As filed with the Securities and Exchange Commission on May 1 , 2006

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AMERICAN TIRE DISTRIBUTORS, INC.

AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.

(Exact Name of Corporation as Specified in Its Charter)

Delaware

5013

59-3796143

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

12200 Herbert Wayne Court

Suite 150

Huntersville, NC 28078

(704) 992-2000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

J. Michael Gaither

Corporate Secretary

American Tire Distributors, Inc.

12200 Herbert Wayne Court

Suite 150

Huntersville, NC 28078

(704) 632-7110

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

E. Michael Greaney, Esq.

Sean P. Griffiths, Esq.

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, NY 10166-0193

(212) 351-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable following the effectiveness of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: ¨

CALCULATION OF REGISTRATION FEE


Title of Each Class Of Securities To Be Registered	Amount To Be Registered		Maximum Offering Price Per Note(1)		Maximum Aggregate Offering Price(1)		Amount of Registration Fee
Senior Floating Rate Notes due 2012	$	96,400,000	100	%	$	96,400,000	$	10,314.80	(2)
Guarantees of Senior Floating Rate Notes due 2012	$	—	—	%	$	—	$	—	(3)

(1)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(f) under the Securities Act of 1933, as amended.

(2)

Of this registration fee, $10,314.80 was paid in connection with the filing of the Registration Statement on Form S-4 initially filed on May 13, 2005 (File No 333-124878). Pursuant to Rule 457(p) under the Securities Act of 1933 the registration fee currently due for this registration statement has been offset against the total fee paid for the aforementioned Form S-4.

(3)

Pursuant to Rule 457(n), no registration fee is payable with respect to the guarantees.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

TABLE OF ADDITIONAL REGISTRANTS

Each of the following direct or indirect subsidiaries of American Tire Distributors, Inc., as a guarantor of the Senior Floating Rate Notes due 2012, is hereby deemed to be a registrant.


Name of Guarantor	State of Incorporation or Formation	Primary Standard Industrial Classification Number	I.R.S. Employer Identification Number	CIK
The Speed Merchant, Inc.	California	5013	94-2414221	0000934022
T.O. Haas Tire Company, Inc.	Nebraska	5013	47-0424109	0001324218

The information in this prospectus is not complete and may be changed. The selling noteholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not a solicitation of an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated May 1, 2006

PRELIMINARY PROSPECTUS

American Tire Distributors, Inc.

Senior Floating Rate Notes due 2012

Guaranteed by

American Tire Distributors Holdings, Inc.

This prospectus relates to the offering for resale from time to time by the selling noteholders named in this prospectus of American Tire Distributors, Inc.’s Senior Floating Rate Notes due 2012 which have a principal amount at maturity of $96,400,000. We initially sold the notes to Banc of America Securities LLC and other initial purchasers in a private placement on March 31, 2005 in a transaction exempt from the registration requirements of the Securities Act of 1933. This prospectus has been made available to the selling noteholders pursuant to our obligations under a registration rights agreement.

The selling noteholders will receive all of the net proceeds from the sale of these notes, although we will bear some of the expenses related to offering these notes. The selling noteholders may offer and sell the notes directly to purchasers or through underwriters, brokers, dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. The notes may be sold in one or more transactions at fixed or negotiated prices or at prices based on prevailing market prices at the time of the sale.

See the “ Description of the Notes” section beginning on page 80 for information about the notes being offered hereby.

See the section entitled “ Risk Factors” beginning on page 16 for a discussion of the risks associated with the notes.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or the accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Prospectus dated , 2006

TABLE OF CONTENTS


		PAGE
PROSPECTUS SUMMARY		1
RISK FACTORS		16
NOTICE TO INVESTORS		25
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS		26
INDUSTRY AND MARKET DATA		27
USE OF PROCEEDS		28
THE ACQUISITION		29
CAPITALIZATION		31
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		32
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		37
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		39
BUSINESS		52
MANAGEMENT		61
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		69
SELLING NOTEHOLDERS		72
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		73
DESCRIPTION OF OTHER INDEBTEDNESS		76
DESCRIPTION OF THE NOTES		80
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS		127
BENEFIT PLAN CONSIDERATIONS		131
PLAN OF DISTRIBUTION		133
LEGAL MATTERS		135
EXPERTS		135
WHERE YOU CAN FIND ADDITIONAL INFORMATION		136
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE		136
CONSOLIDATED FINANCIAL STATEMENTS		F-1

You should rely only on the information contained herein or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these notes. The information in this document may only be accurate as of the date of this document.

Our fiscal year is based on either a 52 or 53 week period ending on the Saturday closest to each December 31. In this prospectus references to the quarter ended April 2, 2005 contain operating results for 13 weeks and the nine months ended December 31, 2005 contain operating results for 39 weeks. References to the 2004 fiscal year are to the 53 week period ended January 1, 2005 and references to the 2003 fiscal year are to the 52 week period ended December 27, 2003. Columns in tables may not add due to rounding.

In this prospectus, “we,” “us” and “our” refer to American Tire Distributors Holdings, Inc., and its operational subsidiary, American Tire Distributors Inc. and its subsidiaries on a consolidated basis, except as otherwise indicated. All references to “American Tire,” “ATD,” the “Company,” and the “operating company” refer to American Tire Distributors, Inc. and its subsidiaries on a consolidated basis. References to “Holdings”

refer solely to American Tire Distributors Holdings, Inc. and do not include American Tire or any of its subsidiaries. Unless the context otherwise requires or otherwise indicated, all references to the “floating rate notes” or the “notes” are to the senior floating rate notes due 2012, references to the “fixed rate notes” are to the senior fixed rate notes due 2013 and references to the “Holdings senior discount notes” are to the Holdings senior discount notes due 2013.

Investcorp S.A., or Investcorp, is a global investment group with offices in New York, London and Bahrain. When we use the term “Investcorp and its co-investors” (or comparable terminology) in this prospectus, we are referring to affiliates of Investcorp as well as international investors with whom Investcorp maintains an administrative relationship and who have obtained indirect equity interests in Holdings by investing in offshore entities organized by Investcorp for that purpose.

Trademark acknowledgements:

The following registered trademarks are used in this prospectus and are our property:

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AMERICAN TIRE DISTRIBUTORS^®;

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DYNATRAC^® tires;

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REGUL^® tires;

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WINSTON^® tires;

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WYNSTAR^® tires;

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CRUISER WIRE^® custom wheels;

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DRIFZ^® custom wheels;

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PACER^® custom wheels;

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ICW^® custom wheels;

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MAGNUM^® automotive lifts;

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HEAFNET^®; and

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WHEEL WIZARD^®.

PROSPECTUS SUMMARY

This summary contains material information about us and the notes but may not contain all of the information that is important to you. For a more complete understanding, we encourage you to read this entire prospectus and the documents we refer you to. You should carefully consider the information set forth under “Risk Factors.” In addition, certain statements are forward-looking statements which involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements.”

The Notes

The summary below describes the principal terms of the notes. The “Description of the Notes” section of this prospectus contains a more detailed description of the terms and conditions of the notes. The notes have been issued by American Tire Distributors, Inc., a wholly-owned subsidiary of American Tire Distributors Holdings, Inc., which is a holding company and has no significant operations or assets, other than the ownership of 100% of the equity interests in American Tire Distributors, Inc.

On March 31, 2005, we completed the private placement of $140,000,000 aggregate principal amount of the notes. In connection with the private placement, we entered into a registration rights agreement with Banc of America Securities LLC, Credit Suisse First Boston LLC and Wachovia Capital Markets, LLC, as the initial purchasers, in which we agreed, under certain circumstances, to file for the benefit of holders of the notes a shelf registration statement covering public resales of the notes. This prospectus is part of that shelf registration statement, and the notes being offered hereby are those initially sold by us in the private placement.

A brief description of the material terms of the notes follows. The following summary is not intended to be complete. For a more detailed description of the notes, see “Description of the Notes”.

Issuer

American Tire Distributors, Inc.

Securities offered

$96,400,000 aggregate principal amount of senior floating rate notes due 2012.

Maturity

April 1, 2012.

Interest rate

Interest accrues at three-month LIBOR plus 6.250% and is reset quarterly on each January 1, April 1, July 1 and October 1.

Interest payment dates

Each January 1, April 1, July 1 and October 1, beginning on July 1, 2005.

Interest began to accrue on March 31, 2005.

Ranking

The notes and the subsidiary guarantees thereof are general unsecured senior obligations and rank equally with any of American Tire’s and the subsidiary guarantors’ unsecured and unsubordinated debt and senior to any of American Tire’s and the subsidiary guarantors’ subordinated debt but are effectively junior to all of American Tire’s and the subsidiary guarantor’s secured obligations, to the extent of the value of the collateral, and all obligations of non-

guarantor subsidiaries. Holdings guarantees, on a subordinated basis, the floating rate notes. Holdings’ subordinated guarantee ranks junior to all senior obligations of Holdings, including the Holdings senior discount notes and its guarantee of the amended and restated credit facility, and effectively junior to all secured obligations of Holdings.

As of December 31, 2005, the secured debt, including capital leases, of the issuer and the subsidiary guarantors totaled approximately $211.2 million and American Tire and the subsidiary guarantors had an additional $45.9 million of secured obligations, principally trade payables.

Guarantees

All of American Tire’s existing and future domestic restricted subsidiaries, other than immaterial subsidiaries and receivables subsidiaries, guarantee on a full, unconditional and joint and several basis the floating rate notes on a senior basis and Holdings guarantees the floating rate notes on a full, unconditional and joint and several basis on a subordinated basis. If American Tire cannot make payments required by the notes, the subsidiary guarantors and Holdings must make them. The guarantees may be released under certain circumstances.

