was classified as a discontinued operation as of December 31, 2007. We expect the cash flows of the other franchise to be replaced by increased cash flows from our remaining operations and therefore, this franchise was not included in discontinued operations as of December 31, 2007.

In January 2008, our board of directors declared a $0.225 per share cash dividend. This was the seventh consecutive quarter that a dividend was paid.

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

In accordance with Exchange Act Rules 13a-15(e) and 15d-15(e), we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and principal financial officer (our “Executives”), of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Executives concluded that our controls and other procedures were effective as of December 31, 2007 to ensure that information we were required to disclose in the reports that we filed or submitted under the Exchange Act was (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to the our management, including the Executives, as appropriate, to allow timely decisions regarding required disclosure.

During the fourth quarter of the fiscal year ended December 31, 2007, there were no changes in our internal controls that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our company’s financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system was designed to provide reasonable assurance to our management and our board of directors regarding the preparation and fair presentation of published financial statements. Our internal control over financial reporting also includes those policies and 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 generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a 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 evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Our assessment 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 internal control over financial reporting was effective as of December 31, 2007. Our auditors, Deloitte & Touche LLP, an independent registered public accounting firm, has audited and reported on our consolidated financial statements and on the effectiveness of our internal controls over financial reporting. Their report is contained herein.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Reference is made to the information set forth in our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information is incorporated herein by reference.

Item 11.

Executive Compensation.

Reference is made to the information set forth in our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Reference is made to the information set forth in our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

Reference is made to the information set forth in our Proxy Statement 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 set forth in our Proxy Statement to be filed within 120 days after the end of our fiscal year, which information is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

(a)

The following documents are filed as a part of this report on Form 10-K:

(1)

Financial Statements:

See index to Consolidated Financial Statements on page 69.

(2)

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. The Exhibits designated by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15(b) of this Form 10-K.


Exhibit Number		Description of Documents

3.1		Restated Certificate of Incorporation of Asbury Automotive Group, Inc. (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (file No. 333-84646) filed with the SEC on March 20, 2002)*

3.2		Restated Bylaws of Asbury Automotive Group, Inc. (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (file No. 333-84646) filed with the SEC on March 20, 2002)*

4.1		Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

4.2		Form of 8% Senior Subordinated Note due 2014 (filed with Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

4.3		Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

100


Exhibit Number		Description of Documents

4.4		First Supplemental Indenture, dated as of January 21, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.5		Second Supplemental Indenture, dated as of December 7, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2012 (filed as Exhibit 4.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.6		Third Supplemental Indenture, dated as of September 30, 2005, among the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the issuance of 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

4.7		Fourth Supplemental Indenture, dated as of March 15, 2007, among Asbury Automotive Group, Inc., the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 of Asbury Automotive Group, Inc. (filed as Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.8		Indenture, dated as of March 16, 2007, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and The Bank of New York, as Trustee, relating to the 3% Senior Subordinated Convertible Notes due 2012 (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.9		Form of 3% Senior Subordinated Convertible Notes due 2012 (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.10		Indenture, dated as of March 26, 2007, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and The Bank of New York, as Trustee, relating to the 7.625% Senior Subordinated Notes due 2017 (filed as Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.11		Form of 7.625% Senior Subordinated Notes due 2017 (filed as Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.12		Indenture, dated as of June 5, 2002, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (file No. 333-91340-08) filed with the SEC on June 27, 2002)*

4.13		Form of 9% Senior Subordinated Note due 2012 (included in Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (file No. 333-91340-08) filed with the SEC on June 27, 2002)*

4.14		First Supplemental Indenture, dated as of March 19, 2003, among the subsidiary guarantors listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)*

4.15		Second Supplemental Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors, and the Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

101


Exhibit Number		Description of Documents

4.16		Third Supplemental Indenture, dated as of December 7, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.17		Fourth Supplemental Indenture, dated as of September 30, 2005, among the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the issuance of 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

4.18		Fifth Supplemental Indenture, dated as of March 8, 2007, among Asbury Automotive Group, Inc. and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 of Asbury Automotive Group, Inc. (filed as Exhibit 4.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2007)*

4.19**		Amended and Restated Wealth Accumulation Plan

10.1**		Amended and Restated 1999 Stock Option Plan

10.2**		Amended and Restated 2002 Equity Incentive Plan

10.3**		Key Executive Incentive Compensation Plan (filed as Appendix D to the Company’s Proxy Statement on April 29, 2004)*

10.4		Form of Officer Director Indemnification Agreement (filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)*

10.5**		Letter Agreement, dated January 5, 2004, between Asbury Automotive Group, Inc. and Thomas R. Gibson (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.6**		Severance Agreement of Philip R. Johnson, dated November 14, 2007

10.7**		Severance Agreement of Lynne A. Burgess, dated November 14, 2007

10.8**		Severance Agreement of J. Gordon Smith, dated February 28, 2008

10.9**		Severance Agreement of Brett Hutchinson, dated February 26, 2008

10.10**		Employment Agreement of Kenneth B. Gilman (filed as Exhibit 10.6 to Amendment No. 3 to the Company’s Registration Statement on Form S-1 (file No. 333-65998) filed with the SEC on January 10, 2002)*

10.11**		First Amendment to Employment Agreement of Kenneth B. Gilman, dated February 26, 2004 (filed as an Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.12**		Second Amendment to Employment Agreement of Kenneth B. Gilman, dated November 8, 2004 (filed as an Exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 12, 2004)*

10.13**		Third Amendment to Employment Agreement of Kenneth B. Gilman, dated as of November 3, 2005 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

10.14**		Letter Agreement between the Company and Kenneth B. Gilman, dated August 8, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 10, 2006)*

102


Exhibit Number		Description of Documents

10.15**		Fourth Amendment to Employment Agreement of Kenneth B. Gilman, dated as of September 7, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2006)*

10.16**		Restricted Share Award Agreement of Kenneth B. Gilman, dated October 23, 2006 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)*

10.17**		Letter Agreement between Kenneth B. Gilman and Asbury Automotive Group, Inc., dated February 13, 2007 (filed as Exhibit 10.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2007)*

10.18**		Employment Agreement of Jeffrey I. Wooley (filed as an Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.19**		Agreement between Asbury Automotive Tampa L.L.C. and Jeffrey I. Wooley, dated March 18, 2005 (filed as Exhibit 10.1 to Company’s Current Report on Form 8-K filed with the SEC on March 22, 2005)*

10.20		First Amended and Restated Lease Agreement by and between Jeffry I. Wooley and Asbury Automotive Tampa, L.P., effective September 17, 1998 (for premises located on Hillsborough Avenue, Tampa, Florida)

10.21		First Amended and Restated Lease Agreement by and between Jeffry I. Wooley and Asbury Automotive Tampa, L.P., effective September 17, 1998 (for premises located on Adamo Drive, Brandon, Florida)

10.22**		Employment Agreement of Charles Oglesby, dated as of September 7, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2006)*

10.23**		Amended Employment Agreement of Charles Oglesby, dated as of May 4, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 9, 2007)*

10.24**		Form of Stock Option Agreement

10.25**		Form of Performance Share Unit Award Agreement

10.26**		Form of Restricted Share Award Agreement for Non-Employee Directors

10.27**		Form of Restricted Share Award Agreement

10.28**		Restricted Share Award Agreement for Non-Employee Directors of Michael J. Durham, dated October 23, 2006 (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)*

10.29		Ford Dealer Agreement (filed as Exhibit 10.13 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)*

10.30		General Motors Dealer Agreement (filed as Exhibit 10.14 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)*

10.31		Honda Dealer Agreement (filed as Exhibit 10.15 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.)*

10.32		Mercedes Dealer Agreement (filed as Exhibit 10.16 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)*

10.33		Nissan Dealer Agreement (filed as Exhibit 10.17 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)*

103


Exhibit Number		Description of Documents

10.34		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)*

10.35		Sublease dated July 28, 2003 between Monster Worldwide, Inc. and Asbury Automotive Group, Inc. (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2003)*

10.36		Revolving Credit Agreement, dated as of March 23, 2005, among Asbury Automotive Group, Inc. and the Subsidiary Borrowers listed therein, as borrowers, the Lenders listed therein, JPMorgan Chase Bank, N.A., as administrative agent and as floor plan agent, Bank of America, N.A., as syndication agent, and J.P. Morgan Securities Inc. and Bank of America Securities LLC, as joint bookrunners and co-lead arrangers (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2005)*

10.37		First Amendment to Credit Agreement and Waiver dated as of March 1, 2006 among Asbury Automotive Group, Inc. and the Subsidiary Borrowers listed therein, as borrowers, the Lenders listed therein, JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, NA, as syndication agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2006)*

10.38		Second Amendment to Credit Agreement dated August 1, 2006, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 7, 2006)*

10.39		Third Amendment to Credit Agreement dated March 8, 2007, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent (filed as Exhibit 10.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2007)*

10.40		Fourth Amendment to Credit Agreement dated October 1, 2007, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent

10.41		Registration Rights Agreement dated March 16, 2007, among Asbury Automotive Group, Inc., the subsidiaries of Asbury Automotive Group, Inc. listed on the signature pages thereto, Goldman, Sachs & Co. and Deutsche Bank Securities Inc., relating to the 3% Senior Subordinated Convertible Notes due 2012 of Asbury Automotive Group, Inc. (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.42		Confirmation of Convertible Bond Hedge Transaction dated March 12, 2007, between Asbury Automotive Group, Inc. and Goldman, Sachs & Co. (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.43		Confirmation of Convertible Bond Hedge Transaction dated March 12, 2007 among Asbury Automotive Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank AG, New York (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.44		Confirmation of Issuer Warrant dated March 12, 2007 between Asbury Automotive Group, Inc. and Goldman, Sachs & Co., dated March 12, 2007 (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.45		Confirmation of Issuer Warrant dated March 12, 2007 among Asbury Automotive Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank AG, New York (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

104


Exhibit Number		Description of Documents

10.46		Amendment to Confirmation dated March 13, 2007, between Goldman, Sachs & Co. and Asbury Automotive Group, Inc. relating to the Issuer Warrant (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.47		Amendment to Confirmation dated March 13, 2007, between Deutsche Bank AG, London Branch and Asbury Automotive Group, Inc. relating to the Issuer Warrant (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.48		Exchange and Registration Rights Agreement dated March 26, 2007, among Asbury Automotive Group, Inc., the subsidiaries of Asbury Automotive Group, Inc. listed on the signature pages thereto, Goldman, Sachs & Co. and Deutsche Bank Securities Inc., relating to the 7.625% Senior Subordinated Notes due 2017 of Asbury Automotive Group, Inc. (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

12		Ratio of Earnings to Fixed Charges

21		Subsidiaries of the Company

23		Consent of Deloitte & Touche LLP

24		Powers of Attorney (included with Signature Page hereto)

31.1		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Incorporated by reference.

**	Management contract or compensatory plan or arrangement.

105

SIGNATURES

Pursuant 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 its behalf by the undersigned, thereunto duly authorized.


	Asbury Automotive Group, Inc.

Date: February 29, 2008	By:	/S/ CHARLES R. OGLESBY
	Name:	Charles R. Oglesby
	Title:	Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Charles R. Oglesby and J. Gordon Smith, and each of them, acting individually, as his or her true and lawful attorney-in-fact, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K for the year ended December 31, 2007, and other documents in connection herewith and therewith, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection herewith and therewith and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.


Signature	Title	Date

/s/ CHARLES R. OGLESBY	Chief Executive Officer,	February 29, 2008
(Charles R. Oglesby)	President and Director

/s/ J. GORDON SMITH	Senior Vice President and	February 29, 2008
(J. Gordon Smith)	Chief Financial Officer

/s/ BRETT HUTCHINSON	Vice President, Controller	February 29, 2008
(Brett Hutchinson)	and Chief Accounting Officer

/s/ MICHAEL J. DURHAM	Director and	February 29, 2008
(Michael J. Durham)	Nonexecutive Chairman of the Board

/s/ JANET M. CLARKE	Director	February 29, 2008
(Janet M. Clarke)

/s/ DENNIS E. CLEMENTS	Director	February 29, 2008
(Dennis E. Clements)

/s/ THOMAS C. DELOACH, JR.	Director	February 29, 2008
(Thomas C. DeLoach, Jr.)

106



/s/ JUANITA T. JAMES	Director	February 29, 2008
(Juanita T. James)

/s/ VERNON E. JORDAN, JR.	Director	February 29, 2008
(Vernon E. Jordan, Jr.)

/s/ EUGENE S. KATZ	Director	February 29, 2008
(Eugene S. Katz)

/s/ PHILIP F. MARITZ	Director	February 29, 2008
(Philip F. Maritz)

/s/ JOHN M. ROTH	Director	February 29, 2008
(John M. Roth)

/s/ JEFFREY I. WOOLEY	Director	February 29, 2008
(Jeffrey I. Wooley)

107

EXHIBIT INDEX


Exhibit Number		Description of Documents
3.1		Restated Certificate of Incorporation of Asbury Automotive Group, Inc. (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (file No. 333-84646) filed with the SEC on March 20, 2002)*

3.2		Restated Bylaws of Asbury Automotive Group, Inc. (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (file No. 333-84646) filed with the SEC on March 20, 2002)*

4.1		Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

4.2		Form of 8% Senior Subordinated Note due 2014 (filed with Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

4.3		Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

4.4		First Supplemental Indenture, dated as of January 21, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors, and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.5		Second Supplemental Indenture, dated as of December 7, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors and the Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2012 (filed as Exhibit 4.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.6		Third Supplemental Indenture, dated as of September 30, 2005, among the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the issuance of 8% Senior Subordinated Notes due 2014 (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

4.7		Fourth Supplemental Indenture, dated as of March 15, 2007, among Asbury Automotive Group, Inc., the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the 8% Senior Subordinated Notes due 2014 of Asbury Automotive Group, Inc. (filed as Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.8		Indenture, dated as of March 16, 2007, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and The Bank of New York, as Trustee, relating to the 3% Senior Subordinated Convertible Notes due 2012 (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*


Exhibit Number		Description of Documents
4.9		Form of 3% Senior Subordinated Convertible Notes due 2012 (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.10		Indenture, dated as of March 26, 2007, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and The Bank of New York, as Trustee, relating to the 7.625% Senior Subordinated Notes due 2017 (filed as Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.11		Form of 7.625% Senior Subordinated Notes due 2017 (filed as Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

4.12		Indenture, dated as of June 5, 2002, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule I thereto, and the Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (file No. 333-91340-08) filed with the SEC on June 27, 2002)*

4.13		Form of 9% Senior Subordinated Note due 2012 (included in Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (file No. 333-91340-08) filed with the SEC on June 27, 2002)*

4.14		First Supplemental Indenture, dated as of March 19, 2003, among the subsidiary guarantors listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)*

4.15		Second Supplemental Indenture, dated as of December 23, 2003, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors, and the Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.16		Third Supplemental Indenture, dated as of December 7, 2004, among Asbury Automotive Group, Inc., the subsidiary guarantors listed on Schedule II thereto, the other Guarantors and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)*

4.17		Fourth Supplemental Indenture, dated as of September 30, 2005, among the Subsidiaries of Asbury Automotive Group, Inc. listed on Schedule II thereto, Asbury Automotive Group, Inc., the other Guarantors listed on Schedule I thereto and The Bank of New York, as Trustee, related to the issuance of 9% Senior Subordinated Notes due 2012 (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

4.18		Fifth Supplemental Indenture, dated as of March 8, 2007, among Asbury Automotive Group, Inc. and The Bank of New York, as Trustee, related to the 9% Senior Subordinated Notes due 2012 of Asbury Automotive Group, Inc. (filed as Exhibit 4.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2007)*

4.19**		Amended and Restated Wealth Accumulation Plan

10.1**		Amended and Restated 1999 Stock Option Plan

10.2**		Amended and Restated 2002 Equity Incentive Plan


Exhibit Number		Description of Documents
10.3**		Key Executive Incentive Compensation Plan (filed as Appendix D to the Company’s Proxy Statement on April 29, 2004)*

10.4		Form of Officer Director Indemnification Agreement (filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)*

10.5**		Letter Agreement, dated January 5, 2004, between Asbury Automotive Group, Inc. and Thomas R. Gibson (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.6**		Severance Agreement of Philip R. Johnson, dated November 14, 2007

10.7**		Severance Agreement of Lynne A. Burgess, dated November 14, 2007

10.8**		Severance Agreement of J. Gordon Smith, dated February 28, 2008

10.9**		Severance Agreement of Brett Hutchinson, dated February 26, 2008

10.10**		Employment Agreement of Kenneth B. Gilman (filed as Exhibit 10.6 to Amendment No. 3 to the Company’s Registration Statement on Form S-1 (file No. 333-65998) filed with the SEC on January 10, 2002)*

10.11**		First Amendment to Employment Agreement of Kenneth B. Gilman, dated February 26, 2004 (filed as an Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.12**		Second Amendment to Employment Agreement of Kenneth B. Gilman, dated November 8, 2004 (filed as an Exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 12, 2004)*

10.13**		Third Amendment to Employment Agreement of Kenneth B. Gilman, dated as of November 3, 2005 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)*

10.14**		Letter Agreement between the Company and Kenneth B. Gilman, dated August 8, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 10, 2006)*

10.15**		Fourth Amendment to Employment Agreement of Kenneth B. Gilman, dated as of September 7, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2006)*

10.16**		Restricted Share Award Agreement of Kenneth B. Gilman, dated October 23, 2006 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)*

10.17**		Letter Agreement between Kenneth B. Gilman and Asbury Automotive Group, Inc., dated February 13, 2007 (filed as Exhibit 10.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2007)*

10.18**		Employment Agreement of Jeffrey I. Wooley (filed as an Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)*

10.19**		Agreement between Asbury Automotive Tampa L.L.C. and Jeffrey I. Wooley, dated March 18, 2005 (filed as Exhibit 10.1 to Company’s Current Report on Form 8-K filed with the SEC on March 22, 2005)*


Exhibit Number		Description of Documents
10.20		First Amended and Restated Lease Agreement by and between Jeffry I. Wooley and Asbury Automotive Tampa, L.P., effective September 17, 1998 (for premises located on Hillsborough Avenue, Tampa, Florida)

10.21		First Amended and Restated Lease Agreement by and between Jeffry I. Wooley and Asbury Automotive Tampa, L.P., effective September 17, 1998 (for premises located on Adamo Drive, Brandon, Florida)

10.22**		Employment Agreement of Charles Oglesby, dated as of September 7, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2006)*

10.23**		Amended Employment Agreement of Charles Oglesby, dated as of May 4, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 9, 2007)*

10.24**		Form of Stock Option Agreement

10.25**		Form of Performance Share Unit Award Agreement

10.26**		Form of Restricted Share Award Agreement for Non-Employee Directors

10.27**		Form of Restricted Share Award Agreement

10.28**		Restricted Share Award Agreement for Non-Employee Directors of Michael J. Durham, dated October 23, 2006 (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)*

10.29		Ford Dealer Agreement (filed as Exhibit 10.13 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)*

10.30		General Motors Dealer Agreement (filed as Exhibit 10.14 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)*

10.31		Honda Dealer Agreement (filed as Exhibit 10.15 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.)*

10.32		Mercedes Dealer Agreement (filed as Exhibit 10.16 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)*

10.33		Nissan Dealer Agreement (filed as Exhibit 10.17 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)*

10.34		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)*

10.35		Sublease dated July 28, 2003 between Monster Worldwide, Inc. and Asbury Automotive Group, Inc. (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2003)*


Exhibit Number		Description of Documents
10.36		Revolving Credit Agreement, dated as of March 23, 2005, among Asbury Automotive Group, Inc. and the Subsidiary Borrowers listed therein, as borrowers, the Lenders listed therein, JPMorgan Chase Bank, N.A., as administrative agent and as floor plan agent, Bank of America, N.A., as syndication agent, and J.P. Morgan Securities Inc. and Bank of America Securities LLC, as joint bookrunners and co-lead arrangers (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2005)*

10.37		First Amendment to Credit Agreement and Waiver dated as of March 1, 2006 among Asbury Automotive Group, Inc. and the Subsidiary Borrowers listed therein, as borrowers, the Lenders listed therein, JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, NA, as syndication agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2006)*

10.38		Second Amendment to Credit Agreement dated August 1, 2006, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 7, 2006)*

10.39		Third Amendment to Credit Agreement dated March 8, 2007, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent (filed as Exhibit 10.1 to Asbury Automotive Group’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2007)*

10.40		Fourth Amendment to Credit Agreement dated October 1, 2007, among Asbury Automotive Group, Inc., the subsidiaries listed therein, the Lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent and floor plan agent and Bank of America, N.A., as syndication agent

10.41		Registration Rights Agreement dated March 16, 2007, among Asbury Automotive Group, Inc., the subsidiaries of Asbury Automotive Group, Inc. listed on the signature pages thereto, Goldman, Sachs & Co. and Deutsche Bank Securities Inc., relating to the 3% Senior Subordinated Convertible Notes due 2012 of Asbury Automotive Group, Inc. (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.42		Confirmation of Convertible Bond Hedge Transaction dated March 12, 2007, between Asbury Automotive Group, Inc. and Goldman, Sachs & Co. (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.43		Confirmation of Convertible Bond Hedge Transaction dated March 12, 2007 among Asbury Automotive Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank AG, New York (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.44		Confirmation of Issuer Warrant dated March 12, 2007 between Asbury Automotive Group, Inc. and Goldman, Sachs & Co., dated March 12, 2007 (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.45		Confirmation of Issuer Warrant dated March 12, 2007 among Asbury Automotive Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank AG, New York (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*


Exhibit Number		Description of Documents
10.46		Amendment to Confirmation dated March 13, 2007, between Goldman, Sachs & Co. and Asbury Automotive Group, Inc. relating to the Issuer Warrant (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.47		Amendment to Confirmation dated March 13, 2007, between Deutsche Bank AG, London Branch and Asbury Automotive Group, Inc. relating to the Issuer Warrant (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

10.48		Exchange and Registration Rights Agreement dated March 26, 2007, among Asbury Automotive Group, Inc., the subsidiaries of Asbury Automotive Group, Inc. listed on the signature pages thereto, Goldman, Sachs & Co. and Deutsche Bank Securities Inc., relating to the 7.625% Senior Subordinated Notes due 2017 of Asbury Automotive Group, Inc. (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)*

12		Ratio of Earnings to Fixed Charges

21		Subsidiaries of the Company

23		Consent of Deloitte & Touche LLP

24		Powers of Attorney (included with Signature Page hereto)

31.1		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Incorporated by reference.

**	Management contract or compensatory plan or arrangement.

Amended and Restated Wealth Accumulation Plan

Exhibit 4.19

ASBURY AUTOMOTIVE

AMENDED AND RESTATED WEALTH ACCUMULATION PLAN

Asbury Automotive Amended and Restated

Wealth Accumulation Plan


ARTICLE I				1
Establishment and Purpose

ARTICLE II
Definitions				1

ARTICLE III
Eligibility and Participation				9

ARTICLE IV
Deferrals				10

ARTICLE V
Company Contributions				13

ARTICLE VI
Benefits				13

ARTICLE VII
Modifications to Payment Schedules				17

ARTICLE VIII
Valuation of Account Balances; Investments				18

ARTICLE IX
Administration				20

ARTICLE X
Amendment and Termination				21

ARTICLE XI
Informal Funding				22

ARTICLE XII
Claims				22

ARTICLE XIII
General Provisions				29

Asbury Automotive Amended and Restated Wealth

Accumulation Plan

ARTICLE I

Establishment and Purpose

Asbury Automotive (the “Company”) hereby amends and restates the Asbury Automotive Wealth Accumulation Plan (the “Plan”), effective January 1, 2008. This amendment and restatement applies to all amounts previously or hereafter deferred under the Plan, it being expressly intended that this amendment and restatement shall constitute a material modification of the Plan as in effect on October 3, 2004, such that all amounts deferred under the Plan prior to January 1, 2005, shall be subject to Code Section 409A.

The purpose of the Plan is to attract and retain key employees by providing each Participant with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Plan is not intended to meet the qualification requirements of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent.

The Plan constitutes an unsecured promise by a Participating Employer to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company or the Adopting Employer, as applicable. Each Participating Employer shall be solely responsible for payment of the benefits of its employees and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Any amounts set aside to defray the liabilities assumed by the Company or an Adopting Employer will remain the general assets of the Company or the Adopting Employer and shall remain subject to the claims of the Company’s or the Adopting Employer's creditors until such amounts are distributed to the Participants.

ARTICLE II

Definitions

2.1

Account. Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.2	Account Balance. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.

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Accumulation Plan

2.3	Adopting Employer. Adopting Employer means an Affiliate who, with the consent of the Company, has adopted the Plan for the benefit of its eligible employees.

2.4	Affiliate. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

2.5

Beneficiary. Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan. The Participant’s spouse, if living, otherwise the Participant’s estate, shall be the Beneficiary if: (i) the Participant has failed to properly designate a Beneficiary, or (ii) all designated Beneficiaries have predeceased the Participant.

A former spouse shall have no interest under the Plan, as Beneficiary or otherwise, unless the Participant designates such person as a Beneficiary after dissolution of the marriage, except to the extent provided under the terms of a domestic relations order as described in Code Section 414(p)(1)(B).

2.6	Business Day. A Business Day is each day on which the New York Stock Exchange is open for business.

2.7

Change in Control. Change in Control, with respect to a Participating Employer that is organized as a corporation, means (i) a change in the ownership of the Participating Employer; (ii) a change in the effective control of the Participating Employer; or (iii) a change in the ownership of a substantial portion of the assets of the Participating Employer in accordance with the definition of Change in Control established in the Asbury Automotive 2002 Equity Incentive Plan, as it may be amended from time to time.

2.8	Chief Executive Officer. Chief Executive Officer means the individual who performs the functions of a Chief Executive Officer for the Company or a Participating Employer.

2.8	Claimant. Claimant means a Participant or Beneficiary filing a claim under Article XII of this Plan.

2.9	Code. Code means the Internal Revenue Code of 1986, as amended from time to time.

2.10	Code Section 409A. Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.

2.11	Committee. Committee means the committee appointed by the Board of Directors of the Company (or the appropriate committee of such board) to administer the Plan. If no designation is made, the Chief Executive Officer of the Company or his delegate shall have and exercise the powers of the Committee.

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Accumulation Plan

2.12	Company. Company means Asbury Automotive Group, Inc.

2.13

Company Contribution. Company Contribution means a credit by a Participating Employer to a Participant’s Account(s) in accordance with the provisions of Article V of the Plan. Company Contributions are credited at the sole discretion of the Participating Employer and the fact that a Company Contribution is credited in one year shall not obligate the Participating Employer to continue to make such Company Contribution in subsequent years. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution.

2.15

Compensation. Compensation means a Participant’s base salary (including any deferred salary under a Code Section 401(k) or 125 plan), bonus, commission, and such other cash or equity-based compensation (if any) approved by the Committee as Compensation that may be deferred under this Plan. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A.

2.16

Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts. The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee, the maximum deferrals under the Plan are:

(a)

General Manager Participants. General Manager Participants may defer up to 100% of their base salary and up to 100% of other types of Compensation for a Plan Year.

(b)

All Other Participants. All other Participants may defer up to 100% of their base salary and up to 100% of other types of Compensation for a Plan Year.

A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.4.

2.17	Death Benefit. Death Benefit means the benefit payable under the Plan to a Participant’s Beneficiary(ies) upon the Participant’s death as provided in Section 6.1 of the Plan.

2.18

Deferral. Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.

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Accumulation Plan

Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Committee as necessary so that it does not exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

2.19	Disability Benefit. Disability Benefit means the benefit payable under the Plan to a Participant in the event such Participant is determined to be Disabled.

2.20

Disabled. Disabled means that a Participant is, by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer. The Committee shall determine whether a Participant is Disabled in accordance with Code Section 409A provided, however, that a Participant shall be deemed to be Disabled if determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

2.21	Earnings. Earnings mean an adjustment to the value of an Account in accordance with Article VIII.

2.22	Effective Date. Effective Date means January 1, 2008.

2.23

Eligible Employee. Eligible Employee means a General Manager Participant or member of the Company’s or a Participating Employer’s management team whose employment duties and responsibilities are the same as those of a General Manager Participant, a member of Company management in it’s corporate office with a title of Director or higher, key regional executives, and any other member of a “select group of management or highly compensated employees” of a Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion.

2.24	Employee. Employee means a common-law employee of an Employer.

2.25	Employer. Employer means, with respect to Employees it employs, the Company and each Affiliate.

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Accumulation Plan

2.26	ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.27	Fiscal Year Compensation. Fiscal Year Compensation means Compensation earned during one or more consecutive fiscal years of a Participating Employer, all of which is paid after the last day of such fiscal year or years.

2.28	General Manager Participant. General Manager Participant means a Participant who holds the title of Dealership General Manager with the Company.

2.29

Participant. Participant means an Eligible Employee who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and any other person with an Account Balance greater than zero, regardless of whether such individual continues to be an Eligible Employee. A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.

2.30	Participating Employer. Participating Employer means the Company and each Adopting Employer.

2.31	Payment Schedule. Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.

2.32

Performance-Based Compensation. Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

2.33

Plan. Generally, the term Plan means the “Asbury Automotive Wealth Accumulation Plan” as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section.

2.34	Plan Year. Plan Year means January 1 through December 31.

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Accumulation Plan

2.35	Retirement. Retirement means a Participant’s Separation from Service after attainment of age 60, or age 55 provided that such Participant has a minimum of five (5) Years of Service.

2.36	Retirement Benefit. Retirement Benefit means the benefit payable to a Participant under the Plan following the Retirement of the Participant.

2.37

Retirement/Termination Account. Retirement/Termination Account means an Account established by the Committee to record the amounts payable to a Participant that have not been allocated to a Specified Date Account. Unless the Participant has established a Specified Date Account, all Deferrals and Company Contributions shall be allocated to a Retirement/Termination Account on behalf of the Participant.

2.38

Separation from Service. An Employee incurs a Separation from Service upon termination of employment with the Employer. Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A. Except in the case of an Employee on a bona fide leave of absence as provided below, an Employee is deemed to have incurred a Separation from Service if the Employer and the Employee reasonably anticipated that the level of services to be performed by the Employee after a date certain would be reduced to 20% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months) disregarding periods during which the Employee was on a bona fide leave of absence.

An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of (i) the six-month anniversary of the commencement of the leave or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract. Notwithstanding the preceding, however, an Employee who is absent from work due to a physical or mental impairment that is expected to result in death or last for a continuous period of at least six months and that prevents the Employee from performing the duties of his position of employment or a similar position shall incur a Separation from Service on the first date immediately following the 29-month anniversary of the commencement of the leave.

For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined in Section 2.25 of the Plan, except that for purposes of determining whether another organization is an Affiliate of the Company, common ownership of 50% shall be determinative.

The Committee specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to a Participant providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Code Section 409A.

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Accumulation Plan

2.39

Specified Date Account. A Specified Date Account means an Account established pursuant to Section 4.3 that will be paid (or that will commence to be paid) at a future date as specified in the Participant’s Compensation Deferral Agreement. Unless otherwise determined by the Committee, a Participant may maintain no more than three (3) Specified Date Accounts. A Specified Date Account may be identified in enrollment materials as an “In-Service Account”.

2.40	Specified Date Benefit. Specified Date Benefit means the benefit payable to a Participant under the Plan in accordance with Section 6.1(C).

2.41	Specified Employee. Specified Employee means an Employee who, as of the date of his Separation from Service, is a “key employee” of the Company or any Affiliate, any stock of which is actively traded on an established securities market or otherwise.

An Employee is a key employee if he meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable regulations thereunder and without regard to Code Section 416(i)(5)) at any time during the 12-month period ending on the Specified Employee Identification Date. Such Employee shall be treated as a key employee for the entire 12-month period beginning on the Specified Employee Effective Date.

For purposes of determining whether an Employee is a Specified Employee, the compensation of the Employee shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c)-2(d)(2) (wages, salaries, fees for professional services, and other amounts received for personal services actually rendered in the course of employment with the employer maintaining the plan, to the extent such amounts are includible in gross income or would be includible but for an election under section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), including the earned income of a self-employed individual; provided, however, that, with respect to a nonresident alien who is not a Participant in the Plan, compensation shall not include compensation that is not includible in the gross income of the Employee under Code Sections 872, 893, 894, 911, 931 and 933, provided such compensation is not effectively connected with the conduct of a trade or business within the United States.

Notwithstanding anything in this paragraph to the contrary, (i) if a different definition of compensation has been designated by the Company with respect to another nonqualified deferred compensation plan in which a key employee participates, the definition of compensation shall be the definition provided in Treas. Reg. Section 1.409A-1(i)(2), and (ii) the Company may through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company, elect to use a different definition of compensation.

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Accumulation Plan

In the event of corporate transactions described in Treas. Reg. Section 1.409A-1(i)6), the identification of Specified Employees shall be determined in accordance with the default rules described therein, unless the Employer elects to utilize the available alternative methodology through designations made within the timeframes specified therein.

2.42	Specified Employee Identification Date. Specified Employee Identification Date means December 31, unless the Employer has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Employer.

2.43	Specified Employee Effective Date. Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date, or such earlier date as is selected by the Committee.

2.44	Substantial Risk of Forfeiture. Substantial Risk of Forfeiture shall have the meaning specified in Treas. Reg. Section 1.409A-1(d).

2.45	Termination Benefit. Termination Benefit means the benefit payable to a Participant under the Plan following the Participant’s Separation from Service prior to Retirement.

2.46

Unforeseeable Emergency. An Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s dependent (as defined in Code section 152(a)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The types of events which may qualify as an Unforeseeable Emergency shall be specified by the Committee in administrative documents or forms and in accordance with the requirements of Treas. Reg. Section 1.409A-3(i)(3).

2.47	Valuation Date. Valuation Date shall mean each Business Day.

2.48	Year of Service. A Year of Service shall mean each 12-month period of continuous service with the Employer.

ARTICLE III

Eligibility and Participation

3.1	Eligibility and Participation. An Eligible Employee becomes a Participant upon the earlier to occur of (i) a credit of Company Contributions under Article V or (ii) receipt of notification of eligibility to participate.

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3.2

Duration. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions, subject to the terms of the Plan, for as long as such Participant remains an Eligible Employee. A Participant who is no longer an Eligible Employee but has not Separated from Service may not defer Compensation under the Plan but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero and during such time may continue to make allocation elections as provided in Section 8.4. An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he or she is entitled have been paid

ARTICLE IV

Deferrals

4.1	Deferral Elections, Generally.

(a)

An Eligible Employee shall submit a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by the Committee, but in any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service period or Compensation. The Committee may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2.

(b)

The Participant shall specify on his or her Compensation Deferral Agreement whether to allocate Deferrals to a Retirement/Termination Account or to a Specified Date Account. If no designation is made, all Deferrals shall be allocated to the Retirement/Termination Account. A Participant may also specify in his or her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the Payment Schedule is not specified in a Compensation Deferral Agreement, the Payment Schedule shall be the Payment Schedule specified in Section 6.2.

4.2	Timing Requirements for Compensation Deferral Agreements.

(a)

First Year of Eligibility. In the case of the first year in which an Eligible Employee becomes eligible to participate in the Plan, he has up to 30 days following his initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period. The determination of whether an Eligible Employee may

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file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-2(a)(7).

A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned on and after the date the Compensation Deferral Agreement becomes irrevocable.

(b)

Prior Year Election. Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement described in this paragraph shall become irrevocable with respect to such Compensation as of January 1 of the year in which such Compensation is earned.

(c)

Performance-Based Compensation. Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:

the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation Deferral Agreement is submitted; and

ii.

the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.

A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation as of the day immediately following the latest date for filing such election. Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant’s death or Disability or upon a Change in Control prior to the satisfaction of the performance criteria, will be void.

(d)

Fiscal Year Compensation. A Participant may defer Fiscal Year Compensation by filing a Compensation Deferral Agreement prior to the first day of the fiscal year or years in which such Fiscal Year Compensation is earned. The Compensation Deferral Agreement described in this paragraph becomes irrevocable on the first day of the fiscal year or years to which it applies.

(e)

Short-Term Deferrals. Compensation that meets the definition of a “short-term deferral” described in Treas. Reg. Section 1.409A-1(b)(4) may be deferred in accordance with the rules of Article VII, applied as if the date the Substantial Risk of Forfeiture lapses is the date payments were originally scheduled to commence, provided, however, that the provisions of Section 7.3 shall not apply to payments attributable to a Change in Control.

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(f)

Certain Forfeitable Rights. With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least twelve months from the date the Participant obtains the legally binding right, an election to defer such Compensation may be made on or before the 30th day after the Participant obtains the legally binding right to the Compensation, provided that the election is made at least twelve months in advance of the earliest date at which the forfeiture condition could lapse. The Compensation Deferral Agreement described in this paragraph becomes irrevocable after such 30th day. If the forfeiture condition applicable to the payment lapses before the end of the required service period as a result of the Participant’s death or Disability or upon a Change in Control, the Compensation Deferral Agreement will be void unless it would be considered timely under another rule described in this Section.

(g)

Company Awards. Participating Employers may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of Company awards (such as sign-on, retention, or severance pay) may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation.

(h)

“Evergreen” Deferral Elections. The Committee, in its discretion, may provide in the Compensation Deferral Agreement that such Compensation Deferral Agreement will continue in effect for each subsequent year or performance period. Such “evergreen” Compensation Deferral Agreements will become effective with respect to an item of Compensation on the date such election becomes irrevocable under this Section 4.2. An evergreen Compensation Deferral Agreement may be terminated or modified prospectively with respect to Compensation for which such election remains revocable under this Section 4.2. A Participant whose Compensation Deferral Agreement is cancelled in accordance with Section 4.6 will be required to file a new Compensation Deferral Agreement under this Article IV in order to recommence Deferrals under the Plan.

4.3

Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to one or more Specified Date Accounts and/or to the Retirement/Termination Account. The Committee may, in its discretion, establish a minimum deferral period for Specified Date Accounts (for example, the third Plan Year following the year Compensation subject to the Compensation Deferral Agreement is earned).

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4.4	Deductions from Pay. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.

4.5	Vesting. Participant Deferrals shall be 100% vested at all times.

4.6

Cancellation of Deferrals. The Committee shall cancel a Participant’s Deferrals (i) for the balance of the Plan Year in which an Unforeseeable Emergency payment is made, (ii) if the Participant receives a hardship distribution under the Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six-month anniversary of the hardship distribution falls, and (iii) during periods in which the Participant is unable to perform the duties of his or her position or any substantially similar position due to a mental or physical impairment that can be expected to result in death or last for a continuous period of at least six months.

ARTICLE V

Company Contributions

5.1

Discretionary Company Contributions. The Participating Employer may, from time to time in its sole and absolute discretion, credit Company Contributions to any Participant in any amount determined by the Participating Employer. Such contributions will be credited to a Participant’s Retirement/Termination Account.

5.2

Vesting. Company Contributions described in Section 5.1, above, and the Earnings thereon, shall vest in accordance with the vesting schedule(s) established by the Committee at the time that the Company Contribution is made. If no vesting schedule is established by the Committee with respect to a particular Company Contribution, such Company Contribution shall vest in accordance with Exhibit A. The Participating Employer may, at any time, in its sole discretion, increase a Participant’s vested interest in a Company Contribution. The portion of a Participant’s Accounts that remains unvested upon his or her Separation from Service after the application of the terms of this Section 5.2 shall be forfeited.

ARTICLE VI

Benefits

6.1	Benefits, Generally. A Participant shall be entitled to the following benefits under the Plan:

(a)

Retirement Benefit. Upon the Participant’s Separation from Service due to Retirement, he or she shall be entitled to a Retirement Benefit. The Retirement Benefit shall be equal to the vested portion of the Retirement/Termination Account and the vested portion of any unpaid balances in any Specified Date

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Accounts. The Retirement Benefit shall be based on the value of that Account as of the end of the month in which Separation from Service occurs. Payment of the Retirement Benefit will be made or begin on or after the first day of the month following the month in which Separation from Service occurs, provided, however, that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made or begin on the first day of the seventh month following the month in which such Separation from Service occurs. If the Retirement Benefit is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date the initial installment was made.

(b)

Termination Benefit. Upon the Participant’s Separation from Service for reasons other than death, Disability or Retirement, he or she shall be entitled to a Termination Benefit. The Termination Benefit shall be equal to the vested portion of the Retirement/Termination Account and the vested portion of any unpaid balances in any Specified Date Accounts. The Termination Benefit shall be based on the value of the Retirement/Termination Account as of the end of the month in which Separation from Service occurs. Payment of the Termination Benefit will be made or begin on or after the first day of the month following the month in which Separation from Service occurs, provided, however, that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made or begin on the first day of the seventh month following the month in which such Separation from Service occurs. If the Termination Benefit is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date the initial installment was made.

(c)

Specified Date Benefit. If the Participant has established one or more Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with respect to each such Specified Date Account. The Specified Date Benefit shall be equal to the vested portion of the Specified Date Account, based on the value of that Account as of the end of the month designated by the Participant at the time the Account was established. Payment of the Specified Date Benefit will be made or begin on or after the first day of the month following the designated month.

(d)

Disability Benefit. Upon a determination by the Committee that a Participant is Disabled, he or she shall be entitled to a Disability Benefit. The Disability Benefit shall be equal to the vested portion of the Retirement/Termination Account and the vested portion of any unpaid balances in any Specified Date Accounts. The Disability Benefit shall be based on the value of the Accounts as of the last day of the month in which Disability occurs and will be paid on or after the first day of the following month.

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(e)

Death Benefit. In the event of the Participant’s death, his or her designated Beneficiary(ies) shall be entitled to a Death Benefit. The Death Benefit shall be equal to the vested portion of the Retirement/Termination Account and the vested portion of any unpaid balances in any Specified Date Accounts. The Death Benefit shall be based on the value of the Accounts as of the end of the month in which death occurred, with payment made on or after the first day of the following month.

(f)

Unforeseeable Emergency Payments. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any portion of his or her vested Accounts. Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted first from the vested portion of the Participant's Retirement/Termination Account until depleted and then from the vested Specified Date Accounts, beginning with the Specified Date Account with the latest payment commencement date. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee.

6.2	Form of Payment.

(a)

Retirement Benefit. A Participant who is entitled to receive a Retirement Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects on his or her initial Compensation Deferral Agreement to have such benefit paid in one of the following alternative forms of payment (i) substantially equal annual installments over a period of two to fifteen years, as elected by the Participant; or (ii) a lump sum payment of a percentage of the balance in the Retirement/ Termination Account, with the balance paid in substantially equal annual installments over a period of two to fifteen years, as elected by the Participant.

(b)

Termination Benefit. A Participant who is entitled to receive a Termination Benefit shall receive payment of such benefit in a single lump sum.

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(c)

Specified Date Benefit. The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the Compensation Deferral Agreement with which the account was established to have the Specified Date Account paid in substantially equal annual installments over a period of two to five years, as elected by the Participant.

Notwithstanding any election of a form of payment by the Participant, upon a Separation from Service the unpaid balance of a Specified Date Account shall be paid in a single lump sum if the Participant Separates from Service prior to the date the Specified Date Account has been fully paid.

(d)

Disability Benefit. A Participant who is entitled to receive a Disability Benefit shall receive payment of such benefit in a single lump sum.

(e)

Death Benefit. A Designated Beneficiary who is entitled to receive a Death Benefit shall receive payment of such benefit in a single lump sum.

(f)

Small Account Balances. The Committee may, in its sole discretion which shall be evidenced in writing no later than the date of payment, elect to pay the value of the Participant’s Accounts upon a Separation from Service in a single lump sum if the balance of such Accounts is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), provided the payment represents the complete liquidation of the Participant’s interest in the Plan. In addition, installment payments from any Account will be paid in a single lump sum if the remaining balance falls below $10,000. Any such lump sump payment shall be made only to the extent permitted under Treas. Reg. Section 1.409A-3(j)(4)(v).

(g)

Rules Applicable to Installment Payments. If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the Valuation Date and (b) equals the remaining number of installment payments.

For purposes of Article VII, installment payments will be treated as a single form of payment. If a lump sum equal to less than 100% of the Retirement/Termination Account is paid, the payment commencement date for the installment form of payment will be the first anniversary of the payment of the lump sum.

6.3	Acceleration of or Delay in Payments. The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-

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3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s Accounts be paid to an “alternate payee,” any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum.

ARTICLE VII

Modifications to Payment Schedules

7.1	Participant’s Right to Modify. A Participant may modify any or all of the alternative Payment Schedules with respect to an Account, consistent with the permissible Payment Schedules available under the Plan, provided such modification complies with the requirements of this Article VII.

7.2	Time of Election. The date on which a modification election is submitted to the Committee must be at least twelve months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification.

7.3

Date of Payment under Modified Payment Schedule. Except with respect to modifications that relate to the payment of a Death Benefit or a Disability Benefit, the date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A.

7.4	Effective Date. A modification election submitted in accordance with this Article VII is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.

7.5	Effect on Accounts. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Accounts.

ARTICLE VIII

Valuation of Account Balances; Investments

8.1

Valuation. Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Company Contributions shall be credited to the Retirement/Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee.

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8.2	Earnings Credit. Each Account will be credited with Earnings on each Business Day, based upon the Participant’s investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Article VIII (“investment allocation”).

8.3

Investment Options. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.

8.4

Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Participating Employer or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account Balances.

A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Committee. Allocation among the investment options must be designated in increments of 1%. The Participant’s investment allocation will become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day.

A Participant may change an investment allocation on any Business Day, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with procedures adopted by the Committee. Changes shall become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day, and shall be applied prospectively.

8.5	Unallocated Deferrals and Accounts. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment option, the primary objective of which is the preservation of capital, as determined by the Committee.

ARTICLE IX

Administration

9.1	Plan Administration. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and to utilize its discretion to decide or

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resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Article XII.

9.2

Administration Upon Change in Control. Upon a Change in Control, the Committee, as constituted immediately prior to such Change in Control, shall continue to act as the Committee. The individual who was the Chief Executive Officer of the Company (or if such person is unable or unwilling to act, the next highest ranking officer) prior to the Change in Control shall have the authority (but shall not be obligated) to appoint an independent third party to act as the Committee.

