RISK FACTORS
The following risk factors, as well as those relating to our business under Part I, Item 1A, Risk Factors in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which are incorporated herein by reference, should be considered prior to deciding to invest in any of the notes offered for sale pursuant to this prospectus. These risk
factors may be amended, supplemented or superseded from time to time by risk factors contained in Exchange Act reports that we file with the SEC. There may be additional risks that are not presently material or known. If any of the events described
below occur, our business, financial condition, results of operations, liquidity or access to the debt or capital markets could be materially adversely affected. The following risks could cause our actual results to differ materially from our
historical experience and from any estimates or expectations set forth in forward-looking statements made in or incorporated by reference into this prospectus or the documents incorporated herein by reference. As used herein, notes
refers to the notes offered hereby and existing notes refers to our 4.875% senior notes due 2021, our 4.625% senior notes due 2021 and our 3.800% senior notes due 2022.
Risks Related to the Notes
Our level of indebtedness could limit the cash flow
available for our operations and could adversely affect our ability to service our debt or obtain additional financing, if necessary.
As of March 31, 2013, after giving effect to the offering, our total consolidated debt outstanding, including that of our subsidiary guarantors, would have been approximately $1.4 billion. Our level
of indebtedness could have important consequences to our financial health. For example, our level of indebtedness could, among other things:
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make it more difficult for us to satisfy our financial obligations, including those relating to the notes, our existing notes and our credit facility;
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affect our liquidity by limiting our ability to obtain additional financing for working capital, or limit our ability to obtain financing for capital
expenditures and acquisitions or make any available financing more costly;
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require us to dedicate all or a substantial portion of our cash flow to service our debt, which would reduce funds available for other business
purposes, such as capital expenditures, dividends or acquisitions, including our ability to open additional stores;
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limit our flexibility in planning for or reacting to changes in the markets in which we compete;
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place us at a competitive disadvantage relative to our competitors who may have less indebtedness and more available cash flow;
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render us more vulnerable to general adverse economic and industry conditions; and
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result in an event of default if we fail to satisfy our obligations under the notes or our other debt or fail to comply with the financial and other
restrictive covenants contained in the indenture or our other debt, which event of default could result in the notes and all of our debt becoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing
such debt.
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In addition, the indenture governing our existing notes and our credit facility contain
financial and/or other restrictive covenants, and the indenture governing the notes will contain restrictive covenants, that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those
covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt, including the notes.
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Despite current indebtedness levels, we and our subsidiaries may incur substantially more debt. This
could further exacerbate the risks associated with our leverage.
The terms of the indenture governing our existing
notes and our credit facility do not, and the terms of the indenture governing the notes will not, prohibit us or our subsidiaries from incurring additional indebtedness. If new debt is added to our and our subsidiaries current debt levels,
the related risks (described in Our level of indebtedness could limit the cash flow available for our operations and could adversely affect our ability to service our debt or obtain additional financing, if necessary) that we and
they now face could intensify.
We are a holding company dependent on our subsidiaries for the ability to service our debt.
We are a holding company with no operations of our own. Consequently, the ability to service our debt is dependent
upon the earnings and cash flows from the business conducted by our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. Any distribution of earnings to us from our subsidiaries, or advances or other distributions of funds by our subsidiaries to us are contingent upon our subsidiaries earnings and cash flows and are
subject to various business considerations. Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization will be structurally subordinated to the claims of that subsidiarys creditors and any preferred
equity holders. In addition, even if we were a creditor of any of our subsidiaries, our rights as a creditor would be subordinated to any secured debt of our subsidiaries to the extent of the assets securing that debt and to any indebtedness of our
subsidiaries senior to that held by us.
The notes and guarantees will be unsecured. Therefore, any future secured creditors would have
a prior claim, ahead of the notes, on our assets and the guarantors assets to the extent such assets secure that secured debt.
The notes will be our senior unsecured indebtedness. The notes will be guaranteed jointly and severally, on a senior unsecured basis by each of our subsidiaries that guarantees our credit facility and our
existing notes. On the issue date, all of our subsidiaries, except for certain immaterial subsidiaries, will guarantee the notes. As of March 31, 2013, neither we nor our subsidiaries had any secured indebtedness. Holders of our and the
subsidiary guarantors future secured indebtedness will have claims that are prior to your claims as holders of the notes to the extent of the value of the assets securing such indebtedness. In the event of any distribution or payment of our
assets in any foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, holders of our future secured indebtedness will have prior claim to our assets that constitute their collateral. Holders of the notes
will participate ratably with all holders of our unsecured indebtedness (including our credit facility and our existing notes) that is deemed to be of the same class as the notes. In that event, because the notes will not be secured by any of our
assets, it is possible that our remaining assets might be insufficient to satisfy your claims in full. In addition, if we fail to meet our payments or other obligations under any future secured debt, the holders of that secured debt would be
entitled to foreclose on our assets securing that secured debt and liquidate those assets to the exclusion of the holders of the notes, even if an event of default existed under the indenture governing the notes at such time.
We can release guarantees from time to time without the consent of holders.
Under the terms of the indenture, holders of the notes will be deemed to have consented to the release of the guarantee of the notes
provided by a subsidiary guarantor, without any action required on the part of the trustee or any holder of the notes, upon such subsidiary guarantor ceasing to guarantee or be an obligor with respect to our credit facility under the circumstances
described under Description of the NotesSubsidiary Guarantees. A subsidiarys guarantee also may be released in certain other circumstances described under Description of the NotesSubsidiary Guarantees. In
such circumstances, such subsidiarys guarantee of our existing notes also would be released. Accordingly, if the lenders under our credit facility release a subsidiary guarantor from its guarantee of, or obligations as a borrower under, our
credit facility, the obligations of such
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subsidiary to guarantee the notes and our existing notes will immediately terminate, and if our credit facility terminated in full, the obligations of our subsidiaries to guarantee the notes and
our existing notes will immediately terminate. In addition, a subsidiary guarantor will be released and relieved from all its obligations under its subsidiary guarantee in the other circumstances set out under Description of the
NotesSubsidiary Guarantees. Any such release would result in any debt or other obligations of the applicable subsidiary becoming structurally senior to the notes.
The notes will be structurally junior to the indebtedness and other liabilities of our subsidiaries that are not guarantors of the notes.
On the issue date of the notes, all of our subsidiaries, except for certain immaterial subsidiaries, will be guarantors of the notes.
However, the indenture provides for the release of existing guarantees under certain circumstances. In addition, our subsidiaries are only required to guarantee the notes if they also incur obligations under or guarantee our credit facility or
certain other debt. You will not have any claim as a creditor against any of our subsidiaries that are not guarantors, and all existing and future indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those
subsidiaries will be structurally senior to the notes. Furthermore, in the event of any bankruptcy, liquidation or reorganization of any of our subsidiaries that are not guarantors, the rights of the holders of the notes to participate in the assets
of such subsidiary will rank behind the claims of that subsidiarys creditors, including trade creditors (except to the extent we have a claim as a creditor of such subsidiary). As a result, the notes will be structurally subordinated to the
outstanding debt and other liabilities, including trade payables of any of our subsidiaries that are not guarantors. In addition, the indentures governing the notes and our existing notes will not prohibit our subsidiaries, including any of our
subsidiaries that are not guarantors, from incurring additional indebtedness which could be structurally senior to the notes and will not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred or
issued by our subsidiaries, including any of our subsidiaries that are not guarantors. Accordingly, there may be insufficient funds to satisfy claims of holders of the notes.
Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.
Our ability to satisfy our obligations under our debt will depend on our ability to generate sufficient cash flow to service our debt,
which in turn depends on our future operating performance and financial results. Our future performance and results will be subject, in part, to factors beyond our control, including interest rates and general economic, financial and business
conditions. In addition, if we consummate significant acquisitions in the future, our cash requirements may increase significantly. If we are unable to generate sufficient cash flow to service our debt, we may be required to:
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refinance all or a portion of our debt, including our existing notes, our credit facility and the notes;
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obtain additional financing;
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sell some of our assets or operations;
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reduce or delay capital expenditures and/or acquisitions; or
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revise or delay our strategic plans.
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If we are required to take any of these actions, it could have a material adverse effect on our business, financial condition, liquidity and results of operations. In addition, we cannot assure you that
we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt instruments, including our credit facility
and the indentures governing the notes and our existing notes.
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Our failure to remain in compliance with the covenants in our existing debt agreements may result in
an event of default.