Optional redemption

On or after April 1, 2007, American Tire may redeem some or all of the notes at the redemption prices listed elsewhere in this prospectus. See “Description of the Notes.”

In addition, at any time (which may be more than once) before April 1, 2007, American Tire can choose to redeem up to 35% of the outstanding notes with money that American Tire raises in certain equity offerings, as long as:

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American Tire pays a redemption price equal to 100% plus a premium equal to the then applicable interest rate plus accrued and unpaid interest;

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American Tire redeems the notes within 90 days of completing the equity offering; and

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at least 65% of the aggregate principal amount of the notes remains outstanding afterwards.

American Tire may also, at any time prior to April 1, 2007, upon a change of control, redeem all of the floating rate notes at a price equal to 100% of the principal amount plus accrued and unpaid interest plus a make whole premium.

Change of control offer

If a change of control of our company occurs, unless American Tire has called all of the floating rate notes for redemption, American Tire must give holders the opportunity to sell their notes to us at 101% of their principal amount plus accrued and unpaid interest.

American Tire might not be able to pay the required price for notes presented to it at the time of a change of control because:

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American Tire might not have enough funds at the time; or

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the terms of our senior credit facility may prevent American Tire from paying.

Restrictive covenants

The indenture governing the notes contain covenants that, among other things, limit American Tire’s and its restricted subsidiaries’ ability to:

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incur additional debt;

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pay dividends or distributions on, or redeem or repurchase, our capital stock;

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issue preferred stock of subsidiaries;

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make certain investments;

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create liens on our assets;

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enter into transactions with affiliates;

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merge or consolidate or sell all or substantially all of our assets;

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create restrictions on the payment of dividends or other amounts to us; and

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transfer or sell assets.

These covenants are subject to a number of important limitations and exceptions. See “Description of the Notes.”

Trading

The notes sold to qualified institutional buyers, as defined in Rule 144A under the Securities Act of 1933, are eligible for trading on the PORTAL market. However, the notes resold pursuant to this prospectus will no longer trade on the PORTAL market. We do not intend to list the notes on any national securities exchange or the automated interdealer quotation system.

Use of Proceeds

The selling noteholders are offering all of the notes covered by this prospectus. We will not receive any proceeds from the sale of the notes in this offering.

You should refer to the section entitled “Risk Factors” for a description of some of the risks you should consider before investing in the notes.

Our Company

We are the leading distributor of tires to the replacement tire market in the United States and provide a critical link between tire manufacturers and the highly fragmented retail tire sales channel. Through our 73 distribution centers, we offer approximately 60,000 stock keeping units, or SKUs, to our approximately 36,000 customers, generally on a same or next day basis. As a result, our customers utilize our broad product offering to offer a comprehensive product lineup that they would be unable to otherwise provide on a stand alone basis due to working capital, logistics and warehouse constraints. We believe our position as the leading intermediary between tire manufacturers and a very fragmented customer base makes us an important distribution partner to the tire manufacturers. Our industry leading market share increased from an estimated 1.7% in 1995 to 6.1% in 2005 as a result of above-market organic growth and targeted acquisitions, making our revenue approximately four times the estimated comparable revenue of our closest wholesale competitor. We believe that our size and broad geographic footprint give us a substantial scale advantage over our competitors, all of whom are regionally focused. For the aggregate twelve-month period ended December 31, 2005, we generated net sales of $1,505.3 million and Indenture EBITDA of $78.8 million (See “Summary Historical and Unaudited Pro Forma Consolidated Financial Data” for a reconciliation of Indenture EBITDA to net cash provided by operating activities).

We believe we have the broadest product offering in our industry, supplying our customers with 11 of the top 12 leading tire brands. We carry the flag brands of all four of the largest tire manufacturers: Bridgestone, Continental, Goodyear and Michelin. In addition to flag brands, we also sell associate and private label brand tires, custom wheels and accessories and related service equipment. We believe our large, diverse product offering allows us to better penetrate markets by being able to provide a wide spectrum of products at multiple price points.

We serve a highly diversified customer base. Our core customers generate over 74.0% of our net sales. In addition to our extensive inventory and same or next day distribution capabilities, we provide our customers with sales and product support services, including a sophisticated ordering and logistics system, to maximize their ability to sell tires, custom wheels and accessories. These valuable services, as well as the deep level of commitment we have to the business operations of our customers, have resulted in a strong and stable position within the industry.

Holdings

Holdings has no significant assets or operations other than its ownership of American Tire Distributors, Inc.

Industry Overview

The U.S. replacement tire market had annual retail sales of approximately $26.5 billion in 2005. Of that amount, passenger car and light truck tires accounted for approximately 60.4% and 15.9% of sales, respectively. Medium truck tires and farm, specialty and other types of tires accounted for approximately 20.4% and 3.3% of sales, respectively.

The U.S. replacement tire market has experienced stable historical growth. The number of new replacement tires shipped in the United States for passenger cars and light trucks increased from 185.4 million tires in 1995 to 241.9 million tires in 2005, for a compound annual growth rate of 2.3%. During that period, annual retail tire sales declined only once, in 2001 when revenues decreased by 0.5%. We believe the decline in 2001 was primarily due to a tire recall by Firestone in 2000, where the manufacturer replaced customer tires earlier than customers would have otherwise required. We believe this stable market growth is due to the:

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increase in both the number and average age of passenger cars and light trucks;

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rise in the number of miles driven per vehicle;

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expansion of replacement tire SKUs;

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growth of high performance and larger diameter tires; and

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shortening of tire replacement cycles.

The replacement tire market for passenger cars and light trucks consists of three primary types of tires: “flag” brands, which are premium tires sold under recognized brands; associate brands, which are primarily lower priced tires; and private label brands, which are manufactured exclusively for and marketed by independent tire wholesale distributors and/or retailers. The market share of flag brand tires in the replacement tire market has increased from approximately 53.0% in 1990 to 63.0% in 2005.

In the United States, consumers purchase replacement tires from several principal sources, including independent tire outlets, manufacturer owned retail stores, mass merchandisers such as Sears and Wal-Mart, auto supply chain stores such as Pep Boys and wholesale clubs and discounters such as Costco and Sam’s Club. Independent tire outlets, our largest customer base, include small local tire stores as well as regional and national chains such as Tire Kingdom and Discount Tire. Independent tire outlets are the largest suppliers of new replacement passenger car tires in the United States, accounting for approximately 59.5% of retail sales of domestic replacement passenger car tires in 2005, up from 54.0% in 1990.

Independent tire outlets obtain their inventory of new replacement tires through three principal sources: tire manufacturers, independent wholesale distributors like us and dealer owned warehouses. Other sources include discount or price clubs and other tire outlet chains. We believe that, in recent years, certain tire manufacturers have reduced the extent to which they supply small independent tire outlets directly due to the inefficiencies of supplying small quantities of product to a large number of locations. At the same time, manufacturers have increased their supply to independent wholesale distributors who are able to deliver tires to a large number of independent tire outlets with greater efficiency. We believe that there are approximately 41,000 tire outlets that are being served either directly by manufacturers or by the approximately 200 wholesale distributors, most of which sell products from only a limited number of manufacturers.

Competitive Strengths

We believe our key competitive strengths include:

Leading Market Position. We are the leading replacement tire distributor in the United States with an estimated national market share of 6.1%. We believe our revenue is approximately four times the estimated comparable revenue of our closest wholesale competitor. We believe that the key benefits of our scale include: an ability to efficiently carry an extensive inventory; an ability to invest in sales tools and technologies to support our customers; and operating efficiencies from our scalable infrastructure. We believe our leading market position, combined with the fact that we, unlike our principal competitors, do not own retail businesses that compete with our customers, enhances our ability to increase sales to existing customers, attract new customers and enter into new markets.

Extensive Distribution Network. We have the largest independent aftermarket tire distribution network in the industry with 73 distribution facilities and over 700 delivery vehicles serving 37 states. Utilizing our sophisticated inventory management and logistics technology, we believe we deliver 88.0% of our orders on a same or next day basis. As a result, we believe that we have an excellent reputation with our customers for providing a high level of prompt customer service.

flag brands of all four of the largest tire manufacturers: Bridgestone, Continental, Goodyear and Michelin. We also offer a number of high quality, private label product lines. In addition to branded and private label tires, we also sell associate brand tires, custom wheels and accessories and related service equipment. We believe that our broad product offering has been a significant factor in attracting and retaining many of our customers.

Diversified Customer Base. We sell our products to approximately 36,000 customers, including both national and regional tire dealer chains, car dealerships and other independent tire outlets. In 2005, no single customer accounted for more than 1.2% of our net sales while our top ten customers accounted for less than 7.0% of our net sales.

Superior and Distinctive Technology. We have invested in sophisticated ordering and logistics technology that provides order processing, warehousing and fulfillment functions, which we believe to be the most efficient in the industry. Our Heafnet system, introduced in 1996, offers customers instant online access to our inventory, allowing dealers to check the price and availability of products and place orders on a 24/7 basis. Approximately 49.0% of our orders in 2005 were placed online using Heafnet, up from 37% in 2004. We have also invested in our logistics technology, including routing and global positioning software systems, to capture additional distribution efficiencies.

Strong Working Capital Management and Low Capital Expenditures. We are able to generate cash flows while maintaining sizeable inventory as our inventory controls and vendor relationships enable us to closely monitor and effectively manage our working capital. Furthermore, our scalable operating platform has allowed us to increase sales volume without significant incremental costs or capital expenditures. During the period from 2001 to 2005, our annual maintenance capital expenditures have averaged approximately $2.0 million to $3.0 million. In addition, our bad debt write-offs have historically been less than 0.1% of sales due to strong credit and collection procedures.