Upon such Change in Control, the Company may not remove the Committee, unless 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the removal and replacement Committee. Notwithstanding the foregoing, neither the Committee nor the officer described above shall have authority to direct investment of trust assets under any rabbi trust described in Section 11.2.

The Participating Employer shall, with respect to the Committee identified under this Section, (i) pay all reasonable expenses and fees of the Committee, (ii) indemnify the Committee (including individuals serving as Committee) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Committee hereunder, except with respect to matters resulting from the Committee’s gross negligence or willful misconduct and (iii) supply full and timely information to the Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Committee may reasonably require.

9.3

Withholding. The Participating Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.

9.4

Indemnification. The Participating Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents (each, an “Indemnified Party”), against all claims, liabilities, fines and penalties, and shall advance to the Indemnified Party all expenses actually and reasonably incurred by or imposed upon the Indemnified Party (including but not limited to reasonable attorney fees), as and when incurred, which arise as a result of the Indemnified Party’s actions or failure to act in connection with the operation and administration of the Plan, to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is

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not paid for by liability insurance purchased or paid for by the Participating Employer (subject to an undertaking from the Indemnified Party to repay such advance if it shall be finally determined by a judicial decision which is not subject to further appeal that the Indemnified Party was not entitled to the reimbursement of such expenses), provided that the Indemnified Party acted in good faith and in a manner he or it reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or its conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Party did not act in good faith and in a manner which he or it reasonably believed to be in or not opposed to the best interests of the Company, or that, with respect to any criminal action or proceeding, the Indemnified Party had reasonable cause to believe that his or its conduct was unlawful. The provisions of this Section 9.4 shall not be deemed exclusive of any other rights of indemnification to which the Indemnified Party may be entitled or which may be granted to the Indemnified Party, and it shall be in addition to any rights of indemnification to which the Indemnified Party may be entitled under any policy of insurance. Notwithstanding the foregoing, the Participating Employer shall not indemnify any Indemnified Party if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Participating Employer consents in writing to such settlement or compromise.

9.5	Delegation of Authority. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company.

9.6

Binding Decisions or Actions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

ARTICLE X

Amendment and Termination

10.1	Amendment and Termination. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article X. Each Participating Employer may also terminate its participation in the Plan.

10.2	Amendments. The Company, by action taken by its Board of Directors, may amend the Plan at any time and for any reason, provided that any such amendment shall not reduce the vested Account Balances of any Participant accrued as of the date of any such

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amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such date) or reduce any rights of a Participant under the Plan or other Plan features with respect to Deferrals made prior to the date of any such amendment or restatement without the consent of the Participant. The Board of Directors of the Company may delegate to the Committee the authority to amend the Plan without the consent of the Board of Directors for the purpose of (i) conforming the Plan to the requirements of law, (ii) facilitating the administration of the Plan, (iii) clarifying provisions based on the Committee’s interpretation of the document and (iv) making such other amendments as the Board of Directors may authorize.

10.3

Termination. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix). If a Participating Employer terminates its participation in the Plan, the benefits of affected Employees shall be paid at the time provided in Article VI.

10.4

Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A, and the Plan and Compensation Deferral Agreements shall be interpreted in accordance with Code Section 409A. Notwithstanding any provision of the Plan to the contrary, the Committee, pursuant to its authority to interpret the Plan, may adopt such amendments to the Plan and the applicable Compensation Deferral Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (i) exempt such Compensation Deferral Agreement from Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Compensation Deferral Agreement, or (ii) comply with the requirements of Code Section 409A and thereby avoid the application of penalty taxes under Code Section 409A.

ARTICLE XI

Informal Funding

11.1

General Assets. Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers, or a trust described in this Article XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Participating Employers. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Participating Employers and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Participating Employer.

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11.2

Rabbi Trust. A Participating Employer may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

If a rabbi trust is in existence upon the occurrence of a “change in control”, as defined in such trust, the Participating Employer shall, upon such change in control, and on each anniversary of the change in control, contribute in cash or liquid securities such amounts as are necessary so that the value of assets after making the contributions exceed the total value of all Account Balances

ARTICLE XII

Claims

12.1

Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee which shall make all determinations concerning such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”).

In General. Notice of a denial of benefits (other than Disability benefits) will be provided within ninety (90) days of the Committee’s receipt of the Claimant's claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial ninety (90) day period. The extension will not be more than ninety (90) days from the end of the initial ninety (90) day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects to make a decision.

Disability Benefits. Notice of denial of Disability benefits will be provided within forty-five (45) days of the Committee’s receipt of the Claimant’s claim for Disability benefits. If the Committee determines that it needs additional time to review the Disability claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial forty-five (45) day period. If the Committee determines that a decision cannot be made within the first extension period due to matters beyond the control of the Committee, the time period for making a determination may be further extended for an additional thirty (30) days. If such an additional extension is necessary, the Committee shall notify the Claimant prior to the expiration of the initial thirty (30) day extension. Any notice of extension shall indicate the circumstances necessitating the extension of time, the date by which the Committee expects to furnish a notice of decision, the

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specific standards on which such entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim and any additional information needed to resolve those issues. A Claimant will be provided a minimum of forty-five (45) days to submit any necessary additional information to the Committee. In the event that a thirty (30) day extension is necessary due to a Claimant’s failure to submit information necessary to decide a claim, the period for furnishing a notice of decision shall be tolled from the date on which the notice of the extension is sent to the Claimant until the earlier of the date the Claimant responds to the request for additional information or the response deadline.

Contents of Notice. If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language. The notice shall (i) cite the pertinent provisions of the Plan document and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review. In the case of a complete or partial denial of a Disability benefit claim, the notice shall provide a statement that the Committee will provide to the Claimant, upon request and free of charge, a copy of any internal rule, guideline, protocol, or other similar criterion that was relied upon in making the decision.

12.2

Appeal of Denied Claims. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written appeal with a committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relevant to the claim to the Appeals Committee. All written comments, documents, records, and other information shall be considered “relevant” if the information (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was relied upon to make the decision, or (iii) demonstrates compliance with administrative processes and safeguards established for making benefit decisions. The Appeals Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim appeal.

(a)

In General. Appeal of a denied benefits claim (other than a Disability benefits claim) must be filed in writing with the Appeals Committee no later than sixty (60) days after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied

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claim within sixty (60) days following receipt of the appeal (or within one hundred and twenty (120) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. The review will take into account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to whether such information was submitted or considered in the initial benefit determination.

(b)

Disability Benefits. Appeal of a denied Disability benefits claim must be filed in writing with the Appeals Committee no later than one hundred eighty (180) days after receipt of the written notification of such claim denial. The review shall be conducted by the Appeals Committee (exclusive of the person who made the initial adverse decision or such person’s subordinate). In reviewing the appeal, the Appeals Committee shall (i) not afford deference to the initial denial of the claim, (ii) consult a medical professional who has appropriate training and experience in the field of medicine relating to the Claimant’s disability and who was neither consulted as part of the initial denial nor is the subordinate of such individual and (iii) identify the medical or vocational experts whose advice was obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decision. The Appeals Committee shall make its decision regarding the merits of the denied claim within forty-five (45) days following receipt of the appeal (or within ninety (90) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. Following its review of any additional information submitted by the Claimant, the Appeals Committee shall render a decision on its review of the denied claim.

(c)

Contents of Notice. If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language.

The decision on review shall set forth (i) the specific reason or reasons for the denial, (ii) specific references to the pertinent Plan provisions on which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, or other

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information relevant (as defined above) to the Claimant’s claim, and (iv) a statement describing any voluntary appeal procedures offered by the plan and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

(d)

For the denial of a Disability benefit, the notice will also include a statement that the Appeals Committee will provide, upon request and free of charge, (i) any internal rule, guideline, protocol or other similar criterion relied upon in making the decision, (ii) any medical opinion relied upon to make the decision and (iii) the required statement under Section 2560.503-1(j)(5)(iii) of the Department of Labor regulations.

12.3

Claims Appeals Upon Change in Control. Upon a Change in Control, the Appeals Committee, as constituted immediately prior to such Change in Control, shall continue to act as the Appeals Committee. Upon such Change in Control, the Company may not remove any member of the Appeals Committee, but may replace resigning members if 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the replacement.

The Appeals Committee shall have the exclusive authority at the appeals stage to interpret the terms of the Plan and resolve appeals under the Claims Procedure.

Each Participating Employer shall, with respect to the Committee identified under this Section, (i) pay its proportionate share of all reasonable expenses and fees of the Appeals Committee, (ii) indemnify the Appeals Committee (including individual committee members) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Appeals Committee hereunder, except with respect to matters resulting from the Appeals Committee’s gross negligence or willful misconduct and (iii) supply full and timely information to the Appeals Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Appeals Committee may reasonably require.

12.4

Legal Action. A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures.

If a Participant or Beneficiary prevails in a legal proceeding brought under the Plan to enforce the rights of such Participant or any other similarly situated Participant or Beneficiary, in whole or in part, the Participating Employer shall reimburse such Participant or Beneficiary for all legal costs, expenses, attorneys’ fees and such other liabilities incurred as a result of such proceedings. If the legal proceeding is brought in connection with a Change in Control, or a “change in control” as defined in a rabbi trust

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described in Section 11.2, the Participant or Beneficiary may file a claim directly with the trustee for reimbursement of such costs, expenses and fees. For purposes of the preceding sentence, the amount of the claim shall be treated as if it were an addition to the Participant’s or Beneficiary’s Account Balance and will be included in determining the Participating Employer’s trust funding obligation under Section 11.2.

12.5	Discretion of Appeals Committee. All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion, and shall be final and conclusive.

12.6	Arbitration.

(a)

Prior to Change in Control. If, prior to a Change in Control, any claim or controversy between a Participating Employer and a Participant or Beneficiary is not resolved through the claims procedure set forth in Article XII, such claim shall be submitted to and resolved exclusively by expedited binding arbitration by a single arbitrator. Arbitration shall be conducted in accordance with the following procedures:

The complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following the giving of such notice, the parties shall meet and attempt in good faith to resolve the matter. In the event the parties are unable to resolve the matter within twenty one (21) days, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within ten (10) Business Days following the giving of the written notice of dispute, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or recognized arbitrator and who, in either event, is experienced in serving as an arbitrator in disputes between employers and employees, which list shall be provided by the main office of either JAMS, the American Arbitration Associate (“AAA”) or the Federal Mediation and Conciliation Service. If, within three Business Days of the parties’ receipt of such list, the parties are unable to agree on an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

Unless the parties agree otherwise, within sixty (60) days of the selection of the arbitrator, a hearing shall be conducted before such arbitrator at a time and a place agreed upon by the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the time and place shall be designated by the arbitrator after consultation with the parties. Within thirty (30) days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator’s award.

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In any arbitration hereunder, the Participating Employer shall pay all administrative fees of the arbitration and all fees of the arbitrator, except that the Participant or Beneficiary may, if he/she/it wishes, pay up to one-half of those amounts. Each party shall pay its own attorneys’ fees, costs, and expenses, unless the arbitrator orders otherwise. The prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation.

The parties shall be entitled to discovery as follows: Each party may take no more than three depositions. The Participating Employer may depose the Participant or Beneficiary plus two other witnesses, and the Participant or Beneficiary may depose the Participating Employer, pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two other witnesses. Each party may make such reasonable document discovery requests as are allowed in the discretion of the arbitrator.

The decision of the arbitrator shall be final, binding, and non-appealable, and may be enforced as a final judgment in any court of competent jurisdiction.

This arbitration provision of the Plan shall extend to claims against any parent, subsidiary, or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, Participant, Beneficiary, or agent of any party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law or under this Plan.

Notwithstanding the foregoing, and unless otherwise agreed between the parties, either party may apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

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Any arbitration hereunder shall be conducted in accordance with the Federal Arbitration Act: provided, however, that, in the event of any inconsistency between the rules and procedures of the Act and the terms of this Plan, the terms of this Plan shall prevail.

If any of the provisions of this Section 12.6(A) are determined to be unlawful or otherwise unenforceable, in the whole part, such determination shall not affect the validity of the remainder of this section and this section shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the provisions of this Section 12.6(A) are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact and treated as determinative to the maximum extent permitted by law.

The parties do not agree to arbitrate any putative class action or any other representative action. The parties agree to arbitrate only the claims(s) of a single Participant or Beneficiary.

(b)

Upon Change in Control. If, upon the occurrence of a Change in Control, any dispute, controversy or claim arises between a Participant or Beneficiary and the Participating Employer out of or relating to or concerning the provisions of the Plan, such dispute, controversy or claim shall be finally settled by a court of competent jurisdiction which, notwithstanding any other provision of the Plan, shall apply a de novo standard of review to any determination made by the Company or its Board of Directors, a Participating Employer, the Committee, or the Appeals Committee.

ARTICLE XIII

General Provisions

13.1

Anti-assignment Rule. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)).

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13.2

No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Participating Employer. The right and power of a Participating Employer to dismiss or discharge an Employee is expressly reserved. The Participating Employers make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan.

13.3

No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee and a Participating Employer. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give an Employee the right to be retained in the service of any Participating Employer or to interfere with the right of any Participating Employer to discipline or discharge the Employee at any time.

13.4

Notice. Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:

ASBURY AUTOMOTIVE GROUP

ATTN: PHIL JOHNSON, VICE PRESIDENT

622 THIRD AVENUE, 37^th FLOOR

NEW YORK, NY 10017

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing or hand-delivered, or sent by mail to the last known address of the Participant.

13.5	Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

13.6

Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

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13.7

Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored.

13.8	Governing Law. To the extent not preempted by ERISA, the laws of the State of Delaware shall govern the construction and administration of the Plan.

IN WITNESS WHEREOF, the undersigned executed this Plan as of the th day of , 2007, to be effective as of the Effective Date.


Asbury Automotive Group, Inc.

By:				(Print Name)

Its:				(Title)

				(Signature)

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Exhibit A

to the

Asbury Automotive

Wealth AccumulationPlan

1.	Vesting. In the absence of a vesting schedule established by the Committee for a particular Discretionary Company Contribution made in accordance with Section 0 of the Plan such Company Contribution shall vest pursuant to the following schedule:


Calendar years since the date of crediting of the Company Contribution	Percent Vested
*(each Company Contribution is treated separately for vesting purposes)*
Less than 3	0	%
3 or more	100	%
Upon Retirement, death, Disability, or Change in Control	100	%

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Amended and Restated 1999 Stock Option Plan

Exhibit 10.1

ASBURY AUTOMOTIVE GROUP, INC.

1999 OPTION PLAN

As Amended and Restated Effective July 25, 2007

The purpose of the Asbury Automotive Group, Inc. 1999 Option Plan (the “Plan”) is to provide designated officers and other key employees of Asbury Automotive Group, Inc., a Delaware corporation (the “Company”), and its subsidiaries with the opportunity to receive grants of options to purchase common shares of the Company, $0.01 par value (“Shares”). The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, attract talented management personnel and align the economic interests of the participants with those of the owners.

1. Administration. (a) Committee. The Plan shall be administered and interpreted by a committee of two or more individuals (the “Committee”) appointed by the Board of Directors of the Company (the “Board”); however, the Board itself may ratify or approve any grants as the Board deems appropriate.

(b) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any previously issued grant and (v) deal with any other matters arising under the Plan.

(c) Committee Determination. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any grants awarded hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

2. Grants. Awards under the Plan shall consist of grants (each, a “Grant”) of nonqualified options (the “Options”), as described in Section 5. All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument or an amendment to the grant instrument (the “Grant Instrument”). The Committee shall approve the form and provisions of each Grant Instrument. Grants need not be uniform as among the Grantees (as defined below).

3. Shares Subject to the Plan. (a) Nature of Options Granted. Each Option granted under the Plan shall provide the Grantee solely the right to acquire Shares in exchange for a dollar amount (the “Exercise Price”) specified in such Option.

(b) Sources of Shares Deliverable Under Options. Any Shares delivered pursuant to an Option may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

(c) Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Option or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(d) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Option, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

4. Eligibility for Participation. (a) Eligible Persons. All officers and other key employees of the Company and its Subsidiaries (“Employees”) shall be eligible to participate in the Plan. Effective March 19, 2002, no new Grants will be made under the Plan, and eligible participants in the Plan shall consist of those persons who hold, as of March 19, 2002, outstanding Options granted under the Plan.

(b) Selection of Grantees. The Committee shall select the Employees who receive Grants under this Plan (the “Grantees”).

5. Granting of Options. (a) Amount of Exercise Price. The Committee shall determine the Exercise Price with respect to each Option at the time of grant, which, except as the Committee may otherwise provide, shall not be less than the Fair Market Value (as defined below) of the Shares in respect of which the Option is granted. Subject to adjustment as provided in Section 6 of this Plan, the aggregate number of Shares for which Options may be issued under this Plan shall not, in the aggregate, exceed 1,072,738 Shares.

(b) Type of Option. Grants shall be “nonqualified options” that are not intended to satisfy the provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and shall be made in accordance with the terms and conditions set forth herein.

(c) Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed 10 years from the date of Grant.

(d) Exercisability of Options; Conditions. Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the vesting

or exercisability of any or all outstanding Options at any time for any reason. Unless the Committee provides otherwise in the Grant Instrument, only Options that are vested may be exercised and Options shall vest, subject to the continuous employment of the Grantee by the Company, at the rate of 33-1/3% for each year the Grantee is employed by, or rendering services to, the Company following the date of Grant; provided that, unless the Committee provides otherwise in the Grant Instrument, no Option shall vest until the Grantee has been employed by, or rendering services to, the Company for a period of one year following the date of Grant.

(e) Termination of Employment, Disability or Death. (i) Except as provided below or as otherwise provided by the Committee in the Grant Instrument, an Option may only be exercised while the Grantee is employed by, or providing services to, the Company as an Employee, consultant or member of the Board. Unless the Committee provides otherwise in the Grant Instrument, in the event that a Grantee ceases to be employed by, or provide services to, the Company for any reason other than resignation (except resignation in connection with retirement) or termination for Cause (as defined below), any Option which is otherwise vested and exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be employed by, or provide services to, the Company (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise vested and exercisable as of the date on which the Grantee ceases to be employed by, or provide services to, the Company shall terminate as of such date.

(ii) Except as otherwise provided by the Committee, in the event that the Grantee ceases to be employed by, or provide services to, the Company on account of a resignation (except resignation in connection with retirement) or a termination for Cause by the Company, any Option held by the Grantee (whether or not then vested and exercisable) shall terminate and be canceled as of the date the Grantee ceases to be employed by, or provide services to, the Company. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise vested and exercisable as of the date on which the Grantee ceases to be employed by, or provide services to, the Company shall terminate as of such date.

(iii) For purposes of Section 5(d), Section 5(e) and Section 7:

(A) The term “Company” shall mean the Company and its Affiliates.

(B) “Employed by, or provide services to, the Company” shall mean employment or service as an employee, consultant or Board member (so that, for purposes of exercising Options, a Grantee shall not be considered to have terminated employment or service until the Grantee ceases to be an employee, consultant or Board member), unless the Committee determines otherwise.

(C) “Cause” shall mean, except to the extent specified otherwise by the Committee in the Grant Instrument, a finding by the Committee that the Grantee (i) has breached his or her employment or service contract with the Company, (ii) has engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or

proven dishonesty in the course of his or her employment or service, (iii) has disclosed trade secrets or confidential information of the Company to persons not entitled to receive such information or (iv) has engaged in such other behavior detrimental to the interests of the Company as the Committee determines.

(f) Exercise of Options. Except as otherwise provided by the Committee in the Grant Instrument, a Grantee may exercise an Option that has become vested and exercisable, in whole or in part, by delivering a notice of exercise to the Company with payment of the Exercise Price (plus the amount of any withholding tax due at the time of exercise after the application of Section 7 hereof) and taking such other action as the Committee may request or approve.

(g) Payment. (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or (A) by exchanging Shares owned by the Grantee (which are not the subject of any pledge or other security interest and which have been owned by such Grantee for at least six (6) months), or (B) if there shall be a public market for the Shares at such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price, or by a combination of the foregoing; provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price.

(ii) Wherever in this Plan or any Grant Instrument a Grantee is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Grantee may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

(h) Adjustments Upon Conversion. As of March 19, 2002, no new Grants shall be made under the Plan. The terms of Options granted under the Plan and outstanding on March 19, 2002, shall continue, with adjustments being made to such Options as appropriate as a result of the conversion of membership interests in Asbury Automotive Group, L.L.C. into Shares in connection with the Company’s initial public offering.

6. Adjustments. (a) In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event, other than an Equity Restructuring (as defined below), affects the Shares such that an adjustment is determined by the Committee in its discretion to be appropriate or desirable in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable or desirable, adjust any or all of (i) the number of Shares or other securities of the Company (or

number and kind of other securities or property) with respect to which Options may be granted, including the maximum number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Options may be granted to any Grantee in any fiscal year of the Company; (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Options and (iii) the exercise price with respect to any Option or, if deemed appropriate or desirable, make provision for a cash payment to the holder of an outstanding Option in consideration for the cancellation of such Option in an amount equal to the excess, if any, of the Fair Market Value of the Shares subject to the Options over the aggregate exercise price of such Option.

(b) Amendments to Options. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Option theretofore granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Grantee or any holder or beneficiary of any Option theretofore granted shall not to that extent be effective without the consent of the affected Grantee holder or beneficiary.

(c) Adjustment of Options Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Options in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 6(a) hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

(d) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 6(a)-(c) :

(A) The number and type of securities or other property subject to each outstanding Grant and the exercise price or grant price thereof, if applicable, shall be equitably adjusted. The adjustments provided under this Section 6(d) shall be nondiscretionary and shall be final and binding on the affected Grantee and the Company.

(B) The Committee shall make such equitable adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of Shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 5(a)).

(e) For purposes of this Section 6, the term “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the share price thereof and causes a change in the per share value of the Shares underlying outstanding Grants.

7. Withholding of Taxes. Each Grant (and each issuance of Shares pursuant to the exercise of any Option) shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company shall have the right to deduct from other wages paid to the Grantee any federal, state or local taxes required by law to be withheld with respect to such Grants, or the exercise thereof, or require that the Grantee or other person receiving or exercising Grants pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Grants or exercise and the Company may defer issuance of Shares until such requirements are satisfied.

8. Nontransferability of Grants. (a) Except as provided below, only the Grantee may exercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer those rights except by will or by the laws of descent and distribution. When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee (“Successor Grantee”) may exercise such rights. A Successor Grantee must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

(b) If any transfer of all or any portion of an Option or of any beneficial interest therein, upon default, foreclosure, forfeit, bankruptcy (voluntary or involuntary), court order, levy of attachment, execution or otherwise than voluntarily (an “Involuntary Transfer”) or a transfer in violation of this Plan or the applicable Grant Instrument has occurred and not been cured within 30 days after written notice has been given to the person transferring such Option (the “Transferor”) or to the person to whom or to which such Option is transferred (the “Transferee”), the Company shall have the right to terminate such Option without consideration.

9. Requirements for Issuance of Shares. The Committee may refuse to issue or transfer any Shares or other consideration under an Option if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any payment tendered to the Company by a Grantee, other holder or beneficiary in connection with the exercise of such Option shall be promptly refunded to the relevant Grantee, holder or beneficiary. Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal and any other applicable securities laws.

10. Change of Control of the Company.

(a) Definition. “Change of Control” shall (i) have the meaning set forth in the Grant Instrument, or (ii) if there is no definition set forth in the Grant Instrument, mean an event or series of events, not including any events occurring prior to or in connection with an initial public offering of Shares (including the occurrence of such initial public offering), by which:

(A) during any period of 12 consecutive calendar months, individuals whose appointment or election to the Board was not endorsed by a majority of the Board before the date of the appointment or election shall cease to constitute a majority of the Board;

(B) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a “Reorganization”) or sale or other disposition of all or substantially all of the assets of the Company to an entity that is not an affiliate of the Company (a “Sale”), that in each case requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization, whether for such Reorganization or Sale (or the issuance of securities of the Company in such Reorganization or Sale), unless immediately following such Reorganization or Sale 50% or more of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of (i) the entity resulting from such Reorganization, or the entity which has acquired all or substantially all of the assets of the Company (the “Surviving Entity”), or (ii) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of 50% or more of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of the Surviving Entity (the “Parent Entity”), is represented by the Company’s outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”) that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization or Sale;

(C) any “person” (as such term is defined in Section 13(d) of the Exchange Act (or any successor section thereto)), corporation or other entity (other than (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iii) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Shares), becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act (or any successor rule thereto)), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then-outstanding securities.

(b) Notice and Acceleration. Unless otherwise set forth in the Grant Instrument, upon a Change of Control (i) the Company shall provide each Grantee with outstanding Grants written notice of such Change of Control and (ii) all outstanding Options shall automatically accelerate and become fully exercisable unless otherwise determined by the Committee.

(c) Assumption of Grants. In the event of (i) a merger of the Company with or into another corporation, (ii) a merger of any Subsidiary with or into another corporation that requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization, or (iii) the sale or disposition of substantially all of the assets of the Company, each outstanding Option shall either continue in effect, be assumed or an equivalent option substituted therefor by the successor corporation or a “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) of the successor

corporation. In the event that the Option does not continue in effect or the successor corporation refuses to assume or substitute for the Option, the Grantee shall fully vest in and have the right to exercise the Option as to all Shares subject to the Option, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of continuation, assumption or substitution as set forth herein, the Company shall notify the Grantee in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, or such shorter period as the Committee may determine to be reasonable, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale or disposition of assets, the Option confers the right to purchase or receive, for each Share subject to the Option immediately prior to the merger or sale or disposition of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale or disposition of assets by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale or disposition of assets is not solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation”, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the Option, to be solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation” equal in fair market value to the per share consideration received by holders of Shares in the merger or sale or disposition of assets.

11. Amendment and Termination of the Plan. (a) Amendment. The Board may amend or terminate the Plan at any time; provided that no such amendment or termination shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan.

(b) Termination of Plan. The Plan shall terminate on December 31, 2008, unless the Plan is terminated earlier by the Board or is extended by the Board.

(c) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended (i) by the Company as provided hereunder or (ii) by agreement of the Company and the Grantee consistent with the Plan.

(d) Governing Document. This Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend this Plan in any manner, except for termination or amendment pursuant to Section 11 hereof. This Plan shall be binding upon and enforceable against the Company and its successors and assigns.

12. Funding of the Plan. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Grants.

13. Rights of Participants. Nothing in this Plan shall entitle any Employee or other person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Company or any other employment rights. No Grantee shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares.

14. Headings. Section headings are for reference only. In the event of a conflict between a heading and the content of a Section, the content of the Section shall control.

15. Effective Date of the Plan. The amended and restated Plan shall be effective July 25, 2007.

16. Miscellaneous. (a) Compliance with Law. The Plan, the exercise of Options and the obligations of the Company to issue Shares under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required, including national or foreign securities exchanges. The Committee may revoke any Grant if it is contrary to law, including the federal securities laws and any applicable state or foreign securities laws or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section.

(b) Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THE PLAN AND GRANT INSTRUMENTS ISSUED UNDER THE PLAN SHALL BE GOVERNED AND CONSTRUED BY AND DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

(c) Indemnification. Each person who is or shall have been a member of the Board or the Committee shall be indemnified and held harmless by the Company to the fullest extent permitted by law against and from any loss, cost, liability or expense (including any related attorney’s fees and advances thereof) in connection with, based upon or arising or resulting from any claim, action, suit or proceeding to which such person may be made a party or in which such person may be involved by reason of any action taken or failure to act under or in connection with the Plan or any Grant Instrument and from and against any and all amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such person in satisfaction of any judgment in any such action, suit or proceeding against such person, provided that he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such persons may be entitled under by contract, as a matter of law or otherwise.

(d) No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees in cash or property, in a manner which is not expressly authorized under the Plan.

(e) No Impact on Benefits. Options granted under the Plan are not compensation for purposes of calculating an employee’s rights under any employee benefit plan, except to the extent provided in any such plan.

(f) Freedom of Action. Subject to Section 11, nothing in the Plan or any Grant Instrument shall be construed as limiting or preventing the Company or any of its Affiliates from taking any action with respect to the operation or conduct of its or their business that it deems appropriate or in its best interest.

(g) No Right to Particular Assets. Nothing contained in this Plan and no action taken pursuant to this Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company and its Affiliates, on the one hand, and any Grantee or executor, administrator or other personal representative or designated beneficiary of such Grantee, on the other hand, or any other persons. Any reserves that may be established by the Company or its Affiliates in connection with this Plan shall continue to be held as part of the general funds of the Company or such Affiliate, and no individual or entity other than the Company or such Affiliate shall have any interest in such funds until paid to a Grantee. To the extent that any Grantee or such Grantee’s executor, administrator or other personal representative, as the case may be, acquires a right to receive any payment from the Company or any of its Affiliates pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or such Affiliate.

(h) Notices. Each Grantee shall be responsible for furnishing the Committee with his or her current and proper address for the mailing of notices and delivery of agreements. Any notices required or permitted to be given shall be deemed given if directed to the person to whom addressed at such address and mailed by regular United States mail, first-class and prepaid. If any item mailed to such address is returned as undeliverable to the addressee, mailing will be suspended until the Grantee furnishes the proper address.

(i) Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included.

(j) Incapacity. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receiving such benefit shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Board, the Committee, the Company, its Affiliates and other parties with respect thereto.

(k) Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

“Affiliate” shall mean, with respect to any person, any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.

“Fair Market Value” shall mean, (i) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (ii) with respect to the Shares, as of any date, (A) the mean between the high and low sales prices of the Shares as reported on the composite tape for securities traded on the New York Stock Exchange for such date (or if not then trading on the New York Stock Exchange, the mean between the high and low sales price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (B) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.

“Subsidiary” shall mean (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.

(l) Section 409A. To the extent applicable, the Plan and Grant Instruments shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Grant may be subject to Section 409A of the Code, the Committee may adopt such amendments to the Plan and the applicable Grant Instrument or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (i) exempt the Grant from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Grant, or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

Amended and Restated 2002 Equity Incentive Plan

Exhibit 10.2

2002 Equity Incentive Plan

Asbury Automotive Group, Inc.

As Amended and Restated Effective July 25, 2007

Section 1. Purpose. The purposes of this Asbury Automotive Group, Inc. 2002 Equity Incentive Plan are to promote the interests of Asbury Automotive Group, Inc. and its shareholders by (i) attracting and retaining exceptional directors, officers and other key employees (including prospective officers and key employees) of the Company and its Subsidiaries and (ii) enabling such individuals to participate in the long-term growth and financial success of the Company.

Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

“Affiliate” shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.

“Award” shall mean any award that is permitted under Section 6 and granted under the Plan.

“Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, require execution or acknowledgment by a Participant.

“Board” shall mean the Board of Directors of the Company.

“Change of Control” shall (i) have the meaning set forth in an Award Agreement, or (ii) if there is no definition set forth in an Award Agreement, mean an event or series of events, not including any events occurring prior to or in connection with an initial public offering of Shares (including the occurrence of such initial public offering), by which:

(A)

during any period of 12 consecutive calendar months, individuals whose appointment or election to the Board was not endorsed by a majority of the Board before the date of the appointment or election shall cease to constitute a majority of the Board;

(B)

the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a “Reorganization”) or sale or

other disposition of all or substantially all of the assets of the Company to an entity that is not an affiliate of the Company (a “Sale”), that in each case requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization, whether for such Reorganization or Sale (or the issuance of securities of the Company in such Reorganization or Sale), unless immediately following such Reorganization or Sale 50% or more of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of (i) the entity resulting from such Reorganization, or the entity which has acquired all or substantially all of the assets of the Company (the “Surviving Entity”), or (ii) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of 50% or more of the total voting power (in respect of the election of directors, or similar officials in the case of an entity other than a corporation) of the Surviving Entity (the “Parent Entity”), is represented by the Company’s outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”) that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization or Sale;

(C)

any “person” (as such term is defined in Section 13(d) of the Exchange Act (or any successor section thereto)), corporation or other entity (other than (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate, or (iii) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Shares), becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act (or any successor rule thereto)), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then-outstanding securities.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean the compensation committee of the Board, or such other committee of the Board as may be designated by the Board to administer the Plan.

“Company” shall mean Asbury Automotive Group, Inc., together with any successor thereto.

“Deferred Share Unit” shall mean a deferred share unit Award granted under the Plan, which represents an unfunded and unsecured promise to deliver Shares in accordance with the terms of the applicable Award Agreement.

“Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the share price thereof and causes a change in the per share value of the Shares underlying outstanding Awards.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exercise Price” shall mean (i) in the case of Options, the price specified in the applicable Award Agreement as the price-per-Share at which such Share can be purchased pursuant to the Option or (ii) in the case of SARs, the price specified in the applicable Award Agreement as the reference price-per-Share used to calculate the amount payable to the Participant.

“Fair Market Value” shall mean, (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (B) with respect to the Shares, as of any date, (i) the mean between the high and low sales prices of the Shares as reported on the composite tape for securities traded on the New York Stock Exchange for such date (or if not then trading on the New York Stock Exchange, the mean between the high and low sales price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (ii) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.

“Incentive Stock Option” shall mean a right to purchase Shares from the Company that (i) is granted under Section 6 of the Plan and (ii) is intended to qualify for special Federal income tax treatment pursuant to Section 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement.

“Independent Director” shall mean a member of the Board who is neither (i) an employee of the Company nor (ii) an employee of any of the Company’s Affiliates.

“Nonqualified Stock Option” shall mean a right to purchase Shares from the Company that (i) is granted under Section 6 of the Plan and (ii) is not an Incentive Stock Option.

“Option” shall mean an Incentive Stock Option or a Nonqualified Stock Option or both, as the context requires.

“Participant” shall mean any director, officer or other key employee (including any prospective officer or key employee) of the Company or its Subsidiaries eligible for an Award under Section 5 of the Plan and selected by the Committee to receive an Award under the Plan.

“Performance Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section 6(g) of the Plan.

“Performance Criteria” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan.

“Performance Formula” shall mean, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

“Performance Goal” shall mean, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.

“Performance Period” shall mean the one or more periods of time as the Committee may select over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

“Performance Share Unit” shall mean a performance share unit Award granted under the Plan, which represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property upon the attainment of Performance Goals in accordance with the terms of the applicable Award Agreement.

“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.

“Plan” shall mean this Asbury Automotive Group, Inc. 2002 Equity Incentive Plan.

“Repricing” shall mean (i) lowering the Exercise Price of an Option or SAR after it has been granted and (ii) any other action with respect to an Option or an SAR that is treated as a repricing under (A) generally accepted accounting principles or (B) any applicable stock exchange rules.

“Restricted Share” shall mean a Share delivered under the Plan that is subject to certain transfer restrictions, forfeiture provisions and/or other terms and conditions specified herein and in the applicable Award Agreement.

“Restricted Share Unit” shall mean a restricted share unit Award granted under the Plan, which represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property in accordance with the terms of the applicable Award Agreement.

“Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

“SAR” shall mean a stock appreciation right granted under the Plan, which represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property equal in value to the excess, if any, of the Fair Market Value per Share over the Exercise Price per Share of the SAR, subject to the terms of the applicable Award Agreement.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall include the staff thereof.

“Shares” shall mean the common shares of the Company, $0.01 par value, or such other securities of the Company (i) into which such common shares shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b).

“Substitute Awards” shall have the meaning specified in Section 4(c).

Section 3. Administration.

(a) The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant and designate those Awards which shall constitute Performance Compensation Awards, (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Awards; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award (subject to Section 162(m) of the Code with respect to Performance Compensation Awards) shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret, administer, reconcile any inconsistency, correct any default and/or supply any omission in the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix) establish and administer Performance Goals and certify whether, and to what extent, they have been attained; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

(b) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any shareholder.

(c) No member of the Board, the Committee or any employee of the Company (each such person, a “Covered Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder. Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once

the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Restated Certificate of Incorporation or Restated Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.

(d) With respect to any Performance Compensation Award granted under the Plan, the Plan shall be interpreted and construed in accordance with Section 162(m) of the Code.

(e) Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Independent Directors or administer the Plan with respect to such Awards. In any such case, the Board shall have all of the authority and responsibility granted to the Committee herein.

Section 4. Shares Available for Awards.

(a) Shares Available. Subject to adjustment as provided in Section 4(b), (i) the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan shall be 4,750,000; (ii) the maximum number of Shares with respect to which Options and SARs may be granted to any Participant in any fiscal year of the Company shall be 350,000; and (iii) the maximum number of Shares with respect to which all other Awards (i.e., Awards other than Options and SARs) may be granted to any Participant in any fiscal year of the Company shall be 175,000. If, after the effective date of the Plan, any Award granted under the Plan is forfeited, or otherwise expires, terminates or is canceled without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or canceled Award shall again become available to be delivered pursuant to Awards under the Plan.

(b) Adjustments.

(i) In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event, other than an Equity Restructuring, affects the Shares such that an adjustment is determined by the Committee

in its discretion to be appropriate or desirable, then the Committee shall, in such manner as it may deem equitable or desirable, adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, including the maximum number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which (A) Options and SARs may be granted to any Participant in any fiscal year of the Company, (B) all other Awards (i.e., Awards other than Options and SARs) may be granted to any Participant in any fiscal year of the Company and (C) Performance Compensation Awards may be granted to any Participant in any fiscal year of the Company and (ii) the terms of any outstanding Award, including (A) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (B) the Exercise Price with respect to any Award or, if deemed appropriate or desirable, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancellation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR (it being understood that, in such event, any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR may be canceled and terminated without any payment or consideration therefor).

(ii) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Section 4(b)(i) or Section 7(c) :

(A) The number and type of securities or other property subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted. The adjustments provided under this Section 4(b)(ii) shall be nondiscretionary and shall be final and binding on the affected Participant and the Company.

(c) Substitute Awards. Awards may, in the discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares available for Awards under the Plan; provided, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by the Company or any of its Subsidiaries or Affiliates through a merger or acquisition shall not be counted against the aggregate number of Shares available for Awards under the Plan.

(d) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

Section 5. Eligibility. Any director, officer or other key employee (including any prospective officer or key employee) of the Company or any of its Subsidiaries (including any prospective officer or key employee) shall be eligible to be designated a Participant.

Section 6. Awards.

(a) Types of Awards. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), Awards may be made under the Plan in the form of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) Restricted Share Units, (v) Deferred Share Units, (vi) Performance Share Units and (vii) other equity-based or equity-related Awards that the Committee determines are consistent with the purpose of the Plan and the interests of the Company. Awards may be granted in tandem with other Awards. No Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is not eligible to receive an Incentive Stock Option under the Code.

(b) Options.

(i) Grant. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), the Committee shall have sole and complete authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, whether the Option will be an Incentive Stock Option or a Nonqualified Stock Option, and the conditions and limitations applicable to the exercise of the Option. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code and any regulations related thereto, as may be amended from time to time. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock Options.

(ii) Exercise Price. Except as otherwise established by the Committee at the time an Option is granted and set forth in the applicable Award Agreement, the Exercise

Price of each Share covered by an Option shall be the Fair Market Value of such Share (determined as of the date the Option is granted); provided, however, that (A) except as otherwise established by the Committee at the time an Option is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by an Option which is granted effective as of the Company’s initial public offering of Shares shall be the initial public offering price per Share and (B) the Exercise Price shall not be less than the Fair Market Value of a Share (determined as of the date the Option is granted). Options are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code. Repricing of Options granted under the Plan shall not be permitted without prior shareholder approval, and any action that would be deemed to result in a Repricing of an Option shall be deemed null and void if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.

(iii) Exercise. Each Option shall be vested and exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement or thereafter. Except as otherwise specified by the Committee in the Award Agreement, Options shall become vested and exercisable with respect to one-third of the Shares subject to such Options on each of the first three anniversaries of the date of grant. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of Federal or state securities laws, as it may deem necessary or advisable.

(iv) Payment.

(A) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate Exercise Price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the Participant (which are not the subject of any pledge or other security interest and which have been owned by such Participant for at least 6 months), or (y) if there shall be a public market for the Shares at such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate Exercise Price, or by a combination of the foregoing; provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate Exercise Price.

(B) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the Exercise Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

(v) Expiration. Except as otherwise set forth in the applicable Award Agreement, each Option shall expire immediately, without any payment, upon the earlier of (A) the tenth anniversary of the date the Option is granted, or (B) the date the Participant who is holding the Option ceases to be employed by the Company or one of its Subsidiaries. In no event may an Option be exercisable after the tenth anniversary of the date the Option is granted.

(i) Grant. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), the Committee shall have sole and complete authority to determine the Participants to whom SARs shall be granted, the number of Shares to be covered by each SAR Award, the Exercise Price thereof and the conditions and limitations applicable to the exercise thereof. SARs may be granted in tandem with another Award, in addition to another Award or freestanding and unrelated to another Award. SARs granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later time.

(ii) Exercise Price. Except as otherwise established by the Committee at the time an SAR is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by an SAR shall be the Fair Market Value of such Share (determined as of the date the SAR is granted); provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share (determined as of the date the SAR is granted). SARs are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code. Repricing of SARs granted under the Plan shall not be permitted without prior shareholder approval, and any action that would be deemed to result in a Repricing of an SAR shall be deemed null and void if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.

(iii) Exercise and Payment. An SAR shall entitle the Participant to receive an amount equal to the excess, if any, of the Fair Market Value of a Share on the date of exercise of the SAR over the Exercise Price thereof. The Committee shall determine, in its sole discretion, whether an SAR shall be settled in cash, Shares, other securities, other Awards or other property, or a combination of any of the foregoing.

(iv) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at or after the grant of an SAR, the term, methods of exercise, methods and form of settlement, and any other terms and conditions of any SAR. Any such determination by the Committee may be changed by the Committee from time to time and may govern the exercise of SARs granted or exercised thereafter. The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall deem appropriate or desirable.

(d) Restricted Shares and Restricted Share Units.

(i) Grant. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), the Committee shall have sole and complete authority to determine the Participants to whom Restricted Shares and Restricted Share Units shall be granted, the number of Restricted Shares and Restricted Share Units to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Shares and Restricted Share Units may be forfeited to the Company, and the other terms and conditions of such Awards.

(ii) Transfer Restrictions. Restricted Shares and Restricted Share Units may not be sold, assigned, transferred, pledged or otherwise encumbered except, in the case of Restricted Shares, as provided in the Plan or the applicable Award Agreement. Certificates issued in respect of Restricted Shares shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company or such other custodian as may be designated by the Committee or the Company, and shall be held by the Company or other custodian, as applicable, until such time as the restrictions applicable to such Restricted Shares lapse. Upon the lapse of the restrictions applicable to such Restricted Shares, the Company or other custodian, as applicable, shall deliver such certificates to the Participant or the Participant’s legal representative.

(iii) Payment. Each Restricted Share Unit shall have a value equal to the Fair Market Value of a Share. Restricted Share Units shall be paid in cash, Shares, other securities, other Awards or other property, as determined in the sole discretion of the Committee, upon the lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement, but in any event within the period required by Section 409A of the Code such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury regulations.

(iv) Dividends. Dividends paid on any Restricted Shares may be paid directly to the Participant, withheld by the Company subject to vesting of the Restricted Shares pursuant to the terms of the applicable Award Agreement, or may be reinvested in additional Restricted Shares or in additional Restricted Share Units, as determined by the Committee in its sole discretion.

(e) Other Stock-Based Awards. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), the Committee shall have the sole and complete authority to grant to Participants other equity-based or equity-related Awards (including Deferred Share Units and Performance Share Units) in such amounts and subject to such terms and conditions as the Committee shall determine; provided that any such Awards must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law.

(f) Dividend Equivalents. Subject to the provisions of the Plan (including, without limitation, Section 9(q)), in the sole and complete discretion of the Committee,

an Award, other than an Option or SAR, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole discretion, including, without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award, or reinvestment in additional Shares, Restricted Shares or other Awards

(g) Performance Compensation Awards.

(i) General. The Committee shall have the authority, at the time of grant of any Award, to designate such Award (other than Options and SARs) as a Performance Compensation Award in order to qualify such Award as “qualified performance-based compensation” under Section 162(m) of the Code. Options and SARs granted under the Plan shall not be included among Awards that are designated as Performance Compensation Awards under this Section 6(g).

(ii) Eligibility. The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 6(g). Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

(iii) Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply to the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and the Performance Formula. Within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.

(iv) Performance Criteria. Notwithstanding the foregoing, the Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and shall be limited to the following: (1) net income before or after taxes, (2) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization), (3) operating income, (4) earnings per share, (5) return on shareholders’ equity, (6) return on investment, (7) return on assets, (8) level or amount of acquisitions, (9) share price, (10) profitability/profit margins, (11) market share, (12) revenues or sales (based on units and/or dollars), (13) costs, (14) cash flow, (15) working capital, (16) customer satisfaction and (17) employee satisfaction. The Performance Criteria may be applied on an absolute basis and/or be relative to one or more peer companies or indices or any combination thereof. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of the applicable Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period.

(v) Performance Goals. The Committee is authorized at any time during the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of such authority after such 90-day period (or such shorter period, if applicable) would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code (1) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company, or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal) or (2) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or the financial statements of the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions.

(vi) Payment of Performance Compensation Awards.

(A) Condition to Receipt of Payment. A Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period. Notwithstanding the foregoing, in the discretion of the Committee, Performance Compensation Awards may be paid to Participants who have retired or whose employment has terminated after the beginning of the Performance Period for which a Performance Compensation Award is made, or to the designee or estate of a Participant

who died prior to the last day of a Performance Period, but not unless and until the Committee has certified attainment of the relevant Performance Goal(s) in accordance with Section 6(g)(vi)(C).

(B) Limitation. A Participant shall be eligible to receive payments in respect of a Performance Compensation Award only to the extent that (1) the Performance Goal(s) for such period are achieved and certified by the Committee in accordance with Section 6(g)(vi)(C) and (2) the Performance Formula as applied against such Performance Goal(s) determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period.

(C) Certification. Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply negative discretion as authorized by Section 6(g).

(D) Negative Discretion. In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may, in it sole judgment, reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period.

(E) Timing of Award Payments. The Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by Section 6(g), but in any event within the period required by Section 409A of the Code such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury regulations, unless the Committee shall determine that any Performance Compensation Award shall be deferred.