Our credit facility contains negative and affirmative covenants affecting us and our existing
and future subsidiaries, including a number of covenants that, subject to customary exceptions, restrict our ability to, among other things:
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create, incur or assume liens;
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make certain loans and investments;
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incur or assume certain additional debt;
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make fundamental changes; and
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change the nature of our business and the business conducted by our subsidiaries.
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In addition, our credit facility requires us to comply with financial covenants, including (i) a minimum consolidated fixed charge
coverage ratio and (ii) a maximum consolidated leverage ratio, in each case, as set forth in the documentation relating to our credit facility.
The indenture governing our existing notes contains negative covenants substantially similar to the covenants that will be contained in the indenture governing the notes. These negative covenants may
affect us and our existing and future subsidiaries, including, subject to customary exceptions, restricting our ability to, among other things:
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incur debt secured by liens,
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enter into sale and leaseback transactions; and
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merge or consolidate with another entity or sell substantially all of our assets to another person.
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A failure to comply with the financial or other covenants contained in our credit facility or the covenants contained in the indentures
governing the notes or our existing notes will constitute a default under such indebtedness and, subject to cure periods and notice provisions applicable to certain covenants, an event of default. An event of default, if not waived by our lenders
under or holders of such indebtedness, could result in the acceleration of such indebtedness and all of our other outstanding indebtedness, including our credit facility, our existing notes and the notes, and cause our debt to become immediately due
and payable. If acceleration occurs, we may not be able to repay our debt and may not be able to borrow sufficient funds to refinance our debt. Even if new financing is offered to us, it may not be on terms acceptable to us.
Our credit ratings may not reflect all risks of your investment in the notes.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated
changes in our credit ratings will generally affect the market value of the notes and our access to the capital markets. These credit ratings may not reflect the potential impact of risks relating to structure or marketing of the notes. Agency
ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization. Each agencys rating should be evaluated independently of any other agencys rating.
We may not be able to repurchase the notes upon a Change of Control Triggering Event.
Upon a Change of Control Triggering Event, as defined under the indenture governing the notes, we are required to offer to repurchase all
of the notes then outstanding for cash at a price equal to 101% of the aggregate
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principal amount of the notes repurchased, plus accrued and unpaid interest to but not including the repurchase date. The indentures governing our existing notes contain a substantially identical
provision and definition of Change of Control Triggering Event that, upon such a Change of Control Triggering Event, would require us to offer to repurchase all of the existing notes then outstanding for cash at a price equal to 101% of
the aggregate principal amount of notes repurchased, plus accrued and unpaid interest to but not including the repurchase date. In order to obtain sufficient funds to pay the repurchase price of the outstanding notes and existing notes, we expect
that we would need to refinance the notes and existing notes. We may not under these circumstances be able to refinance the notes and existing notes on reasonable terms, if at all. Our failure to offer to repurchase all outstanding notes or to
repurchase all validly tendered notes and existing notes would be an event of default under the indentures governing the notes and existing notes, respectively. Such an event of default may cause the acceleration of our other indebtedness. A change
of control will constitute an event of default under our credit facility and would therefore permit the lenders under our credit facility to accelerate the maturity of the borrowings thereunder. Our future indebtedness may contain similar provisions
as those in the notes, our existing notes and our credit facility or could restrict our ability to repurchase the notes and the existing notes in the event of a Change of Control Triggering Event or a change of control. In the event of a Change of
Control Triggering Event or a change of control, as applicable, we may not have sufficient funds to purchase all of the notes and the existing notes and to repay the amounts outstanding under our credit facility or other indebtedness. Please see the
section entitled Description of the NotesChange of Control.
An active trading market for the notes may not develop or
be maintained.
The notes are a new issue of securities with no established trading market. We do not intend to list
the notes on any securities exchange or arrange for the quotation of the notes on any automated dealer quotation system. We have been informed by the underwriters that they presently intend to make a market in the notes as permitted by applicable
laws and regulations after the offering is completed. However, the underwriters have no obligation to make a market in the notes and they may cease their market-making at any time without notice. In addition, the liquidity of the trading market in
the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for this type of security and by changes in our financial performance or prospects or in the prospects for companies in our industry
generally. As a result, we cannot assure you that an active trading market will develop for the notes or be maintained. If an active trading market does not develop or is not maintained, the market price and liquidity of the notes may be adversely
affected. In that case, you may not be able to sell your notes at a particular time or you may not be able to sell your notes at a favorable price.
Federal and state statutes allow courts, under specific circumstances, to avoid or limit the notes and guarantees, and to require holders of the notes to return payments previously made by us or the
guarantors.
Our creditors and the creditors of the guarantors of the notes could challenge the issuance of the notes
or the subsidiary guarantors issuance of their guarantees, respectively, as fraudulent conveyances or on other grounds such as equitable subordination. Under the federal bankruptcy law and similar provisions of state fraudulent transfer laws,
the issuance of the notes and the guarantees could be avoided (that is, cancelled or limited) as fraudulent transfers or subordinated to other creditors if a court determined that the company, at the time it issued the notes, or any guarantor, at
the time it issued the guarantee (or, in some jurisdictions, when payment became due under the guarantee):
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issued the notes or guarantees, as the case may be, with the intent to hinder, delay or defraud its existing or future creditors; or
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received less than reasonably equivalent value or did not receive fair consideration for the issuance of the notes or guarantees, as the case may be,
and if the company or any guarantor:
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was insolvent or rendered insolvent at the time it issued the notes or issued the guarantee, as applicable;
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was engaged in a business or transaction for which the companys or guarantors remaining assets constituted unreasonably small capital; or
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intended to incur, or believed that it would incur, debts beyond its ability to pay such debts generally as they mature.
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If the notes or guarantees were avoided or limited under fraudulent transfer or other laws, any claim you may make against us or the
applicable guarantor for amounts payable on the notes or related guarantee would be unenforceable to the extent of such avoidance or limitation or may be subordinated to the claims of other creditors. Moreover, the court could order you to return
any payments previously made by us or such guarantor.
The measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a party would be considered insolvent if:
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the sum of its debts, including contingent liabilities, was greater than the fair saleable value of its assets;
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the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts,
including contingent liabilities, as they become absolute and mature; or
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it could not pay its debts as they become due.
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We cannot be sure what standard a court would apply in making these determinations or, regardless of the standard, that a court would not avoid the notes or guarantees.
The indenture governing the notes provides that the issuance of the notes and the obligation of each guarantor under its guarantee are
limited as necessary to prevent them from constituting a fraudulent conveyance or fraudulent transfer under applicable law. We cannot assure you that this limitation will protect the issuance of the notes or the guarantees from fraudulent conveyance
or fraudulent transfer challenges or, if it does, that the remaining amount due and collectible would suffice, if necessary, to pay the notes in full when due. In a recent Florida bankruptcy case, this kind of provision was found to be
unenforceable, and subsequent decisions relating to appeals in that case have not addressed this finding, which is the subject of a separate appeal. We do not know if other courts will follow that case or whether a court would rule in the same
manner if there were to be litigation on this point with respect to the indenture governing the notes. However, if such holding were to be followed, the risk that the issuance of the notes, the subsidiary guarantees or both will be found to be
fraudulent conveyances will be significantly increased.
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DESCRIPTION OF THE NOTES
We are issuing the notes under an indenture, to be dated the date of issuance of the notes, between us, the subsidiary guarantors named
therein and UMB Bank, N.A., a national banking association, as trustee.
The terms of the notes include those expressly set
forth in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended (the Trust Indenture Act).
In this description, the words we, us, our and OReilly refer only to OReilly Automotive, Inc. and not to any of the subsidiaries of
OReilly Automotive, Inc.
The following summary of certain provisions of the indenture, the notes and the guarantees
does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the indenture, including, without limitation, the definitions of certain terms in the indenture. Copies of the indenture are
available upon request at the address indicated under Where You Can Find More Information.
We will issue $300
million aggregate principal amount of notes in this offering. As described under Further Issuances, under the indenture we can issue additional notes at later dates. In addition, we can issue additional series of debt securities
without limitation as to aggregate principal amount in the future.
General
The notes will be issued only in registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000
above that amount. The notes initially will be represented by one or more global certificates registered in the name of a nominee of The Depository Trust Company, which we refer to as DTC, as described under Book-Entry,
Delivery and Form.
The trustee, through its corporate trust office in Kansas City, Missouri, will act as our paying
agent and security registrar in respect of the notes. The current location of such corporate trust office is 1010 Grand Blvd., Kansas City, Missouri 64106. So long as the notes are issued in the form of global certificates, payments of principal,
interest and premium, if any, will be made by us through the paying agent to DTC.