Experienced Senior Management Team. Our senior management team, led by our Chief Executive Officer, Dick Johnson, and our President, Bill Berry, is comprised of seasoned industry professionals and veterans of our company. Our senior management has an average of over 20 years of distribution experience and over 15 years with our predecessor companies or us. As of December 31, 2005, our senior management team collectively holds approximately .5% of the capital stock of Holdings.

Business Strategy

We intend to continue to expand our business, enhance our market position and increase our revenues and cash flow by focusing on the following:

Expand Our Share of Existing Customers’ Business. We plan to expand our market share with existing dealers through greater penetration of existing brands as well as branded product expansion. As part of our strategy to grow our market share with existing customers, we have expanded our supplier relationships. In 2002, we enhanced our long standing relationship with Goodyear by obtaining distribution rights for the Goodyear brand. In 2004, we established new relationships with Continental, General and Cooper. According to Modern Tire Dealer, these four brands have a combined market share of over 25.0% in the U.S. passenger car and light truck tire market. We expect to generate additional revenue from these brands through full distribution across our broad geographic footprint.

2006. These GM dealerships can be serviced by our existing distribution centers and are not currently expected to require any additional truck routes. Our technology platform is also fully scalable to accommodate additional distribution centers as necessary to expand efficiently into a new region. In addition, we plan to continue increasing our fill-in business at national and regional chains and tire manufacturer owned stores.

Focus on Higher Profit Products. We plan to continue to focus on increasing the mix of high and ultra high performance tires in our product line and on shifting customers from private and associate brands to flag brands, which provide us with a higher profit per tire. The shift to larger rim diameter products also enhances profit per tire. In 2003, we established supply arrangements with Pirelli and Nitto, who selected us because of our distribution capability. We intend to build demand for both of these brands through our sales force and distribution network. We are also working closely with independent tire retailers, automobile dealers and specialty shops to increase our sales of high margin custom wheels and tire services equipment, tools and supplies.

Capitalize on Profit Enhancement Opportunities. We remain committed to managing our cost structure to increase profitability. As we have expanded our market presence, we have been able to effectively leverage our highly scalable distribution infrastructure to achieve higher growth and increased margins. For example, our utilization of logistics technology, including our GPS applications, has improved distribution efficiency and profitability. We are currently in the process of further enhancing our pricing discipline and expense controls through a strategic segmentation of our customer base. This initiative provides incentives for smaller customers to provide us with a larger share of their business and focuses our sales efforts on larger, more profitable customers.

Selectively Pursue Acquisitions. We believe we are well suited to capitalize on opportunities to acquire smaller companies with key customer relationships. Our acquisition strategy consists of increasing our share in existing markets, adding distribution in new or complementary regions and utilizing our scale to realize cost savings. In addition, we believe acquisitions in our existing geographic markets provide the opportunity for significant cost savings. Over the past two years, we have successfully acquired and integrated three businesses representing approximately $178.0 million in annual net sales. In addition, on January 27, 2006 we successfully acquired Silver State Tire Company and Golden State Tire Distributors (collectively “Silver State”), an additional business representing approximately $26 million in annual net sales. We believe that this experience will help us to pursue suitable acquisition opportunities in the future and integrate them successfully. Consistent with this strategy, we continue to evaluate potential acquisition targets.

Recent Acquisitions

Over the past two years, we have completed and integrated three acquisitions. These acquisitions extended our distribution network, increased our scale, expanded our product offering and allowed us to realize significant cost savings.

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On July 30, 2004, we acquired Big State Tire Supply, a tire distributor located in Lubbock, Texas. Big State operated nine distribution centers located in Texas, Oklahoma and New Mexico and carried primarily Goodyear brand tires. The acquisition of Big State filled a gap in our distribution footprint and allowed us to introduce our broad range of products to those customers.

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On September 2, 2004, we acquired Target Tire, Inc., a tire distributor located in Jacksonville, North Carolina. Target Tire operated 11 distribution centers located in North Carolina, Georgia, South Carolina, Virginia and Tennessee. We have integrated Target Tire into our existing infrastructure, closing ten of its 11 distribution centers and realizing other cost savings.

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On August 23, 2005, we acquired Wholesale Tire Distributors, Inc., Wholesale Tire Distributors of Wyoming, Inc., and Wholesale Tire Distributors of Idaho, Inc. (collectively “Wholesale Tire”), a tire distributor located in Salt Lake City, Utah. The acquisition expanded our operations to Utah, Idaho and Wyoming, as well as parts of Nevada, Colorado, Nebraska and South Dakota.

Recent Developments

On March 30 and 31, 2006, we entered into various merger agreements to effect a reorganization of the structure of our subsidiaries. The effect of the mergers was to merge most of our subsidiaries with and into one, wholly-owned subsidiary of American Tire, The Speed Merchant, Inc. Following the reorganization, Holdings, American Tire, The Speed Merchant, Inc. and T.O. Haas Tire. Company, Inc. are our only remaining corporate entities. Our assets and liabilities on a consolidated basis were not affected by these transactions.

Corporate Information

Our principal executive offices are located at 12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078. Our telephone number is (704) 632-7110.

The Acquisition

The Merger

On February 4, 2005, Holdings entered into a merger agreement with American Tire which was amended and restated on March 7, 2005. Pursuant to the merger agreement, and in exchange for an aggregate purchase price of $710.0 million in cash, less the amount of American Tire’s debt (net of cash on hand) at January 1, 2005 and certain dividends payable to holders of American Tire’s preferred stock, its transaction expenses and certain payments to American Tire’s management, ATD MergerSub, a subsidiary of Holdings, merged into American Tire. In connection with the merger, all of American Tire’s existing redeemable preferred stock was either redeemed or exchanged for redeemable preferred stock of Holdings and each holder of shares of American Tire’s common stock was entitled to receive a portion of the merger consideration equal to $18.83 per share. To the extent that any existing holder of options or warrants to acquire shares of American Tire’s common stock did not exercise such options or warrants prior to the effective time of the merger, American Tire paid such holder an amount in cash equal to the per share consideration less the exercise price of such option or warrant in complete satisfaction of the option or warrant. American Tire continued as the surviving corporation with Holdings as its sole stockholder.

The merger agreement contained customary provisions for such agreements, including representations and warranties made by us and the purchasers. The merger agreement did not contemplate any closing or post closing balance sheet adjustment and did not provide for any post closing indemnity by the sellers.

The Related Transactions

On March 31, 2005, the date of the closing under the merger agreement, the following related transactions occurred:

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Investcorp S.A. and certain co-investors and co-sponsors contributed $210.0 million through the purchase of Holdings common stock; certain members of management contributed $1.5 million to the equity of Holdings. In addition, Holdings issued $20.0 million of 8% cumulative mandatorily redeemable preferred stock and warrants to acquire up to 21,895 shares of Holdings common stock;

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Holdings issued Series B preferred stock with a fair value of $2.7 million in exchange for American Tire’s existing Series B preferred stock, which was subsequently canceled;

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Holdings granted, in exchange for the assignment and transfer of options to purchase ATD common stock under the previously existing ATD stock option plan, options to purchase 33,199 shares of Series A Common Stock, $0.01 par value per share, of the Company. The fair market value of the options granted was $6.5 million;

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American Tire amended and restated its credit facility, which consists of a $300.0 million revolving credit facility pursuant to which it had $155.5 million of outstanding loans on the closing date;

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American Tire redeemed $4.8 million of its Series A preferred stock (representing all the outstanding Series A preferred stock). Holders of its Series C and D preferred stock received merger consideration, including accrued dividends, on a common stock equivalent basis of $81.1 million and $191.9 million, respectively;

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American Tire issued $290.0 million in aggregate principal amount of the outstanding floating rate notes and the outstanding fixed rate notes. Holdings issued $51.5 million in aggregate principal amount at maturity of the outstanding Holdings senior discount notes, which were offered at a substantial discount from their principal amount at maturity and generated gross proceeds of approximately $40.0 million. The total gross proceeds of the outstanding notes were $330.0 million;

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American Tire sent irrevocable notice of redemption to redeem the $28.6 million outstanding principal amount of its Series D 10% senior notes due 2008 on May 15, 2005 at a price equal to $29.1 million, reflecting a prepayment penalty of $0.5 million upon redemption, plus accrued interest through the redemption date; and

•

We paid fees and expenses in connection with the foregoing.

The proceeds from the equity contributions, the outstanding notes, and the borrowings under the amended and restated credit facility were used to effect the merger, to repay certain of American Tire’s debt and to pay related fees and expenses and other amounts payable under the merger agreement. We refer to these equity contributions, the notes offered hereby, the borrowings under the amended and restated credit facility and the application of the use of proceeds, collectively, as the acquisition and related transactions.

Sources and Uses of Funds

We will not receive any proceeds from the sale of the notes offered hereby.

Historical Sources and Uses of Funds

The net proceeds from our offering of the notes and the other senior notes offered concurrently on March 31, 2005 (approximately $315.5 million after deducting the initial purchasers’ discount and fees and expenses of the offering), together with borrowings under the amended and restated credit facility and proceeds of capital contributions from Holdings were used to consummate the acquisition, to repay certain of American Tire’s existing debt and to pay fees and expenses in connection with the acquisition and related transactions.