(F) Maximum Award Payable. Notwithstanding any provision contained in this Plan to the contrary, the maximum Performance Compensation Award that may be granted to any one Participant under the Plan in any fiscal year of the Company is 175,000 Shares or, in the event the Performance Compensation Award is paid in cash, other securities, other Awards or other property, the equivalent cash value of 175,000 Shares on the last day of the Performance Period to which such Award relates, in each case subject to adjustment as provided in Section 4(b). Furthermore, any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase in a manner prohibited by Section 162(m) of the Code.

(G) Discretion. In no event shall any discretionary authority granted to the Committee by the Plan be used to (x) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals

for such Performance Period have not been attained, (y) increase a Performance Compensation Award for any Participant at any time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed under Section 162(m)) or (z) increase a Performance Compensation Award above the maximum amount payable under Sections 4(a) or 6(g) of the Plan.

Section 7. Amendment and Termination.

(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan; and provided further that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Option theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary.

(b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary.

(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof or the occurrence of a Change of Control, but excluding an Equity Restructuring) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole discretion, determines that such adjustments are appropriate or desirable, including, without limitation, providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event and (ii) if deemed appropriate or desirable by the Committee, in its sole discretion, by providing for a cash payment to the holder of an Award in consideration for the cancellation of such Award, including, in the case of an Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancelation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to the Option or SAR over the aggregate Exercise Price of such Option or SAR (it being understood that, in such event, any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair

Market Value of a Share subject to such Option or SAR may be canceled and terminated without any payment or consideration therefor); provided, however, that no adjustment pursuant to this Section 7(c) shall be authorized to the extent that such authority or adjustment would cause an Award designated by the Committee as a Performance Compensation Award under Section 6(g) of the Plan to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.

In the event of (i) a merger of the Company with or into another corporation, (ii) a merger of any Subsidiary with or into another corporation that requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization, or (iii) the sale or disposition of substantially all of the assets of the Company, each outstanding Option shall either continue in effect, be assumed or an equivalent option substituted therefor by the successor corporation or a “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) of the successor corporation. In the event that the Option does not continue in effect or the successor corporation refuses to assume or substitute for the Option, the Participant shall fully vest in and have the right to exercise the Option as to all Shares subject to the Option, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of continuation, assumption or substitution as set forth herein, the Company shall notify the Participant in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, or such shorter period as the Committee may determine to be reasonable, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale or disposition of assets, the option confers the right to purchase or receive, for each Share subject to the Option immediately prior to the merger or sale or disposition of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale or disposition of assets by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale or disposition of assets is not solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation”, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the Option, to be solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation” equal in fair market value to the per share consideration received by holders of Shares in the merger or sale or disposition of assets.

Section 8. Change of Control. Unless otherwise provided in the applicable Award Agreement, in the event of a Change of Control after the date of the adoption of this Plan, (a) any outstanding Options and SARs then held by Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may be, as of immediately prior to such Change of Control and (b) all other outstanding Awards (i.e., other than Options and SARs) then held by

Participants that are unexercisable, unvested or still subject to restrictions, forfeiture or satisfaction of Performance Goals, shall automatically be deemed exercisable or vested, all restrictions and forfeiture provisions related thereto shall lapse, and all Performance Goals shall be deemed to have been satisfied at the target level, as the case may be, as of immediately prior to such Change of Control.

Section 9. General Provisions.

(a) Nontransferability. Except as otherwise specified in the applicable Award Agreement, each Award (and any rights and obligations thereunder) shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative, and no Award (or any rights and obligations thereunder) may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. All terms and conditions of the Plan and all Award Agreements shall be binding upon any permitted successors and assigns.

(b) No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

(c) Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(d) Withholding.

(i) A Participant may be required to pay to the Company or any Affiliate and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.

(ii) Without limiting the generality of clause (i) above, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least six months) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the Option a number of Shares with a Fair Market Value equal to such withholding liability.

(e) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including but not limited to the effect on such Award of the death, disability or termination of employment or service of a Participant, and the effect, if any, of such other events as may be determined by the Committee.

(f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options restricted stock, shares and other types of Awards provided for hereunder (subject to shareholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.

(g) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any Affiliate, nor shall it be construed as giving a Participant any rights to continued service on the Board. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

(h) No Rights as Shareholder. No Participant or holder or beneficiary of any Award shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. In connection with each grant of Restricted Shares, the applicable Award Agreement shall specify if and to what extent the Participant shall not be entitled to the rights of a shareholder in respect of such Awards; provided, however, that Restricted Shares shall, unless otherwise provided in the Award Agreement, remain subject to the provisions of Section 6(d)(ii) and (iv). Except as otherwise provided in Section 4(b), Section 7(c) or the applicable Award Agreement, no adjustments shall be made for dividends or distributions on (whether ordinary or extraordinary, and whether in cash, Shares, other securities or other property), or other events relating to, Shares subject to an Award for which the record date is prior to the date such Shares are delivered.

(i) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof.

(j) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

(k) Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. Federal and any other applicable securities laws.

(l) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

(m) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

(n) Requirement of Consent and Notification of Election Under Section 83(b) of the Code or Similar Provision. No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement or by action of the Committee in writing prior to the making of such election. If an Award recipient, in connection with the

acquisition of Shares under the Plan or otherwise, is expressly permitted under the terms of the applicable Award Agreement or by such Committee action to make any such election and the Participant makes the election, the Participant shall notify the Committee of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code or other applicable provision.

(o) Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code. If any Participant shall make any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such Participant shall notify the Company of such disposition within ten days thereof.

(p) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

(q) Section 409A. To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Award may be subject to Section 409A of the Code, the Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

Section 10. Term of the Plan.

(a) Effective Date. The Plan shall be effective as of the date of its approval by the Board.

(b) Expiration Date. No Award shall be granted under the Plan after the tenth anniversary of the date the Plan is approved under Section 10(a). Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under any such Award shall, nevertheless continue thereafter.

Severance Agreement of Philip R. Johnson, dated November 14, 2007

Exhibit 10.6

LOGO

November 14, 2007

Reference is made to that certain agreement entered into as of April 21, 2003, as amended on December 20, 2006 (collectively the “Agreement”) between Asbury Automotive Group, Inc. (“Asbury”) and Philip Johnson (“Executive”), a key employee of Asbury, which provides for an agreed-upon compensation in the event that Executive’s employment is terminated as defined in such Agreement. The parties hereto agree to amend and restate such Agreement as hereinafter provided.

Severance Pay Arrangement

If a Termination (as defined below) of Executive’s employment occurs at any time during Executive’s employment, Asbury will pay Executive 12 months of Executive’s base salary as of the date of Termination as Severance Pay. Payment (subject to required withholding) will be made by Asbury to Executive in a lump sum within 30 days of Termination.

If Executive participates in a bonus compensation plan at the date of Termination, Severance Pay will also include a portion of the target bonus for the year of Termination in an amount equal to the target bonus multiplied by the percentage of such year that has expired through the date of Termination. Such amount will be paid in a lump sum within 30 days of the date of Termination.

In addition, Executive shall be entitled for 12 months following the date of Termination to continue to participate at the same level of coverage and Executive contribution in any health, dental, disability and life insurance plans, as may be amended from time to time, in which Executive was participating immediately prior to the date of Termination. Such participation will terminate 30 days after Executive has obtained other employment under which Executive is covered by equal benefits. Executive agrees to notify Asbury promptly upon obtaining such other employment. At the option of Executive, COBRA coverage will be available, as provided by company policy, at the termination of the extended benefits provided above.

Notwithstanding anything herein to the contrary, if Executive is determined to be a “specified employee” within the meaning of Section 409A of the Code (as defined in Section 7 below) and if one or more of the payments or benefits to be received by Executive pursuant to this agreement would be considered deferred compensation subject to Section 409A of the Code, then no such payment shall be made or benefit provided until six (6) months following Executive’s date of Termination.

Change of Control Arrangement

In the event that a Termination occurs at any time within two years after a Change of Control, then (1) the term “12 months” in the first and third paragraphs of Section 1 of this agreement shall be replaced with “36 months” and (2) the term “one year” in Section 6 of this agreement shall be replaced with “36 months”. For purposes of this Section, “Change of Control” shall have the meaning ascribed to such term in Asbury’s 2002 Equity Incentive Plan; as such plan may be amended from time to time.

Definition of Termination Triggering Severance Pay

A “Termination” triggering the Severance Pay set forth above in Sections 1 and 2 is defined as a termination of Executive’s employment with Asbury (1) by Asbury without “cause”, or (2) by Executive because of (x) a material change in the geographic location at which Executive must perform Executive’s services (which shall in no event include a relocation of Executive’s current principal place of business to a location less than 50 miles away), (y) a material diminution in Executive’s base compensation, or (z) a material diminution in Executive’s authority, duties, or responsibilities. For the avoidance of doubt, a “Termination” shall not include a termination of Executive’s employment by Asbury for “cause” or due to Executive’s death, “disability,” retirement or voluntary resignation. The definition of “cause” is: (a) Executive’s gross negligence or serious misconduct (including, without limitation, any criminal, fraudulent or dishonest conduct) that is or may be injurious to Asbury or any of its affiliates; or (b) Executive being convicted of, or entering a plea of nolo contendere to, any crime that constitutes a felony or involves moral turpitude; or (c) Executive’s material breach of Sections 4, 5 or 6 below; or (d) Executive’s willful and continued failure to substantially perform Executive’s duties with Asbury; or (e) Executive’s material breach of a material written policy of Asbury. The definition of “disability” is a physical or mental disability or infirmity that prevents the performance by Executive of his duties lasting (or likely to last, based on competent medical evidence presented to Asbury) for a continuous period of six months or longer.

Confidential Information Nondisclosure Provision

domain that was obtained by Executive while employed by Asbury with respect to Asbury or any affiliate or with respect to any products, improvements, customers, methods of distribution, sales, prices, profits, costs, contracts, suppliers, business prospects, business methods, techniques, research, trade secrets or know-how of Asbury or any affiliate (collectively, “Confidential Information”). In the event Executive’s employment terminates for any reason, Executive will deliver to Asbury on or before the date of termination all documents and data of any nature pertaining to Executive’s work with Asbury and will not take any documents or data or any reproduction, or any documents containing or pertaining to any Confidential Information. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of this provision and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Non-Solicitation of Employees

Executive agrees that for a period of one year following payment to Executive as required under Sections 1 and 2, Executive shall not directly or indirectly solicit for employment or employ any person who, at any time during the 12 months preceding such last day of Executive’s employment, is or was employed by Asbury or any affiliate or induce or attempt to persuade any employee of Asbury or any affiliate to terminate their employment relationship. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of this provision and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Covenant Not to Compete

While Executive is employed by Asbury, Executive shall not directly or indirectly engage in, participate in, represent or be connected with in any way, as an officer, director, partner, owner, employee, agent, independent contractor, consultant, proprietor or stockholder (except for the ownership of a less than 5% stock interest in a publicly-traded corporation) or otherwise, any business or activity which competes with the business of Asbury or any affiliate unless expressly consented to in writing by the Chief Executive Officer of Asbury (collectively, “Covenant Not To Compete”).

shall disclose in writing to Asbury the name, address and type of business conducted by any proposed new employer of Executive if requested in writing by Asbury. Executive agrees that in the event of a breach by Executive of this Covenant Not To Compete, Asbury shall be entitled to inform all potential or new employers of this Covenant and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Parachute Payment Limitation

Notwithstanding anything in this agreement to the contrary, if any severance pay or benefits payable under this agreement (without the application of this Section 7), either alone or together with other payments, awards, benefits or distributions (or any acceleration of any payment, award, benefit or distribution) pursuant to any agreement, plan or arrangement with Asbury or any of its affiliates (the “Total Payments”), would constitute a “parachute payment” (as defined in Section 280G of the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder (the “Code”)), then the following shall occur:

(a)

tax counsel selected by Asbury’s independent auditors and acceptable to Executive shall compute the net present value to Executive of all the Total Payments after reduction for the excise taxes imposed by Code Section 4999 and for any normal income taxes that would be imposed on Executive if such Total Payments constituted Executive’s sole taxable income; and

(b)

said tax counsel shall next compute the maximum Total Payments that can be provided without any such Total Payments being characterized as “Excess Parachute Payments” (as defined in Code Section 280G) and reduce the result by the amount of any normal income taxes that would be imposed on Executive if such reduced Total Payments constituted Executive’s sole taxable income.

If the result derived in clause (a) above is greater than the result derived in clause (b) above by more than 10% of the result derived in clause (b) above, then Asbury shall pay Executive the full amount of the Total Payments without reduction. If the result derived from clause (a) above is not greater than the result derived in clause (b) above by more than 10% of the result derived in clause (b) above, then Asbury shall pay Executive the maximum Total Payments possible without any such Total Payments being characterized as Excess Parachute Payments. The determination of how such Total Payments will be reduced shall be made by Executive in good faith after consultation with Asbury.

GENERAL PROVISIONS

Employment is At Will

Executive and Asbury acknowledge and agree that Executive is an “at will” employee, which means that either Executive or Asbury may terminate the employment relationship at any time, for any reason, with or without cause or notice, and that nothing in this agreement shall be construed as an express or implied contract of employment.

Execution of Release

As a condition to the receipt of the Severance Pay payments and benefits described in Sections 1 and 2 above, Executive agrees to execute a release of all claims arising out of Executive’s employment or termination, including, but not limited to, any claim of discrimination, harassment or wrongful discharge under local, state or federal law.

Other Provisions

This agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of Executive and Asbury, including any successor to Asbury.

The transfer of Executive from Asbury to any of its affiliates shall not be deemed to be a termination pursuant to clause (2) of Section 3 of this agreement until such time as Executive is no longer employed by Asbury or any of its affiliates. If Executive is transferred to an affiliate of Asbury, references to “Asbury” herein shall be deemed to include the applicable affiliate to which Executive is transferred.

The headings and captions are provided for reference and convenience only and shall not be considered part of this agreement.

If any provision of this agreement shall be held invalid or unenforceable, such holding shall not affect any other provisions, and this agreement shall be construed and enforced as if such provisions had not been included.

Any disputes arising under or in connection with this agreement shall be resolved by third party mediation of the dispute and, if such dispute is not resolved within 30 days, by binding arbitration, to be held in New York City, New York, in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Each party shall bear his or its own costs of the mediation, arbitration or litigation.

(provided that a written acknowledgment of receipt is obtained by the overnight courier) to the party concerned at the address indicated below or to such changed address as such party may subsequently give such notice of or (3) if given by facsimile, at the time transmitted to the respective facsimile numbers set forth below, or to such other facsimile number as either party may have furnished to the other in writing in accordance herewith, and the appropriate confirmation received (or, if such time is not during a business day, at the beginning of the next such business day); provided, however, that notice of change of address shall be effective only upon receipt:


If to Asbury:		Asbury Automotive Group, Inc.
		c/o General Counsel
		622 Third Avenue, 37th Floor
		New York, NY 10017
		Facsimile: (212) 297-2653

If to Executive:		To the most recent address and facsimile number, if applicable, of Executive set forth in the personnel records of Asbury.

This agreement supersedes any and all agreements between Asbury and Executive relating to payments upon termination of employment or severance pay, including but not limited to the Agreement and may only be modified in writing signed by Asbury and Executive.

This agreement shall be governed by and construed in accordance with the laws of the State of New York.

All payments hereunder shall be subject to any required withholding of federal, state, local and foreign taxes pursuant to any applicable law or regulation.

No provision of this agreement shall be waived unless the waiver is agreed to in writing and signed by Executive and the Chief Executive Officer of Asbury. No waiver by either party of any breach of, or of compliance with, any condition or provision of this agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

The parties hereto acknowledge and agree that, to the extent applicable, this agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of this agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to Executive under Section 409A of the Code and related Department of Treasury guidance, the Company and Executive shall cooperate in good faith to (x) adopt such amendments to this agreement and appropriate policies and procedures,

including amendments and policies with retroactive effect, that they mutually determine to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this agreement, to preserve the economic benefits of this agreement and to avoid less favorable accounting or tax consequences for the Company and/or (y) take such other actions as mutually determined to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder.

This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:

Severance Agreement of Lynne A. Burgess, dated November 14, 2007

Exhibit 10.7

LOGO

November 14, 2007

Reference is made to that certain agreement entered into as of April 21, 2003, as amended on December 20, 2006 (collectively the “Agreement”) between Asbury Automotive Group, Inc. (“Asbury”) and Lynne A. Burgess (“Executive”), a key employee of Asbury, which provides for an agreed-upon compensation in the event that Executive’s employment is terminated as defined in such Agreement. The parties hereto agree to amend and restate such Agreement as hereinafter provided.

Severance Pay Arrangement

Change of Control Arrangement

Definition of Termination Triggering Severance Pay

A “Termination” triggering the Severance Pay set forth above in Sections 1 and 2 is defined as a termination of Executive’s employment with Asbury (1) by Asbury without “cause”, or (2) by Executive because of (x) a material change in the geographic location at which Executive must perform Executive’s services (which shall in no event include a relocation of Executive’s current principal place of business to a location less than 50 miles away), (y) a material diminution in Executive’s base compensation, or (z) a material diminution in Executive’s authority, duties, or responsibilities. For the avoidance of doubt, a “Termination” shall not include a termination of Executive’s employment by Asbury for “cause” or due to Executive’s death, “disability,” retirement or voluntary resignation. The definition of “cause” is: (a) Executive’s gross negligence or serious misconduct (including, without limitation, any criminal, fraudulent or dishonest conduct) that is or may be injurious to Asbury or any of its affiliates; or (b) Executive being convicted of, or entering a plea of nolo contendere to, any crime that constitutes a felony or involves moral turpitude; or (c) Executive’s material breach of Sections 4, 5 or 6 below; or (d) Executive’s willful and continued failure to substantially perform Executive’s duties with Asbury; or (e) Executive’s material breach of a material written policy of Asbury. The definition of “disability” is a physical or mental disability or infirmity that prevents the performance by Executive of her duties lasting (or likely to last, based on competent medical evidence presented to Asbury) for a continuous period of six months or longer.

Confidential Information Nondisclosure Provision

During and after employment with Asbury, Executive agrees not to disclose to any person (other than to an employee or director of Asbury or any affiliate and except as may be required by law) and not to use to compete with Asbury or any affiliate any confidential or proprietary information, knowledge or data that is not in the public domain that was obtained by Executive while employed by Asbury with respect to Asbury or any affiliate or with respect to any products, improvements, customers,

methods of distribution, sales, prices, profits, costs, contracts, suppliers, business prospects, business methods, techniques, research, trade secrets or know-how of Asbury or any affiliate (collectively, “Confidential Information”). In the event Executive’s employment terminates for any reason, Executive will deliver to Asbury on or before the date of termination all documents and data of any nature pertaining to Executive’s work with Asbury and will not take any documents or data or any reproduction, or any documents containing or pertaining to any Confidential Information. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of this provision and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Non-Solicitation of Employees

Covenant Not to Compete

In the event Executive’s employment terminates for any reason, the provisions of the Covenant Not To Compete shall remain in effect for a period of one year following payment to Executive as required under Sections 1 and 2, except that the prohibition above on “any business or activity which competes with the business of Asbury or any affiliate” shall be limited to AutoNation, Sonic, Lithia, Group One, Penske Automotive Group inc. f/k/a United Auto Group, and other public groups. Executive shall disclose in writing to Asbury the name, address and type of business conducted by any proposed new employer of Executive if requested in writing by Asbury.

Executive agrees that in the event of a breach by Executive of this Covenant Not To Compete, Asbury shall be entitled to inform all potential or new employers of this Covenant and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Parachute Payment Limitation

(a)

(b)

GENERAL PROVISIONS

Employment is At Will

Executive and Asbury acknowledge and agree that Executive is an “at will” employee, which means that either Executive or Asbury may terminate the

employment relationship at any time, for any reason, with or without cause or notice, and that nothing in this agreement shall be construed as an express or implied contract of employment.

Execution of Release

Other Provisions

This agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of Executive and Asbury, including any successor to Asbury.

The headings and captions are provided for reference and convenience only and shall not be considered part of this agreement.

Any disputes arising under or in connection with this agreement shall be resolved by third party mediation of the dispute and, if such dispute is not resolved within 30 days, by binding arbitration, to be held in New York City, New York, in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Each party shall bear her or its own costs of the mediation, arbitration or litigation.

All notices and other communications required or permitted under this agreement shall be in writing (including a facsimile or similar writing) and shall be deemed given when (1) delivered personally, (2) sent by certified or registered mail, postage prepaid, return receipt requested or delivered by overnight courier (provided that a written acknowledgment of receipt is obtained by the overnight courier) to the party concerned at the address indicated below or to such changed

address as such party may subsequently give such notice of or (3) if given by facsimile, at the time transmitted to the respective facsimile numbers set forth below, or to such other facsimile number as either party may have furnished to the other in writing in accordance herewith, and the appropriate confirmation received (or, if such time is not during a business day, at the beginning of the next such business day); provided, however, that notice of change of address shall be effective only upon receipt:


If to Asbury:		Asbury Automotive Group, Inc.
		c/o General Counsel
		622 Third Avenue, 37th Floor
		New York, NY 10017
		Facsimile: (212) 297-2653

If to Executive:		To the most recent address and facsimile number, if applicable, of Executive set forth in the personnel records of Asbury.

This agreement shall be governed by and construed in accordance with the laws of the State of New York.

All payments hereunder shall be subject to any required withholding of federal, state, local and foreign taxes pursuant to any applicable law or regulation.

the benefits provided by this agreement, to preserve the economic benefits of this agreement and to avoid less favorable accounting or tax consequences for the Company and/or (y) take such other actions as mutually determined to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder.

This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:


		BY EXECUTIVE				BY ASBURY AUTOMOTIVE GROUP, INC.

		/s/ Lynne A. Burgess				/s/ Charles R. Oglesby
		Print Name:				Print Name and Title:
		Lynne A. Burgess				Charles R.Oglesby
						President & CEO

Severance Agreement of J. Gordon Smith, dated September 29, 2003


		Exhibit 10.8

February 28, 2008

Reference is made to that certain agreement entered into as of April 21, 2003, as amended on December 20, 2006 (collectively the “Agreement”) between Asbury Automotive Group, Inc. (“Asbury”) and Gordon Smith (“Executive”), a key employee of Asbury, which provides for an agreed-upon compensation in the event that Executive’s employment is terminated as defined in such Agreement. The parties hereto agree to amend and restate such Agreement as hereinafter provided.

Severance Pay Arrangement

Change of Control Arrangement

Definition of Termination Triggering Severance Pay

Confidential Information Nondisclosure Provision

Asbury or any affiliate (collectively, “Confidential Information”). In the event Executive’s employment terminates for any reason, Executive will deliver to Asbury on or before the date of termination all documents and data of any nature pertaining to Executive’s work with Asbury and will not take any documents or data or any reproduction, or any documents containing or pertaining to any Confidential Information. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of this provision and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Non-Solicitation of Employees

Covenant Not to Compete

Covenant and to cease payments and benefits that would otherwise be made pursuant to Sections 1 and 2 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this agreement.

Parachute Payment Limitation

(a)

(b)

GENERAL PROVISIONS

Employment is At Will

Execution of Release

Other Provisions

This agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of Executive and Asbury, including any successor to Asbury.

The headings and captions are provided for reference and convenience only and shall not be considered part of this agreement.

facsimile, at the time transmitted to the respective facsimile numbers set forth below, or to such other facsimile number as either party may have furnished to the other in writing in accordance herewith, and the appropriate confirmation received (or, if such time is not during a business day, at the beginning of the next such business day); provided, however, that notice of change of address shall be effective only upon receipt:


If to Asbury:		Asbury Automotive Group, Inc.
		c/o General Counsel
		622 Third Avenue, 37th Floor
		New York, NY 10017
		Facsimile: (212) 297-2653

If to Executive:		To the most recent address and facsimile number, if applicable, of Executive set forth in the personnel records of Asbury.

This agreement shall be governed by and construed in accordance with the laws of the State of New York.

All payments hereunder shall be subject to any required withholding of federal, state, local and foreign taxes pursuant to any applicable law or regulation.

agreement and to avoid less favorable accounting or tax consequences for the Company and/or (y) take such other actions as mutually determined to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder.

This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE:


BY EXECUTIVE				BY ASBURY AUTOMOTIVE GROUP, INC.

/S/ J. Gordon Smith				/S/ Philip R Johnson

Print Name:				Print Name and Title:

J. Gordon Smith				Philip R. Johnson
				Vice President Human Resources

Severance Agreement of Brett Hutchinson, dated February 26, 2008

Exhibit 10.9

SEVERANCE PAY AGREEMENT

FOR KEY EMPLOYEE

Reference is made to that certain agreement (the “Agreement”) entered into as of August 1, 2005 between Asbury Automotive Group, Inc. and its subsidiaries and affiliates (“Asbury”) and Brett Hutchinson (“Executive”), a key employee of Asbury, which provides for an agreed-upon compensation in the event that there is a Termination (as defined below) of Executive’s employment with Asbury. The parties hereto agree to amend and restate such Agreement as hereinafter provided.

1.	Severance Pay Arrangement

In addition, for 12 months following the date of Termination, Executive shall be entitled to continue to participate at the same level of coverage and Executive contribution in any health and dental insurance plans, as may be amended from time to time, in which Executive was participating immediately prior to the date of Termination. Such participation will terminate 30 days after Executive has obtained other employment under which Executive is covered by equal benefits. The Executive agrees to notify Asbury promptly upon obtaining such other employment. At the end of 12 months, Employee, at his or her option, may elect to obtain COBRA coverage in accordance with the terms and conditions of applicable law and Asbury’s standard policy.

Notwithstanding anything herein to the contrary, if Executive is determined to be a “specified employee” within the meaning of Section 409A of the Internal Revenue

Code of 1986, as amended the (“Code”) and if one or more of the payments or benefits to be received by Executive pursuant to this Agreement would be considered deferred compensation subject to Section 409A of the Code, then no such payment shall be made or benefit provided until six (6) months following Executive’s date of Termination.

2.	Definition of Termination Triggering Severance Pay

A “Termination” triggering the Severance Pay set forth above in Section 1 is defined as a termination of Executive’s employment with Asbury (1) by Asbury without “cause”, or (2) by Executive because of (x) a material change in the geographic location at which Executive must perform Executive’s services (which shall in no event include a relocation of Executive’s current principal place of business to a location less than 50 miles away), (y) a material diminution in Executive’s base compensation, or (z) a material diminution in Executive’s authority, duties, or responsibilities. For avoidance of doubt, a “Termination” shall not include a termination of Executive’s employment by Asbury for “cause” or due to Executive’s, death, disability, retirement or voluntary resignation.

For the purposes of this Agreement, the definition of “cause” is: (a) Executive’s gross negligence or serious misconduct (including, without limitation, any criminal, fraudulent or dishonest conduct) that is or may be injurious to Asbury; or (b) Executive being convicted of, or entering a plea of nolo contendere to, any crime that constitutes a felony or involves moral turpitude; or (c) Executive’s breach of Sections 3, 4 or 5 below; or (d) Executive’s willful and continued failure to perform Executive’s duties on behalf of Asbury; or (e) Executive’s material breach of a written policy of Asbury. For purposes of this Agreement, the definition of “disability” is a physical or mental disability or infirmity that prevents the performance by Executive of his or her duties lasting (or likely to last, based on competent medical evidence presented to Asbury) for a continuous period of six months or longer.

“Change of Control” is defined in accordance with the definition of such term in Asbury’s 2002 Equity Incentive Plan, as such plan may be amended from time to time.

3.	Confidential Information and Nondisclosure Provision

As a condition to the receipt of the Severance Pay payments and benefits described in Section 1 above, during and after employment with Asbury, Executive shall agree not to disclose to any person (other than to an employee or director of Asbury, or to Asbury’s attorneys, accountants and other advisors or except as may be required by law) and not use to compete with Asbury any confidential or proprietary information, knowledge or data that is not in the public domain that was obtained by Executive while employed by Asbury regarding Asbury or any products, improvements, customers, methods of distribution, sales, prices, profits, costs, contracts, suppliers, business prospects, business methods, techniques, research, trade secrets or know-how of Asbury (collectively, “Confidential Information”). In the event that Executive’s employment terminates for any reason, Executive will deliver to Asbury on or before the date of Termination all documents and data of any nature pertaining to Executive’s work with Asbury and will not take any documents or data or any reproduction, or any documents containing or pertaining to any Confidential Information. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of such breach and to cease payments and benefits that would otherwise be made pursuant to Section 1 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this Agreement.

4.	Non-Solicitation of Employees

As a condition to the receipt of the Severance Pay payments and benefits described in Section 1 above, Executive agrees that during employment with Asbury and for 12 months following termination of Executive’s employment for any reason, Executive shall not directly or indirectly solicit for employment or employ any person who, at any time during the 12 months preceding the last day of Executive’s employment, is or was employed by Asbury or induce or attempt to persuade any Executive of Asbury to terminate their employment relationship. Executive agrees that in the event of a breach by Executive of this provision, Asbury shall be entitled to inform all potential or new employers of such breach and to cease payments and benefits that would otherwise be made pursuant to Section 1 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this Agreement.

5.	Covenant Not to Compete

As a condition to the receipt of the Severance Pay payments and benefits described in Section 1 above, while Executive is employed by Asbury and for 12 months following termination of Executive’s employment for any reason (subject to the next paragraph), Executive shall not directly or indirectly engage in, participate in, represent or be connected with in any way, as an officer, director, partner, owner, employee, agent, independent contractor, consultant, proprietor or stockholder (except for the ownership of a less than 5% stock interest in a publicly-traded corporation) or otherwise, any business or activity which competes with the business of Asbury unless expressly consented to in writing by the Chief Executive Officer of Asbury (collectively, “Covenant Not To Compete”).

In the event that Executive’s employment ends for any reason, the provisions of the Covenant Not To Compete shall remain in effect for one year following the date of Termination except that the prohibition above on “any business or activity which competes with the business of Asbury” shall be limited to AutoNation, Inc., Sonic Automotive, Inc., Lithia Motors, Inc., Penske Automotive Group, Inc., f/k/a/ United Auto Group, Inc., Group One Automotive Inc., and other competitive groups of similar size. Executive shall disclose in writing to Asbury the name, address and type of business conducted by any proposed new employer of Executive if requested in writing by Asbury. Executive agrees that in the event of a breach by Executive of this Covenant Not To Compete, Asbury shall be entitled to inform all potential or new employers of such breach and to cease payments and benefits that would otherwise be made pursuant to Section 1 above, as well as to obtain injunctive relief and damages which may include recovery of amounts paid to Executive under this Agreement.

GENERAL PROVISIONS

Employment is At Will

Executive and Asbury acknowledge and agree that Executive is an “at will” employee, which means that either Executive or Asbury may terminate the employment relationship at any time, for any reason, with or without cause or notice, and that nothing in this Agreement shall be construed as an express or implied contract of employment.

Execution of Release

As a condition to the receipt of the Severance Pay payments and benefits described in Section 1 above, Executive agrees to execute a release of all claims arising out of Executive’s employment or Termination including but not limited to any claim of discrimination, harassment or wrongful discharge under local, state or federal law.

Alternative Dispute Resolution

Any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration before an arbitrator (who shall be an attorney with at least ten years’ experience in employment law) in the city where Executive is located and in accordance with the rules and procedures of the American Arbitration Association. Each party may choose to retain legal counsel and shall pay its own attorneys’ fees, regardless of the outcome of the arbitration. Executive may be required to pay a filing fee limited to the equivalent cost of filing in the court of jurisdiction. Asbury will pay the fees and costs of conducting the arbitration. Judgment upon the award rendered by the arbitrator may be entered in any court of jurisdiction.

Other Provisions

This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of Executive and Asbury, including any successor to Asbury.

The provisions of Sections 3, 4 and 5 shall survive the termination of this Agreement.

The headings and captions are provided for reference and convenience only and shall not be considered part of this Agreement.

Any notice or other communication required or permitted to be delivered under this Agreement shall be (i) in writing, (ii) delivered personally, by nationally recognized overnight courier service or by certified or registered mail, first-class postage prepaid and return receipt requested, (iii) deemed to have been received on the date of delivery or on the third business day after mailing, and (iv) addressed as follows (or to such other address as the party entitled to notice shall later designate in accordance with these terms):


If to Asbury:		Asbury Automotive Group, Inc.
		c/o General Counsel
		622 3^rd Avenue,
		37^th floor
		New York, New York 10017

If to Executive:		To the most recent address of Executive set forth in the personnel records of Asbury.

This Agreement supersedes any and all agreements between Asbury and Executive relating to payments upon Termination of employment or Severance Pay and may only be modified in a writing signed by Asbury and Executive.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

All payments hereunder shall be subject to any required withholding of federal, state, local and foreign taxes pursuant to any applicable law or regulation.

If any provision of this Agreement shall be held invalid or unenforceable, such holding shall not affect any other provisions, and this Agreement shall be construed and enforced as if such provisions had not been included. No provision of this Agreement shall be waived unless the waiver is agreed to in writing and signed by Executive and the Chief Executive Officer of Asbury. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of this Agreement to the contrary, in the event that Asbury determines that any amounts payable hereunder will be immediately taxable to Executive under Section 409A of the Code and related Department of Treasury guidance, Asbury and Executive shall cooperate in good faith to (x) adopt such amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that they mutually determine to

be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for Asbury and/or (y) take such other actions as mutually determined to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder.

[Remainder of Page Intentionally Left Blank]

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

AGREED TO AS OF FEBRUARY 26, 2008:


		BY EXECUTIVE:				BY ASBURY:

						ASBURY AUTOMOTIVE GROUP, INC.

		/s/ Brett Hutchinson				/s/ Philip R. Johnson
		Print Name:				Print Name and Title:
		Brett Hutchinson				Philip R. Johnson Vice President, Human Resources

First Amended and Restated Lease Agreement

Exhibit 10.20

FIRST AMENDED AND RESTATED LEASE

AGREEMENT

BETWEEN

JEFFREY I. WOOLEY, AS LANDLORD

AND

ASBURY AUTOMOTIVE TAMPA, L.P.,

AS TENANT

(Hillsborough Avenue Property)

FIRST AMENDED AND RESTATED

LEASE AGREEMENT

(Hillsborough Avenue Property)

THIS FIRST AMENDED AND RESTATED LEASE AGREEMENT (the “Lease”) is made and effective this 17th day of September, 1998, by and between JEFFREY I. WOOLEY, having an address of 10000 Lindelaan, Tampa, Florida 33618 (hereinafter called “Landlord”), and ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership, having an address of 712 Fifth Avenue, 49th Floor, New York, New York 10019 (hereinafter called “Tenant”).

W I T N E S S E T H:

WHEREAS, on or about September 17, 1998, Landlord entered into that certain Courtesy Dealership Lease Agreement (Hillsborough Avenue Property) (the “Courtesy Lease”) with JIW Enterprises, Inc. and Courtesy Imports of Tampa, Inc. (collectively “Courtesy”), and

WHEREAS, Courtesy assigned the Courtesy Lease to Tenant, and Landlord and Tenant wish to amend and restate the Courtesy Lease as hereinafter set forth.

NOW, THEREFORE, the Courtesy Lease is hereby amended and restated in its entirety as follows:

ARTICLE ONE

Demised Premises, Term and Construction of Improvements

SECTION 1.01. Landlord, for and in consideration of the terms, covenants and conditions herein contained, does hereby demise, lease and let to Tenant, and Tenant does hereby hire and take from Landlord, upon and subject to the terms, covenants and conditions herein contained, the interest of Landlord (other than under this Lease), in the following:

ALL of those certain parcels of land and premises with certain improvements located thereon, said land and premises being more particularly described on Exhibit A attached hereto and made a part hereof and collectively called the “Demised Premises”;

TO HAVE AND TO HOLD the Demised Premises for a term of ten (10) years commencing on September 17, 1998 (the “Commencement Date”) and expiring at midnight on September 16, 2008 (hereinafter called the “term”). Provided this Lease is not in default, Tenant may elect to extend the term of this Lease for one (1) additional term of five (5) years (such additional term period being hereinafter referred to as the “Renewal Term”), in accordance with the terms and conditions of Section 1.02 below.

SECTION 1.02. In the event Tenant elects to extend the term of this Lease as referenced above, the following terms and conditions shall apply:

(i) This Lease must not be in default either at the time of Tenant’s election to renew the term of this Lease or at the time commencement of the Renewal Term; and

(ii) Except as otherwise provided herein, Tenant’s use and occupancy of the Demised Premises during the Renewal Term shall be upon the same terms, covenants and conditions contained herein. All payments on the part of Tenant to be made and all other obligations on the part of Tenant to be performed as provided in this Lease shall continue to be made and performed by Tenant during the Renewal Term;

(iii) Tenant shall exercise its right to extend the term of this Lease for the Renewal Term by delivering notice of its intent to renew the tern of this Lease to Landlord in writing by certified mail on or before September 16,2007; and

(iv) There shall be no further or additional right to renew this Lease other than as set forth in this Section 1.02. Any termination of this Lease shall terminate the later right of renewal hereunder.

ARTICLE TWO

Rent

SECTION 2.01. Tenant covenants and agrees to pay to Landlord, promptly when due, without notice of demand and without deduction or set-off of any amount for any reason whatsoever, a fixed “minimum rent” outlined as follows, together with any applicable sales, use or rent taxes. The “minimum rent” shall be paid according to the following schedule:

(i) Annual minimum rent for the first (1st) year of the initial term of this Lease shall be Six Hundred Seventy-Nine Thousand Five Hundred and No/100ths Dollars ($679,500.00), payable in equal monthly installments of Fifty-Six Thousand Six Hundred Twenty-Five and No/100ths Dollars ($56,625.00) a month, together with applicable taxes.

(ii) Commencing with the second (2nd) year of the initial term of this Lease, and at the beginning of each year thereafter during the initial term of this Lease and the Renewal Term, the minimum rent shall be adjusted in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers (US. City Average: All Items), issued by the Bureau of Labor Statistics of the U.S. Department of Labor using the year 1982-84 as a base year of 100 (“Index Number”). At the commencement of the second (2nd) Lease Year (as hereinafter defined), the minimum rent shall be adjusted by multiplying the minimum rent paid in the first (1st) year of this Lease by a fraction, the numerator of which shall be the Index Number for the third (3rd) month preceding the commencement of the second (2nd) Lease Year, and the denominator of which shall be the Index Number for the third (3rd) month preceding the Commencement Date of this Lease. At the commencement of each Lease Year thereafter, including any Lease Year which falls within the Renewal Term (if this Lease is renewed as described herein), the minimum rent shall be adjusted by multiplying the minimum rent paid in the preceding Lease Year by a fraction, the numerator of which shall be the Index Number for the third (3rd) month preceding the commencement of the new Lease Year, and the denominator of which shall be the Index Number for the third (3rd) month preceding the commencement of the preceding Lease Year. Notwithstanding the foregoing, however, in no event shall the minimum rent for any Lease Year be less than one hundred two percent (1 02%) of the minimum rent for the preceding Lease Year or more than one hundred six percent (106%) of the minimum rent for the preceding Lease Year. In the event that the index herein referred to ceases to be published during the term of this Lease, or a substantial change is made in the method of establishing such index, then the determination of the adjustment shall be made with the use of such conversion factor, formula or table as may then be published by the Bureau of Labor Statistics, or if none is available, the parties shall accept comparable statistics on the cost of living in the United States, as shall then be computed and published by any agency of the United States, or if none, by a respected financial periodical selected by Landlord. The term “Lease Year” as used herein shall mean consecutive twelve (12) month periods commencing on the Commencement Date, and on each anniversary of the Commencement Date, during the term of this Lease.

The minimum rent reserved hereunder shall be payable in equal monthly installments, in advance, on the first (1st) day of each month during the Lease term; provided, however, that upon the execution of this Lease by Tenant, Tenant shall pay to Landlord the installments of minimum rent due for the first month of the initial term of this Lease (together with applicable sales tax, as described below). Tenant shall pay to Landlord, together with the monthly installments of the minimum rent due hereunder, the sales and use tax imposed by the State of Florida on rental payments under commercial leases and any other taxes, impositions or charges which may be payable by Tenant pursuant to the terms of this Lease, including, but not limited to, the terms of Section 3.01 hereof. If the term commences on a date other than the first day of a calendar month or ends on a date other than the last day of a calendar month, monthly rent for the first month of the term or the last month of the term, as the case may be, shall be prorated based upon the ratio that the number of days in the term within such month bears to the total number of days in such month.

SECTION 2.02. All amounts payable under Section 2.01 of this Article, as well as all other amounts payable by Tenant to Landlord under the terms of this Lease, shall be paid at the office of Landlord set forth above, or at such other place as Landlord shall from time to time designate by notice to Tenant, in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment.

SECTION 2.03. In order to secure payment by Tenant of the amounts specified in Section 2.01 of this Article and to secure the performance by Tenant of its duties and obligations under this Lease, Tenant shall upon the execution of this Lease (and in addition to the first month’s rent to be paid to Landlord upon execution of this Lease pursuant to Section 2.01 hereof) deposit with Landlord the sum of Eighty-Eight Thousand and No/100ths Dollars ($88,000.00) in cash (the “Security Deposit”). The Security Deposit shall not bear interest to Tenant, and Landlord shall be entitled to commingle the Security Deposit with Landlord’s other funds. Within ninety (90) days after the expiration or earlier termination of this Lease, Landlord shall (provided an event of default does not then exist) return the Security Deposit to Tenant, less any portion thereof which has been applied by Landlord in accordance with the terms of this Article. If an event of default shall occur or if Tenant fails to surrender the Premises in the condition required by this Lease, Landlord shall have the right (but not the obligation), without prejudice to any other remedy which Landlord may have on account thereof, to apply all or any portion of the Security Deposit to cure such default or to remedy the condition of the Premises. If Landlord so applies the Security Deposit or any portion thereof before the expiration or earlier termination of this Lease, Tenant shall deposit with Landlord, upon demand, the amount necessary to restore the Security Deposit to its original amount. The Security Deposit shall not be considered an advance payment of rent or a measure of Landlord’s damages in the case of a default by Tenant hereunder. Actions by Landlord against Tenant for any breach of this Lease shall in no way be limited or restricted by the amount of this Security Deposit and resort to such deposit shall not waive any other rights or constitute an election of remedies on the part of Landlord. If Landlord shall sell or transfer its interest in the Demised Premises, Landlord shall transfer the Security Deposit to such purchaser or transferee, in which event Tenant shall look solely to the new landlord for the return of the Security Deposit, and Landlord thereupon shall be released from all liability to Tenant for the return of the Security Deposit. It is agreed that this provision shall apply to every sale or transfer made of the Security Deposit to any new landlord. The Security Deposit shall not be assigned or encumbered by Tenant without the prior written consent of Landlord, and any attempt to assign or encumber the Security Deposit without the consent of Landlord shall be void and of no effect.

ARTICLE THREE

Expenses, Taxes, Other Charges

SECTION 3.01. Tenant agrees that it will pay without deduction or set-off of any amount for any reason whatsoever, all Real Estate Taxes (as hereinafter defined) which may be imposed upon the Demised Premises during the Term hereof. AU Real Estate Taxes shall be paid by Tenant prior to their delinquency, and Tenant shall, prior to the delinquency of any such Real Estate Taxes, provide Landlord with paid receipts or other suitable evidence of the payment of the same. Real Estate Taxes for any partial years included in the Term shall be prorated between Landlord and Tenant. As used herein, the term “Real Estate Taxes” shall mean and include all personal property taxes relating to the Demised Premises, real estate taxes, special assessments, and all other governmental charges, general or special, ordinary or extraordinary, foreseen as well as unforeseen, of any kind and nature whatsoever, which are levied or assessed by any governmental authority or political subdivision thereof against the Demised Premises or any part thereof.

SECTION 3.02. Tenant shall also pay any tax or excise on rents, gross receipts tax or other tax (including, but not limited to, all applicable sales taxes), however described, which is levied or assessed by the United States of America or the State of Florida, or any other applicable governmental body or political subdivision thereof, against Landlord with respect to the rent, additional rent or other charges reserved under this Lease or as a result of Landlord’s receipt of such rent, additional rent or other charges accruing under this Lease.

SECTION 3.03. Tenant may, but only if in good faith and with reasonable diligence, contest by any and all appropriate administrative, trial, appellate or other proceedings the amount, validity, enforceability or application of any taxes, assessments, charges or other obligations that Tenant is required to pay or perform to any person or entity other than Landlord by any provision of this Lease, and defer payment and discharge thereof during the pendency of such contest, provided that: (i) such contest suspends the collection or enforcement of the item contested, (ii) such contest shall have the effect of preventing the sale, loss or forfeiture of the Demised Premises, or any interest therein, to satisfy such item; (iii) within thirty (30) days after Tenant has been notified of the assertion of such item, Tenant shall have notified Landlord in writing of Tenant’s intention to contest same; (iv) neither Landlord nor Tenant will be subject to any criminal liability; (v) Tenant furnishes such security as may be required by law in connection with each such contest; (vi) the value, usefulness, occupation, enjoyment, operation and marketability of the Demised Premises will not be adversely impaired by any such contest; (vii) Tenant otherwise continues to pay and otherwise perform its obligations under this Lease; (viii) no default otherwise exists in the payment or other performance of Tenant under this Lease; (ix)each such contest is continuously prosecuted diligently to final determination; (x) Tenant pays, defends, indemnifies and holds Landlord harmless of and from any and all losses, judgments, decrees and costs (including all reasonable attorneys’ fees) incurred in connection with each such contest; (xi) Tenant promptly following a final determination of each such contest fully pays and discharges all amounts that may be levied, assessed, charged, imposed or otherwise determined to be payable, together with all penalties, fines, interest, costs and expenses and otherwise complies with such final determination at Tenant’s sole cost and expense; (xii) Landlord is furnished with such security as Landlord reasonably may require to assure compliance with all of the foregoing requirements, it being understood that Landlord will not require any additional security if (a) Tenant has otherwise posted such security as may be required by the taxing authorities or (b) has bonded-off any potential lien or encumbrance on the Demised Premises; and (xiii) such contest is permitted by any mortgagee having a mortgage lien upon the Demised Premises. In this regard, Landlord may require that Tenant shall have deposited with Landlord at such place as Landlord may from time to time in writing appoint, a sum of money which shall be sufficient in the judgment of Landlord to pay in full such item being contested, and all interest which might become due thereon, and shall keep on

deposit an amount so sufficient at all times, increasing such amount to cover additional interest whenever, in the judgment of Landlord, such increase is advisable. Any such deposits are to be held without any allowance of interest. So long as all of the foregoing requirements are met and Landlord is promptly reimbursed for all costs and expenses incurred, Landlord will cooperate in connection with any such contest if such cooperation is reasonably required.