The notes will be senior unsecured
obligations of OReilly and will rank equally and ratably with all other unsecured and unsubordinated indebtedness of OReilly from time to time outstanding. The notes will not be entitled to the benefit of any sinking fund.
We do not intend to list the notes on any securities exchange or arrange for quotation of the notes in any automated dealer quotation
system.
The notes will be guaranteed, jointly and severally, on a senior unsecured basis by each of our subsidiaries that
incurs indebtedness or guarantees obligations under the Revolving Credit Facility or incurs or guarantees obligations under any other Credit Facility Debt or Capital Markets Debt (each as defined under Subsidiary Guarantees) of
OReilly or any of our subsidiary guarantors.
Principal, Maturity and Interest
We are issuing $300 million aggregate principal amount of notes in this offering. The notes will mature on June 15, 2023. Interest on the
notes will accrue at a rate of 3.850% per annum and will be payable semi-annually in arrears on June 15 and December 15 of each year beginning on December 15, 2013. We will pay interest to those persons who were holders of record on the June 1 or
December 1 immediately preceding the applicable interest payment date. Interest on the notes will accrue from the date of original issuance of the notes or, if interest has already been paid on the notes, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. If any interest payment date falls on a date that is not a business day, the payment will be made on the next business day, and no interest shall accrue on
the amount of interest due on that interest payment date for the period from and after such interest payment date to the next business day.
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Subsidiary Guarantees
Our obligations under the notes will be guaranteed, jointly and severally, on a senior unsecured basis by each of our subsidiaries that incurs or guarantees obligations under the Revolving Credit Facility
or incurs or guarantees obligations under any other Credit Facility Debt or Capital Markets Debt of OReilly or any of the subsidiary guarantors. Initially all of our subsidiaries, except for certain immaterial subsidiaries, will guarantee the
notes. Each subsidiary guarantee will rank equally in right of payment with all existing and future liabilities of the applicable subsidiary guarantor that are not subordinated, provided that each subsidiary guarantee will effectively rank junior to
any secured indebtedness of its respective subsidiary guarantor to the extent of the value of the assets securing such indebtedness. Under the terms of the guarantees, holders of the notes will not be required to exercise their remedies against us
before they proceed directly against the subsidiary guarantors.
For purposes of the guarantee provisions of the indenture,
the following terms are defined as follows:
Capital Markets Debt
means any debt for borrowed money that
(i) is in the form of, or represented by, bonds, notes, debentures or other securities (other than promissory notes or similar evidences of debt under a credit agreement) and (ii) has an aggregate principal amount outstanding of at least
$25.0 million.
Credit Facility Debt
means any debt for borrowed money that (i) is incurred pursuant
to a credit agreement, including pursuant to the Revolving Credit Facility, or other agreement providing for revolving credit loans, term loans or other debt entered into between OReilly or any subsidiary of OReilly and any lender or
group of lenders and (ii) has an aggregate principal amount outstanding or committed of at least $25.0 million.
Revolving Credit Facility
means the Credit Agreement dated as of January 14, 2011, among OReilly, the
lenders from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, as amended, amended and restated, extended, renewed, restated, supplemented or otherwise modified (in whole or
in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.
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ubsidiary guarantor
means each subsidiary of OReilly that is or becomes a guarantor under the indenture.
Under the indenture, the holders of the notes will be deemed to have consented to the release of the guarantee of the notes
provided by a subsidiary guarantor, without any action required on the part of the trustee or any holder of the notes, upon such subsidiary guarantor ceasing to guarantee or be an obligor with respect to the Revolving Credit Facility or a guarantor
or obligor under any other Credit Facility Debt or Capital Markets Debt of OReilly or any of the subsidiary guarantors. Accordingly, if the lenders under the Revolving Credit Facility release a subsidiary guarantor from its guarantee of, or
obligations as a borrower under, the Revolving Credit Facility, the obligations of such subsidiary to guarantee the notes (and our existing notes) will immediately terminate, and if the Revolving Credit Facility is terminated in full, the
obligations of each of our subsidiaries to guarantee the notes (and our existing notes) will immediately terminate, unless such subsidiary incurs or guarantees obligations under any other Credit Facility Debt or Capital Markets Debt of OReilly
or another subsidiary guarantor and is not released thereunder. OReilly will give prompt written notice to the trustee of the automatic release of any subsidiary guarantor. Even if released from its obligations under the Revolving Credit
Facility, if any of our subsidiaries incurs or guarantees obligations under any other Credit Facility Debt or Capital Markets Debt of OReilly or any subsidiary guarantor while the notes are outstanding, then such subsidiaries will not be
released from their guarantee of the notes.
In addition, a subsidiary guarantor will be released and relieved from all its
obligations under its subsidiary guarantee in the following circumstances, each of which is permitted by the indenture:
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upon the sale or other disposition (including by way of consolidation or merger), in one transaction or a series of related transactions, of a majority
of the total voting power of the capital stock or other interests of such subsidiary guarantor (other than to OReilly or any affiliate); or
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upon the sale or disposition of all or substantially all the property of such subsidiary guarantor (other than to any affiliate of OReilly other
than another subsidiary guarantor).
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provided, however,
that, in each case, after giving effect to such transaction,
such subsidiary is no longer liable for any guarantee or other obligations in respect of any Credit Facility Debt or Capital Markets Debt of OReilly or any of the subsidiary guarantors.
The subsidiary guarantee of a subsidiary guarantor also will be released if we exercise our legal defeasance or our covenant defeasance
option as described under Defeasance or if our obligations under the indenture are discharged as described under Discharge of the Indenture. At our written instruction, the trustee will execute and deliver any
documents, instructions or instruments evidencing any such release.
The notes initially will be guaranteed by all of our
subsidiaries, except for certain immaterial subsidiaries. If a subsidiary becomes obligated to guarantee the notes after the initial issue date, then OReilly shall cause such subsidiary, within 30 days, to (A) execute and deliver to the
trustee a supplemental indenture in form reasonably satisfactory to the trustee pursuant to which such subsidiary shall guarantee all of OReillys obligations under the notes and the indenture and (B) deliver to the trustee an
opinion of counsel to the effect that (i) such supplemental indenture and guarantee of the notes has been duly executed and authorized and (ii) such supplemental indenture and guarantee of the notes constitutes a valid, binding and
enforceable obligation of such subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws and except insofar as enforcement thereof is subject to general principles of equity. Any such guarantee of the
notes shall be equal in ranking (pari passu) or senior in right of payment with the guarantee or other obligation giving rise to the obligation to guarantee the notes.
The indenture governing the notes provides that the obligations of each subsidiary guarantor under its subsidiary guarantee are limited
as necessary to prevent that subsidiary guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law. We cannot assure you that this limitation will protect the subsidiary guarantees from fraudulent conveyance or
fraudulent transfer challenges or, if it does, that the remaining amount due and collectible under the subsidiary guarantees would suffice, if necessary, to pay the notes in full when due. In a recent Florida bankruptcy case, this kind of provision
was found to be unenforceable, and subsequent decisions relating to appeals in that case have not addressed this finding, which is the subject of a separate appeal. We do not know if other courts will follow that case or whether a court would rule
in the same manner if there were to be litigation on this point with respect to the indenture governing the notes. However, if such holding were to be followed, the risk that the subsidiary guarantees will be found to be fraudulent conveyances will
be significantly increased.
Ranking
The notes will be:
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senior unsecured obligations of OReilly,
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effectively subordinated to any of our future secured indebtedness to the extent of the value of the assets securing such indebtedness,
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structurally subordinated to any indebtedness of any of our subsidiaries that do not guarantee the notes,
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pari passu with all our existing and future senior unsecured indebtedness, including the Revolving Credit Facility and our existing notes, and
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senior in right of payment to all our future subordinated indebtedness.
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With respect to each subsidiary guarantor, the subsidiary guarantee will be:
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a senior unsecured obligation of such subsidiary guarantor,
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effectively subordinated to any future secured indebtedness of such subsidiary guarantor to the extent of the value of the assets securing such
indebtedness,
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structurally subordinated to any indebtedness and preferred equity of any subsidiaries of such subsidiary guarantor that do not guarantee the notes,
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pari passu with such subsidiary guarantors existing and future senior unsecured indebtedness, including guarantees of the Revolving Credit
Facility and our existing notes, and
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senior in right of payment to such subsidiary guarantors future subordinated indebtedness.
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As of March 31, 2013, after giving effect to this offering, our total outstanding consolidated debt, including of our subsidiaries
but excluding unused commitments, would have been approximately $1.4 billion, approximately $300 million of which represents the notes, approximately $1.1 billion of which represents our existing notes and approximately $0.2 million of which
represents indebtedness of our subsidiaries.