The acquisition was completed on March 31, 2005. The following table sets forth the cash sources and uses of funds, including the application of the proceeds as described in “The Acquisition” (dollars in millions):


Sources of Funds
Outstanding floating rate notes and fixed rate notes	$	290.0
Outstanding holdings senior discount notes		40.0
8% cumulative mandatorily redeemable preferred stock (1)		15.4
Warrants (1)		4.6
Equity contribution (2)		210.0






Total Sources of Funds	$	560.0


Uses of Funds
Cash merger consideration (3)	$	442.9
Paydown of existing revolving credit facility (4)		24.2
Series A preferred stock (6)		4.8
Funding of Series D senior notes		28.6
Accrued interest on Series D senior notes (5)		1.4
Prepayment penalty on Series D senior notes (7)		0.5
Transaction bonuses and change in control payments (8)		7.9
Fees and expenses (9)		49.7

Total Uses of Funds	$	560.0

(1)

Amounts represent gross proceeds from the issuance by Holdings of 8% cumulative mandatorily redeemable preferred stock of $15.4 million and gross proceeds from the issuance of warrants to acquire shares of Holdings common stock of $4.6 million.

(2)

The equity consists of $210.0 million of gross proceeds from the sale of common stock of Holdings, which is comprised of the contribution by Investcorp, its co-investors and the co-sponsors.

(3)

The cash merger consideration consisted of the following (dollars in millions):


Common stock and related options	$	150.4
Preferred stock Series C		81.1
Preferred stock Series D		191.9
Stock Warrants		19.5

Cash merger consideration	$	442.9

(4)

In connection with the acquisition and related transactions, American Tire entered into the amended and restated credit facility, which consisted of a five-year $300.0 million revolving credit facility, $155.7 million of which was drawn down at closing.

(5)

Reflects the payment of accrued interest on the Series D senior notes upon redemption in May 2005.

(6)

In connection with the acquisition and related transactions American Tire redeemed the existing Series A preferred stock of $4.8 million.

(7)

Represents the prepayment penalty relating to the redemption of American Tire’s Series D senior notes upon redemption in May 2005.

(8)

In connection with the acquisition and related transactions, we funded transaction bonuses and other related change in control payments of $7.9 million of which $4.1 million had been accrued on the balance sheet as of March 3, 2005.

(9)

Reflects the buyers’ transaction fees associated with the acquisition and related transactions as follows (dollars in millions):


Deferred financing costs at American Tire (i)	$	30.1
Legal, accounting and other fees (ii)		8.5
Prepayment of annual management fees (iii)		8.0

American Tire transaction fees and expenses		46.6
Deferred financing costs at Holdings (iv)		3.1

Total transaction fees and expenses	$	49.7

(i)

Reflects capitalized deferred financing fees associated with entering into the amended and restated credit agreement, and the outstanding floating rate notes and fixed rate notes, incurred in connection with the acquisition and related transactions, including fees payable to the initial purchasers in connection with the offering of the outstanding notes and commitment and financing fees payable in connection with our amended and restated credit facility. These fees are amortized over the life of the related debt.

(ii)

Reflects investment banking, legal, accounting, and other fees for professional services incurred in connection with the acquisition and related transactions.

(iii)

Reflects the payment of management advisory fees to be paid to one or more of Investcorp and its co-sponsors (or their respective affiliates) at closing for services to be rendered over a period of five years following closing. This payment will be deferred and amortized pursuant to the terms of the agreement and on a basis consistent with the service provided.

(iv)

Reflects capitalized deferred financing fees associated with the outstanding Holdings senior discount notes of $2.3 million and the deferred financing fees associated with the warrants and the 8% cumulative mandatorily redeemable preferred stock issuance by Holdings of $0.8 million.

For more information, see “Unaudited Pro Forma Condensed Consolidated Financial Statements” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

The Sponsors

Investcorp is a global investment group with approximately 300 employees and offices in New York, London and Bahrain. Investcorp is principally engaged in corporate investment, real estate investment and asset management. Since its formation in 1982, the firm has arranged approximately 70 corporate investments with a combined value of nearly $20 billion. In the United States, Investcorp currently has, in addition to us, 13 companies in its corporate investment portfolio, including Source Media and Associated Materials Incorporated. In Europe, Investcorp and its clients currently own nine corporate investments, including Apcoa AG, Hilding Anders AB and Minimax Holding GmbH.

Investcorp’s co-sponsors include Berkshire Partners and Greenbriar Equity Group.

Berkshire is a Boston-based investment firm that is principally engaged in investments in mid-sized private companies through six investment funds with aggregate capital commitments of $3.5 billion. Berkshire Partners has developed specific industry experience in several areas including industrial manufacturing, consumer products, transportation, communications, business services, and retailing and related services. Over the last ten years, Berkshire Partners has been an investor in over 80 operating companies with more than $12.0 billion of acquisition value and combined revenues in excess of $15.0 billion. Current investments include Carter’s, Inc., Acosta, Inc., Amscan Holdings, Inc. and The Holmes Group, Inc.

Greenbriar is a private equity firm focused exclusively on making investments in the global transportation industry, including (i) traditional sectors such as airlines, air freight, automotive, commercial aerospace, cruise ships, railroads, shipping and trucking; (ii) closely-related sectors such as manufacturing, logistics, distribution and various service sectors supplying the transportation industry; and (iii) extensions of transportation industry activity related to areas such as energy, financial services, infrastructure, retail and technology. Greenbriar manages $700 million of limited partner capital and co-investment commitments, and has formed a strategic joint venture with Berkshire to address opportunities in the transportation sector. Current investments include Hexcel Corp., Active Aero Group and Tinnerman Palnut LLC.

Summary Historical and Unaudited Pro Forma Consolidated Financial Data

The following table sets forth our summary historical and unaudited pro forma consolidated financial data for the periods indicated. This summary historical financial data as of the end of and for the fiscal years 2002 through 2004 is derived from the Predecessor’s consolidated financial statements as of and for those years. Our fiscal year is based on a 52 or 53 week period ending on the Saturday closest to each December 31. Therefore, the financial results of certain fiscal years will not be exactly comparable to the prior or subsequent fiscal years. The 2004 fiscal year (ended January 1, 2005) contains operating results for 53 weeks. The 2003 fiscal year (ended December 27, 2003) and the 2002 fiscal year (ended December 28, 2002) all contain operating results for 52 weeks. Selected historical data for the fiscal quarter ended April 2, 2005 is derived from the Predecessor’s consolidated financial statements as of and for that period. Selected historical data for the period of April 2, 2005 through December 31, 2005 is derived from the successor company and reflects the acquisition and related transactions. The fiscal quarter ended April 2, 2005 contains operating results for 13 weeks and the period of April 2, 2005 through December 31, 2005 contains operating results for 39 weeks. Such consolidated financial statements have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, and are included elsewhere in this prospectus. The pro forma information for 2005 takes into account the acquisition and related transactions as if they had occurred on the first day of our 2005 fiscal year. Unless otherwise stated, the pro forma amounts presented below represent those of Holdings. The following summary historical consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Condensed Consolidated Statement of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	Predecessor												Successor
	Fiscal Year									Fiscal Quarter Ended April 2, 2005			Period from April 2, 2005 – December 31, 2005 (2)			Pro Forma Fiscal Year 2005 (unaudited)
Statement of Operations Data:	2002			2003			2004 (1)			Fiscal Quarter Ended April 2, 2005						Pro Forma Fiscal Year 2005 (unaudited)
	(dollars in thousands)
Net sales	$	1,062,015		$	1,114,410		$	1,282,069		$	354,339		$	1,150,944		$	1,505,283
Cost of goods sold		868,750			910,905			1,043,793			290,488			939,325			1,225,121

Gross profit		193,265			203,505			238,276			63,851			211,619			280,162
Selling, general and administrative expenses		161,914			162,351			183,235			52,653			172,605			228,361
Transaction expenses		—			—			—			28,211			95			—

Operating income		31,351			41,154			55,041			(17,013	)		38,919			51,801
Other income (expense), net:
Interest expense		(18,705	)		(14,071	)		(13,371	)		(3,682	)		(41,359	)		(53,081	)
Gain on repurchase of Series D senior notes		49,759			—			—			—			—			—
Other income (expense), net		288			93			(393	)		(252	)		111			(141	)

Income (loss) from continuing operations before income taxes		62,693			27,176			41,277			(20,947	)		(2,329	)		(1,421	)
Provision (benefit) for income taxes		24,783			11,089			16,236			(6,620	)		(728	)		1,394

Income (loss) from continuing operations		37,910			16,087			25,041			(14,327	)		(1,601	)	$	(2,815	)

Loss from discontinued operations, net of income tax benefit		(483	)		(82	)		—			—			—
Loss on disposal of discontinued operations, net of income tax benefit														—

Net income (loss)	$	37,427		$	16,005		$	25,041		$	(14,327	)	$	(1,601	)


	Fiscal Year									Fiscal Quarter Ended April 2, 2005			Successor Company Period from April 2, 2005 – December 31, 2005 (2)
Statement of Operations Data:	2002			2003			2004 (1)			Fiscal Quarter Ended April 2, 2005
	(dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	2,693		$	3,326		$	3,334					$	5,545
Working capital (6)		83,073			98,997			133,720						201,820
Total assets		411,270			419,003			556,295						1,127,751
Total American Tire debt (7)		196,400			182,716			233,919						501,242
Total Holdings debt (7)		—			—			—						44,003
Total redeemable preferred stock (8)		11,035			10,535			9,535						18,559
Total shareholders’ equity		16,489			32,494			57,765						220,806
Other Financial Data:
Cash flows provided by (used in):
Operating activities	$	15,265		$	17,657		$	25,709		$	9,871		$	(34,654	)
Investing activities		13,413			(1,929	)		(63,302	)		(1,438	)		(468,815	)
Financing activities		(30,116	)		(15,095	)		37,601			(8,264	)		505,511
Depreciation and amortization (3)		8,610			6,957			6,781			1,738			16,409
Capital expenditures (4)		2,059			2,491			4,379			1,574			6,086
Indenture EBITDA (5)		40,327			48,491			64,194			13,865			64,964

(1)

In July 2004, American Tire acquired Big State and in September 2004, it acquired Target Tire. Each transaction was accounted for using the purchase method of accounting.