SECTION 3.04. It is expressly understood and agreed that Tenant shall not be required to pay any of the following taxes or governmental impositions which shall be imposed against Landlord by any governmental authority, whether federal, state, county, city, municipal, or otherwise, to-wit:

(a) any capital stock tax or other tax imposed against Landlord for the privilege or franchise of doing business as a corporation;

(b) any income tax levied upon or against the income of Landlord, including any rental income derived by Landlord from the Demised Premises;

it being further expressly understood and agreed, however, that nothing in this Article Three shall relieve Tenant of the obligation for the payment of any gross sales, occupational license, privilege, excise or other present or future tax, license, fee or other charge imposed against Landlord by any governmental authority, whether federal, state, county, city, municipal or otherwise, in respect to the ownership, leasing, use, occupation, management, operation, maintenance, repair or rebuilding of the Demised Premises or any portion thereof, irrespective of whether the same shall be measured in whole or in part by the rental or other income derived therefrom by Landlord.

ARTICLE FOUR

Use and Compliance with Laws

SECTION 4.01. Tenant agrees that, unless and to the extent that it shall obtain Landlord’s prior approval, it will not use the Demised Premises, nor will it suffer or permit the same to be used, for any purpose other than as an automotive dealership.

SECTION 4.02. Tenant shall throughout the term hereof, and at no expense whatsoever to Landlord, promptly comply, or cause compliance, with all laws and ordinances (including, without limitation, the Americans with Disabilities Act) and the rules, regulations and requirements of all federal, state, county and municipal governments, and appropriate departments, commissions, boards and officers thereof, foreseen or unforeseen, ordinary as well as extraordinary, and whether or not the same shall presently be within the contemplation of the parties hereto or shall involve any change of governmental policy or require structural or extraordinary repairs, alterations or additions and irrespective of the cost thereof, which may be applicable to the Demised Premises, including, without limitation, the fixtures and equipment thereof and the sidewalks and curbs adjoining the Demised Premises or the use or manner of use of the Demised Premises. TENANT ACCEPTS THE DEMISED PREMISES IN THE ACTUAL “AS-IS” CONDITION IN WHICH THE SAME ARE AS OF THE DATE OF THIS LEASE. For purposes of this Lease, the term “AS-IS” shall not be deemed to limit the representations and warranties made by Landlord or the other Sellers or the indemnification obligations of Landlord or the other Sellers in that certain Asset Exchange Agreement among Asbury Villanova II L.L.C., Tenant, Asbury Automotive Tampa GP L.L.C., J.I.W. Enterprises, Inc., Courtesy Imports of Tampa, Inc., Gulf Auto Holdings, Inc., Courtesy Toyota of Brandon, Inc., Landlord and Douglas M. Tew, dated as of December 19, 1997 (the “Asset Exchange Agreement”); however, any rights, claims or actions which Tenant may have under the Asset Exchange Agreement as a result of any such representations and warranties or pursuant to the indemnification provisions in the Asset Exchange Agreement may not be used as a defense or offset in connection with any claim or action involving this Lease.

SECTION 4.03. Tenant shall not during the term hereof maintain, commit or permit the maintenance or commission of any nuisance on or about the Demised Premises. Tenant’s use and occupation shall at all times be in compliance with the ordinances of Hillsborough County and the laws of Florida and of the United States and any regulations thereunder.

SECTION 4.04. Tenant shall at all times and in all respects comply with all federal, state and local laws, ordinances, rules and regulations, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, as amended from time to time, 42 U.S.C. $ 9601, et seq., and the Resource Conservation and Recovery Act, as amended from time to time, 42 U.S.C. $6901, et seq., and the regulations promulgated thereunder (collectively, the “Hazardous Materials Laws”), regarding or relating in any way to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, presence, disposal or transportation of any oil, flammable explosives, asbestos, urea formaldehyde, polychlorinated biphenyls, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including without limitation any “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any such laws, ordinances or regulations (collectively, “Hazardous Materials”).

Tenant shall at its own expense procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required for Tenant’s use of the Demised Premises, including, without limitation, discharge of (appropriately treated) materials or waste into or through any sanitary sewer system serving the Demised Premises. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease to be removed from the Demised Premises and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such Hazardous Materials and wastes. Tenant shall in all respects, handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Demised Premises in complete conformity with all applicable Hazardous Materials laws and prudent industry practices regarding the management of such Hazardous Materials. All reporting obligations to the extent imposed upon Tenant by Hazardous Materials Laws are solely the responsibility of Tenant. Upon expiration or earlier termination of this Lease, Tenant shall cause all Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease located on the Demised Premises to be removed therefrom and transported for use, storage or disposal in accordance and in compliance with all applicable Hazardous Materials Laws. Tenant acknowledges and agrees that it shall be responsible for and shall perform, at its sole cost and expense, any removal, remediation, cleanup and restoration which may be required with regard to the presence of any Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease or the release of any Hazardous Materials into, onto, above or under the Demised Premises by Tenant or any third party during the term hereof, and Tenant shall perform such remedial action in accordance with all applicable laws, including any and all Hazardous Materials Laws. Further, Tenant shall indemnify, protect, defend (by counsel reasonably acceptable to Landlord), and hold Landlord and Landlord’s officers, employees, directors, agents, stockholders, successors and assigns free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses, damages, costs and expenses (including attorneys’ fees) or death of or injury to any person or damage to any property whatsoever, including, without limitation, the Demised Premises and any improvements located thereon, arising from or caused in whole or in part, directly or indirectly, by the presence in, on, about or under the Demised Premises of any Hazardous Materials or by Tenant’s failure to comply with any Hazardous Materials Laws or in connection with any removal, remediation, cleanup, restoration and materials required hereunder as a result of the presence of any Hazardous Materials in, on, about or under the Demised Premises with respect to any Hazardous Materials generated, used or released in, on, about or under the Demised Premises by Tenant or any other party other than Landlord or its agents or employees during the

term hereof or which may be released in, on, about or under the Demised Premises by Tenant or any other party other than Landlord or its agents or employees during the term hereof as may be required to return the Demised Premises to their condition existing prior to the appearance of any Hazardous Materials thereon. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in, on, about or under the Demised Premises nor enter into any settlement agreement, consent, decree or other compromise in respect to any claims relating to or in any way connected with the Demised Premises without first notifying Landlord of Tenant’s intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord’s interest with respect thereto. In addition, at Landlord’s request, at the expiration of the term of this Lease, Tenant shall remove from the Demised Premises and dispose of all tanks or fixtures installed by Tenant which contain, have contained or are contaminated with, Hazardous Materials, in accordance with all applicable laws.

Tenant shall immediately notify Landlord in writing of (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials Laws; (b) any claim made or threatened by any person against Landlord, or the Demised Premises, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (c) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in, on or about the Demised Premises or with respect to any Hazardous Materials removed from the Demised Premises, including, any complaints, notices, warnings, reports or asserted violations in connection therewith. Tenant shall also provide to Landlord, as promptly as possible, and in any event within five business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Demised Premises or Tenant’s use thereof. Upon written request of Landlord (to enable Landlord to defend itself from any claim or charge related to any Hazardous Materials Law), Tenant shall promptly deliver to Landlord copies of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed from the Demised Premises. All such manifests, to the extent such Hazardous Materials were released, generated or used during the term of this Lease by Tenant or any other party other than Landlord and its agents and employees, shall list the Tenant or its agent as a responsible party and in no way shall attribute responsibility for any such Hazardous Materials to Landlord.

Landlord may, at its expense, commission environmental audits of the Demised Premises at any time after prior written notice to Tenant, it being understood that Landlord shall be responsible for the repair of any damage caused by such environmental audit.

Tenant’s obligations under this Section 4.04 shall survive the expiration or termination of this Lease.

ARTICLE FIVE

Utility Charges

supplying any such service to or upon the Demised Premises. Tenant expressly agrees that Landlord is not, nor shall it be, required to furnish to Tenant or any other occupant of the Demised Premises, during the term hereof, any water, sewer, gas, heat, electricity, light, power or any other facilities, equipment, labor, materials or services of any kind whatsoever, and Landlord shall not be liable for any loss or damage suffered by Tenant as a result of a failure of any such services to be available to the Demised Premises.

ARTICLE SIX

Indemnification and No Liability of Landlord

SECTION 6.01. Tenant covenants and agrees, at its sole cost and expense, to indemnify and save harmless Landlord against and from any and all loss, cost, damage or claims by or on behalf of any person, firm or corporation, arising from, in or about the Demised Premises during the term hereof, and further to indemnify and save Landlord harmless against and from any and all claims arising from any condition of any building on the Demised Premises, or of any vaults, passageways or spaces therein or appurtenant thereto, or any sidewalks or roadways adjacent thereto, arising from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed, pursuant to the terms of this Lease, or arising from any act or negligence of Tenant, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the term hereof, in or about the Demised Premises, or upon or under the sidewalks, the parking areas and the roadways, and the land adjacent thereto, and from and against all costs, counsel fees, expenses and liabilities incurred in or about any such claim, action or proceeding brought thereon; and in case any action or proceeding be brought against Landlord by reason of any such a claim, Tenant upon notice from Landlord covenants to resist or defend such action or proceeding by counsel satisfactory to Landlord. The provisions of this Section 6.01 shall not be construed to result in Tenant’s indemnifying Landlord against the consequences of Landlord’s gross negligence or willful misconduct or that of Landlord’s agents or employees; rather, Landlord covenants and agrees, at its sole cost and expense, to indemnify and save harmless Tenant against and from any and all loss, costs, damages or claims by or on behalf of any person, firm or corporation, arising from Landlord’s gross negligence or willful misconduct during the term of this Lease. The obligations under this Section 6.01 shall survive the expiration or termination of this Lease.

SECTION 6.02. In the event of any litigation arising out of or in connection with this Lease or any instrument or documents executed pursuant hereto, the prevailing party shall be entitled to recover all costs, expenses and reasonable attorneys’ fees incurred by it, including, without limitation, those incurred through the pre-trial, trial or appeal stage of any lawsuit, or those incurred in federal bankruptcy or reorganization proceedings, or in connection with enforcing or collecting upon any final judgment.

Tenant, for, and Tenant or any person, firm or corporation claiming by, through or under Tenant hereby release Landlord from, all liability whatsoever arising from any injury, loss or damage to any persons or to the Demised Premises, or to any property of Tenant, or of any other person, contained in or upon the Demised Premises, caused by or arising or resulting from the electric wiring, or plumbing, water, steam, sewerage, or other pipes, or by or from any machinery or apparatus, or by or from any other defect whatsoever, or by or from any injury or damage caused by, arising or resulting from lightning, wind, tempest, water, in, upon or coming through or falling from the roof, skylight, trapdoors, windows, marquees, metal or glass awning, or by or from other actions of the elements, or from any injury or damage caused by or arising, or resulting from acts or negligence of any occupant or occupants of adjacent, contiguous or neighboring premises, or any other cause whatsoever.

ARTICLE SEVEN

Maintenance and Repairs

SECTION 7.01. Tenant shall, throughout the term hereof until the surrender of the Demised Premises (which is governed by Article Fifteen hereof), and, except as may be otherwise expressly provided herein, at no expense whatsoever to Landlord, take good care of the Demised Premises and, subject to the rights of Tenant under Article Nine of this Lease, shall not do or suffer any waste with respect thereto, and Tenant shall, except as may be otherwise expressly provided herein, promptly make all repairs to maintain the Demised Premises in good and lawful order and condition. When used in this Article, the term “repairs” shall include replacement, restoration and/or renewals when necessary. The provisions and conditions of Article Nine applicable to changes or alterations shall similarly apply to repairs required to be done by Tenant under this Article. Tenant shall keep and maintain all portions of the Demised Premises, including, without limitation, the roof and structure of the building and all building equipment, plumbing, and HVAC systems in good working order and condition and shall maintain the sidewalks, in a clean and orderly condition, free of accumulation of water, dirt and rubbish. Except as otherwise provided in Article Fifteen, nothing herein contained shall be construed to prevent Tenant from removing from the Demised Premises its own trade fixtures, furniture, and equipment on the condition, however, that Tenant shall, at its own cost and expense, and it hereby agrees to, repair any and all damages to the Demised Premises resulting from or caused by the removal thereof, and not from ordinary wear and tear.

SECTION 7.02. Tenant shall permit Landlord and the authorized representatives of Landlord to enter the Demised Premises upon reasonable notice at all reasonable times during usual business hours for the purpose of exhibiting or inspecting the same and of making any necessary repairs to the Demised Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority, or that may be necessary to prevent waste or deterioration in connection with the Demised Premises, which Tenant is obligated, but has failed, to make, perform, or prevent, as the case may be. Nothing in this Lease shall imply any duty upon the part of Landlord to do any such work or to make any alterations, repairs, additions or improvements to the Demised Premises, of any kind whatsoever except to the extent required as a result of Landlord’s gross negligence or willful misconduct or that of its agents or employees. The performance thereof by Landlord shall not constitute a waiver of Tenant’s default in failing to perform the same. Landlord shall not in any event (except for events caused by Landlord’s default hereunder) be liable for inconvenience, annoyance, disturbance, loss of business or other damage of Tenant or any other occupant of the Demised Premises or part thereof, by reason of making repairs or the performance of any work on the Demised Premises or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever. Landlord shall, however, in connection with the doing of any such work cause as little inconvenience, annoyance, disturbance, loss of business or other damage to Tenant or any such other occupant as may be reasonably possible in the circumstances.

ARTICLE EIGHT

Mechanics’ Lien

SECTION 8.01. Tenant shall not suffer or permit any liens to stand against the Demised Premises or any part thereof by reason of any work, labor, services or materials done for, or supplied, or claimed to have been done for, or supplied to, Tenant or anyone holding the Demised Premises or any part thereof through or under Tenant. If any such lien shall at any time be filed against the Demised Premises, Tenant shall cause the same to be discharged of record within thirty (30) days after the date of filing the same, by either payment, deposit or bond. If Tenant shall fail to discharge any such lien within such period, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, procure the discharge of the same either by paying amount claimed to be due by deposit in court or bonding. Any amount paid or deposited by Landlord for any of the aforesaid purposes, and all legal and other expenses of Landlord, including counsel fees, in defending any such action or in or about procuring the discharge of such lien, with all necessary disbursements in connection therewith, together with interest thereon at a rate of twelve percent (12%) per annum from the date of payment or deposit, shall become due and payable forthwith by Tenant to Landlord, or, at the option of Landlord, shall be payable by Tenant to Landlord as additional rent, as provided in Article Twelve hereof.

SECTION 8.02. Nothing in this Lease shall be deemed to be, or construed in any way as constituting, the consent or request of Landlord, expressed or implied, by inference or otherwise, to any person, firm or corporation for the performance of any labor or the furnishing of any materials for any construction, rebuilding, alteration or repair of or to the Demised Premises or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials which might in any way give rise to the right to file any lien against Landlord’s interest in the Demised Premises. Landlord shall have the right to post and keep posted at all reasonable times on the Demised Premises any notices which Landlord shall be required so to post for the protection of Landlord and the Demised Premises from any such lien. Tenant agrees to promptly execute such instruments in recordable form in accordance with the terms and provisions of Florida Statute 713.10. As provided by Chapter 713, Florida Statutes, Landlord hereby notifies all persons and entities that any lien claimed by any party as the result of improving the Demised Premises or any improvements thereon pursuant to a contract with Tenant, or with any person other than Landlord, shall extend to, and only to, the right, title and interest in and to the Demised Premises, if any, of the person contracting for such improvements. This paragraph shall be construed so as to prohibit, in accordance with the provisions of Chapter 713, Florida Statutes, the interest of Landlord in the Demised Premises being subject to any lien for any improvements made by Tenant or any other person on the Demised Premises.

SECTION 8.03. Landlord and Tenant hereby agree to execute a memorandum of lease for recording in the Public Records of Hillsborough County, Florida, in form and substance mutually agreeable to Landlord and Tenant, which memorandum of lease shall contain the terms and conditions of the option to purchase as set forth in Article Thirty-Three hereof and the prohibition on mechanics’ liens as set forth in Section 9.01 hereof. Upon the expiration of the Term of this Lease (including any renewal terms), Landlord and Tenant hereby agree to execute a termination of memorandum of lease for recording in the Public Records of Hillsborough County, Florida, in form and substance mutually agreeable to Landlord and Tenant.

ARTICLE NINE

Alterations

unreasonably withheld or delayed. Landlord’s prior written consent shall not be required in instances of non-structural alterations to the Demised Premises or in instances where structural alterations are required by an automobile manufacturer(s) as a condition of continuing the dealership franchise, but Tenant shall provide prior written notice of any such alteration prior to the commencement of any work. Tenant further agrees that it will not make any other alterations or improvements which would change the character of said building or buildings, or which would weaken or impair the structural integrity, or lessen the value of said building or buildings.

SECTION 9.02. Provided Tenant has obtained in the prior written consent of Landlord in accordance with the terms of Section 9.01 hereof if such consent is required, Tenant is granted the right, at its own cost, to make such alterations, additions, enlargements and improvements in and to the building or buildings now or hereafter erected upon the Demised Premises as it may deem desirable for its use, but subject, however, to the following provisions:

(a) The same shall be performed in a first-class workmanlike manner.

(b) Tenant shall cause such plans and specifications to be prepared and will furnish copies thereof to Landlord prior to the commencement of such alterations, and, in instances where Landlord’s prior consent is required pursuant to Section 9.01 above, no work shall be done except in accordance with plans and specifications approved by Landlord, such approval not to be unreasonably withheld or delayed. Landlord shall be deemed to have approved any plans and specifications submitted by Tenant if Landlord does not disapprove the same within fifteen (15) business days. Tenant further agrees that, before the commencement of any such alterations, it will file such plans and specifications with, and obtain the approval thereof by, all municipal or other governmental departments or authorities having jurisdiction thereof. Copies of all such approvals, authorizations, permits and consents of governmental authorities shall be delivered to and retained by Landlord. Landlord shall execute and deliver to Tenant such consents by Landlord as may be required by any such departments or authorities, it being understood, however, that any such consent or consents by Landlord shall not operate or be construed as a consent by Landlord for the purpose of filing any lien or making any charge of any kind whatsoever against either Landlord or the Demised Premises or as a representation or warranty that such plans and specifications will comply with any applicable laws or regulations.

(c) All such alteration work shall be done subject to, and in accordance with, all applicable laws, rules, regulations, and other requirements of all governmental authorities having jurisdiction thereof and of the local Board of Fire Underwriters or of any similar body.

(d) Tenant shall procure and maintain such insurance as Landlord may reasonably require in connection with such alteration work.

(e) Tenant shall promptly pay and discharge all costs, expenses, damages and other liabilities which may arise in connection with or by reason of such alteration work.

(f) Tenant shall pay the amount of any increase in premiums on insurance policies occasioned by the making of any such alterations.

(g) Except in instances of non-structural alterations to the Demised Premises, Tenant’s contractor must be approved by Landlord, which approval shall not be unreasonably withheld or delayed.

(h) Upon the completion by Tenant of such alteration work, Tenant shall furnish to Landlord (in form and substance reasonably acceptable to Landlord) contractor’s affidavits, full and final waivers of liens, and receipted bills covering all labor and materials expended and used in connection with the performance of such alteration work.

SECTION 9.03. All such alterations made by Tenant shall immediately be and become part of the realty and the sole and absolute property of Landlord and shall remain upon and be surrendered with the Demised Premises at the expiration or other termination of this Lease.

ARTICLE TEN

Insurance and Damages

SECTION 10.01. Tenant, at is sole cost and expense, shall obtain and continuously maintain in full force and effect during the term of this Lease policies of insurance covering any and all improvements located on the Demised Premises (the “improvements”) naming the Landlord as loss payee, against (a) loss or damage by fire; (b) loss or damage from such other risks or hazards now or hereafter embraced by an “Extended Coverage Endorsement,” including, but not limited to, windstorm, hail, explosion, vandalism, riot and civil commotion, damage from vehicles, smoke damage, water damage and debris removal; (c) loss for flood if the Demised Premises are in a designated flood or flood insurance area; and (d) loss from so-called explosion, collapse and underground hazards; and (e) loss or damage from such other risks or hazards of a similar or dissimilar nature which are now or may hereafter be customarily insured against with respect to improvements similar in construction, design, general location, use and occupancy to the improvements. At all times, such insurance coverage shall be in an amount equal to one hundred percent (100%) of the then “full replacement cost” of the improvements. “Full Replacement Cost” shall be interpreted to mean the cost of replacing the improvements without deduction for depreciation or wear and tear, and it shall include a reasonable sum for architectural, engineering, legal, administrative and supervisory fees connected with the restoration or replacement of the improvements in the event of damage thereto or destruction thereof. Notwithstanding the foregoing, Tenant shall not be deemed to be in breach of this Section 10.01 if Tenant maintains in force such policies of insurance with respect to such loss or damage as are maintained by the Companies (as the term “Companies” is defined in the Asset Exchange Agreement) as of the date of the Asset Exchange Agreement.

SECTION 10.02. In case of damage to or destruction of any improvements on the Demised Premises or any part thereof by firer other cause, Tenant shall promptly give written notice thereof to Landlord, and Tenant shall, at Tenant’s sole cost and expense, and whether or not the insurance proceeds, if any, shall be sufficient for the purpose, restore, repair, replace, rebuild or alter the same as nearly as possible to its condition immediately prior to such damage or destruction taking into account, however, such reasonable modifications to such improvements to accommodate Tenant’s then existing business conditions, together with such other changes or alterations as may be made at Tenant’s election, all in conformity with and subject to the conditions of Article Nine hereof. Such restorations, repairs, replacements, rebuilding or alterations shall be commenced within ninety (90) days from the date of occurrence of such damage or destruction, which time shall be extended by a time commensurate with any delays due to adjustment of insurance, preparation of plans and specifications, and applications for zoning variances and rezoning and other governmental approvals, and shall thereafter be prosecuted with reasonable diligence, unavoidable delays excepted.

SECTION 10.03.

A. All insurance money paid on account of such damage or destruction shall be paid to and held by Landlord and Tenant as co-trustees and, shall be applied to the payment of the cost of the aforesaid restoration, repairs, replacement, rebuilding or alterations, including the cost of temporary repairs or for the protection of property pending the completion of permanent restoration, repairs, replacements, rebuilding or alterations (all of which temporary repairs, protection of property and permanent restoration, repairs, replacement, rebuilding or alterations are hereinafter collectively referred to as the “restoration”), and shall be paid out to, or at the direction of, Tenant from time to time as such

restoration progresses, in installments equal to ninety percent (90%) of the work completed and one hundred percent (100%) of the materials furnished, and shall be received by Tenant for the purpose of paying the cost of such restoration upon the written request of Tenant which shall be accompanied by the following:

(1) a verified certificate signed by Tenant, or a certificate signed by the architect or engineer in charge of such construction, dated not more than thirty (30) days prior to such request, setting forth the following:

(a) that the sum then requested either has been paid by Tenant, or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished materials for the restoration therein specified, and giving a brief description of such services and materials and the several amounts so paid or due to each of said persons in respect thereof, and stating that no part of such expenditures has been or is being made the basis, in any previous or then pending request, for the withdrawal of insurance money or has been made out of the proceeds of insurance received by Tenant, and that the sum then requested does not exceed the value of the services and materials described in the certificate;

(b) that except for the amount, if any, stated pursuant to the foregoing subclause (l)(a) in such certificate to be due for services or materials, there is no outstanding indebtedness shown on Tenant’s books or known to the person signing such certificate, after due inquiry, which is due on the date of such certificate for labor, wages, materials, supplies or services in connection with such restoration which, if unpaid, might become the basis of a vendor’s, construction, mechanic’s, laborer’s or materialman’s statutory or similar lien upon such restoration or upon the Demised Premises or any part thereof; and

(c) that the cost, as estimated by the person signing such certificate, of the restoration required to be done subsequent to the date of such certificate in order to complete the same, does not exceed the aggregate of the insurance money remaining in the hands of Landlord, after payment of the sum requested in such certificate; and

(2) a certificate or endorsement of a title insurance company doing business in the city where the Demised Premises are located showing that there has not been filed in the public records of the county where the Demised Premises are located, with respect to the Demised Premises or any part thereof, any vendor’s, construction, mechanic’s, laborer’s, materialman’s or like lien, which has not been discharged of record, except such as will be discharged by payment of the amount then requested; and

(3) lien waivers from all contractors, subcontractors and materialmen performing work on the restoration with regard to any sums previously advanced as part of the restoration, and upon request by Tenant for the balance of such funds upon completion of such restoration, Landlord shall have received, in form and substance reasonably satisfactory to Landlord, a final contractor’s affidavit from the general contractor, and full and final waivers of liens and receipted bills covering all labor and materials expended and used in connection with the restoration.

Any balance of such funds remaining after the completion of such restoration shall be paid to Landlord upon completion of such restoration in accordance with the requirements of this Article Ten. Upon compliance with the foregoing provisions of this Section, Landlord and Tenant shall, out of such insurance money, pay or cause to be paid to Tenant or the persons named (pursuant to subclause (l)(a) of this Section) in such certificate the respective amounts stated therein to have been paid by Tenant or to be due to them, as the case may be.

B. If the net insurance money as aforesaid at the time held by Landlord and Tenant shall be insufficient to pay the entire cost of such restoration, Tenant shall pay the deficiency.

C. Upon receipt by Landlord of satisfactory evidence, of the character required by clauses (1), (2) and (3) of this Section, demonstrating that the restoration has been completed and paid for in full and that there are no liens of the character referred to therein, the balance of the insurance money payable to Tenant for such restoration pursuant to the terms hereof shall be paid to Tenant.

D. Anything herein contained to the contrary notwithstanding, in the event of the termination of this Lease pursuant to Article Thirteen or Section 10.06, any and all insurance proceeds then on hand shall be retained by Landlord, and Tenant shall have no right, title, interest or claim thereto or therein whatsoever.

SECTION 10.04. In case of damage to or destruction of any improvements on the Demised Premises by fire or other cause which shall amount to substantially total destruction thereof or shall be of such character as in the judgment of Tenant to require demolition of the remainder thereof, Tenant shall have the right, at its option, either to restore, replace or rebuild the same as provided in this Lease, or to demolish the remainder of the same and to construct, in replacement thereof, a new building, subject in all respects to the provisions of Article Nine hereof and Tenant shall in connection therewith duly and faithfully comply with all of such provisions.

SECTION 10.05. Notwithstanding any damage to or destruction of any improvements on the Demised Premises or any part thereof by fire or other casualty (whether or not the same results in any of the Demised Premises or the improvements thereon being rendered untenantable), and notwithstanding any disruption in Tenant’s use of the Demised Premises resulting from such casualty or from the repair or restoration thereof, in no event shall the rent payable by Tenant hereunder (including the base rent and any Impositions or other charges) be reduced or abated, whether in full or in part, and Tenant shall continue to pay the same to Landlord during the entire period that any or all of the Demised Premises shall remain unrepaired without notice or demand and without abatement, deduction or set-off.

SECTION 10.06. Anything herein to the contrary notwithstanding, if, during the last two (2) years of the initial term, or during the last year of any Renewal Term hereof, the improvements on the Demised Premises shall be so damaged by fire or otherwise that the cost of replacement or restoration thereof shall exceed fifty percent (50%) of the then replacement value of the improvements so damaged then Tenant may elect to cancel this Lease on written notice given within sixty (60) days after such damage, and this Lease shall come to an end on the delivery of such notice; provided, however, that simultaneously with the giving of its notice, Tenant shall deliver to Landlord an assignment duly executed and acknowledged by Tenant and the holders of all mortgages on this Lease, transferring to Landlord all of the rights and claims of Tenant and of such holders in, to and under all insurance proceeds covering such damage or destruction and in and to all insurance policies carried by Tenant pursuant to this Lease. In the event of any such cancellation, Tenant shall not be obligated to perform any restoration, the term of this Lease shall expire and all renewal rights shall terminate as of the effective date of such written notice, all such insurance proceeds shall be the property of Landlord, and neither Tenant nor the holder of any mortgage on this Lease shall have any rights or claims with respect thereto. No such cancellation, however, shall release Tenant from any obligation hereunder for rent, taxes and insurance premiums accrued or payable for or during any period prior to the effective date of such cancellation, and any prepaid rent, taxes and insurance beyond the effective date of such cancellation shall be adjusted.

SECTION 10.07. Tenant agrees to maintain, throughout the term hereof, public liability insurance protecting Landlord against claims of any and all persons, firms and corporations for personal injury, death or property damage occurring upon, in or about the Demised Premises, or any elevators or escalators therein or thereon, or in or about the adjoining streets, sidewalks and passageways, such insurance to afford protection with the coverages having such limits as are not less than those maintained by the Companies as of the date of the Asset Exchange Agreement.

SECTION 10.08. Each insurance policy required under this Article Ten shall have attached thereto (a) an endorsement that such policy shall not be canceled or materially changed without at least thirty (30) days prior written notice to Landlord, and (b) an endorsement to the effect that the insurance as to the interest of Landlord shall not be invalidated by any act or neglect of Landlord or Tenant. All policies or insurance shall be written in companies reasonably satisfactory to Landlord and licensed to do business in the State of Florida. Certificates of insurance, evidencing the coverages required hereby, in a form reasonably acceptable to Landlord, shall be delivered to Landlord upon commencement of the term, and additional certificates of insurance shall be delivered to Landlord not less than twenty (20) days prior to the expiration of the then current policy term.

SECTION 10.09. Tenant shall cause to be inserted in the policy or policies of insurance required by this Article Ten hereof a so-called “Waiver of Subrogation clause” as to Landlord. Tenant hereby waives, releases and discharges Landlord, its agents and employees from all claims whatsoever arising out of loss, claim, expense or damage to or destruction recoverable by insurance required under this Article Ten notwithstanding that such loss, claim, expense or damage may have been caused by Landlord, its agents or employees, and Tenant agrees to look to the insurance coverage only in the event of such loss.

SECTION 10.10. Landlord and Tenant each agrees that it will cooperate with the other, to such extent as such other party may reasonably require, in connection with the prosecution or defense of any action or proceeding arising out of, or for the collection of any insurance monies that may be due in the event of, any loss or damage, and that it will execute and deliver to such other party such instruments as may be required to facilitate the recovery of any insurance monies.

SECTION 10.1 1. Tenant agrees to give prompt notice to Landlord with respect to all fires or other casualties occurring upon the Demised Premises.

ARTICLE ELEVEN

Condemnation

SECTION 1 1.01. If title to the fee of the whole of the Demised Premises or so much thereof as to render the remainder no longer useful for its intended use herein shall be taken or condemned by any competent authority, for any public or quasi-public use, this Lease shall cease and terminate, and all annual rent, additional rent and other charges paid or payable by Tenant hereunder shall be apportioned, as of the date of vesting of title in such condemnation proceeding, and the total award made with respect to the Demised Premises shall be paid to Landlord. Tenant shall surrender the Demised Premises as of the date of such vesting of title. Notwithstanding the foregoing, Tenant shall be entitled to maintain a separate action for an award to compensate Tenant for any moving expenses and damage to trade fixtures of Tenant on the Demised Premises.

SECTION 1 1.02. If title to the fee of less than the whole of the Demised Premises shall be so taken or condemned or conveyed by Landlord in lieu thereof, but the remainder is useful for its intended use herein, then the proceeds paid on account of such taking shall be paid to and held by Landlord and Tenant as co-trustees and shall be made available to Tenant in accordance with the terms of Section 10.3 above and Tenant shall restore the untaken portion of any building or buildings on the Demised Premises, so that each such building, respectively, shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as the building existing immediately prior to such condemnation or taking. All amounts received as a result of such condemnation

or conveyance in lieu thereof, in excess of the amounts paid to so restore the building or buildings located on the Demised Premises, shall be retained by Landlord. The rent owed to Landlord by Tenant under this Lease shall be equitably adjusted based upon the portion of the Demised Premises so taken, condemned or conveyed by Landlord in lieu thereof.

ARTICLE TWELVE

Landlord’s right to Perform Tenant’s Covenants

SECTION 12.01. Tenant covenants and agrees that if it shall at any time fail to pay any Tax pursuant to the provisions of Article Three hereof, or to take out, pay for, maintain or deliver any of the insurance policies provided for in Article Ten hereof, or shall fail to make any other payment or perform any other act which Tenant is obligated to make or perform under this Lease, then Landlord may, without waiving, or releasing Tenant from, any obligations of Tenant in this Lease contained, pay any such Tax, effect any such insurance coverage and pay premiums therefor, and make any other payment or perform any other act which Tenant is obligated to perform under this Lease, in such manner and to such extent as shall be necessary, and, in exercising any such rights, pay necessary and incidental costs and expenses, employ counsel and incur and pay reasonable attorneys’ fees. All sums so paid by Landlord and all necessary and incidental costs and expenses in connection with the performance of any such act by Landlord, together with interest thereon at a rate of twelve percent (12%) per annum from the date of the making of such expenditure by Landlord, shall be deemed additional rent hereunder and, except as otherwise in this Lease expressly provided, shall be payable to Landlord on demand or at the option of Landlord may be added to any rent then due or thereafter becoming due under this Lease, and Tenant covenants to pay any such sum or sums with interest as aforesaid and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of the rent.

ARTICLE THIRTEEN

Default Provisions and Remedies

SECTION 13.01. This Lease and the demised term are subject to the limitation that if, at any time during the term hereof, any one or more of the following events (herein called an “event of default”) shall occur, that is to say:

(a)

if Tenant shall fail to pay any installment of the rent set forth in Section 2.01 of this Lease, or any part thereof, when the same shall become due and payable, and such failure shall continue for five (5) days after written notice thereof from Landlord; provided, however, Landlord shall only be obligated to provide two (2) such five (5) day notice periods within any twelve (12) month period during the term of this Lease, and, upon the third delinquency in the payment of any rent due hereunder during any said twelve (12) month period, Tenant shall immediately be in default under this Lease without any further notice from Landlord; or

(b)

if Tenant shall fail to pay any sum or other charge required to be paid by Tenant hereunder (other than the payment of the rental as set forth in said Section 2.01), and such failure shall continue for thirty (30) days after written notice thereof from Landlord to Tenant; or

(c)

if Tenant shall make an assignment for the benefit of its creditors; or

(d)

if any petition shall be filed against Tenant in any court, whether or not pursuant to any statute of the United States or of any state, in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceedings, and remains undismissed for sixty (60) days or Tenant requires or consents to any such petition or filing, or if any such petition shall be so filed by Tenant; or

(e)

if, in any proceeding, a receiver or trustee be appointed for all or any portion of Tenant’s property; or

(f)

if Tenant shall abandon the Demised Premises for a period in excess of thirty (30) days, it being presumed that Tenant shall have abandoned the Demised Premises if it shall fail to continuously operate its business for such thirty (30) consecutive day period without excuse as specifically allowed under the terms and provisions of this Lease; or

(g)

if Tenant shall assign, mortgage or encumber this Lease, or sublet the whole or any part of the Demised Premises, otherwise than as expressly permitted hereunder, or if this Lease or the estate of Tenant hereunder shall be transferred, or passed to, or devolve upon, any person, firm or corporation other than Tenant herein named, except in the manner permitted hereunder; or

(h)

if Tenant shall fail to perform or observe any other requirement of this Lease (not hereinbefore in this Section 13.01 specifically referred to) on the part of Tenant to be performed or observed, and such failure shall continue for thirty (30) days after written notice thereof from Landlord to Tenant unless a shorter period of time is allowed under this Lease; provided, however, that, if such default cannot be cured with the exercise of diligent efforts within such thirty (30) days, such thirty (30) day period shall be extended for such period of time, not exceeding an additional sixty (60) days, as shall be required for Tenant, in the exercise of diligent efforts, to cure the default unless a shorter period of time is required under the provisions of any mortgage encumbering the Demised Premises; or

(i)

If an “Event of Default” shall occur under the terms and conditions of that certain Lease Agreement of even date herewith by and between Landlord and Tenant with respect to the parcel of land and premises located at 9210 Adamo Drive, Tampa, Florida, (the “Adamo Drive Lease”) if, and only if, at such time, the Landlord of the Adamo Drive Lease and the Landlord under this Lease shall be the same person, or Affiliates of one another. For purposes of this Lease, the term “Affiliate”, as used to indicate a relationship with a specific person, shall mean a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified, and in the case of a specified person who is a natural person, also includes his spouse, his former spouses, his issue, his parents, his estate and any trust for the benefit of his spouse and/or issue,

then upon the happening of any one or more of the aforementioned events of default, and the expiration of the period of time prescribed in any such notice, Landlord may exercise any and all rights and remedies under this Lease and Florida law. Upon the election of Landlord, this Lease and the term hereof, as well as all of the right, title and interest of Tenant hereunder, shall wholly cease and expire and Tenant shall then quit and surrender the Demised Premises to Landlord, but Tenant shall nonetheless and in all events remain liable as hereinafter provided.

SECTION 13.02. In the event of any such default or breach by Tenant, in addition to all remedies available at law or in equity, Landlord may at any time thereafter, with or without notice, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach:

(a)

Terminate Tenant’s right to possession of the Demised Premises by any lawful means, in which case the term of this Lease shall expire and Tenant shall immediately surrender possession of the Demised Premises to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant’s default including, but not limited to, the cost of recovering possession of the Demised Premises, expenses of reletting, reasonable attorneys’ fees, and any real estate commission actually paid or required to be paid.

(b)

Reenter and take possession of the Demised Premises and relet the same for Tenant’s account, holding Tenant liable in damages for all expenses incurred by Landlord in any such reletting and for any difference between the amount of rents received from such reletting and those due and payable under the terms of this Lease, and Landlord shall not be deemed to have thereby accepted a surrender of the Demised Premises. In the event Landlord relets the Demised Premises, Landlord shall have the right to lease or let the Demised Premises or portions thereof for such periods of time and at such rents and for such use and upon such covenants and conditions as Landlord, in its sole discretion, may elect, and Landlord may make such repairs and improvements to the Demised Premises as may be necessary. Landlord shall be entitled to bring such actions or proceedings for the recovery of any deficits due to Landlord as it may deem advisable, without being obligated to wait until the end of the term, and commencement or maintenance of any one or more actions shall not bar Landlord from bringing other or subsequent actions for further accruals, nor shall anything in this subparagraph (b) limit or prohibit Landlord’s right at any time to accelerate all rents and charges due from Tenant to the end of the term, or to terminate this Lease by giving notice to Tenant.

(c)

Declare all rents and charges due hereunder immediately due and payable, and thereupon all such rents and fixed charges to the end of the term shall thereupon be accelerated; provided, however, such accelerated amounts shall be discounted to their then present value on the basis of a five percent (5%) per annum discount from the respective dates that such amount should have been paid hereunder. In the event that any charges due hereunder cannot be exactly determined as of the date of acceleration, the amount of such charges shall be determined by ‘Landlord in a reasonable manner based on historical increases in such charges.

(d)

Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of Florida.

Section 13.03. In the event Tenant fails to pay any installment of rent or other sums required to be paid by Tenant under Article 2 of this Lease within the five (5) day period immediately following the date such rent or other sum is due, Tenant shall pay to Landlord a late charge in the amount of four percent (4%)of such outstanding amount. Upon the occurrence of an Event of Default, any amounts herein required to be paid by Tenant which are not paid when due, shall bear interest at a rate equal to twelve percent (12%) per annum from the date until paid.

Section 13.04. In the event of any litigation or other judicial action with respect to this Lease, the prevailing party, in such action shall, in addition to all other remedies, be entitled to recover from the other party all costs and expenses of such litigation or judicial action, including, but not limited to, all attorneys’ fees or paralegals’ fees incurred in connection therewith, and all such fees incurred in any pretrial, trial, appellate or bankruptcy proceedings.

Section 13.05. As a material inducement to Landlord’s entering into this Lease, Tenant hereby expressly and voluntarily waives any notices required by law, including without limitation the three (3) day notice required by Florida Statute 83.20. The parties hereto shall, and they hereby do, waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of, or in any way connected with, this Lease, the Demised Premises or any claim of injury or damage. In the event Landlord commences any proceeding to enforce this Lease or the landlord/tenant relationship between the parties, or for nonpayment of minimum rent, additional rent or any other sums due Landlord from Tenant under this Lease, Tenant will not interpose any counterclaim of whatever nature or description in any such proceedings unless the failure to do so would bar Tenant’s right to do so in a separate action. In the event Tenant must, because of applicable court rules, interpose any counterclaim or other claim against Landlord in such proceedings, Landlord and Tenant covenant and agree that, in addition to any other lawful remedy of Landlord, upon motion of Landlord, such counterclaim or other claim asserted by Tenant shall be severed out of the proceedings instituted by Landlord (and, if necessary, transfer to a court of different jurisdiction), and the proceedings instituted by Landlord may proceed to final judgment separately and apart from and without consolidation with or reference to the status of each counterclaim or any other claim asserted by Tenant. Tenant hereby consents to the jurisdiction of any state court whose jurisdiction includes the county in which the Premises are located. In the event of any action or proceeding arising from this Lease or any other agreement to which Landlord and Tenant are a party, Tenant hereby stipulates that service of process upon Tenant shall be effective at the Demised Premises.

ARTICLE FOURTEEN

Cumulative Remedies-Waiver-Oral Change

SECTION 14.01. Every term, condition, agreement or provision contained in this Lease shall be deemed to be also a covenant.

SECTION 14.02. The specified remedies to which Landlord may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which Landlord may be lawfully entitled in case of any breach or threatened breach by Tenant of any provision of this Lease.

SECTION 14.03. The failure of either party to insist in any one or more cases upon the strict performance of any of the terms, covenants, conditions, provisions or agreements of this Lease or to exercise any option herein contained shall not be construed as a waiver or a relinquishment for the future of any such term, covenant, condition, provision, agreement or option. A receipt and acceptance by Landlord of rent or any other payment, or the acceptance of performance of anything required by this Lease to be performed, with knowledge of the breach of any term, covenant, condition, provision or agreement of this Lease, shall not be deemed a waiver of such breach, nor shall any such acceptance of rent in a lesser amount than is herein provided for (regardless of any endorsement on any check, or any statement in any letter accompanying any payment of rent) operate or be construed either as an accord and satisfaction or in any manner other than as a payment on account of the earliest rent then unpaid by Tenant, and no waiver by Landlord of any term, covenant, condition, provision or agreement of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord.

SECTION 14.04. In addition to the other remedies provided Landlord in this Lease, Landlord shall be entitled to the immediate restraint by injunction of any violation or attempted or threatened violation, of any of the terms, covenants, conditions, provisions or agreements of this Lease.

SECTION 14.05. This Lease may not be changed orally, but only by agreement in writing signed by the party against whom enforcement of the change, modification or discharge is sought or by his agent.

SECTION 14.06. Whenever the context hereof shall so require, the singular shall include the plural, the male gender shall include the female gender and neuter and vice versa. This Lease and any related instruments shall not be construed more strictly against one party than against the other by virtue of the fact that initial drafts were made and prepared by counsel for one of the parties, it being recognized that this Lease and any related instruments are the product of extensive negotiations between the parties hereto and that both parties hereto have contributed substantially and materially to the final preparation of this Lease and all related instruments.

ARTICLE FIFTEEN

Surrender of Premises

Section 1 5.0 1. Tenant shall, upon the expiration or termination of this Lease for any reason whatsoever, surrender to Landlord the buildings, structures and building equipment then upon the Demised Premises, together with all alterations and replacements thereof then on the Demised Premises, in the same good order, condition and repair, that the Demised Premises are in on the completion of the construction contemplated hereby, except for reasonable and ordinary wear and tear. (Wherever the term “reasonable and ordinary wear and tear” is used in this Lease, it should be understood to contemplate that Tenant will have performed a reasonable maintenance program during the term hereof.) At the expiration of termination of this Lease for any reason whatsoever, Landlord shall have the right, at Landlord’s sole cost and expense, to inspect the Demised Premises through an independent licensed engineer and/or contractor in order to determine that all portions of the Demised Premises are in such good condition, ordinary wear and tear excepted. Any repairs deemed necessary in the opinion of the inspecting agent may be paid for out of proceeds of the Security Deposit. Title to all of Tenant’s trade fixtures, furniture and equipment (other than building equipment) installed in the Demised Premises shall remain in Tenant, and upon expiration or other termination of this Lease, the same may and, upon the demand of Landlord, shall be removed and any resultant damage to the Demised Premises shall be repaired, by and at the expense of Tenant; provided, however, that if, upon any such expiration or other termination of this Lease, Tenant shall be delinquent or in default under any of the provisions hereof, Tenant shall not, without Landlord’s prior written consent, be entitled to remove any such trade fixtures, furniture or equipment unless and until such delinquency or default shall have been cured, and if such delinquency or default shall not have been cured by Tenant within thirty (30) days after the date of such expiration or termination, all such trade fixtures, furniture and equipment of Tenant shall, at Landlord’s option, be and become the absolute property of Landlord.

ARTICLE SIXTEEN

Assignment, Subletting and Encumbrances

further assignment, encumbrance, or subletting. Notwithstanding the foregoing, (i) Tenant shall have the right to assign this Lease or sublease all or a portion of the Demised Premises without Landlord’s consent (x) to any entity with which Tenant shall be merged, consolidated or combined or (y) to any entity which shall purchase all or substantially all of Tenant’s assets or (z) to any subsidiary, parent or affiliate of Tenant or any entity which shall own all or substantially all of Tenant’s outstanding shares or partnership or membership interests or (ii) in the event of an “IPO” as that term is defied in the restated and amended limited partnership agreement of Tenant (the “Limited Partnership Agreement”), Tenant may assign its interest in this Lease or sublease the Demised Premises to those transferees contemplated by Section 4.7(g) of the Limited Partnership Agreement and any majority owned subsidiary of such transferee; provided, however, no such assignment or subletting shall relieve Tenant from its obligations or liabilities hereunder.

Notwithstanding any of the foregoing, it is expressly understood that, at all times during the terms of this Lease, Tenant hereunder must be identical to the tenant under the Adamo Drive Lease (although permitted subtenants may differ).