As of March 31, 2013, after giving effect to this offering, our subsidiary
guarantors would have had debt outstanding of approximately $0.2 million, excluding the guarantees of the notes, the existing notes and unused commitments.
We only have a stockholders claim on the assets of our subsidiaries. This stockholders claim is junior to the claims that creditors of our subsidiaries have against our subsidiaries. Holders
of the notes will only be creditors of OReilly and of those subsidiaries that are subsidiary guarantors. In the case of any subsidiaries that are not subsidiary guarantors, all of the existing and future liabilities of these subsidiaries,
including any claims of trade creditors, and any preferred equity will be effectively senior to the notes.
The ability of our
subsidiaries to pay dividends and make other payments to us is also restricted by, among other things, applicable corporate and other laws and regulations as well as agreements to which our subsidiaries are or may become a party, including the
Revolving Credit Facility. See Description of Other Indebtedness.
Our subsidiaries have other liabilities,
including contingent liabilities that may be significant. The indenture does not contain any limitations on the amount of additional debt that we and our subsidiaries may incur. The amount of this debt could be substantial, and this debt may be debt
of our subsidiaries that are not subsidiary guarantors, in which case this debt would be effectively senior in right of payment to the notes. See Risk FactorsDespite current indebtedness levels, we and our subsidiaries may incur
substantially more debt. This could further exacerbate the risks associated with our leverage.
Further Issuances
We may, from time to time, without notice to or the consent of the holders of the notes, increase the principal amount of notes under the
indenture and issue such increased principal amount (or any portion thereof), in which case any additional notes so issued will have the same form and terms (other than the date of issuance, public offering price and, under certain circumstances,
the date from which interest thereon will begin to accrue and the initial interest payment date), and will carry the same right to receive accrued and unpaid interest, as the notes previously issued, and such additional notes will form a single
series with the previously issued notes, including for voting purposes.
In addition, we may, from time to time, without
notice to or the consent of the holders of the notes, issue additional series of debt securities without limitation as to aggregate principal amount. Such debt securities would be a separate series from the notes, including for voting purposes,
provided, that if any such additional notes are not fungible with the notes initially offered hereby for U.S. federal income tax purposes, such additional notes will have a separate CUSIP number.
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Optional Redemption
Prior to March 15, 2023, the notes will be redeemable, in whole, at any time, or in part, from time to time, at our option upon not less than 30 nor more than 60 days notice, for cash, at a
redemption price, plus accrued and unpaid interest to, but not including, the redemption date (subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date), equal to the greater
of:
(1) 100% of the principal amount thereof, or
(2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus 25 basis points.
On or after March 15, 2023, the notes will be redeemable, in whole at any time or in part from time to time, at our option upon not less than 30 nor more than 60 days notice, for cash, at a
redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date (subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant
interest payment date).
Treasury Yield
means, with respect to any redemption date for the notes, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price
for such redemption date.
Comparable Treasury Issue
means, with respect to the notes, the United States
Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the notes, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term of the notes.
Independent
Investment Banker
means, with respect to the notes offered hereby, either Merrill Lynch, Pierce, Fenner & Smith Incorporated or Wells Fargo Securities, LLC, as selected by us or, if both firms are unwilling or unable to select the
applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by us.
Comparable Treasury Price
means, with respect to any redemption date for the notes, (i) the average of the
applicable Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such applicable Reference Treasury Dealer Quotations, or (ii) if the trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
Reference Treasury Dealer
means,
with respect to the notes offered hereby, (i) Merrill Lynch, Pierce, Fenner & Smith Incorporated or Wells Fargo Securities, LLC or their successor;
provided however
, that if the foregoing shall cease to be a primary United
States Government securities dealer in the United States (a Primary Treasury Dealer), we shall substitute therefor another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by us.
Reference Treasury Dealer Quotations
means, with respect to each Reference Treasury Dealer and any redemption date for
the notes, the average, as determined by the trustee, of the bid and asked prices for the Comparable Treasury Issue for the notes (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.
A notice of
redemption shall be mailed by us (or, at our request, by the trustee on our behalf) by first class mail to each holder of notes to be redeemed. Such notice of redemption shall specify the principal amount
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of notes to be redeemed, the CUSIP and ISIN numbers of the notes to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment and that payment will be made
upon presentation and surrender of such notes. Once notice of redemption is sent to holders, the notes called for redemption will become due and payable on the redemption date at the redemption price, plus interest accrued to, but not including, the
redemption date. On or before 10:00 a.m., New York City time, on the redemption date, we will deposit with the trustee or with one or more paying agents an amount of money sufficient to redeem on the redemption date all the notes so called for
redemption at the appropriate redemption price, together with accrued interest to, but not including, the date fixed for redemption. Unless we default in payment of the redemption price plus interest accrued to the redemption date, commencing on the
redemption date interest on notes called for redemption will cease to accrue and holders of such notes will have no rights with respect to such notes except the right to receive the redemption price and any unpaid interest to, but not including, the
redemption date.
If fewer than all of the notes are being redeemed, the trustee will select the notes to be redeemed pro
rata, by lot or by any other method the trustee in its sole discretion deems fair and appropriate, in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. Upon surrender of any note redeemed in
part, the holder will receive a new note equal in principal amount to the unredeemed portion of the surrendered note.
In
addition, we may at any time purchase notes by tender, in the open market or by private agreement, subject to applicable law.
Change of
Control
Upon the occurrence of a Change of Control Triggering Event, unless we have exercised our right to redeem the
notes as described above under Optional Redemption, the indenture provides that each holder of notes will have the right to require us to repurchase all or a portion of such holders notes pursuant to the offer described below
(the Change of Control Offer), for cash, at a repurchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, on the amount repurchased to, but not including, the date of repurchase,
subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date.
Within 30 days following the date upon which the Change of Control Triggering Event occurred, or at our option, prior to any Change of Control but after the public announcement of the pending Change of
Control, we are required to send, by first class mail, a notice to each holder of notes, with a copy to the trustee, which notice will govern the terms of the Change of Control Offer. Such notice will state, among other things, the repurchase date,
which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the Change of Control Payment Date). The notice, if mailed prior to the date of consummation of the Change of Control, will state that the
Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date. Holders of notes electing to have notes repurchased pursuant to a Change of Control Offer will be required to
surrender their notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the note completed, to the paying agent at the address specified in the notice, or transfer their notes to the paying agent by book-entry
transfer pursuant to the applicable procedures of the paying agent, prior to the close of business on the third business day prior to the Change of Control Payment Date.
We will not be required to make a Change of Control Offer if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by us
and such third party purchases all notes properly tendered and not withdrawn under its offer.
Change of
Control
means the occurrence of any one of the following:
(1) the direct or indirect sale, lease,
transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of
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the assets of OReilly and its subsidiaries taken as a whole to any Person (including any person (as that term is used in Section 13(d)(3) of the Exchange Act)) other than
OReilly or one of its subsidiaries;
(2) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any Person (including any person or group (as those terms are used in Section 13(d)(3) of the Exchange Act)) becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of OReilly or any other Voting Stock into which the Voting Stock of OReilly is reclassified,
consolidated, exchanged or changed, measured by voting power rather than number of shares;
(3) OReilly
consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, OReilly, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of OReilly (or any other
Voting Stock into which the Voting Stock of OReilly is reclassified, consolidated, exchanged or changed) is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Voting
Stock of OReilly (or any other Voting Stock into which the Voting Stock of OReilly is reclassified, consolidated, exchanged or changed) outstanding immediately prior to such transaction constitute, or are converted into or exchanged for,
a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction;
(4) the first day on which the majority of the members of the board of directors of OReilly cease to be Continuing
Directors; or
(5) the adoption of a plan relating to the liquidation or dissolution of OReilly.
Change of Control Triggering Even
t means the occurrence of both a Change of Control and a Rating Event.
Continuing Director
means, as of any date of determination, any member of the board of directors of
OReilly who:
(1) was a member of such board of directors on the date of the indenture; or
(2) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing
Directors who were members of such board of directors at the time of such nomination or election.
Investment
Grade
means a rating of Baa3 or better by Moodys (or its equivalent under any successor rating category of Moodys) and a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P).
Moodys
means Moodys Investors Service, Inc., a subsidiary of Moodys Corporation, and its
successors.
Person
means any individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, limited liability company or government or other entity.
Rating
Agency
means each of Moodys and S&P;
provided
, that if either Moodys or S&P ceases to provide rating services to issuers or investors, we may appoint a replacement for such Rating Agency.