(2)

In August 2005, we acquired Wholesale Tire Distributors, Inc., Wholesale Tire Distributors of Wyoming, Inc., and Wholesale Tire Distributors of Idaho, Inc. (collectively “Wholesale Tire”). This transaction was accounted for using the purchase method of accounting.

(3)

American Tire adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002 and accordingly, goodwill amortization was discontinued.

(4)

Excludes capital expenditures financed by debt.

(5)

The covenants under our floating and fixed rate notes and Holdings’ senior discount notes are tied to ratios based on Indenture EBITDA, referred to as Consolidated Cash Flows in the indenture, and restrict our ability to incur additional indebtedness and to issue preferred stock. The presentation of Indenture EBITDA, a non-GAAP financial measure, and ratios based thereon do not comply with accounting principles generally accepted in the United States because they are adjusted to exclude certain cash expenses, including recurring expenses. We present Indenture EBITDA as it is used to determine our compliance with covenants contained in the related indentures governing our notes. Indenture EBITDA as used herein represents income (loss) from operations before interest expense, provision (benefit) for income taxes, depreciation and amortization and is further adjusted to exclude certain non-recurring and other adjustments permitted in calculating covenant compliance under the indentures (see Consolidated Cash Flow under “Certain Definitions” in the Description of Notes). We believe that the inclusion of this supplementary information is necessary for investors to understand our ability to comply with the financial covenants and debt service of the notes. The table below reconciles Indenture EBITDA to the most directly comparable GAAP measure, net cash provided by operating activities.


	Fiscal Year									Fiscal Quarter Ended April 2, 2005			Successor Company Period from April 2, 2005 – December 31, 2005
	2002			2003			2004			Fiscal Quarter Ended April 2, 2005
Net cash provided by operating activities:	$	15,265		$	17,657		$	25,709		$	9,871		$	(34,654	)
Changes in assets and liabilities		2,491			14,323			9,345			(12,375	)		60,753
Deferred income tax expense		(22,570	)		(6,915	)		(1,847	)		(658	)		2,413
Interest expense		18,705			14,071			13,371			3,682			41,359
Income taxes		24,783			11,089			16,236			(6,620	)		(728	)
Provision for doubtful accounts		(2,036	)		(907	)		(320	)		(279	)		(1,091	)
Amortization of other assets		(1,221	)		(1,208	)		(1,156	)		(232	)		(4,091	)
Stock-based compensation expense		—			—			—			(8,584	)		—
Provision for obsolete inventory		4,832			12			91			(332	)		501
Transaction expenses		—			—			—			28,211			95
Accretion of Interest		—			—			—			—			(4,331	)
Other		78			369			2,765			1,181			4,738

Indenture EBITDA	$	40,327		$	48,491		$	64,194		$	13,865		$	64,964

previous reductions in such liquidation value would have been included in Indenture EBITDA. We currently believe that there will be future reductions in such liquidation value which, if achieved, will be included in Indenture EBITDA in those future periods up to a maximum of $1.6 million through June 2007, although no assurances can be given as to the amount or timing of such reductions, if any. Accordingly, we believe the amount of this benefit is meaningful to an understanding of the results for the 2005 period.

(6)

Working capital is defined as current assets less current liabilities.

(7)

Total debt is the sum of current maturities of long term debt, non-current portion of long-term debt and capital lease obligations.

(8)

For the period from April 2, 2005 through December 31, 2005, total redeemable preferred stock represents the sum of the 8% cumulative mandatorily redeemable preferred stock and Series B preferred stock issued by us.

RISK FACTORS

You should carefully consider the risks described below and other information contained in this prospectus before making an investment decision. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. Any of the events discussed in the risk factors below may occur. If they do, our business, results of operations or financial condition could be materially adversely affected. In such an instance, the trading price of our securities could decline, and you might lose all or part of your investment.

Risks Relating to the Notes

Our substantial leverage may impair our financial condition, and we may incur significant additional debt.

We have a substantial amount of debt. As of December 31, 2005, Holdings had $545.2 million of total debt (including American Tire’s $501.2 million of debt) and American Tire had $501.2 million of total debt. At such date $211.2 million of American Tire’s debt and Holdings’ guarantee of its obligations under the amended and restated credit facility have been secured. In addition, American Tire has provided guarantees on certain leases of Winston Tire Company, a company American Tire previously owned. Our obligation under these guarantees was $10.1 million at December 31, 2005. In addition, we were able to borrow up to an additional $79.6 million under the amended and restated credit facility, subject to customary borrowing conditions, including satisfaction of a borrowing base. We also have a significant amount of other contractual commitments to make cash payments, principally consisting of lease payments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations For Fiscal Years 2005, 2004 and 2003—Liquidity and Capital Resources—Contractual Commitments.” See “Capitalization” for additional information.

Our substantial debt could have important consequences to you, including:

•

our ability to obtain additional financing, whether for working capital, acquisitions, capital expenditures, or other purposes, may be impaired;

•

a substantial portion of our cash flow from operations will be required for debt service, thereby reducing funds available to us for our operations, capital expenditures and acquisitions and making it more difficult for us to satisfy our obligations with respect to the notes;

•

certain of our debt, contains financial and other restrictive covenants which, if breached, would result in an event of default under such debt;

•

increasing our vulnerability to general adverse economic and industry conditions by making it more difficult for us to react quickly to changing conditions;

•

exposing us to risks inherent in interest rate fluctuations because a substantial portion of our borrowings will be at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates; and

•

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.

These limitations and consequences may place us at a competitive disadvantage to other less leveraged competitors.

Subject to specified limitations, the amended and restated credit facility and our outstanding indentures permit us and our subsidiaries to incur substantial additional debt, a portion of which may be secured. If new debt is added to our and our subsidiaries’ current debt levels, the risks described above could intensify. See “Description of Other Indebtedness,” “Description of the Notes—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” and “—Liens,” and “—Description of the Holdings Senior Discount Notes—Certain Covenants—Incurrence of Debt and Issuance of Preferred Stock” and “—Liens” for additional information.

We will require a significant amount of cash, and our ability to generate sufficient cash depends upon many factors, some of which are beyond our control.

Our ability to make payments on and refinance our debt and to fund working capital needs and planned capital expenditures and acquisitions depends on our ability to generate cash flow in the future. To some extent, this is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. For example, our need to stock substantial inventory could increase our working capital needs. We cannot assure you that our business will continue to generate cash flow from operations at current levels or that our cash needs will not increase. If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other needs, we may have to refinance all or a portion of our existing debt or obtain additional financing or reduce expenditures that we deem necessary to our business. We cannot assure you that any refinancing of this kind would be possible or that any additional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on our financial condition and on our ability to meet our obligations to you under the notes.

Your right to receive payments on the floating rate notes and the related subsidiary guarantees is effectively junior to certain other debt.

The floating rate notes and fixed rate notes and the related subsidiary guaranties are, respectively, American Tire’s and the subsidiary guarantors’ unsecured, senior obligations, and rank equally with any of its and the subsidiary guarantors’ unsecured and unsubordinated debt and other liabilities and senior to any of its and the subsidiary guarantors’ subordinated debt. The floating rate notes and fixed rate notes and the related subsidiary guaranties are effectively subordinated to all of, respectively, our, Holdings’ and the subsidiary guarantors’ secured debt, including debt under the amended and restated credit facility, to the extent of the value of the assets securing such debt. Holdings’ guarantee of these notes is contractually subordinated to all of its other debt. Debt under the amended and restated credit facility is secured by a lien on substantially all of our, Holdings’ and its significant subsidiaries’ (which includes the subsidiary guarantors) assets including American Tire’s capital stock and our inventory and accounts receivable. See “Description of Other Indebtedness.” The floating rate notes and fixed rate notes are effectively subordinated to all liabilities of any of American Tire’s subsidiaries that do not guarantee the floating rate notes and fixed rate notes. In addition, we have granted purchase money liens on our inventory to certain of our most significant vendors to secure our obligations to pay for such inventory. As a result, our obligations under the floating rate notes and fixed rate notes are effectively subordinated to those obligations to the extent of the value of the collateral securing them. The indenture relating to the floating rate notes and fixed rate notes permits us to incur additional secured debt (and secured trade payables) and to permit American Tire’s non-guarantor subsidiaries to incur liabilities, subject to certain limitations. See “Description of the Notes.” As of December 31, 2005, we had approximately $211.2 million of secured debt outstanding and $45.9 million of other secured obligations (other than senior debt), principally trade payables.

Covenant restrictions under our debt may limit our ability to operate our business and, in such an event, we and Holdings may not have sufficient assets to pay amounts due to you on the notes.

The terms of the amended and restated credit facility, our outstanding indentures, and the other agreements governing our debt impose certain operating and financial restrictions on us that may restrict our ability to finance future operations, acquisitions or capital needs or to engage in other business activities. Such restrictions affect, and in many respects limit, among other things, our ability and the ability of our restricted subsidiaries to:

•

incur additional debt;

•

make certain investments and acquisitions;

•

create liens on our assets;

•

create restrictions on the payment of dividends or other amounts due;

•

enter into transactions with affiliates;

•

transfer or sell assets; and

•

merge, consolidate or sell substantially all of our assets.