SECTION 16.02. Notwithstanding anything contained in Section 16.01 above to the contrary, Tenant shall have the unrestricted right to mortgage and pledge this Lease, provided, however, that any such mortgage or pledge shall be subject and subordinate to the rights of Landlord hereunder.

ARTICLE SEVENTEEN

Subordination

SECTION 17.01. Tenant agrees and acknowledges that all of Tenant’s right, title and interest under this Lease is automatically subordinate to the lien of any existing or future lender without any further act by Tenant provided that Landlord, concurrently with the execution of this Lease, obtains and delivers to Tenant a nondisturbance agreement in form and substance reasonably satisfactory to Tenant from any existing lender with respect to this Lease and delivers a similar nondisturbance agreement from any future lender(s) as a condition precedent to Tenant’s future subordination. However, in order to manifest and confirm the foregoing, Tenant shall subordinate its leasehold interest in the Demised Premises to the mortgage lien of any financing Landlord may wish to obtain at any time during the Lease term. Provided the aforesaid condition precedent has been satisfied by Landlord, the failure of Tenant to so deliver any such instrument or instruments within ten (10) days after such demand in writing by Landlord shall constitute a default hereunder, and Landlord shall be entitled to all of its remedies. Furthermore, Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to execute such instruments of subordination in the event Tenant fails to execute such instruments within ten (10) days after such demand.

ARTICLE EIGHTEEN

Governing Law

SECTION 18.01. This Lease shall be governed by the laws of the State of Florida. Tampa, Florida, shall be the location for the handling of all disputes hereunder, and all parties hereby consent to personal jurisdiction of any court of competent jurisdiction for Tampa, Florida.

ARTICLE NINETEEN

Estoppel Certificate

SECTION 19.01. Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) business days prior written request by the other party to execute, acknowledge and deliver to the requesting party a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and stating the modifications), and the dates to which the rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Article may be relied upon by any prospective purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of the Demised Premises or any lender or other party doing business with Landlord or Tenant.

ARTICLE TWENTY

Notices

SECTION 20.01. All notices which are required or permitted hereunder must be in writing and shall be deemed to have been given, delivered or made, as the case may be, (notwithstanding lack of actual receipt by the addressee) (i) when delivered by personal delivery or (ii) three (3) business days after having been deposited in the United States mail, certified or registered, return receipt requested, sufficient postage affixed and prepaid, or (iii) one (1) business day after having been deposited with an expedited, overnight courier service (such as by way of example but not limitation, U.S. Express Mail, Federal Express or Purolator), addressed to the party to whom notice is intended to be given at the address set forth below:


Landlord:		Jeffrey I. Wooley
		10000 Lindelaan
		Tampa, Florida 33618

With a copy to:		Andrew J. Lubrano, Esquire
		Hill, Ward & Henderson, P.A.
		Suite 3700 – Barnett Plaza
		101 East Kennedy Boulevard
		Tampa, Florida 33602

Tenant:		Asbury Automotive Tampa, L.P.
		c/o Ripplewood Holdings, L.L.C.
		712 Fifth Avenue, 49th floor
		New York, New York 10019

Any party may change the address to which its notices are sent by giving the other party written notice of any such change in the manner provided in this Section, but notice of change of address is effective only upon receipt.

ARTICLE TWENTY-ONE

Invalidity of Particular Provisions

SECTION 21.01. If any term or provision of this Lease or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law.

ARTICLE TWENTY-TWO

Exculpation of Landlord

SECTION 22.01. Notwithstanding anything to the contrary that may be provided in this Lease, it is specifically understood and agreed, such agreement being a primary consideration of the execution of this Lease by Landlord, that there shall be absolutely no personal liability on the part of Landlord, its successors, assigns or any mortgagee in possession (for the purposes of this paragraph, collectively referred to as “Landlord”), with respect to any of the terms, covenants and conditions of this Lease, and Tenant shall look solely to the equity and all other interests of Landlord in the Demised Premises (including all rental, condemnation, sales and insurance proceeds) for the satisfaction of each and every remedy of Tenant in the event of any breach by Landlord of any of the terms, covenants and conditions of this Lease to be performed by Landlord, such exculpation of liability to be absolute and without any exceptions whatsoever.

ARTICLE TWENTY-THREE

Binding of Covenants and Benefits

SECTION 23.01. Subject to the provisions of this Lease, the terms, conditions, covenants, provisions and agreements herein contained shall be binding upon and inure to the benefit of Landlord, its successors and assigns, and Tenant, its permitted successors and assigns.

The term “Landlord” shall mean the current Landlord, Jeffrey I. Wooley, and any subsequent landlord under this Lease, and the term “Landlord” that is used in this Lease insofar as covenants or obligations on the part of Landlord are concerned shall be limited to mean and include only the owner of the Demised Premises at the time in question, and in the event of any transfer or conveyance of the Demised Premises, then the grantor shall be automatically freed and released from all liability accruing from and after the date of such transfer or conveyance with respect to the performance of any covenant or obligation on the part of Landlord contained in this Lease, it being intended hereby that the covenants and obligations contained in this Lease on the part of Landlord shall be binding on the Landlord, its successors and assigns, only during and in respect to their respective successive periods of ownership.

ARTICLE TWENTY-FIVE

No Partnership or Join Venture

SECTION 25.01. Landlord and Tenant are not and shall not in any way be considered joint venturers, partners or agents of each other, it being expressly understood that the relationship between them is solely that of lessor and lessee and nothing more. Neither party shall have the power to bind or obligate the other in any way unless and except as may be set forth specifically in this Lease.

ARTICLE TWENTY-SIX

Possession and Quiet Enjoyment

SECTION 26.01. Tenant shall have full rights of possession commencing on the Commencement Date. For so long as this Lease is in effect, Tenant may peaceably and quietly enjoy the Demised Premises without hindrance or molestation by Landlord or by any other person lawfully claiming the Demised Premises, subject to the terms and conditions of this Lease.

ARTICLE TWENTY-SEVEN

(Intentionally Reserved)

ARTICLE TWENTY-EIGHT

Brokers

SECTION 28.01. Landlord and Tenant warrant each and to the other that they have not contracted with any other broker or real estate salesperson in connection with this transaction nor are they responsible for any other brokerage fees, commissions or finders fees arising out of this Lease. Each party to this Agreement shall hold the other party harmless of and from any and all real estate brokers’ or salesperson’s commissions or finders’ fees in connection with this transaction which are determined to be due from said indemnifying party by a court of competent and final jurisdiction.

ARTICLE TWENTY-NINE

Radon Gas

SECTION 29.01. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.

ARTICLE THIRTY

Caption and Headings

SECTION 30.01. The captions and headings throughout this Lease are for convenience and reference only and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Lease nor in any way affect this Lease.

ARTICLE THIRTY-ONE

Rights of Leasehold Mortgagees

SECTION 31.01. If Tenant or its successor or permitted assigns shall mortgage this Lease in compliance with the provisions of Section 16.02 hereof, then as long as any such mortgage shall remain unsatisfied of record, the following provisions shall apply:

(a) Landlord, upon serving upon Tenant any notice of default pursuant to the provisions of Article 19 hereof, or any other notice under the provisions of or with respect to this

Lease, shall also serve a copy of such notice upon the holder of such mortgage, at the notice address described below, and no notice by Landlord to Tenant hereunder shall be deemed to have been duly given unless and until a copy thereof has been so served.

(b) Any holder of such mortgage, in case Tenant shall be in default hereunder, shall, within twenty (20) days of its receipt of notice thereof or such longer period as may be specified herein, have right to remedy such default, or cause the same to be remedied, and Landlord shall accept such performance by or at the instance of such holder as if the same had been made by Tenant.

(c) Anything herein contained to the contrary notwithstanding, upon the occurrence of an event of default, other than an event of default due to a default in the payment of money, Landlord shall take no action to effect a termination of this Lease without first giving to the holder of such mortgage written notice thereof and a reasonable time thereafter within which either (i) to obtain possession of the mortgaged property (including possession by a receiver) or (ii) to institute, prosecute and complete foreclosure proceedings or otherwise acquire Tenant’s interest under this Lease with diligence. Such holder upon obtaining possession or acquiring Tenant’s interest under this Lease shall be required promptly to cure all defaults hereunder; provided, however, that (i) such holder shall not be obligated to continue such possession or to continue such foreclosure proceeding after such defaults shall have been cured; (ii) nothing herein contained shall preclude Landlord, subject to the provisions of this Section 31.01, from exercising any rights or remedies under this Lease with respect to any other default by Tenant during the pendency of such foreclosure proceedings; (iii) if such holder shall be a party other than a bank, savings and loan institution, or insurance company which is authorized to do business in the State of Florida (an “Authorized Institution”), such holder shall deposit with Landlord during the period of forbearance by Landlord from taking action to effect a termination of this Lease such security as shall be reasonably satisfactory to Landlord to assure to Landlord the compliance by such holder during the period of such forbearance with the terms, conditions and covenants of this Lease and (iv) such holder, if an Authorized Institution, shall agree with Landlord in writing to comply during the period of such forbearance with the terms, conditions and covenants of this Lease. It is understood and agreed that such holder, or its designee, or any purchaser in foreclosure proceedings (including, without limitation, a corporation formed by such holder) may become the legal owner and holder of this Lease through such foreclosure proceedings or by assignment of this Lease in lieu of foreclosure.

(d) Any notice or other communication which Landlord shall desire or is required to give to or serve upon the holder of a mortgage on this Lease shall be in writing and shall be served by certified mail, return receipt requested, addressed to Bank of America National Trust and Savings Association at 25 1 LaSalle Street, Chicago, Illinois 60697 or at such other address as shall be designated by such holder by notice in writing given to Landlord by certified mail, return receipt requested. Any notice or other communication which the holder of a mortgage on this Lease shall desire or is required to give to or serve upon Landlord shall be deemed to have been duly given or served if sent by certified mail, return receipt requested, addressed to Landlord at Landlord’s address as set forth in Section 20.01 hereof or at such other address as shall be designated by Landlord by notice in writing given to such holder by certified mail.

(e) Anything herein contained to the contrary notwithstanding, the provisions of this Section 31.01 shall inure only to benefit of the holder of the leasehold mortgage which is a first lien. Further, anything herein contained to the contrary notwithstanding, the provisions of this Section 3 1 .01 shall inure only to the benefit of the holder of a leasehold mortgage which has given notice to Landlord of the existence of such leasehold mortgage in accordance with the provisions of Section 20.01 hereof.

(f) Landlord and Tenant shall not enter into any agreement modifying, amending, canceling or surrendering this Lease without the prior written consent of the leasehold mortgagee, which consent shall not be unreasonably withheld, conditioned or delayed.

(g) If any leasehold mortgagee shall acquire title to Tenant’s interest in this Lease, by foreclosure of a mortgage thereon or by assignment in lieu of foreclosure or by an assignment from a nominee or wholly owned subsidiary corporation of such mortgagee, such mortgagee may assign such Lease and shall thereupon be released from all future liability for the performance or observance of the covenant and conditions in such lease contained on the tenant’s part to be performed and observed from and after the date of such assignment, provided that the assignee from such mortgagee shall have assumed such Lease and shall have been approved by Landlord.

(h) No assets of Tenant (including, without limitation, equipment and trade fixtures) located on or about the Demised premises will be deemed by Landlord to be fixtures or to constitute part of Demised premises.

(i) Landlord will not assert, and therefore waives, any liens, whether granted by the Lease, statute or otherwise (including, without limitation, rights of levy or distraint for rent), against the Property.

(j) If Tenant defaults on its obligations to Lender and, as a result, Lender undertakes to enforce its security interest in Tenant’s assets, Landlord will permit Lender within a reasonable period following such default to enter and take possession of the Demised Premises without terminating the Lease provided Lender cures all then existing defaults of Tenant under the Lease and performs all of Tenant’s obligations under the Lease which arise during the period Lender is in possession of the Demised Premises. Lender may cause the Demised Premises to be leased or assigned to an entity designated by Lender and approved by Landlord, such approval not to be unreasonably withheld provided such entity assumes in writing all of Tenant’s obligations under the Lease. In the event Lender takes possession of the Demised Premises pursuant to this paragraph, regardless of Landlord’s consent to a sublease or assignment, Lender shall not thereafter be relieved of its obligation to perform the obligations of Tenant under the Lease, provided Lender shall not be deemed to have assumed Tenant’s obligations under the Lease if Lender takes temporary possession of the Demised Premises for the purposes of removing the Property pursuant to Section 3 1.0 1(j) hereof.

(k) Lender may, at no expense to Landlord and in accordance with the terms of the Loan Agreement between Lender and Tenant, enter onto the Demised Premises at any time or times and take possession of, sever, or remove the Property or any part thereof and said Property upon severance and/or removal may be sold, transferred or otherwise disposed of free and discharged of all liens, claims, demands, rights or interests of Landlord. Lender agrees to repair any damage caused by any severance and/or removal of the Property necessary to restore the Demised Premises to its condition immediately prior to such removal.

ARTICLE THIRTY-TWO

Short Form Lease

SECTION 32.01. Upon the execution hereof, Landlord and Tenant shall also enter into a short form lease, in the form of the Short Form Lease attached hereto as Exhibit and made a part hereof, which shall be recorded in the Public Records of Hillsborough County, Florida, and shall reference the Option provided herein.

ARTICLE THIRTY-THREE

Option to Purchase

SECTION 33.01. The following definitions shall apply throughout this Article Thirty-Three:

(a) “Asbury” shall mean Asbury Automotive Tampa GP, L.L.C. a Delaware limited partnership and the general partner of Tenant.

(b) “Affiliate” shall have the meaning ascribed to it in the Limited Partnership Agreement.

(c) “IPO” shall mean an initial public offering of REIT shares by the REIT pursuant to registration documents declared effective by the Securities and Exchange Commission.

(d) “Landlord’s Employment Agreement” shall mean that certain Employment Agreement, dated as of September 17, 1998, between Tenant and Landlord.

(e) “Limited Partnership Agreement” shall mean that certain First Amended and Restated Limited Partnership Agreement of Asbury Automotive Tampa, L.P., dated as of September 17, 1998.

(f) “Millbourne Realty” shall mean Millbourne Equity Partners, L.P., a Delaware limited partnership.

(g) “Newco” shall mean at the time of the exercise of the Option, a newly organized stock corporation or other business entity owned or controlled by Tenant or the Partners of Tenant 51% of which is owned or controlled by Asbury Automotive Tampa GP L.L.C., and 49% of which is owned or controlled by Jeffrey I. Wooley.

(h) “Option” shall mean the exclusive right to purchase the Property as described in this Article.

(i) “Option Period” shall mean a period commencing on the date hereof and a expiring at midnight two (2) years after such date.

(j) “OP Unit” shall mean a unit of limited partnership interest in Millbourne Realty.

(k) “Partner” or “Partners” shall have the meanings ascribed to them in the Limited Partnership Agreement.

(1) “Percentage Interest” shall have the meaning ascribed to it in the Limited Partnership Agreement.

(m) “Permitted Transferees” shall mean the Partners, Millbourne Realty, the REIT, and any of their respective Affiliates.

(n) “Property” shall mean collectively the Demised Premises and the real property which is the subject matter of the Adamo Drive Lease.

(o) “Purchaser” shall mean Tenant, its Permitted Transferees or Newco, whichever such party exercises the Option and purchases the Property.

(p) “REIT” shall mean Millbourne Equity Trust, a Maryland real estate investment trust.

(q) “REIT Option Event” shall mean the giving of notice (1) by Tenant that Villanova has created or contemplates the creation of a REIT, that Tenant intends to exercise the Option at the REIT Option Price in order to cause the transfer, sale, conveyance, assignment or other disposition of the Property to a REIT or to a Newco in contemplation of the creation of a REIT or (2) by a Permitted Transferee that such Permitted Transferee intends to exercise the Option at the REIT Option Price in order to cause the transfer, sale, conveyance, assignment or other disposition of the Property to such Permitted Transferee.

(r) “REIT Option Price” shall mean Nineteen Million Dollars and No/100ths ($19,OOO,OOO.OO).

(s) “Reversion Event” shall mean the occurrence of any one or more of the following after the closing of the purchase of the Property upon a REIT Option Event or, in the event of a transfer of the Option to a Permitted Transferee, upon the giving of notice pursuant to Section 33.06(b) and prior to an IPO: (1) the contemplated REIT fails to sell common shares of the REIT to the public in an IPO before the earlier to occur of the one- year anniversary of the closing of the purchase transaction or the August 15 occurring immediately subsequent to the calendar year in which the purchase of the Property is closed; (2) either Asbury or its Affiliates fail to own or control the Tenant in proportions at least equal to such proportions as they own or control as of the date of this Lease; (3) the Partners (or their “Permitted Transferees”, as such term is defined under the Limited Partnership Agreement) comprising Tenant cease to maintain their Percentage Interests in the Tenant under this Lease in the same proportions as they exist as of the date of this Lease, except (a) as such Percentage Interests may be adjusted pursuant to the Limited Partnership Agreement as a result of a capital contribution made under Section 4.2 of the Limited Partnership Agreement by one of the Partners, (b) as portions of such Percentage Interests may be assigned by the Wooley Entities with the consent of Asbury, or (c) as Landlord’s Percentage Interest may be reduced pursuant to the call right contained in Section 4.8 of the Limited Partnership Agreement as a result of a termination by Landlord of his Employment Agreement without “Good Reason” as defined therein, or (4) in the event Tenant establishes a Newco to hold the REIT shares attributable to the transfer of the Property to the REIT, such Newco fails to have the same ownership structure as the Limited Partnership as of the date of the creation of Newco except (a) as such ownership structure may be adjusted in a manner similar to the adjustment of Percentage Interests under the Limited Partnership Agreement as a result of a capital contribution made under a provision similar to Section 4.2 of the Limited Partnership Agreement by one of the Partners, (b) as portions of such interests similar to Percentage Interests may be assigned by the Wooley Entities with the consent of Asbury, or (c) as Landlord’s Percentage Interest may be reduced pursuant to a call right similar to the one contained in Section 4.8 of the Limited Partnership Agreement as a result of a termination by Landlord of his Employment Agreement without “Good Reason” as defined therein.

(t) “Reversion Period” shall mean the period beginning with the “REIT Option Event” or, in the event of a transfer of the Option to a Permitted Transferee, the giving of notice pursuant to Section 33.06(b), and ending on the last day a “Reversion Event” can no longer occur.

(u) “Villanova” shall mean Asbury Villanova II L.L.C. a Delaware limited liability company and an Affiliate of Asbury.

(v) “Wooley Entities” shall have the meaning ascribed to it in the Limited Partnership Agreement.

SECTION 33.02 Landlord hereby grants the Option to the Tenant for the Option Period. This Option is personal to Tenant, the Permitted Transferees and, if formed, Newco, and may not be separately assigned under any circumstances without Landlord’s prior written consent (except to a Newco designed to facilitate the completion of the REIT), which consent may be withheld in the sole and absolute discretion of Landlord, except that all or any portion of the Option may be assigned separately from the leasehold interest granted hereunder to any Permitted Transferee with ten (10) days prior written notice to Landlord, without Landlord’s consent.

In the event Purchaser exercises this Option to purchase the Property prior to the expiration of the Option Period, the Option, as exercised, shall be deemed to be a contract for the sale and purchase of the Property. In such event, Landlord agrees to sell and Purchaser agrees to purchase the Property for the price and upon the terms and conditions as hereinafter set forth. It is expressly understood that the Option applies to both parcels comprising the Property and that the same cannot be bifurcated. As a condition precedent to Purchaser’s ability to exercise this Option, neither this Lease nor the Adamo Drive Lease may be in default nor shall there be any acts or occurrences in existence which, with the passage of time, could constitute a default under the aforesaid leases.

SECTION 33.03. Purchaser shall only be entitled to exercise the Option upon the occurrence of a REIT Option Event. Upon the occurrence of a REIT Option Event, the net purchase price for the Property shall be the REIT Option Price. The REIT Option Price shall be paid to Landlord by Purchaser in cash at closing. The proceeds shall be delivered by wire-transfer to Landlord in immediately available federal funds. The wire transferred funds must be received by Landlord in its designated account no later than 2:00 p.m., local time, on the closing date. Nothing contained in this Section or anywhere else in this Article Thirty-Three shall be deemed to give the right to any Purchaser to pay Landlord the REIT Option Price in any method other than in cash at closing.

SECTION 33.04. Following the occurrence of a REIT Option Event and prior to an IPO, Villanova shall in good faith select an “Independent Appraiser”, as such term is defined in the Limited Partnership Agreement, who, once all material facts, including but not limited to the identity of the properties to be included in the REIT, the proposed master lease governing the leasing of Property, and the initial estimated purchase price of the REIT shares in the IPO, are known by Asbury, Villanova and their Affiliates, shall determine the fair market value of the Property, the aggregate fair market value of the REIT (or of the REIT assuming all of the properties intended to be included in the REIT are subsequently transferred to the REIT), the aggregate number of shares of the REIT to be issued to Tenant, a Newco or another Purchaser in exchange or consideration therefor, and, if Landlord elects to receive the REIT Option Price or any part thereof in REIT shares or OP Units, the aggregate number of REIT shares or OP Units of the REIT to be issued to Landlord in exchange or consideration therefor. Such valuation shall be done in a manner consistent with valuations of properties of the other Affiliates of Asbury and Villanova included in the REIT.

SECTION 33.05. Prior to or concurrently with the completion of the IPO of the REIT shares, Tenant or a Newco designed to hold such REIT shares or OP Units shall contribute its ownership interest in the Property or this Option to the REIT in exchange for REIT shares or OP Units. Upon such transfer or at any time thereafter, within ten days’ notice given by Landlord, Tenant or such Newco shall distribute to Landlord at the election of the Landlord, 49% of either the cash value of the REIT shares or OP Units in immediately available federal funds or the REIT shares or OP Units received by Tenant or such Newco. Landlord shall inform the Tenant or Newco no later than the date when the underwriter of the IPO determines that it is important to disclose such information as to whether Landlord shall elect cash or REIT shares or OP Units, provided that at such time Landlord has accumulated reasonable information

that allows him to make an informed decision as to such matters. Landlord shall have the right to record a short form reversion agreement in the public record describing Landlord’s rights hereunder with respect to reversion.

SECTION 33.06. In the event that all or a portion of the Option is transferred to any Permitted Transferee, the foregoing Sections 33.03, 33.04 and 33.05 shall be of no force and effect and the following provisions shall apply in their stead:

(a) REIT Options Price. In the event Landlord shall have been eligible to participate in the private placement of OP Units, and shall have entered into an irrevocable commitment to accept the same in payment of all or a portion of the REIT Option Price or any other consideration relating to the Option hereunder, the REIT Option Price shall be paid in cash or other immediately available funds.

(b) Notice of Exercise of Option. Such Permitted Transferee shall exercise the Option only by providing notice to Landlord in writing, on or before the last day of the Option Period.

(c) Closing: Payment of REIT Price. The closing of the purchase of the Property shall take place in accordance with Section 33.10 provided that payment of the REIT Option Price shall be made in accordance with this Section 33.06(c). The REIT Option Price for the Property shall be payable in cash or in other immediately available funds. Any cash payable shall be payable by wire transfer and must be received by Landlord in its designated account no later than 2:00p.m., local time, on the closing date.

SECTION 33.07. In the event Landlord’s Percentage Interest in Tenant is purchased pursuant to Section 4.8 of the Limited Partnership Agreement as a result of Landlord’s termination of Landlord’s Employment Agreement without “Good Reason” as defined in Landlord’s Employment Agreement, such occurrence shall not be a “Reversion Event”; however, upon such occurrence, Landlord shall share in the REIT shares or OP Units and other benefits (including cash as described in Section 33.05) attributable to the REIT in the same manner and in the same proportions as though the purchase of Landlord’s Percentage Interest in Tenant had not occurred.

SECTION 33.08. During the Reversion Period, Purchaser shall not do any of the following:

(a) Encumber the Property in an amount greater than the REIT Option Price;

(b) Sell or lease the Property or any portion thereof to any person or entity other than to the Tenant under a lease having identical lease terms to this Lease;

(c) Take any other action with respect to the Property that would have a material adverse effect on the Property or the “Business” as such terms is defined in the Asset Exchange Agreement.

SECTION 33.09. Upon the occurrence of a Reversion Event, Purchaser shall thereupon immediately cause all of the Property to be reconveyed to Landlord within ten (10) business days at Tenant’s sole cost and expense, and Tenant shall indemnify and hold Landlord harmless from all reasonable cost and expense associated with the exercise of such Option and with such reconveyance (excluding without limitation any costs and expenses associated with the early payment of federal income taxes incurred by the Landlord). The reconveyance of the Property shall be closed at the offices of Hill, Ward & Henderson, P.A., Barnett Plaza, Suite 3700, 101 East Kennedy Boulevard, Tampa, Florida 33602, or at such other location in Hillsborough County, Florida, acceptable to the parties hereto. At

closing, Tenant or such Newco shall provide Landlord with the same representations, warranties and covenants as Landlord provided Tenant with respect to the Property and shall be obligated by the same duties and obligations with respect to survey, title and deed as was Landlord under the Option, mutatis mutandis (except as to such encumbrances incurred in the ordinary course of business to which Landlord has consented in writing in his sole and absolute discretion). Subject to the foregoing, Landlord shall thereupon return the consideration received by Landlord in the same form or forms as it was received.

SECTION 33.10. In the event Purchaser exercises this Option to purchase the Property, subject to the curative periods, Reversion Events and all other conditions as herein provided, the sale and purchase of the Property shall be closed and the deed shall be delivered on or before ninety (90) days after the date of the exercise of this Option to purchase the Property. In the event the last day for closing the purchase of the Property as herein provided is a Saturday, Sunday or a declared local holiday, the period for closing shall extend to and include the first business day immediately following any such Saturday, Sunday or declared holiday. The exact date for closing the purchase of the Property within said period shall be set by Purchaser, provided Purchaser gives Landlord at least five (5) business days prior written notice of such closing date. The sale and purchase of the Property shall be closed at the offices of Akin, Grump, Straws, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York, commencing at 10:OO a.m., or at such other time or location acceptable to the parties hereto.

At closing, Landlord shall provide Purchaser, at Tenant’s expense, a fee title insurance (ALTA) policy insuring marketable title to the Property, in the full amount of the purchase price of the Property, such policy to be purchased from a source and issued by an insurer reasonably acceptable to Purchaser, and Tenant shall pay the policy premium at or before the closing. A written binder for said insurance shall be delivered to Purchaser or its attorney at least ten (10) days prior to the closing.

At the closing of the sale after exercise of the Option, Landlord shall convey the Property to Purchaser by delivering to Purchaser a special warranty deed free and clear of all liens and encumbrances except (i) easements, covenants and restrictions of record as of the date of this Lease and listed on Exhibit C attached hereto other than those created by or consented to by Purchaser, if any, (ii) zoning ordinances and (iii) matters of survey.

At the closing of the sale after exercise of the Option, Tenant shall pay for the documentary stamps on the deed and for recording the deed.

Landlord shall cause all liens appearing on the title insurance commitment that have been placed on the Property as a result of Landlord’s financing with respect to the Property to be deleted simultaneously with the Closing.

Simultaneously with the closing of the sale after exercise of the Option, this Lease will be terminated, and Tenant shall negotiate and enter into a new lease with Millbourne Realty or its designee.

Purchaser may have the Property surveyed at Tenant’s expense prior to the date set for closing. If the survey shows any encroachments on the Property not shown on the Survey dated June 22, 1998, prepared by Landmark Engineering & Surveying Corporation, other than those consented to by Purchaser, the same shall be treated as a title defect, and written notice of the encroachments shall be given to Landlord by Purchaser, and Landlord shall make reasonable efforts to remove such encroachments to Purchaser’s reasonable satisfaction prior to Closing.

Landlord is conveying the Property in “AS-IS” condition with no representation or warranty of any type, either express or implied, being made by Landlord as to its physical condition or fitness for a particular use. The term “AS-IS” shall be limited as set forth in Section 4.02 hereof.

Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.

In the event Purchaser exercises this Option to purchase the Property, Purchaser may have the energy efficiency rating of the buildings located on the Property being purchased determined. A copy of the brochure relating to this matter prepared by the State of Florida will be furnished by Landlord promptly upon Purchaser’s exercise of this Option.

If all or any portion of the Property should be damaged or taken through condemnation (which term shall include any damage or taking by any governmental entity or authority and any transfer by private sale in lieu thereof), either permanently or temporarily (but in the case of temporary damage or takings, only if such taking or damage has not already ceased at the time of Closing), the Option Price shall be reduced by the price paid to Landlord by such governmental entity or authority for such damage or taking and actually received by Landlord prior to Closing; otherwise, Purchaser shall proceed to closing without a reduction in the purchase price but Purchaser shall be entitled to any and all subsequent awards and settlements, if any.

Tenant shall be responsible for all taxes and assessments as of the date of closing and the same shall not be prorated.

It is understood and agreed that no real estate brokers have brought about this Option or the subsequent sale of said Property, and no commissions are due and owing any real estate broker for the sale and purchase of said Property.

At the closing of the sale and purchase of the Property on the terms hereof, Landlord shall furnish to Purchaser its affidavit in form acceptable to the title company, stating that (i) to its knowledge, Landlord has sole and exclusive possession and occupancy of the Property except for the rights of Tenant and a Purchaser other than Tenant, if any, and any and all subtenants under the terms of this Lease and the Adamo Drive Lease, and (ii) either that there have been no improvements made to the Property by Landlord during the ninety (90) days immediately preceding the date of closing, or if there have been any such improvements, that all lien ors in connection with said improvements have been paid in full.

This Article Thirty-Three constitutes the entire agreement between Landlord and Tenant pertaining to the Option, and supersedes all negotiations, preliminary agreements, and all prior and contemporaneous discussions and understandings of Landlord and Tenant in connection with the subject matters hereof.

ARTICLE THIRTY-FOUR

Waiver of Jury Trial

SECTION 34.01. AS A MATERIAL INDUCEMENT TO THE EXECUTION OF THIS LEASE, LANDLORD AND TENANT AGREE THAT IN THE EVENT ANY LITIGATION ARISING OUT OF THE TERMS AND PROVISIONS OF THIS LEASE OR THE RELATIONSHIP BETWEEN LANDLORD AND TENANT, THEN NEITHER PARTY SHALL SEEK A JURY TRIAL IN SUCH PROCEEDING, IT BEING EXPRESSLY AGREED AND STIPULATED BY THE PARTIES HERETO THAT ANY DISPUIE’S ARE BETTER RESOLVED BY A JUDGE.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of the day and year first above written.

Signed, sealed and delivered in the presence of:


/s/Barbara A. Murphy		/s/Jeffrey I. Wooley (Seal)
Name:	Barbara A. Murphy	Jeffrey I. Wooley
	(Type or Print Name)

/s/Jessica Stone		“LANDLORD”
Name:	Jessica Stone
	(Type or Print Name)


/s/Barbara A. Murphy		/s/Ian Snow
Name:	Barbara A. Murphy	Name:	Ian Snow
	(Type or Print Name)	Title:	Authorized Agent

			“TENANT”
/s/Lauren Coffman
Name:	Lauren Coffman
	(Type or Print Name)

Exhibit A

(Hillsborough Avenue Property)

PARCEL I:

A tract in the Northeast 1/4 of section 4, Township 29 South, Range 18 East, Hillsborough County, Florida, described as follows:

From a Point of Beginning which is the point of intersection of the North right-of-way line of West Crest Avenue and the Westerly right-of-way line of State Road No. 600, run North 89 °19’22” West along the North right-of-way line of West Crest Avenue a distance of 600.0 feet; run thence North 0°37’38” East a distance of 648.84 feet to a point on the Southerly right-of-way line of State Road No. 580; run thence Easterly, Southeasterly, and Southerly, along the Southerly right-of-way line of said State Road No. 580 and the Westerly right-of-way line of State Road No. 600 the following courses:

(a) Easterly along a curve to the left (radius 2914.79 feet) an arc distance of 91.87 feet (chord 91.87 feet, chord bearing south 88°34’11.5” East);

(b)	South 86°00’41” East a distance of 198.76 feet;

(c)	South 89°28’22” East a distance of 50.0 feet to a point of curvature;

(d) Southeasterly along a curve to the right (radius 180.0 feet) an arc distance of 251.54 feet (chord 231.56 feet, chord bearing South 49°26’21.5” East) to a point of tangency:

(e)	South 9°24’21” East a distance of 471.28 feet;

(f)	South 0°28’40” West distance of 23.80 feet to the Point of Beginning.

PARCEL II:

Lots 1, 2 and 3 in Block 3 of Re-Plat of Drew Park Subdivision, according to the map or plat thereof recorded in Plat Book 29, Pages 70 to 95 inclusive of the Public Records of Hillsborough County, Florida.

PARCEL III:

Lot “F” of Block 2, of Re-Plat of Drew Park, as per map or plat thereof, as recorded in Plat Book 29, Pages 70 to 95, of the Public Records of Hillsborough County, Florida; LESS AND EXCEPT:

A tract consisting of part of said Lot “F” described as follows:

From the Southeast corner of said Lot “F” run North 89°57’35” West along the South boundary of said Lot “F”, a distance of 484.0 feet to the Southwest corner of said Lot run thence North 0°02’35” West along the West boundary of said Lot “F” a distance of 99.10 feet; run thence North 14°10’45” East along the Northwesterly boundary of said Lot “F” a distance of 5.5 feet; run thence South 84°45’20” East a distance of 141.35 feet; run thence North 28°50’30” East a distance of 257.20 feet; run thence South 89°37’15” East a distance of 217.89 feet to a point on the East boundary of said Lot “F”; thence South along said East boundary of Lot “F” a distance of 315.7 feet to the Point of Beginning.

AND LESS AND EXCEPT:

The North 206.23 feet of the East 98.9 feet of Lot “F”, Block 2, Re-Plat of Drew Park, according to the plat thereof on file in the Office of the Clerk of the Circuit Court, in and for Hillsborough County, Florida, recorded in Plat Book 29, Page 72, said lands situate lying and being in Hillsborough County, Florida.

PARCEL IV:

A tract in the Northeast 1/4 of Section 4, Township 29 South, Range 18 East, Hillsborough County, Florida, described as follows:

From the point of intersection of the North right-of-way line of West Crest Avenue and the Westerly right-of-way line of State Road No. 600, run North 89°19’22” West along the North right-of-way line of West Crest Avenue a distance of 600.0 feet to a Point of Beginning.

From said Point of Beginning, run North 0°37’38” East a distance of 349.21 feet; run thence North 89°20’42” West a distance of

150.0 feet; run thence South 0°37’38” West a distance of 349.15 feet to a point on the North right-of-way line of West Crest Avenue; run thence South 89°19’22” East along said North right-of-way line a distance of 150.0 feet to the Point of Beginning.

PARCEL V:

Lots 8, 9, 10, 25, 26, 27, 28 and 29 in Block 3 of a REPLAT OF DREW PARK SUBDIVISION, as per map or plat thereof recorded in Plat Book 29, Pages 70 to 95 inclusive of the Public Records of Hillsborough County, Florida, LESS the North 5 feet of the West 55 feet of Lot 8 deeded to the City of Tampa in O.R. Book 1492, Page 732 of the Public Records of Hillsborough County, Florida.

PARCEL VI:

Lots 11 and 12, Block 3, Re-Plat of Drew Park, according to the Plat thereof on file in the Office of the Clerk of the Circuit Court in and for Hillsborough County, Florida recorded in Plat Book 29, Page 70 through 95, said lands situate, lying and being in Hillsborough County, Florida.

Exhibit B

This Instrument was Prepared

By and Should Be Returned to:

Thomas N. Henderson, Esquire

Hill, Ward & Henderson, P. A.

Post Office Box 2231

Tampa, Florida 33601

SHORT-FORM LEASE

(Hillsborough Avenue)

THIS SHORT-FORM LEASE is made and entered into this 17^th day of September, 1998, by and between JEFFREY I. WOOLEY (the “Landlord”) and ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership (the “Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord is the owner of that certain real property located in Hillsborough County, Florida, more particularly described on Exhibit A attached hereto and made a part hereof as if fully set forth herein (said parcel of real property, together with all fixtures and improvements now or hereafter situated thereon, being hereinafter referred to, collectively, as the “Property”);

WHEREAS, Landlord and Tenant entered into a certain First Amended and Restated Lease Agreement dated September 17, 1998 (the “Lease”) for the Property pursuant to the terms and conditions set forth in the Lease; and

WHEREAS, Landlord and Tenant desire to execute and record this Short-Form Lease to provide record notice to all persons and entities dealing with the Property of the rights and obligations of the Landlord and Tenant in accordance with the terms of the Lease;

NOW THEREFORE, in consideration of the sum of Ten and No/100ths Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Landlord hereby agrees to lease to Tenant, and Tenant hereby agrees to lease from Landlord, the pursuant to the terms and conditions as set forth in the unrecorded Lease whose terms and conditions are incorporated herein by reference.

2. This Short-Form Lease is not a complete summary of the agreement relating to the letting of the Property but, rather, all persons or entities having an interest in the Property should refer to the unrecorded Lease.

3. The Lease contains the following provisions:

4. The Lease has a term of ten (10) years and is scheduled to end at midnight on September 16, 2008. Provided the Lease is not in default, Tenant may elect to extend the term of the Lease for one additional term of five (5) years.

5. The Lease contains an option for the Tenant or certain Permitted Transferees to purchase the Property from Landlord commencing on the date of the lease and expiring at midnight two (2) years after such date.

6. Upon final termination of the Lease, Tenant will execute, acknowledge and deliver to Landlord a sufficient cancellation and termination of this Short-Form Lease in recordable form (the “Termination Agreement”), and the delivery of the Termination Agreement by Tenant shall be a condition precedent to the return of Tenant’s deposit as referenced in the Lease to the extent that Tenant is entitled to the same under the terms of the Lease. In the event Tenant fails to deliver the Termination Agreement pursuant to the terms hereof within fifteen (15) days after the receipt of written notice from Landlord demanding same and evidencing that Landlord is entitled to the Termination Agreement, Tenant shall be liable to Landlord for any and all damages, direct and indirect, resulting from Tenant’s delay in performing its obligations hereunder including, but not limited to, Landlord’s attorneys’ fees and costs incurred as a result of Tenant’s failure to deliver the Termination Agreement.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Short-Form Lease to be effective as of the day and year first above written.


		(Seal)
Name:		Jeffrey I. Wooley
	(Type or Print Name)

			“Landlord”

Name:
	(Type or Print Name)

		ASBURY AUTOMOTIVE TAMPA, L.P. a Delaware limited partnership

		By:	ASBURY AUTOMOTIVE TAMPA GP L.L.C., a Delaware limited liability company, general partner

		By:	(Seal)

Name:		Name:

	(Type or Print Name)	Its:

			(Corporate Seal)

Name:			“Tenant”
	(Type or Print Name)

STATE OF FLORIDA

COUNTY OF HILLSBOROUGH

The foregoing instrument was acknowledged before me this day of September, 1998, by JEFFREY I. WOOLEY who is personally known to me or has produced as identification.

Notary Public

(Type, Print or Stamp Name)

My Commission Expires:

STATE OF FLORIDA

COUNTY OF HILLSBOROUGH

The foregoing instrument was acknowledged before me this day of September, 1998, by , as of ASBURY AUTOMOTIVE TAMPA GP L.L.C., as the general partner of ASBURY AUTOMOTIVE TAMPA, L.P., on behalf of said partnership and company. He is personally known to me or has produced as identification.

Notary Public

(Type, Print or Stamp Name)

My Commission Expires:

Exhibit C

PERMITTED EXCEPTIONS

(Hillsborough Avenue)

1.	The lien of the taxes for the year 1998 and all subsequent years.

2.	Rights of parties in possession under any unrecorded leases or subleases.

3.	Matters of survey.

Subject to any and all matters as recited on the Plat of RE-PLAT OF DREW PARK recorded in Plat Book 29, Page(s) 70; as affected by: ORDINANCE NO. 3756-4 passed and ordained June 22, 1965 by the City Council of the City of Tampa, approved June 25, 1965, recorded July 19, 1965 in O.R. Book 1478, Page 276, Public Records of HILLSBOROUGH County, Florida, (Affects Parcels 11, III,V and VI).

Covenants, conditions, reservations and easements contained in QUIT CLAIM DEED from THE UNITED STATES OF AMERICA to JOE L. MOORE & COMPANY, INC., an Alabama corporation, dated April 7, 1949, filed April 8, 1949 in Deed Book 1519, Page 442; as affected by: CORRECTIONAL QUITCLAIM DEED dated April 18, 1949, filed April 21, 1949 in Deed Book 1521, Page 284, HILLSBOROUGH County Records. (Affects Parcels II, III, V and VI).

6.	Covenants, conditions and restrictions contained in the RESTRICTION AGREEMENT by JOE L. MOORE & COMPANY, incorporated, dated April 25, 1949, filed April 25, 1949 in Deed Book 1521, Page 510, HILLSBOROUGH County Records. (Affects Parcels II, III,V and VI).

Terms, covenants, conditions, rights, duties, obligations and easements contained in the AGREEMENT between CITY OF TAMPA, a Florida municipal corporation and JOE L. MOORE & COMPANY, INC., an Alabama corporation, dated September 14, 1949, filed December 30,1949 in Deed Book 1553, Page 325; as affected by: QUIT CLAIM DEED dated December 29, 1949, filed January 5, 1950 in Deed Book 1555, Page 353, HILLSBOROUGH County Records. (Affects Parcels II, III,V and VI).

Covenants, conditions and reservations and easements contained in QUIT CLAIM DEED from UNITEDSTATES OF AMERICA to G.L. REEVES, MRS. JOHN B. SUTTON, HENRY C. TILLMAN and W. FRANK HOBBS, dated March 9, 1950, filed March 15, 1950 in Deed Book 1565, Page 162, HILLSBOROUGH County Records. (Affects Parcels I and V).

HOLD HARMLESS AGREEMENT between J.I. WOOLEY and the CITY OF TAMPA dated February 4, 1993 and May 31, 1996 respectively, recorded February 25, 1993 and July 19, 1996, respectively, in O.R. Book 6894, Page 453 and O.R. Book 8221, Page 1494, Public Records of HILLSBOROUGH County, Florida. (Affects Parcels I and IV).

10.	EASEMENT granted to TAMPA ELECTRIC COMPANY, a Florida corporation from JEFFREY I. WOOLEY, dated February 9, 1995, recorded March 3, 1995 in O.R. Book 7684, Page 1570 HILLSBOROUGH County Records. (Affects Parcel I).

11.	Terms, covenants, conditions, rights, duties and obligations contained in Lease between JEFFREY I. WOOLEY, a/k/a J.I. WOOLEY, a/k/a JEFF I. WOOLEY, to ASBURY AUTOMOTIVE TAMPA, L.P.

First Amended and Restated Lease Agreement

Exhibit 10.21

FIRST AMENDED AND RESTATED

LEASE AGREEMENT

(Adamo Drive Property)

THIS FIRST AMENDED AND RESTATED LEASE AGREEMENT (the “Lease”) is made and effective this 17th day of September, 1998, by and between JEFFREY I. WOOLEY, having an address of 10000 Lindelaan, Tampa, Florida 33618 (hereinafter called “Landlord), and ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership, having an address of 712 Fifth Avenue, 49th Floor, New York, New York 10019 (hereinafter called “Tenant”).

W I T N E S S E T H:

WHEREAS, on or about September 17, 1998, Landlord entered into that certain Courtesy Dealership Lease Agreement (Adamo Drive Property) (the “Courtesy Lease”) with JIW Enterprises, Inc., Gulf Auto Holdings, Inc. and Courtesy Toyota of Brandon, Inc. (collectively, “Courtesy”); and

WHEREAS, Courtesy assigned the Courtesy Lease to Tenant, and Landlord and Tenant wish to amend and restate the Courtesy Lease as hereinafter set forth.

NOW, THEREFORE, the Courtesy Lease is hereby amended and restated in its entirety as follows:

ARTICLE ONE

Demised Premises Term and Construction of Improvements

Section 1.02. In the event Tenant elects to extend the term of this Lease as referenced above, the following terms and conditions shall apply:

(i) This Lease must not be in default either at the time of Tenant’s election to renew the term of this Lease or at the time commencement of the Renewal Term; and

(ii) Except as otherwise provided herein, Tenant’s use and occupancy of the Demised Premises during the Renewal Term shall be upon the same terms, covenants and conditions contained herein. All payments on the part of Tenant to be made and all o other obligations on the part of Tenant to be performed as provided in this Lease shall continue to be made and performed by Tenant during the Renewal Term;

(iii) Tenant shall exercise its right to extend the term of this Lease for the Renewal Term b delivering notice of its intent to renew the term of this Lease to Landlord in writing by certified mail on or before September 16, 2007; and

(iv) There shall be no further additional right to renew this Lease other than as set forth in this Section 1.02. Any termination of this Lease shall terminate the later right of renewal hereunder.

ARTICLE TWO

Rent

(i) Annual minimum rent for the first (1^st) year of the initial term of this Lease shall be Eight Hundred Thirty Thousand Four Hundred Ninety-Nine and 96/100ths Dollars ($830,499.96), payable in equal monthly installments of Sixty-Nine Thousand Two Hundred Eight and 33/100ths Dollars ($69,208.33) a month, together with applicable taxes.