Rating Event
means:
(1) if the notes are rated Investment Grade by each of the Rating Agencies on the first day of the Trigger Period, the notes cease to be rated Investment Grade by each of the Rating Agencies on any date
during the Trigger Period, or
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(2) if the notes are not rated Investment Grade by each of the Rating
Agencies on the first day of the Trigger Period, the notes are downgraded by at least one rating category (
e.g.
, from BB+ to BB or Ba1 to Ba2) from the applicable rating of the notes on the first day of the Trigger Period by each of the
Rating Agencies on any date during the Trigger Period.
S&P
means Standard & Poors
Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Trigger Period
means
the period commencing 60 days prior to the first public announcement by us of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following
consummation of a Change of Control for so long as either of the Rating Agencies has publicly announced that it is considering a possible ratings change).
Voting Stock
of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote generally in the election of the board of directors of
such Person.
Under clause (4) of the definition of Change of Control, a Change of Control will occur when a majority of
OReillys board of directors cease to be Continuing Directors. In a decision in connection with a proxy contest, the Delaware Court of Chancery held that the occurrence of a change of control under a similar indenture provision may
nevertheless be avoided if the existing directors were to approve the slate of new director nominees (who would constitute a majority of the new board) as continuing directors, provided the incumbent directors give their approval in the
good faith exercise of their fiduciary duties owed to the corporation and its stockholders. Therefore, in certain circumstances involving a significant change in the composition of OReillys board of directors, including in connection
with a proxy contest where OReillys board of directors does not endorse a dissident slate of directors but approves them as Continuing Directors, holders of the notes may not be entitled to require OReilly to make a Change of
Control Offer.
The change of control feature of the notes may in certain circumstances make it more difficult to consummate
or discourage a sale or takeover of us and, thus, the removal of incumbent management. We could, in the future, enter into certain transactions, including takeovers, recapitalizations or other similar transactions, that would not constitute a Change
of Control under the notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings on the notes.
Certain Covenants
Limitation on Liens
The indenture provides that we will not, and will not permit any of the subsidiaries to, create, incur, issue, assume or guarantee any
debt secured by a Lien (other than Permitted Liens) upon any shares of stock, indebtedness, property or other assets (other than deposit accounts, inventory, accounts receivable or the proceeds thereof), without making effective provision to secure
all of the notes, equally and ratably with any and all other debt secured thereby, so long as any of such other debt shall be so secured.
Limitation on Sale and Leaseback Transactions
The indenture provides that we will not, and will not permit any subsidiary to, enter into any arrangement with any person providing for the leasing by us or any subsidiary of any property or assets that
has been or is to be sold or transferred by us or such subsidiary to such person, with the intention of taking back a lease of such property or assets (a Sale and Leaseback Transaction) unless either:
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within 12 months after the receipt of the proceeds of the sale or transfer, we or any subsidiary apply an amount equal to the greater of the net
proceeds of the sale or transfer or the fair value (as
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determined in good faith by OReillys board of directors) of such property or assets at the time of such sale or transfer to the prepayment or retirement (other than any mandatory
prepayment or retirement) of Senior Funded Debt; or
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we or such subsidiary would be entitled, at the effective date of the sale or transfer, to incur debt secured by a Lien on such property or assets in
an amount at least equal to the Attributable Debt in respect of the Sale and Leaseback Transaction, without equally and ratably securing the notes pursuant to the covenant described under Limitation on Liens.
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The foregoing restriction in the paragraph above will not apply to any Sale and Leaseback Transaction
(i) for a term of not more than three years including renewals; (ii) between us and a subsidiary or between subsidiaries, provided that the lessor is us or a wholly owned subsidiary; or (iii) entered into within 180 days after the
later of the acquisition or completion of construction of the subject property or assets.
Merger, consolidation or sale of assets
The indenture provides that we shall not merge, consolidate or amalgamate with or into any other person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all of our property in any one transaction or series of related transactions unless:
(1) OReilly shall be the surviving person (the Surviving Person) or the Surviving Person (if other than
OReilly) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws of the U.S., any State thereof or
the District of Columbia,
(2) the Surviving Person (if other than OReilly) expressly assumes, by
supplemental indenture in form reasonably satisfactory to the trustee, executed and delivered to the trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the notes, according
to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the indenture to be performed by OReilly,
(3) immediately before and immediately after giving effect to such transaction or series of related transactions, no default or event of default shall have occurred and be continuing, and
(4) OReilly shall deliver, or cause to be delivered, to the trustee, an officers certificate and an opinion
of counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent in the indenture relating to such transaction have been complied with.
For the purposes of this covenant, the sale, transfer, assignment, lease, conveyance or other disposition of all the property of one or more subsidiaries
of OReilly, which property, if held by OReilly instead of such subsidiaries, would constitute all or substantially all the property of OReilly on a consolidated basis, shall be deemed to be the transfer of all or substantially all
the property of OReilly.
The indenture provides that, unless the subsidiary guarantee of the applicable subsidiary
guarantor is permitted to be released in connection with such transaction as described above under Subsidiary Guarantees, such subsidiary guarantor shall not merge, consolidate or amalgamate with or into any other person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all its property in any one transaction or series of related transactions unless:
(1) such subsidiary guarantor shall be the surviving person (the Surviving Guarantor) or the Surviving Guarantor (if other than such subsidiary guarantor) formed by such merger, consolidation
or
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amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation, limited partnership or limited liability company organized and existing
under the laws of the U.S., any State thereof or the District of Columbia,
(2) the Surviving Guarantor (if
other than such subsidiary guarantor) expressly assumes, by supplemental indenture in form reasonably satisfactory to the trustee, executed and delivered to the trustee by such Surviving Guarantor, such subsidiary guarantors guarantee of the
due and punctual payment of the principal of, and premium, if any, and interest on, all the notes, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the indenture to be performed by
such subsidiary guarantor,
(3) immediately before and immediately after giving effect to such transaction or
series of related transactions, no default or event of default shall have occurred and be continuing, and
(4)
OReilly shall deliver, or cause to be delivered, to the trustee, an officers certificate and an opinion of counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto comply with this covenant
and that all conditions precedent in the indenture relating to such transaction have been complied with.
Notwithstanding the
foregoing, (i) any subsidiary may merge, consolidate or amalgamate with or into or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its property to OReilly or a subsidiary guarantor and
(ii) OReilly may merge with an affiliate incorporated solely for the purpose of and with the sole effect of reincorporating or reorganizing OReilly in another state of the United States.
Certain Definitions
The following terms used in Certain Covenants are defined as follows. Reference is made to the indenture for the full
definition of all such terms as well as any other capitalized terms used herein for which no definition is provided.
Attributable Debt
in respect of a Sale and Leaseback Transaction means, at the time of determination, the present
value discounted at the rate of interest implicit in the terms of the lease (as determined in good faith by us) of the obligations of the lessee under such lease for net rental payments during the remaining term of the lease (including any period
for which such lease has been extended or may, at our option, be extended).
Consolidated Net Tangible
Assets
means the aggregate amount of our assets (less applicable reserves and other properly deductible items) and our consolidated subsidiaries assets after deducting therefrom (a) all current liabilities (excluding the sum of
any debt for money borrowed having a maturity of less than twelve months from the date of our most recent consolidated balance sheet but which by its terms is renewable or extendable beyond twelve months from such date at the option of the borrower
and, without duplication, any current installments thereof payable within such twelve month period) and (b) all goodwill, trade names, patents, unamortized debt discount and expense and other like intangibles, all as set forth on our most
recent consolidated balance sheet and computed in accordance with United States generally accepted accounting principles (GAAP).
Funded Debt
means debt which matures more than one year from the date of creation, or which is extendable or renewable at the sole option of the obligor so that it may become payable
more than one year from such date or which is classified, in accordance with GAAP, as long-term debt on the consolidated balance sheet for the most-recently ended fiscal quarter (or if incurred subsequent to the date of such balance sheet, would
have been so classified) of the person for which the determination is being made. Funded Debt does not include (1) obligations created pursuant to leases, (2) any debt or portion thereof maturing by its terms within one year from the time
of any computation of the amount of outstanding Funded Debt unless such debt shall be extendable
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or renewable at the sole option of the obligor in such manner that it may become payable more than one year from such time, or (3) any debt for which money in the amount necessary for the
payment or redemption of such debt is deposited in trust either at or before the maturity date thereof.
Lien
means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, security
interest, lien, encumbrance or other security arrangement of any kind or nature on or with respect to such property or assets.