The amended and restated credit facility requires us to meet a fixed charge coverage ratio if we do not have at least $25.0 million available to be drawn down under the revolving credit facility. The restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise could restrict our corporate activities. Such restrictions could adversely affect our ability to finance our future operations and capital needs or to engage in other business activities that would be in our interest or the interest of the noteholders. Events beyond our control, including changes in general economic and business conditions, may affect our ability to meet that financial ratio or our other covenants. We cannot assure you that we will meet that test or that the lenders will waive any failure to meet that test. A breach of this covenant or our other covenants could result in an event of default under the amended and restated credit facility. In that event, the lenders under the amended and restated credit facility could terminate all commitments to lend and elect to declare all amounts borrowed thereunder, together with accrued interest, to be immediately due and payable. If we were unable to repay such borrowings, the lenders could proceed against the collateral pledged to them. If the debt under the amended and restated credit facility were to be accelerated, there can be no assurance that our assets would be sufficient to repay such debt and the notes in full. As a result, you may receive less than the full amount you would be otherwise entitled to receive on the notes. See “Description of the Other Indebtedness” and “Description of the Notes” for additional information.

Fraudulent transfer statutes may limit your rights as a holder of the notes.

Federal and state fraudulent transfer laws permit a court, if it makes certain findings, to:

•

avoid all or a portion of our obligations to holders of the notes;

•

subordinate our obligations to holders of the notes to our other existing and future debt, entitling other creditors to be paid in full before any payment is made on the notes; and

•

take other action detrimental to holders of the notes, including invalidating the notes.

In that event, we cannot assure you that you would ever be repaid.

Under federal and state fraudulent transfer laws, in order to take any of those actions, courts will typically need to find that, at the time the notes were issued, we:

•

issued the notes with the intent of hindering, delaying or defrauding current or future creditors; or

•

received less than fair consideration or reasonably equivalent value for incurring the debt represented by the notes; and

(1)

were insolvent or were rendered insolvent by reason of the issuance of the notes;

(2)

were engaged, or were about to engage, in a business or transaction for which our assets were unreasonably small; or

(3)

intended to incur, or believed or should have believed we would incur, debts beyond our ability to pay as such debts mature.

Many of the foregoing terms are defined in or interpreted under those fraudulent transfer statutes. To the extent that proceeds of the offering of the outstanding notes was used to make payments to our former stockholders, a court could find that we did not receive fair consideration or reasonably equivalent value for the incurrence of the debt represented by the outstanding notes. If so, a court could find that we are not receiving fair consideration or reasonably equivalent value for the incurrence of the notes for which the outstanding notes are being registered in this offering.

The measure of insolvency for purposes of the foregoing considerations will vary depending on the law of the jurisdiction that is being applied in any such proceeding. Generally, a company would be considered insolvent if, at the time it incurred the debt or issued the guarantee, either:

•

the sum of its debts (including contingent liabilities) is greater than its assets, at fair valuation; or

•

the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured.

We cannot assure you what standard a court would apply in determining our solvency and whether it would conclude that we were solvent when we incurred our obligations under the notes.

Our obligations under the floating rate notes are guaranteed by Holdings and all of America Tire’s existing domestic subsidiaries (other than immaterial subsidiaries), and the guarantees may also be subject to review under various laws for the protection of creditors. It is possible that creditors of the guarantors may challenge the guarantees as a fraudulent transfer or conveyance. The analysis set forth above would generally apply, except that the guarantees could also be subject to the claim that, because the guarantees were incurred for our benefit, and only indirectly for the benefit of the guarantors, the obligations of the guarantors thereunder were incurred for less than reasonably equivalent value or fair consideration. A court could void a guarantor’s obligation under its guarantee, subordinate the guarantee to the other debt of a guarantor, direct that holders of the notes return any amounts paid under a guarantee to the relevant guarantor or to a fund for the benefit of its creditors, or take other action detrimental to the holders of the notes. In addition, the liability of each guarantor under the indenture governing the floating rate notes is limited to the amount that will result in its guarantee not constituting a fraudulent conveyance or improper corporate distribution, and there can be no assurance as to what standard a court would apply in making a determination as to what would be the maximum liability of each guarantor.

American Tire may not be able to make the change of control offer required by the indenture.

Upon a change of control, subject to certain conditions, American Tire will be required to make an offer to repurchase all outstanding floating rate notes and fixed rate notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The source of funds for that purchase of notes will be American Tire’s available cash or cash generated from its subsidiaries’ operations or other potential sources, including borrowings, sales of assets or sales of equity. We cannot assure you that sufficient funds from such sources will be available at the time of any change of control to make required repurchases of floating rate notes and fixed rate notes tendered. In addition, the amended and restated credit facility limits our ability to repurchase floating rate notes and fixed rate notes and provides that certain change of control events will constitute an event of default thereunder. Our future debt agreements may contain similar restrictions and provisions. If the holders of the floating rate notes and fixed rate notes exercise their right to require American Tire to repurchase all of the floating rate notes and fixed rate notes upon a change of control, the financial effect of this repurchase could cause a default under our other debt, even if the change of control itself would not cause a default. Accordingly, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of our other debt and the floating rate notes and fixed rate notes or that restrictions in our senior credit facilities and the indentures will not allow such repurchases. See “Description of the Notes—Change of Control” and “Description of Other Indebtedness” for additional information.

There is no established trading market for the notes that may make it difficult for you to sell or pledge your notes.

Prior to this offering there was no public market for the notes, and no active trading market might ever develop. Except for the Nasdaq’s screen-based automated trading system known as PORTAL, “Private Offerings, Resale and Trading through Automated Linkages,” which will not be available for notes sold under this registration statement, there currently is no trading market for the notes. If the notes are traded, they may

trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the price, and volatility in the price, of our shares of common stock, our performance and other factors. In addition, we do not know whether an active trading market will develop for the notes. To the extent that an active trading market does not develop, the liquidity and trading prices of the notes may be harmed.

We do not intend to list the notes on a securities exchange. The notes are eligible for trading on PORTAL but PORTAL will not be available for notes sold under this registration statement. The initial purchasers of the notes are not obligated to make a market in the notes. Any market-making activity, if initiated, may be discontinued at any time, for any reason or for no reason, without notice.

The liquidity of any market for the notes will depend upon the number of holders of the notes, our results of operations and financial condition, the market for similar securities, the interest of securities dealers in making a market in the notes and other factors.

Risks Relating to Our Company

We depend on our relationships with our vendors and a disruption of these relationships or of our vendors’ operations could have an adverse effect on our business and results of operations.

There are a limited number of tire manufacturers worldwide and, accordingly, we rely on a limited number of tire manufacturers for our products, including flag and associate brands as well as our private label brands. Our business depends on developing and maintaining productive relationships with these vendors. In particular, we rely on Michelin and Goodyear, our top two suppliers, who supplied 26.8% and 16.6%, respectively, of the tires we sold in 2005. Although in most cases we have long term relationships with these manufacturers, our contracts with all but one of our suppliers are short term in nature, and there can be no assurance that these suppliers will continue to supply products to us on favorable terms, or at all. In addition, our growth strategy depends on our ability to make selective acquisitions. Our vendors may not be willing to supply the companies we acquire, which could have a material adverse effect on our business. Furthermore, in the event that any of our vendors were to experience financial, operational, production, supply, labor or quality assurance difficulties that resulted in a reduction or interruption in our supply, or if they otherwise failed to meet our manufacturing requirements, we could be materially adversely affected. In addition, our failure to promptly pay or order sufficient quantities from our vendors may result in an increase in the cost of the products we purchase or a reduction in cooperative advertising and marketing funds or may lead to vendors refusing to sell products to us at all. To the extent that we would be required to find replacements for our manufacturers, a change in manufacturers could result in cost increases, time delays in deliveries and a loss of customers, any of which could have a material adverse effect on us. Finally, although the majority of tires manufactured by the major tire manufacturers are sold to the replacement tire market, the manufacturers pay disproportionate attention to automobile companies that purchase tires for use as original equipment on vehicles sold to consumers. Increased demand from the automobile companies could also result in cost increases and time delays in deliveries from manufacturers to us, any of which could have a material adverse effect on us.

While the independent tire outlet share of the replacement tire market has been relatively stable in the recent past, the share of larger dealers has grown at the expense of smaller tire dealers. Our business would be adversely affected if the vendors determined that, due to the increasing size of such dealers, they could deal directly with such dealers.

Our business could be adversely affected by consolidation among customers as it may reduce our importance as a holder of sizable inventory, thereby reducing our revenues and earnings.

Our success has been dependent, in part, on the fragmented customer base in our industry. Because of the small size of most customers, they cannot support substantial inventory positions and thus we fill an important role as our size permits us to maintain a sizable inventory. We generally do not have long term contracts with our

customers and they can cease doing business with us at any time. If a trend towards consolidation among customers develops in the future, it could reduce our importance and reduce our revenues, margins and earnings. While the independent tire outlet share of the replacement tire market has been relatively stable in the recent past, the share of larger dealers has grown at the expense of smaller tire dealers. If that trend continues, the number of dealers able to handle sizable inventory could increase, reducing the importance of distributors to the independent dealer market.

We would also be adversely affected if other channels in the replacement tire market, including mass merchandisers and wholesale clubs, gain market share from the independent tire outlet channel. Our market share in those other channels is lower, as these channels are generally sizable enough to deal directly with vendors.

The industry in which we operate is highly competitive, and our failure to effectively compete may adversely affect our results of operations and our ability to service our debt obligations.