(ii) Commencing with the second (2^nd) year of the initial term of this Lease, and at the beginning of each year thereafter during the initial term of this Lease and the Renewal Term, the minimum rent shall be adjusted in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. City Average: All Items), issued by the Bureau of Labor Statistics of the U.S. Department of Labor using the year 1982-84 as a base year of 100 (“Index Number”). At the commencement of the second (2^nd) Lease Year (as hereinafter defined), the minimum rent shall be adjusted by multiplying the minimum rent paid in the first (1^st) year of this Lease by a fraction, the numerator of which shall be the Index Number for the third (3^rd) month preceding the commencement of the second (2^nd) Lease Year, and the denominator of which shall be the Index Number for the third (3^rd) month preceding the Commencement Date of this Lease. At the commencement of each Lease Year thereafter, including any Lease Year which falls within the Renewal Term (if this Lease is renewed as described herein), the minimum rent shall be adjusted by multiplying the minimum rent paid in the preceding Lease Year by a fraction, the numerator of which shall be the Index Number for the third (3rd) month preceding the commencement of the new Lease Year, and the denominator of which shall be the Index Number for the third (3rd) month preceding the commencement of the preceding Lease Year. Notwithstanding the foregoing, however, in no event shall the minimum rent for any Lease Year be less than one hundred two percent (102%) of the minimum rent for the preceding Lease Year or more than one hundred six percent (106%) of the minimum rent for the preceding Lease Year. In the event that the index herein referred to ceases to be published during the term of this Lease, or a substantial change is made in the method of establishing such index, then the determination of the adjustment shall be made with the use of such conversion factor, formula or table as may then be published by the Bureau of Labor Statistics, or if none is available, the parties shall accept comparable statistics on the cost of living in the United States, as shall then be computed and published by any agency of the United States, or if none, by a respected financial periodical selected by Landlord. The term “Lease Year” as used herein shall mean consecutive twelve (12) month periods commencing on the Commencement Date, and on each anniversary of the Commencement Date, during the term of this Lease.

of the initial term of this Lease (together with applicable sales tax, as described below). Tenant shall pay to Landlord, together with the monthly installments of the minimum rent due hereunder, the sales and use tax imposed by the State of Florida on rental payments under commercial leases and any other taxes, impositions or charges which may be payable by Tenant pursuant to the terms of this Lease, including, but not limited to, the terms of Section 3.01 hereof. If the term commences on a date other than the first day of a calendar month or ends on a date other than the last day of a calendar month, monthly rent for the first month of the term or the last month of the term, as the case may be, shall be prorated based upon the ratio that the number of days in the term within such month bears to the total number of days in such month.

SECTION 2.03. In order to secure payment by Tenant of the amounts specified in Section 2.01 of this Article and to secure the performance by Tenant of its duties and obligations under this Lease, Tenant shall upon the execution of this Lease (and in addition to the first month’s rent to be paid to Landlord upon execution of this Lease pursuant to Section 2.01 hereof) deposit with Landlord the sum of Two Hundred Twenty Thousand and No/100ths Dollars ($220,000.00) in cash (the “Security Deposit”). The Security Deposit shall not bear interest to Tenant, and Landlord shall be entitled to commingle the Security Deposit with Landlord’s other funds. Within ninety (90) days after the expiration of earlier termination of this Lease, Landlord shall (provided an event of default does not then exist) return the Security Deposit to Tenant, less any portion thereof which has been applied by Landlord in accordance with the terms of this Article. If an event of default shall occur or if Tenant fails to surrender the Premises in the condition required by this Lease, Landlord shall have the right (but no obligation), without prejudice to any other remedy which Landlord may have on account thereof, to apply all or any portion of the Security Deposit to cure such default or to remedy the condition of the Premises. If Landlord so applies the Security Deposit or any portion thereof before the expiration or earlier termination of this Lease, Tenant shall deposit with Landlord, upon demand, the amount necessary to restore the Security Deposit to its original amount. The Security Deposit shall not be considered an advance payment of rent or a measure of Landlord’s damages in the case of a default by Tenant hereunder. Actions by Landlord against Tenant for any breach of this Lease shall in no way be limited or restricted by the amount of this Security Deposit and resort to such deposit shall not waive any other rights or constitute an election of remedies on the part of Landlord. If Landlord shall sell or transfer its interest in the Demised Premises, Landlord shall transfer the Security Deposit to such purchaser or transferee, in which event Tenant shall look solely to the new landlord for the return of the Security Deposit, and Landlord thereupon shall be released from all liability to Tenant for the return of the Security Deposit. It is agreed that this provision shall apply to every sale or transfer made of the Security Deposit to any new landlord. The Security Deposit shall not be assigned or encumbered by Tenant without the prior written consent of Landlord, and any attempt to assign or encumber the Security Deposit without the consent of Landlord shall be void and of no effect.

ARTICLE THREE

Expenses, Taxes, Other Charges

term “Real Estate Taxes” shall mean and include all personal property taxes relating to the Demised Premises, real estate taxes, special assessments, and all other governmental charges, general or special, ordinary or extraordinary, foreseen as well as unforeseen, of any kind and nature whatsoever, which are levied or assessed by any governmental authority or political subdivision thereof against the Demised Premises or any part thereof.

SECTION 3.03. Tenant may, but only if in good faith and with reasonable diligence, contest by any and all appropriate administrative, trial, appellate or other proceedings the amount, validity, enforceability or application of any taxes, assessments, charges or other obligations that Tenant is required to pay or perform to any person or entity other than Landlord by any provision of this Lease, and defer payment and discharge thereof during the pendency of such contest, provided that: (i) such contest suspends the collection or enforcement of the item contested, (ii) such contest shall have the effect of preventing the sale, loss or forfeiture of the Demised Premises, or any interest therein, to satisfy such item; (iii) within thirty (30) days after Tenant has been notified of the assertion of such item, Tenant shall have notified Landlord in writing of Tenant’s intention to contest same; (iv) neither Landlord nor Tenant will be subject to any criminal liability; (v) Tenant furnishes such security as may be required by law in connection with each such contest; (vi) the value, usefulness, occupation, enjoyment, operation and marketability of the Demised Premises will not be adversely impaired by any such contest; (vii) Tenant otherwise continues to pay and otherwise perform its obligations under this Lease: (viii) no default otherwise exists in the payment or other performance of Tenant under this Lease; (ix) each such contest is continuously prosecuted diligently to final determination: (x) Tenant Days, defends, indemnifies and holds Landlord harmless of and from any and all losses, judgments, decrees and costs (including all reasonable attorneys’ fees) incurred in connection with each such contest; (xi) Tenant promptly following a final determination of each such contest fully pays and discharges all amounts that may be levied, assessed, charged, imposed or otherwise determined to be payable, together with all penalties, fines, interest, costs and expenses and otherwise complies with such final determination at Tenant’s sole cost and expense; (xii) Landlord is furnished with such security as Landlord reasonably may require to assure compliance with all of the foregoing requirements, it being understood that Landlord will not require any additional security if (a) Tenant has otherwise posted such security as may be required by the taxing authorities or (b) has bonded-off any potential lien or encumbrance on the Demised Premises; and (xiii) such contest is permitted by any mortgagee having a mortgage lien upon the Demised Premises. In this regard, Landlord may require that Tenant shall have deposited with Landlord at such place as Landlord may from time to time in writing appoint, a sum of money which shall be sufficient in the judgment of Landlord to pay in full such item being contested, and all interest which might become due thereon, and shall keep on deposit an amount so sufficient at all times, increasing such amount to cover additional interest whenever, in the judgment of Landlord, such increase is advisable. Any such deposits are to be held without any allowance of interest. So long as all of the foregoing requirements are met and Landlord is promptly reimbursed for all costs and expenses incurred, Landlord will cooperate in connection with any such contest if such cooperation is reasonably required.

(a) any capital stock tax or other tax imposed against Landlord for the privilege or franchise of doing business as a corporation;

(b) any income tax levied upon or against the income of Landlord, including any rental income derived by Landlord from the Demised Premises;

it being further expressly understood and agreed, however, that nothing in this Article Three shall relieve Tenant of the obligation for the payment of any gross sales, occupational license, privilege, excise or other present or future tax, license, fee or other charge imposed against Landlord by any governmental authority, whether federal, state, county, city, municipal or otherwise, in respect to the ownership, leasing, use, occupation, management, operation, maintenance, repair or rebuilding of the Demised Premises or any portion thereof. irrespective of whether the same shall be measured in whole or in part by the rental or other income derived therefrom by Landlord.

ARTICLE FOUR

Use and Compliance with Laws

SECTION 4.02. Tenant shall throughout the term hereof, and at no expense whatsoever to Landlord, promptly comply, or cause compliance, with all laws and ordinances (including, without limitation, the Americans with Disabilities Act) and the rules, regulations and requirements of all federal, state, county and municipal governments, and appropriate departments, commissions, boards and officers thereof, foreseen or unforeseen, ordinary as well extraordinary, and whether or not the same shall presently be within the contemplation of the parties hereto or shall involve any change of governmental policy or require structural or extraordinary repairs, alterations or additions and irrespective of the cost thereof, which may be applicable to the Demised Premises, including, without limitation, the fixtures and equipment thereof and the sidewalks and curbs adjoining the Demised Premises or the use or manner of use of the Demised Premises. TENANT ACCEPTS THE DEMISED PREMISES IN THE ACTUAL “AS-IS” CONDITION IN WHICH THE SAME ARE AS OF THE DATE OF THIS LEASE. For purposes of this Lease, the term “AS-IS” shall not be deemed to limit the representations and warranties made by Landlord or the other Sellers or the indemnification obligations of Landlord or the other Sellers in that certain Asset Exchange Agreement among Asbury Villanova II L.L.C., Tenant, Asbury Automotive Tampa GP L.L.C., J.I.W. Enterprises, Inc., Courtesy Imports of Tampa, Inc., Gulf Auto Holdings, Inc., Courtesy Toyota of Brandon, Inc., Landlord and Douglas M. Tew, dated as, of December 19, 1997 (the “Asset Exchange Agreement”); however, any rights, claims or actions which Tenant may have under the Asset Exchange Agreement as a result of any such representations and warranties or pursuant to the indemnification provisions in the Asset Exchange Agreement may not be used as a defense or offset in connection with any claim or action involving this Lease.

Laws”), regarding or relating in any way to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, presence, disposal or transportation of any oil, flammable explosives, asbestos, urea formaldehyde, polychlorinated biphenyls, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including without limitation any “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any such laws, ordinances or regulations (collectively, “Hazardous Materials”).

Tenant shall at its own expense procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required for Tenant’s use of the Demised Premises, including, without limitation, discharge of (appropriately treated) materials or waste into or through any sanitary sewer system serving the Demised Premises. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease to be removed from the Demised Premises and transported solely by duly licensed haulers to duly licensed facilities for disposal of such Hazardous Materials and wastes. Tenant shall in all respects, handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Demised Premises in complete conformity with all applicable Hazardous Materials laws and prudent industry practices regarding the management of such Hazardous Materials. All reporting obligations to the extent imposed upon Tenant by Hazardous Materials Laws are solely the responsibility of Tenant. Upon expiration or earlier termination of this Lease, Tenant shall cause all Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease located on the Demised Premises to be removed therefrom and transported for use, storage or disposal in accordance and in compliance with all applicable Hazardous Materials Laws. Tenant acknowledges and agrees that it shall be responsible for and shall perform, at its sole cost and expense, any removal, remediation, cleanup and restoration which may be required with regard to the presence of any Hazardous Materials generated or used by Tenant or any other party other than Landlord or its agents or employees in, on or about the Demised Premises during the term of this Lease or the release of any Hazardous Materials into, onto, above or under the Demised Premises by Tenant or any third party during the term hereof, and Tenant shall perform such remedial action in accordance with all applicable laws, including any and all Hazardous Materials Laws. Further, Tenant shall indemnify, protect, defend (by counsel reasonably acceptable to Landlord), and hold Landlord and Landlord’s officers, employees, directors, agents, stockholders, successors and assigns free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses, damages, costs and expenses (including attorneys’ fees) or death of or injury to any person or damage to any property whatsoever, including, without limitation, the Demised Premises and any improvements located thereon, arising from or caused in whole or in part, directly or indirectly, by the presence in, on, about or under the Demised Premises of any Hazardous Materials or by Tenant’s failure to comply with any Hazardous Materials Laws or in connection with any removal, remediation, cleanup, restoration and materials required hereunder as a result of the presence of any Hazardous Materials in, on, about or under the Demised Premises with respect to any Hazardous Materials generated, used or released in, on, about or under the Demised Premises by Tenant or any other party other than Landlord or its agents or employees during the term hereof or which may be released in, on, about or under the Demised Premises bevy Tenant or any other party other than Landlord or its agents or employees during the term hereof as may be required to return the Demised Premises to their condition existing prior to the appearance of any Hazardous Materials thereon. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in. on, about or under the Demised Premises nor enter into any settlement agreement, consent, decree or other compromise in respect to any claims relating to or in any way connected with the Demised Premises without first notifying Landlord of Tenant’s intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord’s interest with respect thereto. In addition, at Landlord’s request, at the expiration of the term of this Lease, Tenant shall remove from the Demised Premises and dispose of all tanks or fixtures installed by Tenant which contain, have contained or are contaminated with, Hazardous Materials, in accordance with all applicable laws.

Tenant shall immediately notify Landlord in writing of (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials Laws; (b) any claim made or threatened by any person against Landlord, or the Demised Premises, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (c) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in, on or about the Demised Premises or with respect to any Hazardous Materials removed from the Demised Premises, including, any complaints, notices, warnings, reports or asserted violations in connection therewith. Tenant shall also provide to Landlord, as promptly as possible, and in any event within five business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Demised Premises or Tenant’s use thereof. Upon written request of Landlord (to enable Landlord to defend itself from any claim or charge related to any hazardous Materials Law), Tenant shall promptly deliver to landlord copies of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed from the Demised Premises. All such manifests, to the extent such Hazardous Materials were released, generated or used during the term of this Lease by Tenant or any other party other than Landlord and its agents and employees, shall list the Tenant or its agent as a responsible party and in no way shall attribute responsibility for any such Hazardous Materials to Landlord.

Tenant’s obligations under this Section 4.04 shall survive the expiration or termination of this Lease.

ARTICLE FIVE

Utility Charges

SECTION 5.01. Tenant agrees to pay or cause to be paid all charges for gas, water, sewer, electricity, light, heat, power, telephone or other communication service or other utility or service used, rendered or supplied to, upon or in connection with the Demised Premises throughout the term hereof, and to indemnify Landlord and save it harmless against any liability or damages on such account. Tenant shall also at its sole cost and expense procure or cause to be procured any and all necessary permits, licenses or other authorizations required for the lawful and proper use, occupation, operation and management of the Demised Premises and for the lawful and proper installation and maintenance upon the Demised Premises of wires, pipes, conduits, tubes and other equipment and appliances for use in supplying any such service to or upon the Demised Premises. Tenant expressly agrees that Landlord is not, nor shall it be, required to furnish to Tenant or any other occupant of the Demised Premises, during the term hereof, any water, sewer, gas, heat, electricity, light, power or any other facilities, equipment, labor, materials or services of any kind whatsoever, and Landlord shall not be liable for any loss or damage suffered by Tenant as a result of a failure of any such services to be available to the Demised Premises.

ARTICLE SIX

Indemnification and No Liability of Landlord

SECTION 6.01. Tenant covenants and agrees, at its sole cost and expense, to indemnify and save harmless Landlord against and from any and all loss, cost, damage or claims by or on behalf of any person, firm or corporation, arising from, in or about the Demised Premises during the term hereof, and further to indemnify and save Landlord harmless against and from any and all claims arising from any condition of any building on the Demised Premises, or of any vaults, passageways or spaces therein or appurtenant thereto, or any sidewalks or roadways adjacent thereto, arising from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed, pursuant to the terms of this Lease, or arising from any act or negligence of Tenant, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the term hereof, in or about the Demised Premises, or upon or under the sidewalks, the parking areas and the roadways, and the land adjacent thereto, and from and against all costs, counsel fees, expenses and liabilities incurred in or about any such claim, action or proceeding brought thereon; and in case any action or proceeding be brought against Landlord by reason of any such claim, Tenant upon notice from Landlord covenants to resist or defend such action or proceeding by counsel satisfactory to Landlord. The provisions of this Section 6.01 shall not be construed to result in Tenant’s indemnifying Landlord against the consequences of Landlord’s gross negligence or willful misconduct or that of Landlord’s agents or employees; rather, Landlord covenants and agrees, at its sole cost and expense, to indemnify and save harmless Tenant against and from any and all loss, costs, damages or claims by or on behalf of any person, firm or corporation, arising from Landlord’s gross negligence or willful misconduct during the term of this Lease. The obligations under this Section 6.01 shall survive the expiration or termination of this Lease.

SECTION 6.03. Except to the extent that the same may be the Sellers’ obligations under the Asset Exchange Agreement, either directly or pursuant to the indemnification provisions thereof, and except to the extent of a breach of any representation or warranty of Landlord that may be contained in this Lease, Tenant further covenants and agrees that Landlord shall not be responsible or liable to Tenant, or any person, firm or corporation claiming by, through or under Tenant for, and Tenant and any such person, firm or corporation claiming by, through or under Tenant hereby release Landlord from any liability whatsoever arising from or by reason of, any defect in any building or buildings on the Demised Premises, or in any engines, boilers, elevators, machinery, electric wiring or fixtures, or other equipment or apparatus or appliances in any such building, or for any failure or defect of water, heat, electric light or power supply, or of any apparatus or appliance in connection therewith, or from any injury or loss or damage to person or property resulting therefrom. Further, except to the extent the same is caused by Landlord’s gross negligence or willful misconduct or that of its agents or employees, Landlord shall not be responsible or liable to Tenant, or any person, firm or corporation claiming by, through or under Tenant, for, and Tenant or any person, firm or corporation claiming by, through or under Tenant hereby release Landlord from, all liability whatsoever arising from any injury, loss or damage to any persons or to the Demised Premises, or to any property of Tenant, or of any other person, contained in or upon the Demised Premises, caused by or arising or resulting from the electric wiring, or plumbing, water, steam, sewerage, or other pipes, or by or from any machinery or apparatus, or by or from any other defect whatsoever, or by or from any injury or damage caused by, arising or resulting from lightning, wind, tempest, water, in, upon or coming through or falling from the roof, skylight, trapdoors, windows, marquees, metal or glass awning, or by or from other actions of the elements, or from any injury or damage caused by or arising, or resulting from acts or negligence of any occupant or occupants of adjacent, contiguous or neighboring premises, or any other cause whatsoever.

ARTICLE SEVEN

Maintenance and Repairs

SECTION 7.02. Tenant shall permit Landlord and the authorized representatives of Landlord to enter the Demised Premises upon reasonable notice at all reasonable times during usual business hours for the purpose of exhibiting or inspecting the same and of making any necessary repairs to the Demised Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority, or that may be necessary to prevent waste or deterioration in connection with the Demised Premises, which Tenant is obligated, but has failed, to make, perform, or prevent, as the case may be. Nothing in this Lease shall imply any duty upon the part of Landlord to do any work or to make any alterations, repairs, additions or improvements to the Demised Premises, of any kind whatsoever except to the extent required as a result of Landlord’s gross negligence or willful misconduct or that of its agents or employees. The performance thereof by Landlord shall not constitute a waiver of Tenant’s default in failing to perform the same. Landlord shall not in any event (except for events caused by Landlord’s default hereunder) be liable for inconvenience, annoyance, disturbance, loss of business or other damage of Tenant or any other occupant of the Demised Premises or part thereof, by reason of making repairs or the performance of any work on the Demised Premises or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever. Landlord shall, however, in connection with the doing of any such work cause as little inconvenience, annoyance, disturbance, loss of business or other damage to Tenant or any such other occupant as may be reasonably possible in the circumstances.

ARTICLE EIGHT

Mechanics’ Lien

SECTION 8.01. Tenant shall not suffer or permit any liens to stand against the Demised Premises or any part therefrom by reason of any work, labor, services or materials done for, or supplied, or claimed to have been done for, or supplied to, Tenant or anyone holding the Demised Premises or any part thereof through or under Tenant. If any such lien shall at any time be filed against the Demised Premises, Tenant shall cause the same to be discharged of record within thirty (30) days after the date of

filing the same, by either payment, deposit or bond. If Tenant shall fail to discharge any such lien within such period, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, procure the discharge of the same either by paying amount claimed to be due by deposit in court or bonding. Any amount paid or deposited by Landlord for any of the aforesaid purposes, and all legal and other expenses of Landlord, including counsel fees, in defending any such action or in or about procuring the discharge of such lien, with all necessary disbursements in connection therewith, together with interest thereon at a rate of twelve percent (12%) per annum from the date of payment or deposit, shall become due and payable forthwith by Tenant to Landlord, or, at the option of Landlord, shall be payable by Tenant to Landlord as additional rent, as provided in Article Twelve hereof.

ARTICLE NINE

Alterations

SECTION 9.01. Tenant agrees that it will make no structural alterations to the building or buildings now or hereafter erected upon the Demised Premises or construct any additional improvements on the Demised Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Landlord’s prior written consent shall not be required in instances of non-structural alterations to the Demised Premises or in instances where structural alterations are required by an automobile manufacturer(s) as a condition of continuing the dealership franchise, but Tenant shall provide prior written notice of any such alteration prior to the commencement of any work. Tenant further agrees that it will not make any other alterations or improvements which would change the character of said building or buildings, or which would weaken or impair the structural integrity, or lessen the value of said building or buildings.

(a) The same shall be performed in a first-class workmanlike manner.

(b) Tenant shall cause such plans and specifications to be prepared and will furnish copies thereof to Landlord prior to the commencement of such alterations and, in instances where Landlord’s prior consent is required pursuant to Section 9.01 above, no work shall be done except in accordance with plans and specifications approved by Landlord, such approval not to be unreasonably withheld or delayed. Landlord shall be deemed to have approved any plans and specifications submitted by Tenant if Landlord does not disapprove the same within fifteen (15) business days. Tenant further agrees that, before the commencement of any such alterations, it will file such plans and specifications with, and obtain the approval thereof by, all municipal or other governmental departments or authorities having jurisdiction thereof. Copies of all such approvals, authorizations, permits and consents of governmental authorities shall be delivered to and retained by Landlord. Landlord shall execute and deliver to Tenant such consents by Landlord as may be required by any such departments or authorities, it being understood, however, that any such consent or consents by Landlord shall not operate or be construed as a consent by Landlord for the purpose of filing any lien or making any charge of any kind whatsoever against either Landlord or the Demised Premises or as a representation or warranty that such plans and specifications will comply with any applicable laws or regulations.

(c) such alteration work shall be done subject to, and in accordance with, all applicable laws, rules, regulations, and other requirements of all governmental authorities having jurisdiction thereof and of the local Board of Fire Underwriters or of any similar body.

(d) Tenant shall procure and maintain such insurance as Landlord may reasonably require in connection with such alteration work.

(e) Tenant shall promptly pay and discharge all costs, expenses, damages and other liabilities which may arise in connection with or by reason of such alteration work.

(f) Tenant shall pay the amount of any increase in premiums on insurance policies occasioned by the making of any such alterations.

(g) Except in instances of non-structural alterations to the Demised Premises, Tenant’s contractor must be approved by Landlord, which approval shall not be unreasonably withheld or delayed.

ARTICLE TEN

Insurance and Damage

SECTION 10.02. In case of damage to or destruction of any improvements on the Demised Premises or any part thereof by fire or other cause, Tenant shall promptly give written notice thereof to Landlord, and Tenant shall, at Tenant’s sole cost and expense, and whether or not the insurance proceeds, if any, shall be sufficient for the purpose, restore, repair, replace, rebuild or alter the same as nearly as possible to its condition immediately prior to such damage or destruction taking into account, however, such reasonable modifications to such improvements to accommodate Tenant’s then existing business conditions, together with such other changes or alterations as may be made at Tenant’s election, all in conformity with and subject to the conditions of Article Nine hereof. Such restorations, repairs, replacements, rebuilding or alterations shall be commenced within ninety (90) days from the date of occurrence of such damage or destruction, which time shall be extended by a time commensurate with any delays due to adjustment of insurance, preparation of plans and specifications, and applications for zoning variances and rezoning and other governmental approvals, and shall thereafter be prosecuted with reasonable diligence, unavoidable delays excepted.

SECTION 10.03.

A. All insurance money paid on account of such damage or destruction shall be paid to and held by Landlord and Tenant as co-trustees and, shall be applied to the payment of the cost of the aforesaid restoration, repairs, replacement, rebuilding or alterations, including the cost of temporary repairs or for the protection of the completion of permanent restoration, repairs, replacements, rebuilding or alterations (all of which temporary repairs, protection of property and permanent restoration, repairs, replacement, rebuilding or alterations are hereinafter collectively referred to as the “restoration”), and shall be paid out to, or at the direction of, Tenant from time to time as such restoration progresses, in installments equal to ninety percent (90%) of the work completed and one hundred percent (100%) of the materials furnished, and shall be received by Tenant for the purpose of paying the cost of such restoration upon the written request of Tenant which shall be accompanied by the following:

(a) that the sum then requested either has been paid by Tenant, or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished materials for the restoration therein specified, and giving a brief description of such services and materials and the several amounts so paid or due to each of said persons in respect thereof, and stating that no part of such expenditures has been or is being made the basis, in any previous or then pending request, for the withdrawal of insurance. money or has been made out of the proceeds of insurance received by Tenant, and that the sum then requested does not exceed the value of the services and materials described in the certificate;

B. If the net insurance money as aforesaid at the time held by Landlord and Tenant shall be insufficient to pay the entire cost of such restoration, Tenant shall pay the deficiency.

SECTION 10.08. Each insurance policy required under this Article Ten shall have attached thereto (a) an endorsement that such policy shall not be canceled or materially changed without at least thirty (30) days prior written notice to Landlord, and (b) an endorsement to the effect that the insurance as to the interest of Landlord shall not be invalidated by any act or neglect of Landlord or Tenet. All policies or insurance shall be written in companies reasonably satisfactory to Landlord and licensed to do business in the State of Florida. Certificates of insurance, evidencing the coverages required hereby, in a form reasonably acceptable to Landlord, shall be delivered to Landlord upon commencement of the term, and additional certificates of insurance shall be delivered to Landlord not less than twenty (20) days prior to the expiration of the then current policy term.

SECTION 10.1 1. Tenant agrees to give prompt notice to Landlord with respect to all fires or other casualties occurring upon the Demised Premises.

ARTICLE ELEVEN

Condemnation

SECTION 11.01. If title to the fee of the whole of the Demised Premises or so much thereof as to render the remainder no longer useful for its intended use herein shall be taken or condemned by any competent authority, for any public or quasi-public use, this Lease shall cease and terminate, and all annual rent, additional rent and other charges paid or payable by Tenant hereunder shall be apportioned, as of the date of vesting of title in such condemnation proceeding, and the total award made with respect to the Demised Premises shall be paid to Landlord. Tenant shall surrender the Demised Premises as of the date of such vesting of title. Notwithstanding the foregoing, Tenant shall be entitled to maintain a separate action for an award to compensate Tenant for any moving expenses and damage to trade fixtures of Tenant on the Demised Premises.

SECTION 11.02. If title to the fee of less than the whole of the Demised Premises shall be so taken or condemned or conveyed by Landlord in lieu thereof, but the remainder is useful for its intended use herein, then the proceeds paid on account of such taking shall be paid to and held by Landlord and Tenant as co-trustees and shall be made available to Tenant in accordance with the terms of Section 10.3 above and Tenant shall restore the untaken portion of any building or buildings on the Demised Premises, so that each such building, respectively, shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as the building existing immediately prior to such condemnation or taking. All amounts received as a result of such condemnation or conveyance in lieu thereof in excess of the amounts paid to so restore the building or buildings located on the Demised Premises, shall be retained by Landlord. The rent owed to Landlord by Tenant under this Lease shall be equitably adjusted based upon the portion of the Demised Premises so taken, condemned or conveyed by Landlord in lieu thereof.

ARTICLE TWELVE

Landlord’s Right to Perform Tenant’s Covenants

SECTION 12.01. Tenant covenants and agrees that if it shall at any time fail to pay any Tax pursuant to the provisions of Article Three hereof, or to take out, pay for, maintain or deliver any of the insurance perform any other act which Tenant is obligated to make or perform under this Lease, then Landlord may, without waiving, or releasing Tenant from, any obligations of Tenant in this Lease contained, pay any such Tax, effect any such insurance coverage and pay premiums therefor, and make

any other payment or perform any other act which Tenant is obligated to perform under this Lease, in such manner and to such extent as shall be necessary, and, in exercising any such rights, pay necessary and incidental costs and expenses, employ counsel and incur and pay reasonable attorneys’ fees. All sums so paid by Landlord and all necessary and incidental costs and expenses in connection with the performance of any such act by Landlord, together with interest thereon at a rate of twelve percent (12%) per annum from the date of the making of such expenditure by Landlord, shall be deemed additional rent hereunder and, except as otherwise in this Lease expressly provided, shall be payable to Landlord on demand or at the option of Landlord may be added to any rent then due or thereafter becoming due under this Lease, and Tenant covenants to pay any such sum or sums with interest as aforesaid and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of the rent.

ARTICLE THIRTEEN

Default Provisions and Remedies

(a) if Tenant shall fail to pay any installment of the rent set forth in Section 2.01 of this Lease, or any part thereof, when the same shall become due and payable, and such failure shall continue for five (5) days after written notice thereof from Landlord; provided, however, Landlord shall only be obligated to provide two (2) such five (5) day notice periods within any twelve (12) month period during the term of this Lease, and, upon the third delinquency in the payment of any rent due hereunder during any said twelve (12) month period, Tenant shall immediately be in default under this Lease without any further notice from Landlord; or

(b) if Tenant shall fail to pay any sum or other charge required to be paid by Tenant hereunder (other than the payment of the rental as set forth in said Section 2.01), and such failure shall continue for thirty (30) days after written notice thereof from Landlord to Tenant; or

(d) if any petition shall be filed against Tenant in any court, whether or not pursuant to any statute of the United States or of any state, in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceedings, and remains undismissed for sixty (60) days or Tenant requires or consents to any such petition or filing, or if any such petition shall be so filed by Tenant; or

(e) if, in any proceeding, a receiver or trustee be appointed for all or any portion of Tenant’s property; or

(f) if Tenant shall abandon the Demised Premises for a period in excess of thirty (30) days, it being presumed that Tenant shall have abandoned the Demised Premises if it shall fail to continuously operate its business for such thirty (30) consecutive day period without excuse as specifically allowed under the terms and provisions of this Lease; or

(g) if Tenant shall assign, mortgage or encumber this Lease, or sublet the whole or any part of the Demised Premises, otherwise than as expressly permitted hereunder, or if this Lease or the estate of Tenant hereunder shall be transferred, or passed to, or devolve upon, any person, firm or corporation other than Tenant herein named, except in the manner permitted hereunder; or

(h) if Tenant shall fail to perform or observe any other requirement of this Lease (not hereinbefore in this Section 13.01 specifically referred to) on the part of Tenant to be performed or observed, and such failure shall continue for thirty (30) days after written notice thereof from Landlord to Tenant unless a shorter period of time is allowed under this Lease; provided, however, that, if such default cannot be cured with the exercise of diligent efforts within such thirty(30) days, such thirty (30) day period shall be extended for such period of time, not exceeding an additional sixty (60) days, as shall be required for Tenant, in the exercise of diligent efforts, to cure the default unless a shorter period of time is required under the provisions of any mortgage encumbering the Demised Premises; or

(i) If an “Event of Default” shall occur under the terms and conditions of that certain Lease Agreement of even date herewith by and between Landlord and Tenant with respect to the parcel of land and premises located at the southwest comer of Hillsborough and Dale Mabry Avenues, Tampa, Florida, (the “Hillsborough Avenue Lease”) if, and only if, at such time, the Landlord of the Hillsborough Avenue Lease and the Landlord under this Lease shall be the same person, or Affiliates of one another. For purposes of this Lease, the term “Affiliate”, as used to indicate a relationship with a specific person, shall mean a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified, and in the case of a specified person who is a natural person, also includes his spouse, his former spouses, his issue, his parents, his estate and any trust for the benefit of his spouse and/or issue.

(a) Terminate Tenant’s right to possession of the Demised Premises by any lawful means, in which case the term of this Lease shall expire and Tenant shall immediately surrender possession of the Demised Premises to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant’s default including, but not limited to, the cost of recovering possession of the Demised Premises, expenses of reletting, reasonable attorneys’ fees, and any real estate commission actually paid or required to be paid.

(b) Reenter and take possession of the Demised Premises and relet the same for Tenant’s account, holding Tenant liable in damages for all expenses incurred by Landlord in any such reletting and for any difference between the amount of rents received from such reletting and those due and payable under the terms of this Lease, and Landlord shall not be deemed to have thereby accepted a surrender of the Demised Premises. In the event Landlord relets the Demised Premises, Landlord shall have the right to lease or let the Demised Premises or portions thereof for such periods of time and at such rents and for such use and upon such covenants and conditions as Landlord, in its sole discretion, may elect, and Landlord may make such repairs and improvements to the Demised Premises as may be necessary. Landlord shall be entitled to bring such actions or proceedings for the recovery of any deficits due to Landlord as it may deem advisable, without being obligated to wait until the end of the term, and commencement or maintenance of any one or more actions shall not bar Landlord from bringing other or subsequent

actions for further accruals, nor shall anything in this subparagraph (b) limit or prohibit Landlord’s right at any time to accelerate all rents and charges due from Tenant to the end of the term, or to terminate this Lease by giving notice to Tenant.

(c) Declare all rents and charges due hereunder immediately due and payable, and thereupon all such rents and fixed charges to the end of the term shall thereupon be accelerated; provided, however, such accelerated amounts shall be discounted to their then present value on the basis of a five percent (5%) per annum discount from the respective dates that such amount should have been paid hereunder. In the event that any charges due hereunder cannot be exactly determined as of the date of acceleration, the amount of such charges shall be determined by Landlord in a reasonable manner based on historical increases in such charges.

(d) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of Florida.

Section 13.03. In the event Tenant fails to pay any installment of rent or other sums required to be paid by Tenant under Article 2 of this Lease within the five (5) day period immediately following the date such rent or other sum is due, Tenant shall pay to Landlord a late charge in the amount of four percent (4%) of such outstanding amount. Upon the occurrence of an Event of Default, any amounts herein required to be paid by Tenant which are not paid when due, shall bear interest at a rate equal to twelve percent (12%) per annum from the date until paid.

Section 13.04. In the event of any litigation or other judicial action with respect to this base, the prevailing party in such action shall, in addition to all other remedies, be entitled to recover from the other party all costs and expenses of such litigation or judicial action, including, but not limited to, all attorneys’ fees or paralegals’ fees incurred in connection therewith, and all such fees incurred in any pretrial, trial, appellate or bankruptcy proceedings.

ARTICLE FOURTEEN

Cumulative Remedies-Waiver-Oral Change

SECTION 14.01. Every term, condition, agreement or provision contained in this Lease shall be deemed to be also a covenant.

SECTION 14.02. The specified remedies to which Landlord may resort under the terms of this Lease are not intended to be exclusive of any other remedies or means of redress to which Landlord may be lawfully entitled in case of any breach or threatened breach by Tenant of any provision of this Lease.

SECTION 14.05. This Lease may not be changed orally, but only by agreement in writing signed by the party against whom enforcement of the change, modification or discharge is sought or by his agent.

ARTICLE FIFTEEN

Surrender of Premises

may be paid for out of proceeds of the Security Deposit. Title to all of Tenant’s trade fixtures, furniture and equipment (other than building equipment) installed in the Demised Premises shall remain in Tenant, and upon expiration or other termination of this Lease, the same may and, upon the demand of Landlord, shall be removed and any resultant damage to the Demised Premises shall be repaired, by and at the expense of Tenant; provided, however, that if, upon any such expiration or other termination of this Lease, Tenant shall be delinquent or in default under any of the provisions hereof, Tenant shall not, without Landlord’s prior written consent, be entitled to remove any such trade fixtures, furniture or equipment unless and until such delinquency or default shall have been cured, and if such delinquency or default shall not have been cured by Tenant within thirty (30) days after the date of such expiration or termination, all such trade fixtures, furniture and equipment of Tenant shall, at Landlord’s option, be and become the absolute property of Landlord.

ARTICLE SIXTEEN

Assignment, Subletting and Encumbrances

SECTION 16.01. Except as set forth below, Tenant shall not assign, mortgage or otherwise encumber this Lease, or sublet all or any part of the Demised Premises, without the prior written consent of Landlord in each instance which consent shall not be unreasonably delayed or withheld. No permitted assignment or sublease of the whole or any part of the Demised Premises by Tenant shall in any way release Tenant or affect or reduce any of the obligations of Tenant under this Lease, but this Lease shall continue in full force and effect, it being the intention and meaning of the parties hereto that Tenant shall be and remain liable to Landlord for any and all acts and omissions of any and all assignees, subtenants and similar occupants. The consent by Landlord to an assignment, encumbrance, or subletting shall not be construed in any way to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment, encumbrance, or subletting. Notwithstanding the foregoing, (i) Tenant shall have the right to assign this Lease or sublease all or a portion of the Demised Premises without Landlord’s consent (x) to any entity with which Tenant shall be merged, consolidated or combined or (y) to any entity which shall purchase all or substantially all of Tenant’s assets or (z) to any subsidiary, parent or affiliate of Tenant or any entity which shall own all or substantially all of Tenant’s outstanding shares or partnership or membership interests, or (ii) in the event of an “IPO” as that term is defined in the restated and amended limited partnership agreement of Tenant (the “Limited Partnership Agreement”), Tenant may assign its interest in this Lease or sublease the Demised Premises to those transferees contemplated by Section 4.7(g) of the Limited Partnership Agreement and any majority owned subsidiary of such transferee; provided, however, no such assignment or subletting shall relieve Tenant from its obligations or liabilities hereunder.

Notwithstanding any of the foregoing, it is expressly understood that, at all times during the terms of this Lease, Tenant hereunder must be identical to the tenant under the Hillsborough Avenue Lease (although permitted subtenants may differ).

ARTICLE SEVENTEEN

Subordination

agreement from any future lender(s) as a condition precedent to Tenant’s future subordination. However, in order to manifest and confirm the foregoing, Tenant shall subordinate its leasehold interest in the Demised Premises to the mortgage lien of any financing Landlord may wish to obtain at any time during the Lease term. Provided the aforesaid condition precedent has been satisfied by Landlord, the failure of Tenant to so deliver any such instrument or instruments within ten (10) days; after such demand in writing by Landlord shall constitute a default hereunder, and Landlord shall be entitled to all of its remedies. Furthermore, Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to execute such instruments of subordination in the event Tenant fails to execute such instruments within ten (10) days after such demand.

ARTICLE EIGHTEEN

Governing Law

ARTICLE NINETEEN

Estoppel Certificate

ARTICLE TWENTY

Notices


Landlord:		Jeffrey I. Wooley
		10000 Lindelaan
		Tampa, Florida 3361 8

With a copy to:		Andrew J. Lubrano, Esquire
		Hill, Ward & Henderson, P.A.
		Suite 3700 -Barnett Plaza
		101 East Kennedy Boulevard
		Tampa, Florida 33602



Tenant:		Asbury Automotive Tampa, L.P.
		C/O Ripplewood Holdings, L.L.C.
		712 Fifth Avenue, 49th Floor
		New York, New York 10019

ARTICLE TWENTY-ONE

Invalidity of Particular Provisions

ARTICLE TWENTY-TWO

Exculpation of Landlord

ARTICLE TWENTY-THREE

Binding Covenants and Benefits

ARTICLE TWENTY-FIVE

No Partnership or Joint Venture

SECTION 25.01. Landlord and Tenant are not and shall not in any way be considered joint venturers, partners or agents of each other, it being expressly understood that the relationship between them is solely that of lessor and lessee and nothing more. Neither party shall have the power to bid or obligate the other in any way unless and except as may be set forth specifically in this Lease.

ARTICLE TWENY-SIX

Possession and Quiet Enjoyment

ARTICLE TWENTY-SEVEN

[Intentionally Reserved]

ARTICLE TWENTY-EIGHT

Brokers

ARTICLE TWENTY-NINE

Radon Gas

ARTICLE THIRTY

Captions and Headings

ARTICLE THIRTY-ONE

Rights of Leasehold Mortgagees

SECTION 3 1.01. If Tenant or its successor or permitted assigns shall mortgage this Lease in compliance with the provisions of Section 16.02 hereof, then as long as any such mortgage shall remain unsatisfied of record, the following provisions shall apply:

(a) Landlord, upon serving upon Tenant any notice of default pursuant to the provisions of Article 19 hereof, or any other notice under the provisions of or with respect to this Lease, shall also serve a copy of such notice upon the holder of such mortgage, at the notice address described below, and no notice by Landlord to Tenant hereunder shall be deemed to have been duly given unless and until a copy thereof has been so served.

(d) Any notice or other communication which Landlord shall desire or is required to give to or serve upon the holder of a mortgage on this Lease shall be in writing and shall be served by certified mail, return receipt requested, addressed to Bank of America National Trust and Savings Association at 251 LaSalle Street, Chicago, Illinois 60697 or at such other address as shall be designated by such holder by notice in writing given to Landlord by certified mail, return receipt requested. Any notice or other communication which the holder of a mortgage on this Lease shall desk or is required to give to or serve upon Landlord shall be deemed to have been duly given or served if sent by certified mail, return receipt requested, addressed to Landlord at Landlord’s address as set forth in Section 20.01 hereof or at such other address as shall be designated by Landlord by notice in writing given to such holder by certified mail.

(g) If any leasehold mortgagee shall acquire title to Tenant’s interest in this Lease, by foreclosure of a mortgage thereon or by assignment in lieu of foreclosure or by an assignment from a nominee or wholly owned subsidiary corporation of such mortgagee, such mortgagee may assign such Lease and shall thereupon be released from all future liability for the performance or observance of the covenants and conditions in such lease contained on the tenant’s part to be performed and observed from and after the date of such assignment, provided that the assignee from such mortgagee shall have assumed such Lease and shall have been approved by Landlord.

ARTICLE THIRTY-TWO

Short Form Lease

SECTION 32.01. Upon the execution hereof, Landlord and Tenant shall also enter into a short form lease, in the form of the Short Form Lease attached hereto as Exhibit B and made a part hereof, which shall be recorded in the Public Records of Hillsborough County, Florida., and shall reference the Option provided herein.

ARTICLE THIRTY-THREE

Option to Purchase

SECTION 33.01. The following definitions shall apply throughout this Article Thirty- Three:

(a) “Asbury” shall mean Asbury Automotive Tampa GP, L.L.C. a Delaware limited partnership and the general partner of Tenant.

(b) “Affiliate” shall have the meaning ascribed to it in the Limited Partnership Agreement.

(c) “IPO” shall mean an initial public offering of the REIT shares by the REIT pursuant to registration documents declared effective by the Securities and Exchange Commission.

(d) “Landlord’s Employment Agreement” shall mean that certain Employment Agreement, dated as of September 17, 1998, between Tenant and Landlord.

(e) “Limited Partnership Agreement” shall mean that certain first Amended and Restated Limited Partnership Agreement of Asbury Automotive Tampa, L.P., dated as of September 17, 1998.

(f) “Millbourne Realty” shall mean Millbourne Equity Partners, L.P., a Delaware limited partnership.

(h) “Option” shall mean the exclusive right to purchase the Property as described in this article.

(i) “Option Period” shall mean a period commencing on the date hereof and expiring at midnight two (2) years after such date.

(j) “OP Unit” shall mean a unit of limited partnership interest in Millbourne Realty.

(k) “Partner” or “Partners” shall have the meanings ascribed to them in the Limited Partnership Agreement.

(l) “Percentage Interest” shall have the meaning ascribed to it in the Limited Partnership Agreement.

(m) “Permitted Transferees” shall mean the Partners, Millbourne Realty, the REIT, and any of their respective Affiliates.

(n) “Property” shall mean collectively the Demised Premises and the real property which is the subject matter of the Hillsborough Avenue Lease.

(o) “Purchaser” shall mean Tenant, its Permitted Transferees or Newco, whichever such party exercises the Option and purchases the Property.

(p) “REIT” shall mean Millbourne Equity Trust, a Maryland real estate investment trust.

(r) “REIT Option Price” shall mean Nineteen Million Dollars and No/100ths ($19,000,000.00).

(s) “Reversion Event” shall mean the occurrence of any one or more of the following after the closing of the purchase of the Property upon a REIT Option Event or, in the event of a transfer of the Option to a Permitted Transferee, upon the giving of notice pursuant to Section 33.06(b) and prior to an IPO: (1) the contemplated REIT fails to sell common shares of the REIT to the public in an IPO before the earlier to occur of the one-year anniversary of the closing of the purchase transaction or the August 15 occurring immediately subsequent to the calendar year in which the purchase of the Property is closed; (2) either Asbury or its Affiliates fail to own or control the Tenant in proportions at least equal to such proportions as they own or control as of the date of this Lease; (3) the Partners (or their “Permitted Transferees”, as such term is defined under the Limited Partnership Agreement) comprising Tenant cease to maintain their Percentage Interests in the Tenant under this Lease in the same proportions as they exist as of the date of this Lease, except (a) as such Percentage Interests may be adjusted pursuant to the Limited Partnership Agreement as a result of a capital contribution made under Section 4.2 of the Limited Partnership Agreement by one of the Partners, (b) as portions of such Percentage Interests may be assigned by the Wooley Entities with the consent of Asbury, or (c) as Landlord’s Percentage Interest may be reduced pursuant to the call right contained in Section 4.8 of the Limited Partnership Agreement as a result of a termination by Landlord of his Employment Agreement without “Good Reason” as defined therein, or (4) in the event Tenant establishes a Newco to hold the REIT shares attributable to the transfer of the Property to the REIT, such Newco fails to have the same ownership structure as the Limited Partnership as of the date of the creation of Newco except (a) as such ownership structure may be adjusted in a manner similar to the adjustment of Percentage Interests under the Limited Partnership Agreement as a result of a capital contribution made under a provision similar to Section 4.2 of the Limited Partnership Agreement by one of the Partners, (b) as portions of such interests similar to Percentage Interests may be assigned by the Wooley Entities with the consent of Asbury, or (c) as Landlord’s Percentage Interest may be reduced pursuant to a call right similar to the one contained in Section 4.8 of the Limited Partnership Agreement as a result of a termination by Landlord of his Employment Agreement without “Good Reason” as defined therein.

(u) “Villanova” shall mean Asbury Villanova II L.L.C. a Delaware limited liability company and an Affiliate of Asbury.

(v) “Wooley Entities” shall have the meaning ascribed to it in the Limited Partnership Agreement.

As a condition precedent to Purchaser’s ability to exercise this Option, neither this Lease nor the Hillsborough Avenue Lease may be in default nor shall there be any acts or occurrences in existence which, with the passage of time, could constitute a default under the aforesaid leases.