Permitted Liens
means:
(1) Liens (other than Liens created or imposed under the Employee Retirement Income Security Act of 1974, as amended (ERISA)), for taxes, assessments or governmental charges or levies not yet
subject to penalties for non timely payment or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the property or assets
subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof);
(2) statutory Liens of landlords and Liens of mechanics, materialmen, warehousemen, carriers and suppliers and other
Liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided that any such Liens which are material secure only amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same or are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the property or
assets subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof);
(3) Liens (other than Liens created or imposed under ERISA) incurred or deposits made by us and our subsidiaries in
the ordinary course of business in connection with workers compensation, unemployment insurance and other types of social security, laws or regulations, or to secure the performance of tenders, statutory obligations, bids, leases, trade or
government contracts, surety, indemnification, appeal, performance and return-of-money bonds, letters of credit, bankers acceptances and other similar obligations (exclusive of obligations for the payment of borrowed money), or as security for
customs or import duties and related amounts;
(4) Liens in connection with attachments or judgments
(including judgment or appeal bonds), provided that the judgments secured shall, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 30 days after the
expiration of any such stay;
(5) Liens securing indebtedness (including capital leases) incurred to
finance the purchase price or cost of construction of property or assets (or additions, repairs, alterations or improvements thereto), provided that such Liens and the indebtedness secured thereby are incurred within twelve months of the later of
acquisition or completion of construction (or addition, repair, alteration or improvement) and full operation thereof;
(6) Liens securing industrial revenue bonds, pollution control bonds or similar types of tax-exempt bonds;
(7) Liens arising from deposits with, or the giving of any form of security to, any governmental agency required as a condition to the transaction of business or exercise of any privilege, franchise
or license;
(8) encumbrances, covenants, conditions, restrictions, easements, reservations and rights of
way or zoning, building code or other restrictions, (including defects or irregularities in title and similar
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encumbrances) as to the use of real property, or Liens incidental to conduct of the business or to the ownership of our or our subsidiaries properties not securing debt that do not in the
aggregate materially impair the use of said properties in the operation of our business, including our subsidiaries, taken as a whole;
(9) leases, licenses, subleases or sublicenses granted to others not interfering in any material respect with our business, including our subsidiaries, taken as a whole;
(10) Liens on property or assets at the time such property or assets are acquired by us or any of our subsidiaries;
(11) Liens on property or assets of any person at the time such person becomes one of our subsidiaries;
(12) Liens on receivables from customers sold to third parties pursuant to credit arrangements in the
ordinary course of business;
(13) Liens existing on the date of the indenture or any extensions,
amendments, renewals, refinancings, replacements or other modifications thereto;
(14) Liens on any
property or assets created, assumed or otherwise brought into existence in contemplation of the sale or other disposition of the underlying property or assets, whether directly or indirectly, by way of share disposition or otherwise;
(15) Liens securing debt of a subsidiary guarantor owed to us or to another one of our subsidiary guarantors;
(16) Liens in favor of the United States of America or any State thereof, or any department, agency or
instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments;
(17) Liens to secure debt of joint ventures in which we or any of our subsidiaries have an interest, to the extent
such Liens are on property or assets of, or equity interests in, such joint ventures;
(18) Liens arising
solely by virtue of any statutory or common law provisions relating to bankers Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution;
(19) Liens arising from financing statement filings regarding operating leases;
(20) Liens in favor of customs and revenue authorities to secure custom duties in connection with the importation of
goods;
(21) Liens securing the financing of insurance premiums payable on insurance policies; provided,
that such Liens shall only encumber unearned premiums with respect to such insurance, interests in any state guarantee fund relating to such insurance and subject and subordinate to the rights and interests of any loss payee, loss payments which
shall reduce such unearned premiums;
(22) Liens securing cash management obligations (that do not
constitute indebtedness), or arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods and contractual rights of set-off relating to purchase orders and other similar arrangements, in each case in the
ordinary course of business;
(23) Liens on any property or assets of our foreign subsidiaries securing debt
of such subsidiaries (but not debt of OReilly or any of our subsidiary guarantors); and
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(24) other Liens on our property or assets and the property or assets
of our subsidiaries securing debt in an aggregate principal amount (together with the aggregate amount of all Attributable Debt in respect of Sale and Leaseback Transactions entered into in reliance on this clause) not to exceed, as of any date of
incurrence of such debt pursuant to this clause and after giving effect to such incurrence and the application of the proceeds therefrom, the greater of (1) $250.0 million and (2) 15% of our Consolidated Net Tangible Assets.
Senior Funded Debt
means all Funded Debt of ours or our subsidiaries (except Funded Debt, the payment of which is
subordinated to the payment of the notes).
Events of Default
Each of the following constitutes an event of default with respect to the notes:
(1) a default in the payment of principal of or premium, if any, on any note when due at its maturity, upon optional redemption, upon required repurchase or otherwise,
(2) our failure to pay interest on any note within 30 days of when such amount becomes due and payable,
(3) our failure to comply with any of our covenants or agreements in the indenture or the notes (other than a failure
that is subject to the foregoing clause (1) or (2)) and our failure to cure (or obtain a waiver of) such default and such failure continues for 60 days after written notice is given to us as provided below,
(4) a default under any debt for money borrowed by us or any subsidiary guarantor that results in acceleration of the
maturity of such debt, or failure to pay any such debt within any applicable grace period after final stated maturity, in an aggregate amount greater than $75.0 million or its foreign currency equivalent at the time without such debt having
been discharged or acceleration having been rescinded or annulled within 10 days after receipt by us of notice of the default by the trustee or holders of not less than 25% in aggregate principal amount of the notes then outstanding (the
cross acceleration provision),
(5) certain events of bankruptcy, insolvency or reorganization
affecting us or any subsidiary guarantor (the bankruptcy provisions), and
(6) except as permitted
by the indenture, any subsidiary guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any subsidiary guarantor, or any person acting on its behalf, shall
deny or disaffirm its obligation under the subsidiary guarantee.
A default under clause (3) is not an event of default
until the trustee or the holders of not less than 25% in aggregate principal amount of the notes then outstanding notify us of the default and we do not cure such default within the time specified after receipt of such notice. Such notice must
specify the default, demand that it be remedied and state that such notice is a Notice of Default.
If an event of
default (other than an event of default resulting from certain events involving bankruptcy, insolvency or reorganization with respect to us or any subsidiary guarantor) shall have occurred and be continuing, the trustee or the holders of not less
than 25% in aggregate principal amount of the notes then outstanding may declare, by notice to us in writing (and to the trustee, if given by holders of such notes) specifying the event of default, to be immediately due and payable the principal
amount of all the notes then outstanding, plus accrued but unpaid interest to the date of acceleration. After any such acceleration, but before a
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judgment or decree based on acceleration is obtained by the trustee, the registered holders of a majority in aggregate principal amount of the notes then outstanding may, under certain
circumstances, rescind and annul such acceleration and waive such event of default if all events of default, other than the nonpayment of accelerated principal, premium or interest, have been cured or waived as provided in the indenture. In case an
event of default resulting from certain events of bankruptcy, insolvency or reorganization with respect to us or any subsidiary guarantor shall occur, such amount with respect to all the notes shall be due and payable immediately without any
declaration or other act on the part of the trustee or the holders of the notes.
Notwithstanding the preceding paragraph, in
the event of a declaration of acceleration in respect of the notes because an event of default pursuant to clause (4) shall have occurred and be continuing, such declaration of acceleration shall be automatically annulled if (i) the
default under the debt that is the subject of such event of default has been cured by us or any subsidiary guarantor or has been waived by the holders thereof or (ii) the holders of such debt that is the subject of such event of default have
rescinded their declaration of acceleration in respect of such debt, and written notice of such cure, waiver or rescission shall have been given to the trustee by us and countersigned by the holders of such debt or a trustee, fiduciary or agent for
such holders, within 20 days after such declaration of acceleration in respect of the notes and if the annulment of the acceleration of the notes would not conflict with any judgment or decree of a court of competent jurisdiction, and no other event
of default exists or has occurred during such 20-day period which has not been cured or waived during such period.
Subject to
the provisions of the indenture relating to the duties of the trustee in case an event of default shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request or
direction of any of the holders of the notes, unless such holders shall have offered to the trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense. Subject to such provisions for the indemnification of the
trustee, the holders of a majority in aggregate principal amount of the notes then outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the notes.