The industry in which we operate is highly competitive, and some of our competitors have resources greater than ours. Tire manufacturers distribute tires to the retail market by direct shipments to independent tire outlets, national retail chains and manufacturer owned retail stores as well as through shipments to independent wholesale distributors. A number of independent wholesale tire distributors also compete in the regions in which we do business. Most of our customers buy products from our competitors and us. Although we believe that we have been able to compete successfully in our markets to date, there can be no assurance that we will be able to continue to do so in the future. See “Business—Competition.”

The automotive replacement tire industry is subject to cycles in the general economy. A downturn in the economy could reduce consumer spending on our products which could decrease our net sales and operating margins.

A downturn in the economy may delay or reduce consumer purchases of our products and services or lead consumers to purchase more associate or private label brands and reduce spending on higher margin products, which could adversely affect our revenues, cash flow and profits. Sales in our industry declined in 2001 due in part to the recession as well as the effect of the Firestone recall in 2000, and sales in our industry have declined on an annual basis in prior recessions. A slowdown in economic activity could adversely affect our results. Many factors affect the level of consumer spending on replacement tires, including, among others, general business conditions, interest rates, gasoline prices, the availability of consumer credit and consumer confidence in future economic conditions. While the number of automobiles registered in the United States has steadily increased over time, should a reduction in the number of automobiles driven by automobile owners or a reduction in new car purchases occur, it would adversely affect the demand for our products.

Our business is subject to seasonal and other fluctuations that affect our cash flows which could affect our ability to service our debt during certain periods.

Demand for tires tends to fluctuate from quarter to quarter, with the highest demand generally from March through October of each calendar year and the lowest demand typically from November through February of each calendar year. In addition, the popularity, supply and demand for particular tire products may change from year to year based on consumer confidence, the volume of tires reaching the replacement tire market, the level of personal discretionary income and other factors. Local economic, weather, transportation and other conditions also affect the volume of tire sales, on both a wholesale and retail basis. Such fluctuations may adversely affect our cash flows and our ability to service our debt in certain periods.

We are currently converting from our legacy software platform to Oracle. If this transition is not successful, our business and operations could be disrupted and our operating results would be harmed.

We are currently implementing a three year conversion of our computer system to Oracle. We have already implemented the general ledger as well as the accounts payable function and a portion of the inventory function

on Oracle but still must transition other key functions. We cannot be sure that the transition will be fully implemented on a timely basis, if at all. If we do not successfully implement this project, our operations may be disrupted and our operating results could be harmed. Even if the integration is completed on time, the new system may not operate as we expect it to. In addition, we may have to expend significant resources to find an alternative source for performing these functions and we cannot guarantee this would be accomplished in a timely manner or without significant additional disruption to our business.

If we experience problems with our fleet of trucks or are otherwise unable to make timely deliveries of our products to our customers, our business and reputation could be harmed.

We use a fleet of trucks to deliver our products to our customers, most of which are leased from third parties. We are subject to the risks associated with providing trucking services, including inclement weather, disruptions in the transportation infrastructure, disruptions in our lease arrangements, availability and price of fuel, and liabilities arising from accidents to the extent we are not covered by insurance. Our failure to deliver tires and other products in a timely and accurate manner could harm our reputation and brand, which could have an adverse effect on our business.

Our growth strategy of identifying and consummating acquisitions and expanding our services into new regions entails integration, financing and other risks, including expenditures associated with developing a distribution infrastructure with new distribution centers and routes.

As part of our business strategy, we have expanded, and intend to expand, our operations through selective acquisitions. This growth strategy entails risks inherent in identifying desirable acquisition candidates, in integrating the operations of acquired businesses into our existing operations and risks relating to potential unknown liabilities associated with acquired businesses. In addition, we may not be able to finance a desirable acquisition or to pay as much as our competitors because of our leveraged financial condition, restrictions under the instruments governing our debt or general economic conditions.

In connection with future acquisitions, we may assume the liabilities of the companies we acquire. These liabilities could materially and adversely affect our business. Difficulties that we may encounter in integrating the operations of acquired businesses could also have a material adverse effect on our results of operations and financial condition. Moreover, we may not realize any of the anticipated benefits of an acquisition and integration costs may exceed anticipated amounts. While our most recent acquisitions have been successfully integrated to-date, our prior management experienced significant difficulties in integrating an acquisition several years ago. Difficulties with that entity, as well as problems with an information technology upgrade, led to the restructuring of our debt in 2002 described elsewhere in this prospectus.

The launch of our distribution services into new regions will require expenditures to develop a distribution infrastructure, including new distribution centers and routes, and we generally do not expect to achieve profitability from new regions for a period of time. We may also face competition from existing distributors in those regions that could reduce the benefits we anticipate from such expansion.

We could be subject to product liability, personal injury or other litigation claims which could have an adverse effect on our business, financial condition and results of operations.

Purchasers of our products, or their employees or customers, could be injured or suffer property damage from exposure to, or defects in, products we sell or distribute, or have sold or distributed in the past, and we could be subject to claims, including product liability or personal injury claims and claims due to injuries caused by our truck drivers. These claims may not be covered by insurance and vendors may be unwilling or unable to satisfy their indemnification obligations to us with respect to these claims. As a result, the defense, settlement or successful assertion of any future product liability, personal injury or other litigation claims could cause us to incur significant costs and could have an adverse effect on our business, financial condition, results of operations or cash flows.

Our high amount of debt may adversely affect our financial condition, restrict our growth, or place us at a competitive disadvantage.

We have a high amount of debt. As of December 31, 2005, our debt (including capital leases) was $545.2 million. In addition, as of December 31, 2005 we were able to borrow up to an additional $66.6 million under our credit facility, subject to customary borrowing conditions. Our high amount of debt could have important consequences, including:

•

making it more difficult to satisfy our obligations;

•

impairing our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions and other general corporate requirements;

•

increasing our vulnerability to general adverse economic and industry conditions by making it more difficult for us to react quickly to changing conditions;

•

requiring a substantial portion of our cash flow from operations for the payment of interest on our debt and reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions and general corporate requirements;

•

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

•

placing us at a competitive disadvantage compared to our competitors that have less debt.

We anticipate that any future acquisitions we pursue as part of our growth strategy may be financed through a combination of cash on hand, operating cash flow and availability under ATD’s existing credit facility. If new debt is added to current debt levels, the related risks described above could increase.

Our variable rate debt subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain of our borrowings, primarily borrowings under our credit facility and the notes, are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same. This would require us to use more of our available cash to service our indebtedness. There can be no assurance that we will be able to enter into interest rate swap agreements or other hedging arrangements in the future, or that existing or future hedging arrangements will offset increases in interest rates. At December 31, 2005, we had $329.5 million outstanding under our credit facility and the notes, of which $244.5 million was not hedged by an interest rate swap agreement and was thus subject to exposure to interest rate changes.

Our business strategy relies increasingly upon online commerce and we may not be able to adapt to rapid technological change.

Customers’ access to our website directly affects the volume of orders we fulfill and thus affects our revenues. Approximately 49% of our orders in 2005 were placed online, up from 37% in 2004. We expect our internet generated business to continue to grow as a percentage of overall sales. Technology in the online commerce industry changes rapidly. Customer functionality requirements and preferences also change. Competitors often introduce new products and services with new technologies, all of which could render our existing website and proprietary technology obsolete. To succeed, we must continually enhance website responsiveness, functionality and features, acquire and license leading technologies, enhance our existing services and respond to technological advances and emerging industry standards and practices on a cost effective and timely basis. If we do not adapt quickly enough to changing customer requirements and industry standards, there could be a decline in online orders and a decrease in net sales.

Our business could be adversely affected by the current high price of fuel and any further increases in the price of fuel.

Both the industry in which we operate and our distribution methods are affected by the availability and price of fuel. Because we use a fleet of trucks to deliver tires and other products to our customers, the current high price of fuel or any further increases in the price of fuel may cause us to incur increased costs in operating our fleet, which may have an adverse effect on our business, financial condition and results of operations.

Loss of key personnel and/or failure to attract and retain highly qualified personnel could make it more difficult for us to generate cash flow from operations and service our debt.

We are dependent on the continued services of our senior management team. We may not be able to retain our existing senior management, fill new positions or vacancies created by expansion or turnover or attract additional senior management personnel. We believe the loss of such key personnel could adversely affect our financial performance. In addition, our ability to manage our anticipated growth will depend on our ability to identify, hire and retain qualified management personnel. We cannot assure you that we can attract and retain sufficient qualified personnel to meet our business needs. See “Management—Directors and Executive Officers.”

The interests of our controlling shareholders may be in conflict with your interests as a holder of notes.

Investcorp and its co-investors own a majority of the voting power of our common stock and have the ability to elect a majority of our board of directors and generally to control our affairs and policies. Circumstances may occur in which the interests of our controlling shareholders could be in conflict with the interests of the holders of the notes. For example, our controlling shareholders may have an interest in pursuing transactions that, in their judgment, enhance the value of their equity investment in our company, even though those transactions may involve risks to you as a holder of the notes. See “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Certain Relationships and Related Transactions.”