SECTION 33.03. Purchaser shall only be entitled to exercise the Option upon the occurrence of a REIT Option Event Upon the occurrence of a REIT Option Event, the net purchase price for the Property shall be the REIT Option Price. The REIT Option Price shall be paid to Landlord by Purchaser in cash at closing. The proceeds shall be delivered by wire-transfer to Landlord in immediately available federal funds. The wire transferred funds must be received by Landlord in its designated account no later than 2:00 p.m., local time, on the closing date. Nothing contained in this Section or anywhere else in this Article Thirty-Three shall be deemed to give the right to any Purchaser to pay Landlord the REIT Option Price in any method other than in cash at closing.

SECTION 33.04. Following the occurrence of a REIT Option Event and prior to an IPO, Villanova shall in good faith select an “Independent Appraiser”, as such term is defined in the Limited Partnership Agreement, who, once all material facts, including but not limited to the identity of the properties to be included in the REIT, the proposed master lease governing the leasing of Property, and the initial estimated purchase price of the REIT shares in the IPO, are known by Asbury, Villanova and their Affiliates, shall determine the fair market value of the Property, the aggregate fair market value of the REIT (or of the REIT assuming all of the properties intended to be. included in the REIT are subsequently transferred to the REIT), the aggregate number of shares of the REIT to be issued to Tenant, a Newco or another Purchaser in exchange or consideration therefore, and, if Landlord elects to receive the REIT Option Price or any part thereof in REIT shares or OP Units, the aggregate number of REIT shares or OP Units of the REIT to be issued to Landlord in exchange or consideration therefore. Such valuation shall be done in a manner consistent with valuations of properties of the other Affiliates of Asbury and Villanova included in the REIT.

SECTION 33.05. Prior to or concurrently with the completion of the IPO of the REIT shares, Tenant or a Newco designed to hold such REIT shares or OP Units shall contribute its ownership

interest in the Property or this Option to the REIT in exchange for REIT shares or OP Units. Upon such transfer or at any time thereafter, within ten days’ notice given by Landlord, Tenant or such Newco shall distribute to Landlord at the election of the Landlord, 49% of either the cash value of the REIT shares or OP Units in immediately available federal funds or the REIT shares or OP Units received by Tenant or such Newco. Landlord shall inform the Tenant, or Newco no later than the date when the underwriter of the IPO determines that it is important to disclose such information as to whether Landlord shall elect cash or REIT shares or OP Units, provided that at such time Landlord has accumulated reasonable information that allows him to make an informed decision as to such matters. Landlord shall have the right to record a short form reversion agreement in the public record describing Landlord’s rights hereunder with respect to reversion.

(a) REIT Option Price. In the event Landlord shall have been eligible to participate in the private placement of OP Units, and shall have entered into an irrevocable commitment to accept the same in payment of all or a portion of the REIT Option Price or any other consideration relating to the Option hereunder, the REIT Option Price shall be paid in cash or other immediately available funds.

(b) Notice of Exercise of Option. Such Permitted Transferee shall exercise the Option only by providing notice to Landlord in writing, on or before the last day of the Option Period.

SECTION 33.08. During the Reversion Period, Purchaser shall not do any of the following:

(a)

Encumber the Property in an amount greater than the REIT Option Price;

(b)

Sell or lease the Property or any portion thereof to any person or entity other than to the Tenant under a lease having identical lease terms to this Lease;

(c)

Take any other action with respect to the Property that would have a material adverse effect on the Property or the “Business” as such term is defined in the Asset Exchange Agreement.

taxes incurred by the Landlord). The reconveyance of the Property shall be closed at the offices of Hill, Ward & Henderson, P.A., Barnett Plaza, Suite 3700, 101 East Kennedy Boulevard, Tampa, Florida 33602, or at such other location in Hillsborough County, Florida, acceptable to the parties hereto. At closing, Tenant or such Newco shall provide Landlord with the same representations, warranties and covenants as Landlord provided Tenant with respect to the Property and shall be obligated by the same duties and obligations with respect to survey, title and deed as was Landlord under the Option, mutatis mutandis (except as to such encumbrances incurred in the ordinary course of business to which Landlord has consented in writing in his sole and absolute discretion). Subject to the foregoing, Landlord shall thereupon return the consideration received by Landlord in the same form or forms as it was received.

SECTION 33.10. In the event Purchaser exercises this Option to purchase the Property, subject to the curative periods, Reversion Events and all other conditions as herein provide, the sale and purchase of the Property shall be closed and the deed shall be delivered on or before ninety (90) days after the date of the exercise of these Option to purchase the Property. In the event the last day for closing the purchase of the property as herein provided is a Saturday, Sunday or a declared local holiday, the period for closing shall extend to and include the first business day immediately following any such Saturday, Sunday or declared holiday. The exact date for closing the purchase of the Property within said period shall be set by Purchaser, provided Purchaser gives Landlord at least five (5) business days prior written notice of such closing date. The sale and purchase of the Property shall be closed at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York, commencing at 10:00 am., or at such other time or location acceptable to the parties hereto.

At the closing of the sale after exercise of the Option, Tenant shall pay for the documentary stamps on the deed and for recording the deed.

Simultaneously with the closing of the sale after exercise of the Option, this Lease will be terminated, and Tenant shall negotiate and enter into a new lease with Millbourne Realty or its designee.

Landlord is conveying, the Property in “AS-IS” condition with no representation or warranty of any type, either express or implied, being made by Landlord as to its physical condition or fitness for a particular use. The term “AS-IS” shall be limited as set forth in Section 4.02 hereof.

Tenant shall be responsible for all taxes and assessments as of the date of closing and the same shall not be prorated.

At the closing of the sale and purchase of the Property on the terms hereof, Landlord shall furnish to Purchaser its affidavit in form acceptable to the title company, stating that (i) to its knowledge, Landlord has sole and exclusive possession and occupancy of the Property except for the rights of Tenant and a Purchaser other than Tenant, if any, and any and all subtenants under the terms of this Lease and the Hillsborough Avenue Lease, and (ii) either that there have been no improvements made to the Property by Landlord during the ninety (90) days immediately preceding the date of closing, or if there have been any such improvements, that all lienors in connection with said improvements have been paid in full.

ARTICLE THIRTY-FOUR

Waiver of Jury Trial

SECTION 34.01. AS A MATERIAL INDUCEMENT TO THE EXECUTION OF THIS LEASE, LANDLORD AND TENANT AGREE THAT IN THE EVENT ANY LITIGATION ARISING OUT OF THE TERMS AND PROVISIONS OF THIS LEASE OR THE RELATIONSHIP BETWEEN LANDLORD AND TENANT. THEN NEITHER PARTY SHALL SEEK A JURY TRIAL IN SUCH PROCEEDING, IT BEING EXPRESSLY AGREED AND STIPULATED BY THE PARTIES HERETO THAT ANY DISPUTES ARE BETTER RESOLVED BY A JUDGE.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of the day and year first above written.


Signed, sealed and delivered in the presence of:

/s/ Barbara Murphy		/s/ Jeffrey I. Wooley (Seal)
Name:	Barbara A. Murphy	Jeffrey I. Wooley
	(Type or Print Name)

/s/ Jessica Stone			“LANDLORD”
Name:	Jessica Stone
	(Type or Print Name)
		ASBURY AUTOMOTIVE TAMPA, L.P.,
		a Delaware limited partnership

		By:	ASBURY AUTOMOTIVE TAMPA
			GP L.L.C., a Delaware limited liability company, general partner

/s/ Barbara Murphy		/s/ Ian Snow
Name:	Barbara A. Murphy	Name:	Ian Snow
	(Type or Print Name)	Title:	Authorized Agent

			“TENANT”

/s/ Lauren Coffman
Name:	Lauren Coffman
	(Type or Print Name)

EXHIBIT A

(Adamo Drive Property)

PARCEL I:

Those portions of the Southeast 1/4 of the Southeast 1/4 of Section 13, and the Northeast 1/4 of the Northeast 1/4 of Section 24, all in Township 29 South, Range 19 East, Hillsborough County, Florida being further described as follows:

Begin at the Northeast corner of said Section 24; thence South 00°08’00” East, 880.75 feet along the East line of said Section 24 to the North right-of-way line of State Road 60: (D.O.T. Section No. 1011-601) thence along said North right-of-way line the following: South 84’32’00” West, 434.69 feet; thence North 50°35’00” West, 71.48 feet to the East right-of-way line of U.S. Highway No. 301 (State Road 43) (D.O.T. Section No. 10010-2502); thence along said East right-of-way line the following: North 05°26’00” West, 99.47 feet to a curve concave Westerly and having a radius of 6985.50 feet; thence Northerly along said curve, 203.34 feet through a central angle of 01°40’04” (chord North 06°16’02” West 203.33 feet); thence radial from said curve, North 82°53’56” East, 15.00 feet radial to a curve concave Westerly and having a radius of 7000.50 feet; thence Northerly along said curve, 217.89 feet through a central angle of 01°47’00”(chord North 07°59’34.5” West, 217.88 feet) to a non-tangent compound curve concave Westerly and having a radius of 68.00 feet; thence Northerly along said curve, 22.99 feet through a central angle of 19°22’14” (North 08°58’41” West, 22.88 feet) to a non-tangent curve concave Westerly and having a radius of 7000.50 feet; thence Northerly along said curve, 229.50 feet through a central angle of 01°52’42” (chord North 10°00’38.5” West, 229.49 feet); thence non-tangent from said curve, North 04”57’25” West, 239.45 feet; thence North 10°57’00” West, 54.91 feet to the South right-of-way line of the Seaboard Coast Line Railroad: thence South 84°31’04” East, 608.35 feet along said South right-of-way line to the East line of said Section 13; thence South 00°53’00” East, 124.94 feet along said East line to the point of Beginning.

PARCEL II:

A tract in the Northwest 1/4 of section 19, Township 29 South, Range 20 East, Hillsborough County, Florida, described as follows:

From the point of intersection of the West boundary of said Northwest l/4 of Section 19, and the Northerly right-of-way line of State Road No. 60 (Adamo Drive), run North 84°32’00” East along said Northerly right-of-way line of State Road No. 60 a distance of 367.30 feet; run thence North 0°01’10” East a distance of 570.00 feet; run thence North 89°58’50” West a distance of 366.88 feet to a point on the West boundary of said Northwest 1/4 of Section 19; run thence South 00°08’00” East along said West boundary of Northwest 1/4 of Section 19, a distance of 605.12 feet to the Point of Beginning.

EXHIBIT B

This Instrument was Prepared

By and Should Be Returned:

Thomas N. Henderson, Esquire

Hill, Ward & Henderson, P.A.

Post Office Box 2231

Tampa, Florida 33601

SHORT-FORM LEASE

(Adamo Drive)

THIS SHORT-FORM LEASE is made and entered into this 17th day of September, 1998, by and between JEFFREY I. WOOLEY (the “Landlord”) and ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership (the “Tenant”).

W I T N E S S E T H

WHEREAS, Landlord and Tenant entered into a certain Fist Amended and Restated Lease Agreement dated September 17, 1998 (the “Lease”) for the Property pursuant to the terms and conditions set forth in the Lease; and

NOW, THEREFORE, in consideration of the sum of Ten and No/100ths Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Landlord hereby agrees to lease to Tenant, and Tenant hereby agrees to lease from Landlord, the Property pursuant to the terms and conditions as set forth in the unrecorded Lease whose terms and conditions are incorporated herein by reference.

3. The Lease contains the following provisions:

Landlord shall have the right to post and keep posted at all reasonable times on the Demised Premises any notices which Landlord shall be required so to post for the protection of Landlord and the Demised Premises from any such lien. Tenant agrees to promptly execute such instruments in recordable form in accordance with the terms and provisions of Florida Statute 713.10. As provided by Chapter 713, Florida Statutes, Landlord hereby notifies all persons and entities that any lien claimed by any party as the result of improving the Demised Premises or any improvements thereon pursuant to a contract with Tenant, or with any person other than Landlord, shall extend to, and only to, the right, title and interest in and to the Demised Premises, if any, of the person contracting for such improvements. This paragraph shall be construed so as to prohibit, in accordance with the provisions of Chapter 713, Florida Statutes, the interest of Landlord in the Demised Premises being subject to any lien for any improvements made by Tenant or any other person on the Demised Premises.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Short-Form Lease to be effective as of the day and year first above written.


		(Seal)
Name:		Jeffrey I. Wooley
	(Type or Print Name)

			“Landlord”

Name:
	(Type or Print Name)

		ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership

		By:	ASBURY AUTOMOTIVE TAMPA GP L.L.C., a Delaware limited Liability company, general partner

		By:

Name:		Name:

	(Type or Print Name)	Its:

			(Corporate Seal)

Name:			“Tenant”
	(Type or Print Name)

STATE OF FLORIDA

COUNTY OF HILLSBOROUGH

The foregoing instrument was acknowledged before me this day of September, 1998, by JEFFREY I. WOOLEY who is personally known to me or has produced as identification.

Notary Public

(Type, Print or Stamp Name)

My Commission Expires:

STATE OF FLORIDA

COUNTY OF HILLSBOROUGH

Notary Public

(Type, Print or Stamp Name)

My Commission Expires:

EXHIBIT A

(Adamo Drive Property)

PARCEL I:

Begin at the Northeast corner of said Section 24; thence South 00°08’00” East, 880.75 feet along the East line of said Section 24 to the North right-of-way line of State Road 60; (D.O.T. Section No. 1011-601) thence along said North right-of-way line the following: South 84°32’00” West, 434.69 feet; thence North 50°35’00” West, 71.48 feet to the East right-of-way line of U.S. Highway No. 301 (State Road 43) (D.O.T. Section No. 10010-2502); thence along said East right-of-way line the following: North 05°26’00” West, 99.47 feet to a curve concave Westerly and having a radius of 6985.50 feet; thence Northerly along said curve, 203.34 feet through a central angle of 01°40’04” (chord North 06°16’02” West, 203.33 feet); thence radial from said curve, North 82°53’56” East, 15.00 feet radial to a curve concave Westerly and having a radius of 7000.50 feet; thence Northerly along said curve, 217.89 feet through a central angle of 01°47’00” (chord North 07°59’34.5” West, 217.88 feet) to a non-tangent compound curve concave Westerly and having a radius of 68.00 feet; thence Northerly along said curve, 22.99 feet through a central angle of 19°22’14” (North 08°58’41” West, 22.88 feet) to a non-tangent curve concave Westerly and having a radius of 7000.50 feet; thence Northerly along said curve, 229.50 feet through a central angle of 01°52’42” (chord North 10°00’38.5” West, 229.49 feet); thence non-tangent from said curve, North 04°57’25” West, 239.45 feet; thence North 10°57’00” West, 54.91 feet to the South right-of-way line of the Seaboard Coast Line Railroad; thence South 84°31’04” East, 608.35 feet along said South right-of-way line to the East line of said Section 13; thence South 00°53’00” East, 124.94 feet along said East line to the Point of Beginning.

PARCEL II:

A tract in the Northwest 1/4 of Section 19, Township 29 south, Range 20 East, Hillsborough County, Florida, described as follows:

From the point of intersection of the West boundary of said Northwest ¹/4 of Section 19 and the Northerly right-of-way line of state Road No. 60 (Adamo Drive), run North 84°32’00” East along said Northerly right-of-way line of State Road No. 60 a distance of 367.30 feet; run thence North 0°01’10” East a distance of 570.00 feet; run thence North 89°58’50” West a distance of 366.88 feet to a point on the West boundary of said Northwest 1/4 of Section 19; run thence South 00°08’00” East along said West boundary of Northwest 1/4 of Section 19, a distance of 605.12 feet to the Point of Beginning.

EXECUTION COPY

SUBLEASE

THIS SUBLEASE, is entered into as of this 17th day of September, 1998, by and between ASBURY AUTOMOTIVE TAMPA, L.P., a Delaware limited partnership, as tenant (herein called “Sublessor”) and WTY MOTORS, L.P., a Delaware limited partnership (herein called “Subtenant”) .

W I T N E S S E T H:

WHEREAS, by that certain Lease Agreement annexed hereto as Exhibit A and made a part hereof (the “Master Lease”), dated the date hereof by and between Jeffrey I. Wooley, as landlord (“Landlord”) and Sublessor, as tenant, Landlord leased to Sublessor certain premises more particularly described in the Master Lease (the “Leased Property); and

WHEREAS, Sublessor desires to sublease to Subtenant, and Subtenant desires to hire from Sublessor a portion of the Demised Premises leased to Sublessor pursuant to the Master Lease as more particularly described in Exhibit B annexed hereto, which portion of the Demised Premises shall be referred to herein as the “Subleased Premises”, on the terms and conditions hereinafter set forth;

WHEREAS, all capitalized terms used herein and not otherwise defined shall have the meaning given to such term in the Master Lease;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, it is agreed as follows:

1. DEMISE AND TERM. Sublessor hereby leases to Subtenant, and Subtenant hereby hires from Sublessor the Subleased Premises. The term of this Sublease shall be the period commencing on the Commencement Date and ending on September 17, 2008 (the “Expiration Date”), unless sooner terminated as herein provided.

2. SUBORDINATE TO MASTER LEASE. This Sublease is and shall be subject and subordinate to the Master Lease and to all matters to which the Master Lease is or shall be subject and subordinate. Subtenant acknowledges that it has reviewed and examined a copy of the Master Lease.

3. PROVISIONS OF MASTER LEASE.

(a) Incorporation by Reference. All of the terms, covenants and conditions of the Master Lease are incorporated herein by reference so that, with respect to and as applicable to the Subleased Premises, each and every term, covenant and condition of the Master Lease binding or inuring to the benefit of the landlord thereunder shall, in respect of this Sublease, bind or inure to the benefit of Sublessor, and, with respect to and as applicable to the Subleased Premises, each and every term, covenant and condition of the Master Lease binding or inuring to the benefit of the tenant thereunder shall, in respect of this Sublease, bind or inure to the benefit of Subtenant with the same force and effect as if such terms, covenants and conditions were completely set forth in this Sublease, and as if the words “Landlord” and “Tenant,” or words of similar import, wherever the same appear in the Master Lease, were construed to mean, respectively, “Sublessor”

and “Subtenant” in this Sublease, and as if the words “Premises”, or words of similar import, wherever the same appear in the Master Lease, were construed to mean “Subleased Premises” in this Sublease, and as if the word “Agreement” and “Lease”, or words of similar import, wherever the same appear in the Master Lease, were construed to mean this “Sublease,” and as if the word “Term,” or words of similar import, wherever the same appears in the Master Lease, were construed to mean “the term of this Sublease; and as if the words “the date hereof,” or words of similar import, wherever the same appear in the Master Lease, were construed to mean “the date of this Sublease

(b) Subtenant’s Obligations. All acts and obligations to be performed and all terms and conditions to be observed by Sublessor as tenant under the Master Lease with respect to the Subleased Premises shall be performed and observed by Subtenant and Subtenant’s obligations shall run to Sublessor or Landlord as Sublessor may determine to be appropriate or required by the respective interests of Sublessor and Landlord.

(c) Time Limits. The time limits contained in the Master Lease for the giving of notices, making of demands or performing of any act, condition or covenant on the part of Tenant thereunder, or for the exercise by Tenant thereunder of any right, remedy or option, are changed for the purposes of incorporation herein by reference by shortening all time limits of ten (10) days or less by three (3) days in each instance and by shortening all time limits in excess of ten (10) days by five (5) days in each instance, so that in each instance Subtenant shall have three (3) days or five (5) days, as the case may be, less time to observe or perform hereunder than Sublessor has as the tenant under the Master Lease, provided that no period of two (2) days or more days shall be shortened to less than two (2) days.

(d) Conflict of Terms. If any of the express terms, conditions or provisions of this Sublease shall conflict with any of the terms, conditions or provisions incorporated by reference, such conflict: (i) if it relates to services or facilities to be provided by the Landlord under the Master Lease or benefits to be conferred by the Landlord under the Master Lease, shall be resolved in each such instance in favor of the express terms, conditions and provisions of the Master Lease, and (ii) if it relates to any other term, condition or provision of this Sublease, shall be resolved in each such instance in favor of the express terms, conditions and provisions of this Sublease.

(e) Notices from Landlord. If Subtenant receives any notice or demand from the Landlord with respect to the Subleased Premises or this Sublease, Subtenant shall promptly give a copy thereof to Sublessor. If Sublessor receives any notice or demand from the Master Landlord with respect to any obligations to be performed by Sublessor or Subtenant with respect to the Subleased Premises or any services or facilities to be furnished to Subtenant at the Subleased Premises, Sublessor shall promptly give a copy thereof to Subtenant.

4. NO BREACH OF MASTER LEASE. Subtenant shall not do or permit to be done any act or thing which may constitute a breach or violation of any term, covenant or condition of the Master Lease by the tenant thereunder, whether or not such act or thing is permitted under the provisions of this Sublease.

5. NO PRIVITY OF ESTATE. Nothing contained in this Sublease shall be construed to create privity of estate or contract between Subtenant and Landlord.

6. INDEMNIFICATION BY SUBTENANT. Subtenant does hereby indemnify and hold harmless Sublessor and Landlord from and against any and all losses, costs, damages, expenses, charges and liabilities, including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by Sublessor or Landlord, and shall defend Sublessor and Landlord against all claims, actions, proceedings and suits relating to: (i) the conduct of

Subtenant’s business in, or use or occupancy of, the Subleased Premises; (ii) any accidents, damages or injuries to persons or property occurring in, on or about the Subleased Premises, other than accidents, damages or injuries caused by Sublessor or Landlord or their respective officers, employees, agents or contractors; (iii) any breach or default by Subtenant in the observance or performance of the covenants and agreements contained herein (or incorporated herein by reference) beyond any applicable cure period; (iv) any work done in or to the Subleased Premises by Subtenant or Subtenant’s contractors, agents or employees; (v) any act, omission or negligence on the part Of Subtenant and/or its officers, employees, agents, customers, contractors or invitees, or any person claiming through or under Subtenant; or (vi) any losses of or damages to property, injuries to person, or claims of other Subtenant’s or occupants of Subtenant or of any other tenant or occupant of the Subleased Premises, arising out of or in connection with any alterations, additions or improvements in or to the Subleased Premises by Subtenant or Subtenant’s contractors, agents or employees, or acts, omissions or negligence in connection herewith.

7. USE. Subtenant shall use and occupy the Subleased Premises for the Permitted Use and for no other purpose. Subtenant shall comply with the certificate of occupancy relating to the Subleased Premises and with all laws, statutes, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and the appropriate agencies, officers, departments, boards and commissions thereof, and the board of fire underwriters and/or the fire insurance rating organization or similar organization performing the same or similar functions, whether now or hereafter in force, applicable to the Subleased Premises and arising out of Subtenant’s occupancy, use or manner of use thereof.

8. RENT. Subtenant shall pay to Sublessor, for the term (as defined in the Master Lease) and any Renewal Term, % of the rent as set forth in the Master Lease in the manner as set forth in the Master Lease when due, without notice or demand therefor, and without deduction, abatement, counterclaim or set off of any amount or for any reason whatsoever. Subtenant’s liability for the amounts due under this Sublease shall survive the expiration or sooner termination (for reasons other than Subtenant’s default) of this Sublease. If this Sublease shall be terminated due to Subtenant’s default, Subtenant’s liability under this Section 8 shall survive indefinitely.

9. CONDITION QF SUBLEASED PREMISES. Subtenant acknowledges that it has had the opportunity to examine and inspect the entire Subleased Premises and the fixtures and improvements, therein and is fully familiar with the physical condition thereof. Subtenant agrees that Subtenant is leasing the Subleased Premises and the fixtures therein “as is”, and that neither Sublessor nor the Landlord is required to perform any work or expend any monies in order to make the Subleased Premises ready for Subtenant’s occupancy. In making and executing this Sublease, Subtenant acknowledges that Sublessor has not made and does not make any representations or warranties as to the physical condition of the Subleased Premises or the fixtures or improvements therein and that Subtenant has relied solely on Such investigations, examinations and inspections as Subtenant has chosen to make or has made.

10. CONSENTS AND APPROVALS. In any instance when Sublessor’s consent or approval is required under this Sublease, Sublessor’s refusal to consent to or approve any matter or thing shall be deemed reasonable if, inter alia, such consent or approval has not been obtained from the Landlord and, provided that Sublessor shall otherwise be willing to grant such consent or approval Sublessor shall use reasonable efforts to obtain the consent of the Landlord if such consent or approval is required under the Master Lease. Sublessor’s failure to notify Subtenant of whether it will or will not consent to or approve any such matter or thing within the applicable time limits, if any, will not be deemed unduly delayed if, inter alia, such notification has not been received from the Landlord within such time limits, provided that Sublessor has not unreasonably delayed in delivering such request of Landlord. Sublessor shall have no obligation to take any action or incur any cost or expense to compel the Landlord to

consent to any matter or thing under the Master Lease or as to this Sublease. In the event that Subtenant shall seek the approval by or consent of Sublessor and Sublessor shall fail or refuse to give such consent, Subtenant shall not be entitled to any damages or abatement for any withholding or delay of such approval or consent by Sublessor, it being agreed that Subtenant’s sole remedy shall be an action for injunction or specific performance and that said remedy of an action for injunction or specific performance shall be available only in those cases where Sublessor shall have expressly agreed in writing not to unreasonably withhold or delay its consent.

11. NOTICES. All notices, consents, approvals, demands and requests which are required or desired to be given by either party to the other hereunder shall be given in the manner in which notices are made under the Master Lease.

12. TERMINATION OF MASTER LEASE. If for any reason the term of the Master Lease shall terminate prior to the expiration date of this Sublease, this Sublease shall thereupon be terminated and Sublessor shall not be liable to Subtenant by reason thereof. Sublessor shall have the right to cancel or terminate the Master Lease or voluntarily permit same to be canceled or terminated or surrendered so long as the Landlord shall recognize the right of Subtenant to remain in possession of the Subleased Premises pursuant to the then-executory provisions of this Sublease in which event Subtenant shall attorn to the Landlord as the Sublessor hereunder. If pursuant to any provision of the Master Lease the tenant thereunder shall have the right to terminate the Master Lease prior to the Expiration Date of this Sublease, then Subtenant shall not have the right to terminate this Sublease by reason of such provision incorporated by reference herein.

13. ASSIGNMENT AND SUBLETTING. Subtenant shall not, by operation of law or otherwise, assign, sell, mortgage, pledge or in any manner transfer this Sublease or any interest therein, or sublet the Subleased Premises or any part or parts thereof, or grant any concession or license or otherwise permit occupancy of all or any part of the Subleased Premises by any person other than Subtenant. If Subtenant is a corporation, the provisions of this Section shall apply to a transfer (by one or more transfers) of stock or any other mechanism (such as, by way of example, the issuance of additional stock, a stock voting agreement or change in classes of stock) which results in a change of control of Subtenant or, as if such transfer of stock which results in a change of control of Subtenant or such transferee were an assignment of this Sublease; and if Subtenant is a partnership, limited liability company or joint venture, the provisions of this Article shall apply with respect to a transfer (by one or more transfers) of an interest in the distributions of profits and losses of such partnership, limited liability company or joint venture or other mechanism (such as, by way of example, the creation of additional general partnership, limited liability company or limited partnership interests) which results in a change of control of such partnership, limited liability company or joint venture, as if such transfer of an interest in the distributions of profits and losses of such partnership, limited liability company or joint venture which results in a change of control of such partnership, limited liability company or joint venture were an assignment of this Sublease. The term “control” shall mean, in the case of a corporation, ownership or voting control, directly or indirectly, of (a) more than fifty (50%) percent of all the voting stock, and in case of a joint venture, limited liability company or partnership or similar entity, ownership, directly or indirectly, of more than fifty (50%) percent of all the general or other partnership (or similar) interests therein, or (b) more than fifty (50%) percent of all the voting stock, and in case of a joint venture, limited liability company or partnership or similar entity, ownership, directly or indirectly, of more than fifty (50%) percent of all the general or other partnership (or similar) interests therein.

14. INSURANCE.

(a) Insurance Policies . Subtenant shall maintain throughout the term of this Sublease all liability and other insurance in respect of the Subleased Premises and the conduct and operation of business therein as required by the terms of the Master Lease, with Sublessor and the Landlord named as additional insureds. Subtenant shall deliver to Sublessor a fully paid-for policy or certificate prior to the

Commencement Date. Subtenant shall procure and pay for renewals of such insurance from time to time before the expiration thereof, and Subtenant shall deliver to Sublessor and the Master Landlord such renewal policy or certificate at least twenty (20) days before the expiration of any existing policy. All such policies shall contain a provision whereby the same cannot be canceled or modified unless Sublessor and the Landlord are given at least thirty (30) days’ prior written notice of such cancellation or modification, and shall otherwise comply with the terms of the Master Lease

(b) Releases. Subtenant hereby releases the Landlord or anyone claiming through or under the Landlord by way of subrogation or otherwise to the extent that Sublessor released the Landlord and/or the Landlord was relieved of liability or responsibility pursuant to the provisions of the Master Lease, and Subtenant will cause its insurance carriers to include any clauses or endorsements in favor of the Landlord which Sublessor is required to provide pursuant to the provisions of the Master Lease.

15. ALTERATIONS. Subtenant shall not make or cause, suffer or permit the making of any alteration, addition, change, replacement, installation or addition in or to the Subleased Premises without obtaining the prior written consent of Sublessor in each instance (which consent will not be unreasonably withheld or delayed with respect to non-structural alterations which do not affect the building systems) and, if required pursuant to the Master Lease, the consent of the Landlord. Sublessor shall use reasonable efforts to obtain the consent of the Landlord, at Subtenant’s sole cost and expense. Any such alteration, addition, change, replacement, installation or addition shall be made only in strict accordance with the terms, conditions and provisions of the Master Lease. Any such alteration, addition, change, replacement, installation or addition shall, upon installation, become the property of Sublessor and shall be surrendered with the Subleased Premises upon the expiration or earlier termination of this Sublease; provided that Subtenant shall have the right to remove its computers, office equipment, furniture and furnishings upon the expiration or earlier termination of this Sublease.

16. DEFAULT BY SUBTENANT. The following shall constitute a default by Subtenant hereunder: (i) any failure of Subtenant to pay any Rent or other charges payable when due; or (ii) any failure of Subtenant to perform any other of the terms, covenants or conditions of this Sublease (including those incorporated herein by reference) to be observed or performed by Subtenant within the time periods specifically set forth in any provision of the Master Lease; or (iii) if Subtenant shall commit any Event of Default. In case of any default hereunder, then, in addition to all other remedies (including those incorporated herein by reference) available to Sublessor, Sublessor shall have the right to terminate this Sublease on three (3) days’ notice to Subtenant, upon which Sublessor shall have the immediate right of re-entry and may remove all persons and property from the Subleased Premises by summary proceedings, force or otherwise.

17. RIGHT TO CURE SUBTENANT’S DEFAULTS. If Subtenant shall at any time fail to make any payment or perform any other obligation of Subtenant hereunder, then Sublessor shall have the right, but not the obligation, after the lesser of five (5) days’ notice to Subtenant or the time within which the Landlord may act on Sublessor’s behalf under the Master Lease, or without notice to Subtenant in the case of any emergency, and without waiving or releasing Subtenant from any obligations of Subtenant hereunder, to make such payment or perform such other obligation of Subtenant in such manner and to such extent as Sublessor shall deem necessary, and in exercising any such right, to pay any reasonable incidental costs and expenses, employ attorneys, and incur and pay reasonable attorneys’ fees and disbursements. Subtenant shall pay to Sublessor upon demand all sums so paid by Sublessor and all incidental costs and expenses of Sublessor in connection therewith, together with interest thereon at the Interest Rate from the date of the making of such expenditures.

18. LIABILITY OF SUBLESSOR. Sublessor’s liability for its obligations under this Sublease will be limited to Sublessor’s interest in the Subleased Premises and Subtenant will not look to any other property or assets of Sublessor in seeking either to enforce Sublessor’s obligations under this Sublease or to satisfy a judgment for Sublessor’s failure to perform such obligations.

19. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM. Subtenant hereby waives all right to trial by jury in any summary or other action, proceeding or counterclaim arising out of or in any way connected with this Sublease, the relationship of Sublessor and Subtenant, the Subleased Premises or the use and occupancy thereof, and any claim of injury or damages. Subtenant also hereby waives all rights to assert or interpose a counterclaim (excepting compulsory counterclaims) in any summary proceeding or other action or proceeding to recover or obtain possession of the Subleased Premises.

20. NO WAIVER. The failure of either party to insist in any one or more cases upon the strict performance or observance of any obligation of the other party hereunder or to exercise any right or option contained herein shall not be construed as a waiver or relinquishment for the future of any such obligation of the other party or any right or option of such party. No waiver by Sublessor or Subtenant of any term, covenant or condition of this Sublease shall be deemed to have been made unless expressed in writing and signed by the party making such waiver.

21. COMPLETE AGREEMENT. There are no representations, agreements, arrangements or understandings, oral or written, between the parties relating to the subject matter of this Sublease which are not fully expressed in this Sublease. This Sublease cannot be changed or terminated orally or in any manner other than by a written agreement executed by both parties.

22. SUCCESSORS AND ASSIGNS. The provisions of this Sublease, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns. In the event of any assignment or transfer of Sublessor’s interest under the Master Lease or the Subleased Premises, the transferor or assignor, as the case may be, shall be and hereby is entirely relieved and freed of all obligations under this Sublease to the extent the assignee assumes or is deemed to have assumed such obligations.

23. INTERPRETATION. Irrespective of the place of execution or performance, this Sublease shall be governed by and construed in accordance with the laws of the State of Florida.

24. OPTION TO EXTEND TERM. The Term of this Sublease shall be extended in the event that the Sublessor extends the term of the Master Lease for the Renewal Term.

IN WITNESS WHEREOF, Sublessor and Subtenant have hereunto executed this Sublease as of the day and year first above written.


	SUBLESSOR:

	ASBURY AUTOMOTIVE TAMPA, L.P.

/s/ Barbara A. Murphy	By:	ASBURY AUTOMOTIVE TAMPA GP L.L.C.
Barbara A. Murphy		as General Partner

	By:	/s/ Ian Snow
/s/ Lauren Coffman	Name:	IAN SNOW
Lauren Coffman	Title:	AUTHORIZED AGENT

	SUBTENANT:

	WTY MOTORS, L.P.

	By:	ASBURY TAMPA MANAGEMENT L.L.C. as General Partner

/s/ Barbara A. Murphy	By:	/s/ Jeffrey I. Wooley
Barbara A. Murphy	Name:	Jeffrey I. Wooley
	Title:	President

/s/ Jessica Stone
Jessica Stone

Form of Stock Option Agreement

EXHIBIT 10.24

ASBURY AUTOMOTIVE GROUP, INC.

2002 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION GRANT

This STOCK OPTION GRANT, dated as of , (the “Date of Grant”), is delivered by Asbury Automotive Group, Inc., a Delaware corporation (the “Company”), to (the “Grantee”).

RECITALS

The Asbury Automotive Group, Inc. 2002 Equity Incentive Plan (the “Plan”) provides for the grant of options to purchase shares of common stock of the Company, $0.01 par value. The Plan’s Committee has decided to make an option grant as an inducement for the Grantee to promote the best interests of the Company and its owners. Except as otherwise set forth herein, capitalized terms used herein without definition shall have the meanings assigned thereto in the Plan.

NOW, THEREFORE, the parties to this Stock Option Grant, intending to be legally bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Stock Option Grant and in the Plan, and subject to adjustment as set forth in the Plan, the Company hereby grants to the Grantee an Option to purchase Shares at an exercise price of $ per Share, which is not less than one hundred percent (100%) of Fair Market Value as of the Date of Grant. The Option shall become vested and exercisable according to Paragraph 2 below. This Stock Option Grant is subordinate to, and the terms and conditions of the Options granted hereunder are subject to, the terms and conditions of the Plan. If there is any inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall govern.

2. Vesting of Option. The Option shall become vested and exercisable as of the following vesting dates, if the Grantee is employed by, or providing service to, the Company or any of its Subsidiaries as of the applicable vesting date:


Vesting Date		Vested Shares
[VESTING DATES]		[insert percentages]

In the event of a Change of Control (as defined in the Plan) after the date of adoption of the Plan, the Option, to the extent then outstanding and unexercisable or unvested, shall automatically be deemed exercisable or vested, as the case may be, as of immediately prior to such Change of Control, as contemplated by Section 8 of the Plan. In the event the Grantee ceases to be employed by the Company or any of its Subsidiaries due to the Grantee’s death or Disability (as defined below), the Option, to the extent then outstanding and unexercisable or unvested, shall automatically be deemed exercisable or vested, as the case may be, as of the date of the Grantee’s termination of employment by reason of such death or Disability. The Committee, in its sole discretion, may accelerate the vesting or exercisability of all or any portion of the Option, at any time and from time to time.

3. Term of Option.

(a) The Option shall have a term of ten years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Stock Option Grant (including Paragraph 2 of this Stock Option Grant) or the Plan (including Section 8 of the Plan).

(b) The Option shall automatically terminate upon the happening of the first of the following events:

(i) Ninety days after the Grantee ceases to be employed by the Company or one of its Subsidiaries, if the termination is for any reason other than resignation (except resignation in connection with Retirement), Cause, death or Disability;

(ii) The date on which the Grantee ceases to be employed by the Company or one of its Subsidiaries by reason of resignation (except resignation in connection with Retirement) or for Cause; or

(iii) One year after the Grantee ceases to be employed by the Company or one of its Subsidiaries by reason of death or Disability.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is ten years from the Date of Grant. Any portion of the Option that is not vested at the time the Grantee ceases to be employed by, or provide services to, the Company or any of its Subsidiaries shall immediately terminate.

For purposes of this Stock Option Grant, “Cause” shall have the meaning set forth in any employment agreement then in effect between the Grantee and the Company or any of its Affiliates or, if not defined in any such agreement, “Cause” shall mean a finding by the Committee that the Grantee (A) has breached his or her employment or service contract with the Company or any of its Affiliates, (B) has engaged in disloyalty to the Company or any of its Affiliates, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, (C) has disclosed trade secrets or confidential information of the Company or any of its Affiliates to persons not entitled to receive such information or (D) has engaged in such other behavior detrimental to the interests of the Company or any of its Affiliates as the Committee determines. The determination of the existence of Cause shall be made by the Committee in good faith, which determination shall be conclusive for purposes of this Stock Option Grant.

For purposes of this Stock Option Grant, “Retirement” shall mean resignation from the Company and its Subsidiaries if, by the time of such resignation, the Grantee has (A) attained age 60 and (B) completed no less than 10 years of service with the Company and its Subsidiaries.

For purposes of this Stock Option Grant, “Disability” shall have the meaning set forth in any employment agreement then in effect between the Grantee and the Company or any of its Affiliates or, if not defined in any such agreement, “Disability” shall mean a physical or mental disability or infirmity that prevents the performance by the Grantee of his or her duties in the course of the Grantee’s employment by the Company or any of its Subsidiaries lasting (or likely to last) for a continuous period of six months or longer. The determination of the existence of Disability shall be made by the Committee in good faith, and the Committee’s determination shall be conclusive for purposes of this Stock Option Grant.

4. Exercise Procedures.

(a) Subject to the provisions of this Stock Option Grant and the Plan, the Grantee may exercise the vested Option, in whole or in part, by delivering a notice of exercise to the Company, in the manner provided in Paragraph 11 below, with payment of the exercise price in accordance with the terms of the Plan and this Stock Option Agreement; provided the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised. Payment of the exercise price may be made in cash, or its equivalent, or (i) by exchanging Shares owned by the Grantee (which are not the subject of any pledge or other security interest and which have been owned by such Grantee for at least 6 months), or (ii) if there shall be a public market for the Shares at such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price, or by a combination of the foregoing; provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price. No Shares shall be delivered pursuant to exercise of the Option until payment in full of the aggregate exercise price therefor is received by the Company. Wherever in the Plan or this Stock Option Grant the Grantee is permitted to pay the exercise price of the Option or taxes relating to the exercise of the Option by delivering Shares, the Grantee may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option. Notwithstanding any other provision of the Plan or this Stock Option Grant to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange that the Committee shall in its sole discretion determine to be necessary or advisable.

(b) The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations, including the federal securities laws and any applicable state or foreign securities laws and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. All obligations of the Company under this Stock Option Grant shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes. Without limiting the generality of the preceding sentence, the Grantee may elect to satisfy, in whole or in part, any tax withholding obligation of the Company with respect to the Option by delivery of Shares owned by the Grantee (which are not subject to any pledge or other security interest and which have been owned by the Grantee for at least six months) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the Option a number of Shares with a Fair Market Value equal to such withholding liability.

5. Restrictions on Exercise. The Option may be exercised only by the Grantee during the Grantee’s lifetime, or, if permissible under applicable law, by the Grantee’s legal guardian or representative. After the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan and this Stock Option Grant) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Stock Option Grant.

6. Grant Subject to Plan Provisions. This Stock Option Grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the Option are subject to the provisions of the Plan and to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Company’s shares, (iii) capital or other changes of the Company and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

7. No Employment or Other Rights. The grant of the Option shall not confer upon the Grantee any right to be retained by or in the employ of the Company or any of its Affiliates and shall not interfere in any way with the right of the Company and its Affiliates to terminate the Grantee’s employment or service at any time. The right of the Company and its Affiliates to terminate at will the Grantee’s employment or service at any time for any reason, free from any liability or any claim under the Plan or this Stock Option Grant, is specifically reserved unless otherwise expressly provided in the Plan or in any Award Agreement.

8. No Equityholder. Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of an equityholder with respect to the Shares subject to the Option, until the Shares have been issued upon the exercise of the Option.

9. Assignment and Transfers. The rights and interests of the Grantee under this Stock Option Grant may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee except, in the event of the death of the Grantee, by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. The rights and protections of the Company and its Affiliates hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Stock Option Grant may be assigned by the Company without the Grantee’s consent.

10. Applicable Law. The validity, construction, interpretation and effect of this Stock Option Grant shall be governed by and determined in accordance with the laws of the State of Delaware without giving effect to the conflict of laws provisions thereof.

11. Notice. Any notice to the Company provided for in this Stock Option Grant shall be addressed to the Company in care of the General Counsel, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

12. Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to the Option or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

13. Adjustment Upon the Occurrence of Certain Unusual or Nonrecurring Events. Subject to the terms of the Plan, the Committee may make adjustments in the terms and conditions of, and the criteria included in, this Option in recognition of unusual or nonrecurring events (other than an Equity Restructuring) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, in accordance with the terms of the Plan. In the event of an Equity Restructuring, the Option shall be adjusted in accordance with Section 4(b)(ii) of the Plan.

refuses to assume or substitute for the outstanding portion of the Option, the Grantee shall fully vest in and have the right to exercise the Option as to all Shares subject to the outstanding portion of the Option, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of continuation, assumption or substitution as set forth herein, the Company shall notify the Grantee in writing or electronically that the outstanding portion of the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, or such shorter period as the Committee may determine to be reasonable, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale or disposition of assets, the option confers the right to purchase or receive, for each Share subject to the outstanding portion of the Option immediately prior to the merger or sale or disposition of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale or disposition of assets by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale or disposition of assets is not solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation”, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the outstanding portion of the Option, to be solely common stock of the successor corporation or its “parent corporation” or “subsidiary corporation” equal in fair market value to the per share consideration received by holders of Shares in the merger or sale or disposition of assets.

14. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Option, the Grantee will make or enter into such written representations, warranties and agreements as the Committee may request in order to comply with applicable securities laws or with this Stock Option Grant.

15. Signature in Counterparts. This Stock Option Grant may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

16. Amendment. This Stock Option Grant may be amended, modified or supplemented in accordance with the Plan.

17. Headings. Headings are given to paragraphs of this Stock Option Grant solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Stock Option Grant, the Plan or any provisions thereof.

18. Section 409A. This Stock Option Grant and the Option are intended to be exempt from the provisions of Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, as providing for an option to purchase service recipient stock as described in Section 1.409A-1(b)(5)(i)(A) of the Department of Treasury regulations. Notwithstanding any provision of this Stock Option Grant to the contrary, in the event that the Committee determines that the Option may be subject to Section 409A of the

Code, the Committee may adopt such amendments this Stock Option Grant or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Option from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Option, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Stock Option Grant, and the Grantee has executed this Stock Option Grant, effective as of the Date of Grant.


	ASBURY AUTOMOTIVE GROUP, INC.
Attest:

	by
Name:	Name:
Title:	Title:

	Accepted by:

	By:
		Grantee

Form of Performance Share Unit Award Agreement

Exhibit 10.25

ASBURY AUTOMOTIVE GROUP, INC.

2002 EQUITY INCENTIVE PLAN

PERFORMANCE SHARE UNIT AWARD AGREEMENT

PERFORMANCE SHARE UNIT AWARD AGREEMENT UNDER THE ASBURY AUTOMOTIVE GROUP, INC. 2002 EQUITY INCENTIVE PLAN dated as of date between Asbury Automotive Group, Inc. (the “Company”), a Delaware corporation, and {NAME}.

This Performance Share Unit Award Agreement (the “Award Agreement”) sets forth the terms and conditions of a target award of {X} performance compensation shares (the “Award”) that are subject to the terms and conditions specified herein (“Performance Awards”) and that are granted to you under the Asbury Automotive Group, Inc. 2002 Equity Incentive Plan (the “Plan”). This Award provides you with the opportunity to earn, subject to the terms of this Award Agreement, shares of the Company’s common stock, $0.01 par value (“Shares”).

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT. BY SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

SECTION 1. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan. As used in this Award Agreement, the following terms shall have the meanings set forth below:

“Cause” shall have the meaning set forth in any employment agreement then in effect between you, on the one hand, and the Company or any of its Affiliates, on the other hand, or, if not defined in any such agreement, “Cause” shall mean a finding by the Committee of any of the following: (a) your being convicted of, or entering a plea of nolo contendere to, any crime that constitutes a felony or involves moral turpitude, (b) your gross negligence or serious misconduct (including, without limitation, any criminal, fraudulent or dishonest conduct) that is injurious to the Company or any of its Affiliates, (c) your material breach of your employment or service contract with the Company or any of its Affiliates, (d) your willful and continued failure to substantially perform your duties with the Company and it’s Affiliates or (e) your material breach of a material written policy of the Company, in each case (with respect to clauses (b), (c), (d) and (e)) which is not corrected within 30 days after written notice from the Company. The determination of the existence of Cause shall be made by the Committee in good faith.