No holder of notes will have any right to institute any proceeding
with respect to the indenture, or for the appointment of a receiver or trustee, or for any remedy thereunder, unless:
(1) such holder has previously given to the trustee written notice of a continuing event of default,
(2) the holders of at least 25% in aggregate principal amount of the notes then outstanding have made a written request and offered indemnity to the trustee reasonably satisfactory to it to institute such
proceeding as trustee, and
(3) the trustee shall not have received from the holders of a majority in
aggregate principal amount of the notes then outstanding a written direction inconsistent with such request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a holder of any note for enforcement of payment of the principal of, and premium, if any, or interest on, such note on or after the
respective due dates expressed in such note.
The indenture provides that if a default with respect to the notes occurs and is
continuing and is known to the trustee, the trustee must mail to each holder of notes notice of the default within 90 days after it occurs. The trustee may withhold the notice if and so long as a committee of its trust officers in good faith
determines that withholding notice is in the interest of the holders of the notes.
The indenture requires us to furnish to
the trustee, within 120 days after the end of each fiscal year, a written statement of an officer regarding compliance with the indenture. Within 30 days after the occurrence of any default or event of default, we are required to deliver
to the trustee written notice in the form of an officers certificate a statement specifying its status and what actions we are taking or propose to take with respect thereto.
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Modification and Waiver
Modifications and amendments of the indenture may be made by us, the subsidiary guarantors and the trustee with the consent of the holders of a majority in aggregate principal amount of the outstanding
notes affected by such modification or amendment.
No such modification or amendment may, without the consent of the holder of
each outstanding note affected thereby,
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reduce the percentage of principal amount of notes the holders of which must consent to an amendment, modification, supplement or waiver,
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reduce the rate of or extend the time of payment for interest on any note,
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reduce the principal amount or extend the stated maturity of any note,
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reduce the redemption price of any note or add redemption provisions to any note,
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make any note payable in money other than that stated in the indenture or the note,
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other than in accordance with the provisions of the indenture, eliminate any existing subsidiary guarantee of the notes,
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impair the right to receive, and to institute suit for the enforcement of, any payment with respect to the notes, or
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after the time a Change of Control Offer is required to have been made, adversely affect the right of repayment or repurchase at the option of a
holder.
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Without the consent of any holder, we, the subsidiary guarantors and the trustee may amend the
indenture to, among other things, provide for the assumption by a successor of our or any subsidiary guarantors obligations under the indenture as permitted thereunder; provide for the issuance of additional notes in accordance with the
limitations set forth in the indenture; add guarantees or security with respect to the notes or confirm and evidence the release, termination or discharge of any guarantee or security interest in accordance with the indenture; comply with the
requirements of the SEC in connection with the qualification and maintenance of qualification under the Trust Indenture Act and comply with the rules of any applicable securities depositary; conform the text of the indenture or the notes or the
subsidiary guarantees to any description thereof in this prospectus or any supplement thereto; cure any ambiguity, omission, defect or inconsistency; or make any other change that does not adversely affect the rights of any holder in any material
respect.
The holders of a majority in principal amount of the outstanding notes affected may waive compliance by us with
certain restrictive provisions of the indenture. The holders of a majority in principal amount of the outstanding notes may waive any past default under the indenture, except a default in the payment of principal, premium, if any, or interest and
certain covenants and provisions of the indenture which cannot be amended without the consent of the holder of each outstanding note.
Defeasance
We may
terminate at any time all our obligations with respect to the notes and the indenture, which we refer to as legal defeasance, except for certain obligations, including those respecting the defeasance trust and obligations to register the
transfer or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and to maintain a registrar and paying agent in respect of the notes. We may also terminate at any time our
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obligations with respect to the notes under the covenants described under Subsidiary Guarantees, Certain Covenants and SEC Reports which we
refer to as covenant defeasance. We may exercise the legal defeasance option notwithstanding our prior exercise of the covenant defeasance option.
If we exercise our legal defeasance option with respect to the notes, payment of the notes may not be accelerated because of an event of default with respect thereto. If we exercise the covenant
defeasance option with respect to the notes, payment of the notes may not be accelerated because of an event of default specified in clause (3) (with respect to the covenants described under Subsidiary Guarantees,
Certain Covenants or SEC Reports), clause (4), clause (5) (with respect to subsidiary guarantors only) or clause (6). If we exercise our legal defeasance option or our covenant defeasance option, each
subsidiary guarantor will be released from its obligations with respect to its subsidiary guarantee.
The legal defeasance
option or the covenant defeasance option with respect to the notes may be exercised only if:
(1) we
irrevocably deposit in trust with the trustee money or U.S. Government obligations or a combination thereof for the payment of principal of and interest on the notes to maturity,
(2) we deliver to the trustee a certificate from a nationally recognized firm of independent registered public
accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. Government obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the notes to maturity,
(3) in the case of the legal
defeasance option, 91 days pass after the deposit is made and during the 91-day period no default described in clause (5) under Events of Default occurs with respect to OReilly or any other person making such
deposit which is continuing at the end of the period,
(4) no default or event of default has occurred and is
continuing on the date of such deposit (other than, if applicable, a default or event of default with respect to the notes resulting from the borrowing of funds to be applied to such deposits),
(5) such deposit does not constitute a default under any other agreement or instrument binding us,
(6) we deliver to the trustee an opinion of counsel to the effect that the trust resulting from the deposit does not
require registration under the Investment Company Act of 1940, as amended,
(7) in the case of the legal
defeasance option, we deliver to the trustee an opinion of counsel stating that:
(a) we have received from,
or there has been provided by, the IRS a ruling, or
(b) since the date of the indenture there has been a
change in the applicable U.S. federal income tax law,
to the effect, in either case, that, and based thereon such opinion of
counsel shall confirm that, the holders of the notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such legal defeasance had not occurred,
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(8) in the case of the covenant defeasance option, we deliver to the trustee
an opinion of counsel to the effect that the holders of the notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred, and
(9) we deliver to the trustee an officers certificate and an opinion of counsel, each stating that all conditions precedent to the legal defeasance or covenant defeasance, as applicable, relating to
the notes have been complied with as required by the indenture.
Discharge of the Indenture
When (i) we deliver to the trustee all outstanding notes (other than notes replaced because of mutilation, loss, destruction or
wrongful taking) for cancellation or (ii) all outstanding notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption as described above (or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption), and we irrevocably deposit with the trustee funds sufficient to pay at maturity or upon redemption
all outstanding notes, including principal of, premium if any, and interest thereon, and if in either case we pay all other sums related to the notes payable under the indenture by us, then the indenture shall, subject to certain surviving
provisions, cease to be of further effect. The trustee shall acknowledge satisfaction and discharge of the indenture with respect to the notes on our demand accompanied by an officers certificate and an opinion of counsel.
Regarding the Trustee
The indenture provides that, except during the continuance of an event of default, the trustee will perform only such duties as are
specifically set forth in the indenture. During the existence of an event of default, the trustee will exercise such rights and powers vested in it under the indenture and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such persons own affairs.
The indenture and provisions of the
Trust Indenture Act that are incorporated by reference therein contain limitations on the rights of the trustee, should it become one of our creditors, to obtain payment of claims in certain cases or to realize on certain property received by it in
respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions with us or any of our affiliates;
provided
,
however
, that if it acquires any conflicting interest (as defined in the indenture
or in the Trust Indenture Act), it must eliminate such conflict or resign.
The trustee is a lender under our credit facility
and also serves as trustee under the indenture for our existing notes. An affiliate of the trustee is acting as one of the underwriters in this offering. See UnderwritingOther Relationships.
Governing Law
The
indenture, the notes and the subsidiary guarantees will be governed by and construed in accordance with the laws of the State of New York.
SEC Reports
Notwithstanding that we may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, we will timely
file with the SEC, and, if requested by the trustee, we will provide the trustee and holders of notes within 15 days after filing with the SEC copies of, such annual reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and applicable to a registrant that is a U.S. corporation subject to such Sections; provided, however, that we will not be so obligated to file such information, documents and reports with the SEC if
the SEC does not permit such filings.
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Book-entry, delivery and form
Certain book-entry procedures for the global notes
The notes will
be initially issued in the form of one or more global notes in fully registered, book-entry form, which we refer to as global notes. Each global note will be deposited with, or on behalf of, DTC or its nominee.
All interests in the global notes will be subject to the operations and procedures of DTC, Euroclear Bank S.A./N.V., as operator of the
Euroclear System (Euroclear), and Clearstream Banking, société anonyme (Clearstream). The descriptions of the operations and procedures of DTC, Euroclear and Clearstream set forth below are provided solely as a
matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. We obtained the information in this section and elsewhere in this
prospectus concerning DTC, Euroclear and Clearstream and their respective book-entry systems from sources that we believe are reliable, but neither we, the trustee nor the underwriters take any responsibility for the accuracy of any of this
information, and investors are urged to contact the relevant system or its participants directly to discuss these matters.