“Committee” shall mean the compensation committee of the Board, or such other committee of the Board as may be designated by the Board to administer the Plan.

“Determination Date” means the date, as determined by the Committee, on which the Committee determines whether and to what extent the Performance Goals with respect to the Award have been achieved; provided that such date shall be no later than March 15, 2010.

“Performance Commencement Date” means January 1, 2007.

“Performance Cycle” means calendar years 2007 through 2009.

SECTION 2. (a) Performance-Based Right to Payment. The number of Shares that shall be issued pursuant to the Award shall be determined based on the Company’s achievement of Performance Goals as set forth on Exhibit A. On the Determination Date, the Committee in its sole discretion shall determine whether and to what extent the Performance Goals as set forth on Exhibit A have been attained. Except as otherwise provided in Section 4 of this Award Agreement, the payment of Shares with respect to your Performance Awards is contingent on the attainment of the Performance Goals as set forth on Exhibit A. Accordingly, except as otherwise provided in Section 4 of this Award Agreement, you will not become entitled to payment with respect to the Performance Awards subject to this Award Agreement unless and until the Committee determines that the Performance Goals set forth on Exhibit A have been attained. Upon such determination by the Committee and subject to the provisions of the Plan and this Award Agreement, you shall be entitled to payment of that portion of this Award as corresponds to the Performance Goals attained (as determined by the Committee in its sole discretion) as set forth on Exhibit A. Furthermore, pursuant to Section 3 (except as otherwise provided therein) and except as otherwise provided in Section 4 of this Award Agreement, in order to be entitled to payment with respect to any Performance Awards, you must be employed by the Company or an Affiliate on the Payment Date, provided that, to the extent payments pursuant to this Award Agreement are attributable to Dividend Equivalents (as defined in Section 6), such payments will be made in cash.

(b) Payment of Award. The Committee shall determine the date on which payments pursuant to this Award Agreement shall be made (the “Payment Date”); provided that (i) the Payment Date shall not be any earlier than the Determination Date and (ii) except as otherwise provided in Section 4(a)(ii) of this Award Agreement, the Payment Date shall not be earlier than January 1, 2010, and not later than March 15, 2010. Notwithstanding anything herein to the contrary, the Payment Date shall be within the period required by Section 409A of the Code, such that the payment qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury regulations. Except as otherwise provided in Section 4 of this Award Agreement, payments made pursuant to this Award Agreement shall be payable in Shares.

SECTION 3. Forfeiture of Performance Awards. Except as otherwise provided in Section 4 of this Award Agreement, if your employment with the Company and its Affiliates terminates prior to the Payment Date, your rights with respect to any Performance Awards awarded to you pursuant to this Award Agreement shall immediately terminate, and you will be entitled to no payments or benefits with respect thereto, unless the Committee, as permitted pursuant to the terms of the Plan, determines in its sole discretion otherwise (in which case any payment to be made to you pursuant to

this Award Agreement will be made to you on the Payment Date and, for the avoidance of doubt, within the period required by Section 409A of the Code, such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury regulations).

SECTION 4. Change of Control. In the event of a Change of Control after the date of this Award Agreement, the provisions of this Section 4 shall apply.

(a) Timing of Payment. In the event of a Change of Control after the date of this Award Agreement and prior to the Payment Date, to the extent your rights with respect to Performance Awards have not previously been terminated in connection with the termination of your employment with the Company and its Affiliates prior to such Change of Control, payments made pursuant to this Award Agreement:

(i) shall be paid on the Payment Date, provided you remain continuously employed with the Company and its Affiliates through the Payment Date;

(ii) shall be paid promptly following the date of your termination of employment with the Company and its Affiliates if your employment is involuntarily terminated (other than for Cause) by the Company and its Affiliates following such Change of Control (but in no event later than the fifteenth day of the third month following the calendar year in which such termination occurs); or

(iii) shall be forfeited if your employment with the Company and its Affiliates is terminated prior to the Payment Date for any reason other than an involuntary termination described in the preceding clause (ii).

(b) Form of Payment. If the Change of Control occurs prior to the Payment Date, any amount to be paid under this Award Agreement shall be paid (at such time as determined in accordance with paragraph (a) above) in equity securities of the successor corporation (the “ Acquiror Securities “) with the number of such Acquiror Securities determined by calculating the number of Shares earned under this Award Agreement (as determined in accordance with paragraph (c) below) and converting such Shares on the same basis as the conversion applicable to holders of Shares generally in connection with the Change of Control; provided, however, that if the consideration received by holders of Shares generally in connection with the Change of Control is not solely Acquiror Securities, the Committee may, with the consent of the successor corporation, provide that the amount to be paid under this Award Agreement will be solely in the form of Acquiror Securities (other than any amount in respect of Dividend Equivalents, which shall be paid in cash in accordance with Section 6) equal in fair market value to the per Share consideration received by holders of Shares generally in connection with the Change of Control. Notwithstanding the foregoing, the successor corporation may elect, no later than 90 days following a Change of Control (but in no event later than the scheduled payment date determined in accordance with paragraph (a) above), to settle (at such time as determined in accordance with paragraph (a) above) the Performance Awards in a lump-sum cash payment (in lieu of settling such Performance Awards with Acquiror Securities) in an amount equal to the product of (i) the number of Shares earned under this Award Agreement (as determined in accordance with paragraph

(c) below) and (ii) the fair market value per Share at the time of the Change of Control, as determined by the Committee in its sole discretion, and an amount equal to the value of the Dividend Equivalents retained by the Company with respect to the Shares as of the Change of Control shall be added to the product of the foregoing clauses (i) and (ii); provided, however, that, in the event the consideration received by holders of Shares in connection with the Change of Control is paid solely in cash, the successor corporation shall be deemed to have made such election as of the time of such Change of Control.

(c) Determination of Performance Results. (i) If the Change of Control occurs prior to the first anniversary of the Performance Commencement Date, the Performance Goals set forth on Exhibit A shall be deemed to have been satisfied at the target level.

(ii) If the Change of Control occurs on or following the first anniversary of the Performance Commencement Date and prior to the third anniversary of the Performance Commencement Date, immediately prior to the Change of Control, the Committee in its sole discretion shall determine whether and to what extent the Performance Goals as set forth on Exhibit A have been attained as of such Change of Control. For purposes of this clause (ii), the Committee shall determine the performance results for (A) any completed year in the Performance Cycle and (B) any year in the Performance Cycle which is not fully completed as of the Change of Control but in which at least six full months have elapsed prior to the Change of Control (collectively, the “Completed Years”). For any Completed Year that does not consist of a full twelve months, the Committee in its sole discretion shall determine whether and to what extent the Performance Goals as set forth on Exhibit A have been attained for such year on an annualized basis.

(A) If there is only one Completed Year prior to the Change of Control, the points achieved during the Completed Years shall be multiplied by three for purposes of determining the level of achievement on the cumulative three-year point scale set forth on Exhibit A.

(B) If there are only two Completed Years prior to the Change of Control, the points achieved during the Completed Years shall be multiplied by 1.5 for purposes of determining the level of achievement on the cumulative three-year point scale set forth on Exhibit A.

(C) If there are three Completed Years prior to the Change of Control, the points achieved during the Completed Years shall be multiplied by 1.0 for purposes of determining the level of achievement on the cumulative three-year point scale set forth on Exhibit A.

SECTION 5. Grant Subject to Plan Provisions. This Award is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and terms of this Award are subject to the provisions of the Plan and to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions

pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Company’s shares, (c) capital or other changes of the Company and (d) other requirements of applicable law. The Committee shall have the authority to interpret and construe this Award pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder. This Award is granted pursuant to Section 6(e) of the Plan and shall not be deemed a “Performance Compensation Award” for purposes of Section 6(g) of the Plan. This Award, nevertheless, shall be subject to the terms of Section 6(g); provided, however, that actions otherwise required to be taken during the first 90 days of the Performance Period may be taken following such 90-day period for purposes of this Award. Notwithstanding the provisions of Section 6(g)(vi)(D) of the Plan, the Committee shall not exercise the use of negative discretion authorized under Section 6(g)(vi)(D) of the Plan to reduce or eliminate the amount of the Performance Award earned under the terms of this Award Agreement (it being understood that the determination of the attainment of the Performance Goals as set forth on Exhibit A shall be in the sole discretion of the Committee and shall not be deemed to be a reduction or elimination of the Performance Award for this purpose).

SECTION 6. Certain Rights as a Shareholder. You shall not have any rights or privileges of a shareholder with respect to the Shares that may be issued and delivered to you or your legal representative on the Payment Date pursuant to this Award, except that you will be entitled to receive an amount in cash equal to the value of the dividends that were paid on the Shares during the Performance Cycle (the “Dividend Equivalents”). Such Dividend Equivalents will be retained by the Company and will be paid in cash if and when the Shares are issued.

SECTION 7. No Employment or Other Rights. The grant of this Award shall not confer upon you any right to be retained as a director, officer or employee of or to the Company or any of its Affiliates and shall not interfere in any way with the right of the Company and its Affiliates to terminate your employment or service at any time. The right of the Company and its Affiliates to terminate at will your employment or service at any time for any reason, free from any liability or any claim under the Plan or this Award Agreement, is specifically reserved unless otherwise expressly provided in the Plan or in this Award Agreement.

SECTION 8. Non-Transferability of Performance Awards. Your rights and interests under this Award Agreement may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you except, in the event of your death, by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

SECTION 9. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

SECTION 10. Taxes, Consents, Stop Transfer Orders and Legends. (a) Taxes. The delivery of Shares pursuant to Section 2(b) (or any cash payment made pursuant to Section 4) and any Dividend Equivalents pursuant to Section 6 is conditioned on satisfaction of any applicable withholding taxes in accordance with Section 9(d) of the Plan. You are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with this Award (including any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes. The Committee shall have the discretion to unilaterally modify this Award in a manner (i) that it in good faith believes conforms with the requirements of Section 409A of the Code and (ii) for any distribution event that could be expected to violate Section 409A of the Code, in order to make the distribution only upon a “permissible distribution event” within the meaning of Section 409A of the Code (as determined by the Committee in good faith). The Committee shall have the sole discretion to interpret the requirements of the Code, including Section 409A, for purposes of the Plan and this Award.

(b) Consents. Your rights in respect of Performance Awards are conditioned on the receipt to the full satisfaction of the Committee of (i) any required consents that the Committee may determine to be necessary or advisable (including, without limitation, your consenting to the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan) and (ii) your making or entering into such written representations, warranties and agreements in connection with the acquisition of any Shares pursuant to this Award as the Committee may request in order to comply with applicable securities laws or this Award.

(c) Stop Transfer Orders and Legends. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to this Award shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

SECTION 11. Committee Discretion. Subject to the terms of the Plan, the Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

SECTION 12. Confidentiality. You hereby agree to keep confidential, and to not disclose to anyone, the existence and terms of this Award Agreement (including the Performance Goals set forth on Exhibit A), except to your immediate family and your financial and legal advisors, or as may be required by law or ordered by a court with valid jurisdiction over such matter. You further agree that any disclosure to your immediate family and your financial and legal advisors will only be made after such individuals or entities acknowledge and agree to maintain the confidentiality of this Award Agreement and its terms.

SECTION 13. Applicable Law. The validity, construction, interpretation and effect of this Award Agreement shall be governed by and determined in accordance with the laws of the State of Delaware without giving effect to the conflict of laws provisions thereof.

SECTION 14. Notice. All notices, requests, demands and other communications required or permitted to be given under the terms of this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three Business Days after they have been mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:


If to the Company:		Asbury Automotive Group, Inc. 622 Third Avenue New York, NY 10017 Attention: General Counsel

If to you:		At the then-current address shown on the payroll of the Company

The Company and you may change the address to which notices under this Award Agreement shall be sent by providing written notice to the other in the manner specified above. Notwithstanding the above, the Company and its Affiliates may provide notice to you by email or other electronic means to which you have regular access.

SECTION 15. Section 409A. This Award Agreement and the Award are intended to be exempt from the provisions of Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, as providing for any payments to be made within the applicable “short-term deferral” period (within the meaning of Section 1.409A-1(b)(4) of the Department of Treasury regulations) following the lapse of a “substantial risk of forfeiture” (within the meaning of Section 1.409A-1(d) of the Department of Treasury regulations). Notwithstanding any provision of this Award Agreement to the contrary, in the event that the Committee determines that the Award may be subject to Section 409A of the Code, the Committee may adopt such amendments this Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

SECTION 16. Headings. Headings are given to the Sections and subsections of this Award Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Award Agreement, the Plan or any provision thereof.

SECTION 17. Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and Performance Awards shall be subject to the provisions of Sections 6(g)(v) (including, without limitation, in connection with adjustments to the number or identity of peer companies), 4, 7(a) and 7(c) (including, without limitation, in connection with adjustments to the number or kinds of shares, security or other property subject to this Award Agreement) of the Plan).

SECTION 18. Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.


ASBURY AUTOMOTIVE GROUP, INC.,

By
Name:
Title:

{NAME},

EXHIBIT A

Performance Goals with Respect to the Performance Awards for the Performance Period from

[Date] through [Date]

Points Achieved [Insert scale]

% of Standard Award [ insert award percentage]

Point Scoring


Metric	Description	Point Allocation	Measurement
New Vehicle Retail Revenue Same Store	Percent increase in same –store new vehicle retail revenue vs. other public consolidators	[Insert point allocation]	[ insert measurement]

Used Vehicle Retail Revenue Same Store	Percent increase in same – store used vehicle retail revenue vs. other public consolidators

Platform Same Store F&I PVR	Percent growth in platform PVR

Fixed Operations Gross Profit Same Store	Percent growth in same – store fixed operations gross profit

EPS Growth	Year-over-year percentage growth in EPS from continuing operations

Form of Restricted Share Award Agreement for Non-Employee Directors

Exhibit 10.26

ASBURY AUTOMOTIVE GROUP, INC.

2002 EQUITY INCENTIVE PLAN

RESTRICTED SHARE AWARD AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

RESTRICTED SHARE AWARD AGREEMENT UNDER THE ASBURY AUTOMOTIVE GROUP, INC. 2002 EQUITY INCENTIVE PLAN dated as of [—] (the “Grant Date”), between Asbury Automotive Group, Inc., a Delaware Corporation (the “Company”), and [NAME].

This Restricted Share Award Agreement (this “Award Agreement”) sets forth the terms and conditions of an award of [—] shares (the “Award”) of the Company’s Common Stock, $0.01 par value (“Shares”), that are subject to certain restrictions on transfer and risks of forfeiture and other terms and conditions specified herein (“Restricted Shares”) and that are granted to you under the Asbury Automotive Group, Inc. 2002 Equity Incentive Plan (the “Plan”).

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

“Disability” means a physical or mental disability or infirmity that prevents the performance by you of your duties in the course of your service on the Board lasting (or likely to last) for a continuous period of six months or longer. The determination of the existence of Disability shall be made by the Committee in good faith, and the Committee’s determination shall be conclusive for purposes of this Award.

“Vesting Date” means any date on which your rights with respect to all or a portion of the Restricted Shares subject to this Award Agreement may become fully vested, and the restrictions set forth in this Award Agreement may lapse, as provided in Section 3(a) of this Award Agreement.

SECTION 2. The Plan. This Award is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and terms of this Award are subject to the provisions of the Plan and to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights

and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Company’s shares, (c) capital or other changes of the Company and (d) other requirements of applicable law. The Committee shall have the authority to interpret and construe this Award pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

SECTION 3. Vesting and Delivery. (a) Vesting. On each Vesting Date set forth below, your rights with respect to the number of Restricted Shares that corresponds to such Vesting Date, as specified in the chart below, shall become vested, and the restrictions set forth in this Award Agreement shall lapse, provided that you must serve as a member of the Company’s Board of Directors (the “Board”) as of the applicable Vesting Date, except as otherwise determined by the Committee in its sole discretion.


Vesting Date		Percentage Vested
First anniversary of the Grant Date		[Insert percentage]
Second anniversary of the Grant Date
Third anniversary of the Grant Date

In the event of a Change of Control (as defined in the Plan) after the Grant Date, the Restricted Shares, to the extent then outstanding and unvested, shall automatically be deemed vested as of immediately prior to such Change of Control, as contemplated by Section 8 of the Plan. In the event you cease to serve as a member of the Board due to your (a) death or (b) Disability, the Restricted Shares, to the extent then outstanding and unvested, shall automatically be deemed vested as of the date of your cessation of service on the Board by reason of such death or Disability. The Committee, in its sole discretion, may accelerate the vesting of all or any portion of the Restricted Shares, at any time and from time to time.

(b) Delivery of Shares. On or following the Grant Date, certificates issued in respect of Restricted Shares shall be registered in your name and deposited by you, together with a stock power endorsed in blank, with the Company or such other custodian as may be designated by the Committee or the Company, and shall be held by the Company or other custodian, as applicable, until such time, if any, as your rights with respect to such Restricted Shares become vested. Upon the vesting of your rights with respect to such Restricted Shares, the Company or other custodian, as applicable, shall deliver such certificates to you or your legal representative.

you cease to serve as a member of the Board, your rights with respect to such Restricted Shares or Retained Distributions shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.

SECTION 5. Voting Rights; Dividend Equivalents. Until the forfeiture of any Restricted Shares pursuant to Section 4 above and subject to Sections 3 and 6 hereof, you shall have the right to vote such Restricted Shares, to receive and retain all regular cash dividends paid on such Restricted Shares and to exercise all other rights, powers and privileges of a holder of Shares with respect to such Restricted Shares; provided that the Company will retain custody of all distributions other than regular cash dividends (“Retained Distributions”) made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions have been made, paid or declared have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account.

SECTION 6. Non-Transferability of Restricted Shares and Retained Distributions. Unless otherwise provided by the Committee in its discretion, Restricted Shares and Retained Distributions may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered except as provided in Section 9(a) of the Plan. Any purported assignment, alienation, pledge, attachment, sale or other transfer or encumbrance of Restricted Shares or Retained Distributions in violation of the provisions of this Section 6 and Section 9(a) of the Plan shall be void.

SECTION 7. Taxes, Consents, Stop Transfer Orders and Legends. (a) Taxes. The vesting of any Shares pursuant to Section 3(a) and the delivery of Share certificates pursuant to Section 3(b) are conditioned on satisfaction of any applicable withholding taxes in accordance with Section 9(d) of the Plan. You are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with this Award Agreement (including any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes. The Committee shall have the discretion to unilaterally modify this Award Agreement in a manner that it in good faith believes conforms with the requirements of Section 409A of the Code for any distribution event that could be expected to violate Section 409A of the Code, in order to make the distribution only upon a “permissible distribution event” within the meaning of Section 409A of the Code (as determined by the Committee in good faith). The Committee shall have the sole discretion to interpret the requirements of the Code, including Section 409A, for purposes of the Plan and this Award Agreement.

(b) Consents. Your rights in respect of the Restricted Shares are conditioned on the receipt to the full satisfaction of the Committee of (i) any required consents that the Committee may determine to be necessary or advisable (including, without limitation, your consenting to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan, (ii) your making or entering into such written representations,

warranties and agreements in connection with the acquisition of any Shares pursuant to this Award as the Committee may request in order to comply with applicable securities laws or this Award and (iii) a stock power endorsed by you in blank in accordance with Section 3(b).

(c) Stop Transfer Orders and Legends. The Company may affix to certificates for Shares issued pursuant to this Award Agreement any legend that the Committee determines to be necessary or advisable (including to reflect any restrictions to which you may be subject under any applicable securities laws). The Company may advise the transfer agent to place a stop order against any legended Shares.

SECTION 8. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

SECTION 9. Committee Discretion. Subject to the terms of the Plan, the Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

SECTION 10. Notice. All notices, requests, demands and other communications required or permitted to be given under the terms of this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three Business Days after they have been mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:


If to the Company:		Asbury Automotive Group, Inc. [Address] [Address] Attention: [General Counsel] [[Fax :][Telecopy :] (212) [—]-[—]]

If to you:		[Name] [Address] [Address]

The parties may change the address to which notices under this Award Agreement shall be sent by providing written notice to the other in the manner specified above. Notwithstanding the above, the Company and its Affiliates may provide notice to you by email or other electronic means to which you have regular access.

SECTION 11. Section 409A. This Award Agreement and the Award are intended to be exempt from the provisions of Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, as providing for the transfer of restricted property as described in Section 1.409A-1(b)(6) of the

Department of Treasury regulations. Notwithstanding any provision of this Award Agreement to the contrary, in the event that the Committee determines that the Award may be subject to Section 409A of the Code, the Committee may adopt such amendments this Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

SECTION 12. Headings. Headings are given to the Sections and subsections of this Award Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Award Agreement or any provision thereof.

SECTION 13. Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the Restricted Shares shall be subject to the provisions of Sections 6(d), 7(a) and 7(c) of the Plan).

SECTION 14. Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.


ASBURY AUTOMOTIVE GROUP, INC.,

by
Name:
Title:

[NAME],

Form of Restricted Share Award Agreement

Exhibit 10.27

ASBURY AUTOMOTIVE GROUP, INC.

2002 EQUITY INCENTIVE PLAN

RESTRICTED SHARE AWARD AGREEMENT

RESTRICTED SHARE AWARD AGREEMENT UNDER THE ASBURY AUTOMOTIVE GROUP, INC. 2002 EQUITY INCENTIVE PLAN dated as of DATE (the “Grant Date”), between Asbury Automotive Group, Inc., a Delaware Corporation (the “Company”), and NAME

This Restricted Share Award Agreement (this “Award Agreement”) sets forth the terms and conditions of an award of Number shares (the “Award”) of the Company’s Common Stock, $0.01 par value (“Shares”), that are subject to certain restrictions on transfer and risks of forfeiture and other terms and conditions specified herein (“Restricted Shares”) and that are granted to you under the Asbury Automotive Group, Inc. 2002 Equity Incentive Plan (the “Plan”).

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

“Disability” means a physical or mental disability or infirmity that prevents the performance by you of your duties in the course of your service lasting (or likely to last) for a continuous period of six months or longer. The determination of the existence of Disability shall be made by the Committee in good faith, and the Committee’s determination shall be conclusive for purposes of this Award.

SECTION 3. Vesting and Delivery. (a) Vesting. On each Vesting Date set forth below, your rights with respect to the number of Restricted Shares that corresponds to such Vesting Date, as specified in the chart below, shall become vested, and the restrictions set forth in this Award Agreement shall lapse, provided that you must be employed as of the applicable Vesting Date, except as otherwise determined by the Committee in its sole discretion.


Vesting Date		Number of Shares Vested
First anniversary of the Grant Date		NUMBER
Second anniversary of the Grant Date		NUMBER
Third anniversary of the Grant Date		NUMBER

In the event of a Change of Control (as defined in the Plan) after the Grant Date, the Restricted Shares, to the extent then outstanding and unvested, shall automatically be deemed vested as of immediately prior to such Change of Control, as contemplated by Section 8 of the Plan. In the event your employment is terminated due to your (a) death or (b) Disability, the Restricted Shares, to the extent then outstanding and unvested, shall automatically be deemed vested as of the date of your termination by reason of such death or Disability. The Committee, in its sole discretion, may accelerate the vesting of all or any portion of the Restricted Shares, at any time and from time to time.

SECTION 4. Forfeiture of Restricted Shares. Unless the Committee determines otherwise or except as otherwise set forth in Section 3(a), if your rights with respect to any Restricted Shares or Retained Distributions (as defined below) awarded to you pursuant to this Award Agreement have not become vested prior to the date on which your employment is terminated, your rights with respect to such Restricted Shares or Retained Distributions shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.

this Award as the Committee may request in order to comply with applicable securities laws or this Award and (iii) a stock power endorsed by you in blank in accordance with Section 3(b).

SECTION 8. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.


If to the Company:		Asbury Automotive Group, Inc. 622 Third Avenue 37th Floor New York, NY 10017 Attention: General Counsel Fax : (212) 212-297-2653

If to you:		NAME ADDRESS

Agreement to the contrary, in the event that the Committee determines that the Award may be subject to Section 409A of the Code, the Committee may adopt such amendments this Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Section 409A of the Code.

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.


ASBURY AUTOMOTIVE GROUP, INC.,

by
Name:
Title:

NAME,

Fourth Amendment to Credit Agreement dated October 1, 2007

Exhibit 10.40

FOURTH AMENDMENT TO

CREDIT AGREEMENT

This FOURTH AMENDMENT TO CREDIT AGREEMENT (the “Fourth Amendment or this “Amendment”), effective as of October 1, 2007, is entered into by and among Asbury Automotive Group, Inc. (the “Company”), each of the subsidiaries of the Company listed on the signature pages hereof (the “Floor Plan Borrowers”), each of the Lenders listed on the signature pages hereof (the “Lenders”), JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (the “Agent”), JPMorgan Chase Bank, N.A., as Floor Plan Agent for the Lenders (the “Floor Plan Agent”) and Bank of America, N.A., as Syndication Agent.

PRELIMINARY STATEMENT

WHEREAS, the Company, the Floor Plan Borrowers, the Lenders, the Agent, the Floor Plan Agent and the Syndication Agent entered into that certain Revolving Credit Agreement dated March 23, 2005, as amended by that First Amendment to Credit Agreement and Waiver, effective March 1, 2006, that Second Amendment to Credit Agreement dated August 1, 2006 and that Third Amendment to Credit Agreement dated March 8, 2007 (as so amended, and as further amended from time to time, the “Credit Agreement”), under the terms of which such Lenders agreed to make available to the Company (a) a revolving credit commitment not to exceed at any time $125,000,000.00 and (b) a floor plan loan commitment not to exceed $425,000,000.00; and

WHEREAS, the Company and the Floor Plan Borrowers have requested the Lenders, the Agent and the Floor Plan Agent to amend further certain provisions of the Credit Agreement; and

WHEREAS, the Lenders, the Agent and the Floor Plan Agent have agreed to do so to the extent reflected in this Amendment.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration and the mutual benefits, covenants and agreements herein expressed, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Defined Terms. All capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

2. Amendments to Section 1.1. (a) Section 1.1 of the Credit Agreement is hereby amended by (i) restating the definition of “Silo Borrowers” contained therein, to read as follows:

“Silo Borrowers” means those Subsidiaries engaged in the sale of New Motor Vehicles manufactured by: (i) Ford Motor

-1-

Company (including Mazda); (ii) General Motors Corporation or any of their subsidiaries; (iii) Chrysler LLC or DaimlerChrysler AG or any of their Affiliates or Subsidiaries.

and (ii) by amending the definition of “Revolving Credit Borrowing Base” by deleting the phrase “excluding Toyota/Lexus Floor Plan Borrowers” therefrom.

3. Amendment of Section 10.1(o). Section 10.1(o) is amended and restated in its entirety as follows:

“(o) Indebtedness of any Silo Borrower (which, for purposes of this Section 10.1(o), shall include any Silo Borrower that is both a Silo Borrower and a Floor Plan Borrower) consisting of floor plan financing for New Motor Vehicles provided by Ford Motor Credit Company, General Motors Acceptance Corporation (“GMAC”), DaimlerChrysler Financial Services Americas LLC (“DCFS”) or DCFS USA LLC (“DCFS USA”) to such Subsidiary (“Permitted New Vehicle Floor Plan Indebtedness”), provided (i) such financing applies only to New Motor Vehicles sold to such Subsidiary by a Manufacturer affiliated with Ford Motor Credit Company, GMAC, DCFS or DCFS USA and that have never been and are not subject to a security interest in favor of the Agent other than as contemplated in an intercreditor agreement as described below in this Section 10.1(o), (ii) such Indebtedness is secured solely by a Lien on said New Motor Vehicles and the proceeds thereof and such other collateral as agreed by Agent and the Required Lenders, and (iii) the Agent shall have executed with Ford Motor Credit Company, GMAC, DCFS and DCFS USA an Intercreditor Agreement, reasonably satisfactory to the Agent, the Floor Plan Agent and the Required Lenders, setting forth the respective rights of each party in the assets of such Silo Borrower;”

4. Amendment to Exhibit 9.5(g). Exhibit 9.5(g) of the Credit Agreement is hereby amended and restated in its entirety in the form of Exhibit 9.5(g) to the Fourth Amendment.

5. Amendment to Section 11.4(a). Section 11.4(a) of the Credit Agreement is hereby amended to delete the proviso in Section (ii) of the first sentence of such section.

6. Toyota/Lexus Borrowers and Documents Generally. Simultaneously herewith all of the Toyota/Lexus Floor Plan Borrowers have executed or will execute Addendum and Joinder Agreements pursuant to which said entities become party to the Guaranty Agreement and the Security Agreement and, henceforth, there will be no distinction between the Toyota/Lexus Floor Plan Borrowers and the other Floor Plan Borrowers under said documents or the Credit Agreement, nor shall there be any distinction between the Security Agreement (Toyota/Lexus Inventory) and the Security Agreement (Toyota/Lexus Non-Inventory) on the one

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hand and the Security Agreement on the other. The Security Agreement (Toyota/Lexus Inventory) and the Security Agreement (Toyota/Lexus Non-Inventory) are hereby amended and restated in the form of the Security Agreement. The Credit Agreement is hereby amended mutatis mutandis to reflect said changes described in this Section 6, in addition to the specific amendments described in Sections 3 and 5 above.

7. Ratification. The Company and each of the Floor Plan Borrowers hereby ratify all of its Obligations under the Credit Agreement and each of the Loan Documents to which it is a party, and agrees and acknowledges that the Credit Agreement and each of the Loan Documents to which it is a party are and shall continue to be in full force and effect as amended and modified by this Amendment. Nothing in this Amendment extinguishes, novates or releases any right, claim, lien, security interest or entitlement of any of the Lenders, the Agent or the Floor Plan Agent created by or contained in any of such documents nor is the Company nor any Floor Plan Borrower released from any covenant, warranty or obligation created by or contained herein or therein.

8. Representations and Warranties. The Company and each of the Floor Plan Borrowers hereby represents and warrants to the Administrative Agent and the Lenders that (a) this Amendment has been duly executed and delivered on behalf of the Company and each of the Floor Plan Borrowers, (b) this Amendment constitutes a valid and legally binding agreement enforceable against the Company and each of the Floor Plan Borrowers in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, (c) the representations and warranties contained in the Credit Agreement and the Loan Documents are true and correct on and as of the date hereof in all material respects as though made as of the date hereof, except as heretofore otherwise disclosed in writing to the Agent, (d) no Default or Event of Default exists under the Credit Agreement or under any Loan Document and (e) the execution, delivery and performance of this Amendment has been duly authorized by the Company and each of the Floor Plan Borrowers.

9. Conditions to Effectiveness. This Amendment shall be effective upon the execution and delivery hereof by all parties to the Agent and receipt by the Agent of the following in form satisfactory to the Agent:

(a) this Amendment;

(b) a certificate of an officer and of the secretary or an assistant secretary of each of the Company, and each Floor Plan Borrower certifying, inter alia, (i) copies of each of the articles or certificate of incorporation or organization, as amended and in effect, of such Person, the bylaws or Operating Agreement or regulations, as amended and in effect, of such Person (or a statement that such documents have not changed) and the resolutions adopted by the Board of Directors or Managers of such Person (A) authorizing the execution, delivery and performance by such Person of the Loan Documents to which it is or will be a party, and (B) approving the form of this Amendment and (ii) the incumbency and specimen signatures of the officers of such Person executing any documents on its behalf;

-3-

(c) the payment to the Agent of all billed fees and expenses (including the billed fees and disbursements of Andrews Kurth LLP);

(d) an Intercreditor Agreement between the Agent and DCFS USA; and

(e) such other consents, approvals, opinions or documents as the Agent or the Lenders may reasonably request.

10. Release and Indemnity. (a) The Company does hereby release and forever discharge the Agent, Floor Plan Agent and each of the Lenders and each affiliate thereof and each of their respective employees, officers, directors, trustees, agents, attorneys, successors, assigns or other representatives from any and all claims, demands, damages, actions, cross-actions, causes of action, costs and expenses (including legal expenses), of any kind or nature whatsoever, whether based on law or equity, which any of said parties has held or may now or in the future own or hold, whether known or unknown, for or because of any matter or thing done, omitted or suffered to be done on or before the actual date upon which this Amendment is signed by any of such parties (a) arising directly or indirectly out of the Loan Documents, or any other documents, instruments or any other transactions relating thereto and/or (b) relating directly or indirectly to all transactions by and between the Company, the Floor Plan Borrowers, or their representatives and the Agent, the Floor Plan Agent and each Lender or any of their respective directors, officers, agents, employees, attorneys or other representatives. Such release, waiver, acquittal and discharge shall and does include, without limitation, any claims of usury, fraud, duress, misrepresentation, lender liability, control, exercise of remedies and all similar items and claims, which may, or could be, asserted by the Company or any Floor Plan Borrower including any such caused by the actions or negligence of the indemnified party (other than its gross negligence or willful misconduct).

(b) The Company and each Floor Plan Borrower hereby ratifies the indemnification provisions contained in the Loan Documents, including, without limitation, Section 13.4 of the Credit Agreement, and agrees that this Amendment and losses, claims, damages and expenses related thereto shall be covered by such indemnities.

11. Counterparts. This Amendment may be signed in any number of counterparts, which may be delivered in original or facsimile form each of which shall be construed as an original, but all of which together shall constitute one and the same instrument.

12. Governing Law. This Amendment, all Notes, the other Loan Documents and all other documents executed in connection herewith shall be deemed to be contracts and agreements under the laws of the State of New York and of the United States of America and for all purposes shall be construed in accordance with, and governed by, the laws of New York and of the United States.

13. Final Agreement of the Parties. Any previous agreement among the parties with respect to the subject matter hereof is superseded by the Credit Agreement, as amended by this Amendment. Nothing in this Amendment, express or implied is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Amendment.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written.

[Signature on separate pages]

Signature Page to

Fourth Amendment to Credit Agreement

Ratio of Earnings to Fixed Charges

Exhibit 12

ASBURY AUTOMOTIVE GROUP, INC.

STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(in thousands, except ratios)


Ratio of earnings to fixed charges	For the Years Ended December 31,
	2007			2006			2005			2004			2003
EARNINGS COMPUTATION:
Income from continuing operations	$	54,286		$	67,089		$	57,768		$	48,340		$	43,875
Income tax expense		30,537			40,506			34,573			28,721			26,891
Fixed charges		101,627			102,872			84,684			71,027			63,103
Amortization of capitalized interest		252			235			195			141			52
Capitalized interest		(250	)		(593	)		(810	)		(1,334	)		(785	)

Earnings for purposes of computation	$	186,452		$	210,109		$	176,410		$	146,895		$	133,136

FIXED CHARGES COMPUTATION:
Other interest expense	$	37,608		$	42,714		$	39,279		$	37,473		$	34,599
Floor plan interest expense		42,161			39,645			26,967			18,372			14,253
Amortization deferred financing fees		2,582			2,359			2,192			1,579			5,333
Interest component of rent expense		19,026			17,561			15,436			12,269			8,133
Capitalized interest		250			593			810			1,334			785

Fixed charges for purposes of computation	$	101,627		$	102,872		$	84,684		$	71,027		$	63,103

RATIO OF EARNINGS TO FIXED CHARGES		1.83	x		2.04	x		2.08	x		2.07	x		2.11	x

Subsidiaries of the Company


Asbury Automotive Group Subsidiary List				Exhibit 21
As of December 31, 2007


Entity Name	Domestic State	Foreign Qualification
AF Motors L.L.C.	DE	FL
ALM Motors L.L.C.	DE	FL
ANL L.P.	DE	FL
Asbury AR Niss L.L.C.	DE	AR
Asbury Arkansas Hund L.L.C.	DE	AR
Asbury Atlanta AC L.L.C.	DE	GA
Asbury Atlanta AU L.L.C.	DE	GA
Asbury Atlanta BM L.L.C.	DE	GA
Asbury Atlanta Chevrolet L.L.C.	DE	GA
Asbury Atlanta Hon L.L.C.	DE	GA
Asbury Atlanta Inf L.L.C.	DE	GA
Asbury Atlanta Infiniti L.L.C.	DE	GA
Asbury Atlanta Jaguar L.L.C.	DE	GA
Asbury Atlanta Lex L.L.C.	DE	GA
Asbury Atlanta Nis L.L.C.	DE	GA
Asbury Atlanta Toy L.L.C.	DE	GA
Asbury Atlanta VL L.L.C.	DE	GA
Asbury Automotive Arkansas Dealership Holdings L.L.C.	DE	AR, MS
Asbury Automotive Arkansas L.L.C.	DE	AR, MS
Asbury Automotive Atlanta L.L.C.	DE	GA
Asbury Automotive Brandon, L.P.	DE	FL
Asbury Automotive Central Florida, L.L.C.	DE	FL
Asbury Automotive Deland, L.L.C.	DE	FL
Asbury Automotive Financial Services, Inc.	DE	CT
Asbury Automotive Florida, L.L.C.	DE
Asbury Automotive Fresno L.L.C.	DE	CA
Asbury Automotive Group Holdings, Inc.	DE	PA
Asbury Automotive Group L.L.C.	DE	CT, OR
Asbury Automotive Jacksonville GP L.L.C.	DE	FL
Asbury Automotive Jacksonville, L.P.	DE	FL
Asbury Automotive Management L.L.C.	DE	NY, PA
Asbury Automotive Mississippi L.L.C.	DE	MS
Asbury Automotive North Carolina Dealership Holdings L.L.C.	DE	NC
Asbury Automotive North Carolina L.L.C.	DE	NC
Asbury Automotive North Carolina Management L.L.C.	DE	NC
Asbury Automotive North Carolina Real Estate Holdings L.L.C.	DE	NC, NJ, SC, VA
Asbury Automotive Oregon L.L.C.	DE	OR
Asbury Automotive Oregon Management L.L.C.	DE	OR
Asbury Automotive South, L.L.C.	DE
Asbury Automotive Southern California L.L.C.	DE	CA
Asbury Automotive St. Louis, L.L.C.	DE	MO
Asbury Automotive Tampa GP L.L.C.	DE	FL
Asbury Automotive Tampa, L.P.	DE	FL
Asbury Automotive Texas L.L.C.	DE	TX
Asbury Automotive Texas Real Estate Holdings L.L.C.	DE	TX
Asbury Deland Imports 2, L.L.C.	DE	FL
Asbury Fresno Imports L.L.C.	DE	CA


Asbury Automotive Group Subsidiary List				Exhibit 21
As of December 31, 2007


Entity Name	Domestic State	Foreign Qualification
Asbury Jax AC, L.L.C.	DE	FL
Asbury Jax Holdings, L.P.	DE	FL
Asbury Jax Hon, L.L.C.	DE	FL
Asbury Jax K, L.L.C.	DE	FL
Asbury Jax Management L.L.C.	DE	FL
Asbury Jax PB Chev, L.L.C.	DE
Asbury Jax VW, L.L.C.	DE	FL
Asbury MS Chev, L.L.C.	DE	MS
Asbury MS Gray-Daniels L.L.C.	DE	MS
Asbury MS Metro L.L.C.	DE	MS
Asbury MS Yazoo L.L.C.	DE	MS
Asbury No Cal Niss L.L.C.	DE	CA
Asbury Sacramento Imports L.L.C.	DE	CA
Asbury So Cal DC L.L.C.	DE	CA
Asbury So Cal Hon L.L.C.	DE	CA
Asbury So Cal Niss L.L.C.	DE	CA
Asbury St. Louis Cadillac L.L.C.	DE	MO
Asbury St. Louis Gen L.L.C.	DE	MO
Asbury St. Louis Lex L.L.C.	DE	MO
Asbury St. Louis LR L.L.C.	DE	MO
Asbury Tampa Management L.L.C.	DE	FL
Asbury-Deland Imports L.L.C.	DE	FL
Atlanta Real Estate Holdings L.L.C.	DE	GA
Avenues Motors, Ltd.	FL
Bayway Financial Services, L.P.	DE	FL
BFP Motors L.L.C.	DE	FL
C&O Properties, Ltd.	FL
Camco Finance II L.L.C.	DE	NC, SC
Camco Finance L.L.C.	DE	NC, VA
CFP Motors, Ltd.	FL
CH Motors, Ltd.	FL
CHO Partnership, Ltd.	FL
CK Chevrolet LLC	DE	FL
CK Motors LLC	DE	FL
CN Motors, Ltd.	FL
Coggin Automotive Corp.	FL
Coggin Cars L.L.C.	DE	FL
Coggin Chevrolet L.L.C.	DE	FL
Coggin Management, L.P.	DE	FL
CP-GMC Motors, Ltd.	FL
Crown Acura/Nissan, LLC	NC
Crown Battleground, LLC	NC
Crown CHH L.L.C.	DE	NC
Crown CHO L.L.C.	DE	NC
Crown CHV L.L.C.	DE	NC
Crown Dodge, LLC	NC
Crown FDO L.L.C.	DE	NC
Crown FFO Holdings L.L.C.	DE	NC
Crown FFO L.L.C.	DE	NC
Crown Fordham L.L.C.	DE	NC
Crown GAC L.L.C.	DE	NC
Crown GAU L.L.C.	DE	NC
Crown GBM L.L.C.	DE	NC
Crown GCA L.L.C.	DE	NC
Crown GCH L.L.C.	DE	NC


Asbury Automotive Group Subsidiary List				Exhibit 21
As of December 31, 2007


Entity Name	Domestic State	Foreign Qualification
Crown GDO L.L.C.	DE	NC
Crown GHO L.L.C.	DE	NC
Crown GKI L.L.C.	DE	NC
Crown GMI L.L.C.	DE	NC
Crown GNI L.L.C.	DE	NC
Crown GPG L.L.C.	DE	NC
Crown GVO L.L.C.	DE	NC
Crown Honda, LLC	NC
Crown Honda-Volvo, LLC	NC
Crown Mitsubishi, LLC	NC
Crown Motorcar Company L.L.C.	DE	VA
Crown PBM L.L.C.	DE	NJ
Crown Raleigh L.L.C.	DE	NC
Crown RIA L.L.C.	DE	VA
Crown RIB L.L.C.	DE	VA
Crown Royal Pontiac, LLC	NC
Crown SJC L.L.C.	DE	SC
Crown SNI L.L.C.	DE	SC
CSA Imports L.L.C.	DE	FL
JC Dealer Systems LLC (f/k/a Dealer Profit Systems L.L.C.)	DE	FL
Escude-M L.L.C.	DE	MS
Escude-MO L.L.C.	DE	MS
Escude-NN L.L.C.	DE	MS
Escude-NS L.L.C.	DE	MS
Escude-T L.L.C.	DE	MS
HFP Motors L.L.C.	DE	FL
KP Motors L.L.C.	DE	FL
McDavid Austin-Acra, L.L.C.	DE	TX
McDavid Frisco-Hon, L.L.C.	DE	TX
McDavid Grande, L.L.C.	DE	TX
McDavid Houston-Hon, L.L.C.	DE	TX
McDavid Houston-Niss, L.L.C.	DE	TX
McDavid Irving-Hon, L.L.C.	DE	TX
McDavid Outfitters, L.L.C.	DE	TX, LA
McDavid Plano-Acra, L.L.C.	DE	TX
NP FLM L.L.C.	DE	AR
NP MZD L.L.C.	DE	AR
NP VKW L.L.C.	DE	AR
Plano Lincoln-Mercury, Inc.	DE	TX
Precision 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	AR
Premier Pon L.L.C.	DE	AR
Prestige Bay L.L.C.	DE	AR
Prestige Toy L.L.C.	DE	AR
RER Properties, LLC	NC
RWIJ Properties, LLC	NC
Spectrum Insurance Services L.L.C.	DE	GA
Tampa Hund, L.P.	DE	FL
Tampa Kia, L.P.	DE	FL
Tampa LM, L.P.	DE
Tampa Mit, L.P.	DE


Asbury Automotive Group Subsidiary List				Exhibit 21
As of December 31, 2007


Entity Name	Domestic State	Foreign Qualification
Tampa Suzu, L.P.	DE
Thomason Auto Credit Northwest, Inc.	OR
Thomason Dam L.L.C.	DE	OR
Thomason Frd L.L.C.	DE	OR
Thomason Hon L.L.C.	DE	OR
Thomason Hund L.L.C.	DE	OR
Thomason Maz L.L.C.	DE	OR
Thomason Niss L.L.C.	DE	OR
Thomason Outfitters L.L.C.	DE	OR
Thomason Pontiac-GMC L.L.C.	DE	OR
Thomason Suzu L.L.C.	DE	OR
Thomason TY L.L.C.	DE	OR
Thomason Zuk L.L.C.	DE	OR
WMZ Brandon Motors, L.P.	DE
WMZ Motors, L.P.	DE
WTY Motors, L.P.	DE	FL

Consent of Deloitte & Touche LLP

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-105450, 333-84646 and 333-115402 on Form S-8 and 333-123505 on Form S-3 of our report dated February 29, 2008, relating to the financial statements of Asbury Automotive Group, Inc., and subsidiaries (which report expresses an unqualified opinion and includes an explanatory paragraph regarding the Company’s adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 on January 1, 2007) and the effectiveness of Asbury Automotive Group, Inc. and subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Asbury Automotive Group, Inc. and subsidiaries for the year ended December 31, 2007.

/s/ DELOITTE & TOUCHE LLP

New York, New York

February 29, 2008

Certificate of Chief Executive Officer pursuant to section 302

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles R. Oglesby, certify that:

I have reviewed this annual report on Form 10-K of Asbury Automotive Group, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial 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 about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are 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’s internal control over financial reporting.

/s/ Charles R. Oglesby

Charles R. Oglesby

Chief Executive Officer

February 29, 2008

Certificate of Chief Financial Officer pursuant to section 302

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Gordon Smith, certify that:

I have reviewed this annual report on Form 10-K of Asbury Automotive Group, Inc.;

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ J. Gordon Smith

J. Gordon Smith

Chief Financial Officer

February 29, 2008

Certificate of Chief Executive Officer pursuant to section 906

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Asbury Automotive Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles R. Oglesby, 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 the Company.

/s/ Charles R. Oglesby

Charles R. Oglesby

Chief Executive Officer

February 29, 2008

Certificate of Chief Financial Officer pursuant to section 906

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Asbury Automotive Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Gordon Smith, 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 the Company.

/s/ J. Gordon Smith

J. Gordon Smith

Chief Financial Officer

February 29, 2008