DTC
DTC has advised us that it is:
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a limited-purpose trust company organized under the laws of the State of New York;
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a banking organization within the meaning of the New York Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the New York Uniform Commercial Code, as amended; and
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a clearing agency registered pursuant to Section 17A of the Exchange Act.
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DTC holds securities for its participants (DTC Participants), and to facilitate the clearance and settlement of securities
transactions in deposited securities among DTC Participants through electronic book-entry changes to the accounts of DTC Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC Participants include
securities brokers and dealers (including some or all of the underwriters), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTCs system also is available to other entities such as
Clearstream, Euroclear, banks, brokers, dealers and trust companies (collectively, the Indirect Participants) that clear through or maintain a custodial relationship with a direct DTC Participant, either directly or indirectly. Investors
who are not participants may beneficially own securities held by or on behalf of DTC only through direct DTC Participants or Indirect Participants in DTC.
Clearstream
Clearstream has advised us that it is a limited
liability company organized under Luxembourg law. Clearstream holds securities for its participating organizations (Clearstream Participants), and facilitates the clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates.
Clearstream provides Clearstream Participants with, among other things, services for safekeeping, administration, clearance and establishment of internationally traded securities and securities lending
and borrowing. Clearstream interfaces with domestic markets in several countries. Clearstream is registered as a bank
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in Luxembourg and as such is subject to regulation by the Commission de Surveillance du Secteur Financier. Clearstream Participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, and may include the underwriters. Indirect access to Clearstream also is available to other institutions that
clear through or maintain a custodial relationship with a Clearstream Participant, either directly or indirectly.
Distributions with respect to notes held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants
in accordance with its rules and procedures to the extent received by the U.S. depositary for Clearstream.
Euroclear
Euroclear advised us that it was created in 1968 to hold securities for participants of Euroclear (Euroclear
Participants), and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack
of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the
Euroclear Operator), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the Cooperative). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is regulated and examined by the Belgian Banking and
Finance Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian
law. These Terms and Conditions govern transfer of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a
fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of the Euroclear Participants, and has no record of or relationship with
persons holding through Euroclear Participants. Distributions of principal, premium, if any, and interest with respect to notes held through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the relevant
systems rules and procedures, to the extent received by the U.S. depositary for Euroclear.
Links have been established
among DTC, Clearstream and Euroclear to facilitate the initial issuance of the notes and cross-market transfers of the notes associated with secondary market trading. DTC will be linked indirectly to Clearstream and Euroclear through the DTC
accounts of their respective U.S. depositaries.
Book-entry procedures
We expect that, pursuant to procedures established by DTC:
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upon deposit of each global note, DTC will credit, on its book-entry registration and transfer system, the accounts of direct DTC Participants
designated by the underwriters with an interest in that global note; and
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ownership of beneficial interests in the global notes will be shown on, and the transfer of ownership interests in the global notes will be effected
only through, records maintained by DTC (with respect to the interests of DTC Participants) and by DTC Participants and Indirect Participants (with respect to the interests of persons other than DTC Participants).
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The laws of some jurisdictions may require that some purchasers of notes take physical
delivery of those notes in definitive form. Accordingly, the ability to transfer beneficial interests in notes represented by a global note to those persons may be limited. In addition, because DTC can act only on behalf of DTC Participants, who in
turn act on behalf of persons who hold interests through such DTC Participants, the ability of a person holding a beneficial interest in a global note to pledge or transfer that interest to persons or entities that do not participate in DTCs
system, or to otherwise take actions in respect of that interest, may be affected by the lack of a physical note in respect of that interest.
So long as DTC or its nominee is the registered owner of a global note, DTC or that nominee, as the case may be, will be considered the sole legal owner or holder of the notes represented by that global
note for all purposes of the notes and the indenture. Except as provided below, owners of beneficial interests in a global note (1) will not be entitled to have the notes represented by that global note registered in their names, (2) will
not receive or be entitled to receive physical delivery of certificated notes, and (3) will not be considered the owners or holders of the notes represented by that beneficial interest under the indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the trustee. Accordingly, each holder owning a beneficial interest in a global note must rely on the procedures of DTC and, if that holder is not a DTC Participant or an Indirect
Participant, on the procedures of the participant through which that holder owns its interest, to exercise any rights of a holder of notes under the indenture or that global note. We understand that under existing industry practice, in the event
that we request any action of holders of notes, or a holder that is an owner of a beneficial interest in a global note desires to take any action that DTC, as the holder of that global note, is entitled to take, DTC would authorize the participants
to take that action and the participants would authorize holders owning through those participants to take that action or would otherwise act upon the instruction of those holders. Neither we nor the trustee will have any responsibility or liability
for any aspect of the records relating to, nor payments made on account of, notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to the notes.
Except as described below under Certificated Notes, beneficial interests in the global notes may not be exchanged for
certificated notes. However, if DTC notifies us that it is unwilling or unable to be a depositary for the global notes or ceases to be a clearing agency or if we so elect (subject to DTCs procedures) or if there is an event of default under
the notes, DTC will exchange the global notes for certificated notes that it will distribute to its participants.
Payments
with respect to the principal of, premium, if any, and interest on, a global note will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the global note under the indenture. Under the
terms of the indenture, we and the trustee may treat the persons in whose names the notes, including the global notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever.
Accordingly, neither we nor the trustee has or will have any responsibility or liability for the payment of those amounts to owners of beneficial interests in a global note. Payments by the DTC Participants and the Indirect Participants to the
owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of the DTC Participants and Indirect Participants and not of DTC.
Secondary market trading between DTC Participants will be effected in accordance with DTCs procedures, and will be settled in
same-day funds. Secondary market trading between Euroclear Participants or Clearstream Participants will be effected in the ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between the persons holding directly or indirectly through DTC, on the one hand, and persons holding directly or
indirectly through Euroclear or Clearstream, on the other hand, will be effected through DTC in accordance with DTCs rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary. However, those cross-market
transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in that system in accordance with the rules and procedures and within the established deadlines (Brussels time) of that system.
Euroclear or Clearstream, as the
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case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective U.S. depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant global notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear Participants and Clearstream Participants may not
deliver instructions directly to the depositaries for Euroclear or Clearstream.
Although we understand that DTC, Euroclear
and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the global notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform those
procedures, and those procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or Indirect Participants of their
respective obligations under the rules and procedures governing their operations.
Settlement and payment
We will make payments in respect of the notes represented by the global notes (including principal, premium, if any, and interest) by
wire transfer of immediately available funds to the accounts specified by the global note holder. The Company shall pay principal of, premium, if any, and interest on any note in definitive registered form (without a coupon) by check mailed to the
address of the Person entitled thereto as it appears in the note register (or upon written notice from such person given at least 15 days before the payment date, by wire transfer in immediately available funds if such Person is entitled to interest
on an aggregate principal amount of notes in excess of $2.0 million).
Because of time zone differences, the securities
account of a Euroclear Participant or Clearstream Participant purchasing an interest in a global note from a DTC Participant will be credited, and any such crediting will be reported to the relevant Euroclear Participant or Clearstream Participant,
during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of
interests in a global note by or through a Euroclear Participant or Clearstream Participant to a DTC Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account
only as of the business day for Euroclear or Clearstream following DTCs settlement date.
None of OReilly, any
subsidiary guarantor, underwriter or agent, the trustee or any applicable paying agent will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial interests in a global note, or for
maintaining, supervising or reviewing any records.
Certificated Notes
We will issue certificated notes to each person that DTC identifies as the beneficial owner of notes represented by a global note upon
surrender by DTC of the global note if:
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DTC notifies us that it is no longer willing or able to act as a depositary for such global note or ceases to be a clearing agency registered under the
Exchange Act, and we have not appointed a successor depositary within 90 days of that notice or becoming aware that DTC is no longer so registered;
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an event of default has occurred and is continuing, and DTC requests the issuance of certificated notes; or
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we determine (subject to DTCs procedures) not to have the notes represented by a global note.
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Neither we nor the trustee will be liable for any delay by DTC, its nominee or any DTC Participant or Indirect Participant in identifying
the beneficial owners of the notes. We and the trustee may conclusively rely on, and will be protected in relying on, instructions from DTC or its nominee for all purposes, including with respect to the registration and delivery, and the respective
principal amounts, of the certificated notes to be issued.
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