If we are not able to adequately implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and are the subject of sanctions or investigation, our results of operations and our ability to provide timely and reliable financial information may be adversely affected.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related regulations implemented by the SEC and the Public Company Accounting Oversight Board, or PCAOB, are creating uncertainty for public companies and other companies subject to the federal securities laws, increasing legal and financial compliance costs and making some activities more time consuming. We will be evaluating our internal control over financial reporting to allow management to report on, and our registered independent public accounting firm to provide as opinion on, our internal control over financial reporting, which we are required to comply with in our annual report which we will file in 2008 for our 2007 fiscal year. Furthermore, the SEC Advisory on Smaller Public Companies continues to evaluate the requirements of Section 404 of the Act for non-accelerated filers, including debt only issuers, and acknowledges some relief is needed. In the absence of further rulemaking, however, we will continue performing the system and process evaluation and testing (and any necessary remediation) required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act. As a result, we expect to incur substantial additional expenses and diversion of management’s time. While we anticipate being able to fully implement the requirements relating to internal control over financial reporting and all other aspects of Section 404 by the applicable deadlines, we cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities such as the SEC or the PCAOB. Any such action could adversely affect our financial results or investors’ confidence in our company and could cause the price of our securities to fall. In addition, if we fail to develop and maintain effective controls and procedures, we may be unable to provide the financial information in a timely and reliable manner.

NOTICE TO INVESTORS

The notes described in this prospectus have not been recommended by or approved by the Securities and Exchange Commission, or the SEC, or any other federal or state securities commission or regulatory authority, nor has the SEC or any such state securities commission or authority passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

You should not construe the contents of this prospectus as investment, legal or tax advice. You should consult your counsel, accountant and other advisors as to legal, tax, business, financial and related aspects of a purchase of the notes. We are not making any representation to you regarding the legality of an investment in the notes by you under appropriate legal investment or similar laws.

In making an investment decision regarding the notes offered by this prospectus, you must rely on your own examination of our company and the terms of this offer, including, without limitation, the merits and risks involved. This offer is being made on the basis of this prospectus.

The information contained in this prospectus has been furnished by us and other sources we believe to be reliable. This prospectus contains summaries, believed to be accurate, of some of the terms of specific documents, but reference is made to the actual documents, copies of which will be made available upon request, for the complete information contained in those documents.

No person is authorized in connection with any offer made by this prospectus to give any information or to make any representation not contained in this prospectus, and, if given or made, any other information or representation must not be relied upon as having been authorized by us. The information contained in this prospectus is as of the date hereof and subject to change, completion or amendment without notice. Neither the delivery of this prospectus at any time nor any subsequent commitment to enter into any financing shall, under any circumstances, create any implication that there has been no change in the information set forth in this prospectus or in our affairs since the date of this prospectus.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this prospectus, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans, future industry growth and objectives of management for future operations, are forward looking statements. In addition, forward looking statements generally can be identified by the use of forward looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in these forward looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations, or “cautionary statements,” are disclosed under “Risk Factors” and elsewhere in this prospectus, including, without limitation, in conjunction with the forward looking statements included in this prospectus. All subsequent written and oral forward looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.

Any forward looking statements that we make in this prospectus speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

INDUSTRY AND MARKET DATA

Some of the market and industry data contained in prospectus are based on independent industry publications or other publicly available information, while other information is based on internal company sources. Although we believe that these independent sources and our internal data are reliable as of their respective dates, the information contained in them has not been independently verified, and we cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market industry data contained in this prospectus, and beliefs and estimates based on such data, may not be reliable. Unless otherwise indicated, all industry data contained in this prospectus was taken from Modern Tire Dealer and Tire Business.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the notes offered hereby. The proceeds from the sale of the notes offered by this prospectus are solely for the account of the selling noteholders.

THE ACQUISITION

The Merger

On February 4, 2005, Holdings entered into a merger agreement with American Tire which was amended and restated on March 7, 2005. Pursuant to the merger agreement, and in exchange for an aggregate purchase price of $710.0 million in cash, less the amount of American debt (net of cash on hand) and certain dividends payable to holders of American Tire preferred stock, its transaction expenses and certain payments to American Tire’s management, ATD MergerSub, a subsidiary of Holdings, merged into American Tire. In connection with the merger, all of American Tire’s existing redeemable preferred stock was either redeemed or exchanged for redeemable preferred stock of Holdings and each holder of shares of American Tire’s common stock was entitled to receive a portion of the merger consideration equal to $18.83 per share. To the extent that any existing holder of options or warrants to acquire shares of American Tire’s common stock did not exercise such options or warrants prior to the effective time of the merger, American Tire paid such holder an amount in cash equal to $18.83 per share consideration less the exercise price of such option or warrant in complete satisfaction of the option or warrant. American Tire continued as the surviving corporation with Holdings as its sole stockholder.

The Related Transactions

On March 31, 2005, the date of the closing under the merger agreement, the following related transactions occurred:

•

Holdings issued Series B preferred stock with a fair value of $2.7 million in exchange for American Tire’s existing Series B preferred stock, which was subsequently canceled;

•

American Tire amended and restated its credit facility, which consisted of a $300.0 million revolving credit facility pursuant to which it had $155.7 million of outstanding loans on the closing date;

•

American Tire issued $290.0 million in aggregate principal amount of the floating rate notes and the fixed rate notes. Holdings issued $51.5 million in aggregate principal amount at maturity of the Holdings senior discount notes, which were offered at a substantial discount from their principal amount at maturity and generated gross proceeds of approximately $40.0 million. The total gross proceeds of the outstanding notes was $330.0 million;

•

American Tire sent irrevocable notice of redemption to redeem the $28.6 million outstanding principal amount of our Series D 10% senior notes due 2008 on May 15, 2005 at a price equal to $29.1 million, reflecting a prepayment penalty of $0.5 million upon redemption, plus accrued interest through the redemption date; and

•

We paid fees and expenses in connection with the foregoing.

The proceeds from the equity contributions, the outstanding floating rate notes, fixed rate notes and Holdings senior discount notes issued by us, and the borrowings under the amended and restated credit facility were used to effect the merger, to repay certain of American Tire’s existing debt and to pay related fees and expenses and other amounts payable under the merger agreement. We refer to these equity contributions, the outstanding floating rate notes, fixed rate notes and Holdings senior discount notes issued by us, the borrowings under the amended and restated credit facility and the application of the use of proceeds, collectively, as the acquisition and related transactions.

CAPITALIZATION

The following table sets forth, as of January 1, 2005, American Tire’s capitalization on an actual basis and, as of December 31, 2005, our capitalization on an actual basis to reflect the net effect of the acquisition and related transactions. For more information, see “The Acquisition” and “Use of Proceeds.”

This table should be read in conjunction with “Summary Historical and Unaudited Pro Forma Consolidated Financial Data,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.


	As of January 1, 2005		As of December 31, 2005
	Actual		Actual
	(dollars in millions)
Debt:
Existing credit facility and other long-term debt	$	190.5	$	7.2
Series D senior notes due 2008 (1)		28.6		—
Capital lease obligations		14.8		14.5
Amended and restated credit facility (2)		—		189.5
Floating rate notes and fixed rate notes		—		290.0
Holdings senior discount notes		—		44.0

Total debt		233.9		545.2

Series A preferred stock		5.5		—
Series B preferred stock		4.0		1.6
8% cumulative mandatorily redeemable preferred stock		—		16.9

Total stockholders’ equity		57.8		220.8

Total capitalization	$	301.2	$	784.5

(1)

Upon closing of the acquisition and related transactions, we called the Series D senior notes for redemption on May 15, 2005 and pursuant to the discharge provisions of the related indenture, irrevocably deposited with the trustee for such notes the amount necessary to retire the Series D senior notes on the redemption date, including interest accruing through the redemption date, the prepayment premium and any other costs required to discharge the obligations.

(2)

Immediately following the acquisition and related transactions, American Tire had $155.7 million of outstanding revolving loans under the amended and restated credit facility and approximately $7.0 million of revolver commitments used as credit support in the form of letters of credit. As of December 31, 2005, the outstanding balance on the revolving credit facility was $189.5 million and $66.6 million was available for additional borrowings, subject to satisfaction of customary borrowing conditions, including a borrowing base.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

The following unaudited pro forma condensed consolidated statement of operations have been derived by applying the impact of the acquisition of American Tire by Holdings and the related transactions referred to as the “acquisition and related transactions,” to American Tire’s historical consolidated statement of operations included elsewhere in this prospectus. An unaudited pro forma condensed consolidated balance sheet is not required as the acquisition and related transactions have been reflected in Holdings’ historical consolidated balance sheet.

The unaudited pro forma condensed consolidated statement of operations for the fiscal year 2005 gives effect to the acquisition and related transactions as if they had occurred on January 1, 2005.

The unaudited pro forma condensed consolidated statement of operations has been prepared giving effect to the acquisition and related transactions, which have been accounted for using the purchase method of accounting in accordance with the Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations.” Under the purchase method of accounting, the total purchase price of the acquisition and related transactions, including related fees and expenses (i.e. total acquisition consideration), were allocated to American Tire’s assets and liabilities based upon management’s estimates of fair value with the remainder being allocated to goodwill. The final purchase price allocation is as follows:


Merger consideration (cash and securities)	$	469.4
Less: Net book value of assets acquired (a)		(42.0	)

Excess purchase price over net book value of assets acquired		511.4
Adjustments to goodwill related to:
Property and equipment		(17.0	)
Inventory		(4.7	)
Customer lists		(204.3	)
Trademarks and tradenames		(45.1	)
Software		(0.1	)
Deferred tax liabilities		103.5
Postretirement benefit obligations		1.6

Total adjustments		(166.1	)

Goodwill	$	345.3

(a)

Reflects the net book value at the date of acquisition less deferred transaction fees and intangible assets that were written off in purchase accounting.

The unaudited pro forma condensed consolidated statement of operations and related notes are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have been achieved if the transactions described above had occurred on January 1, 2005 nor are they necessarily indicative of future operating results. Actual results could differ. The unaudited pro forma adjustments are based upon information and assumptions available at the time of the preparation of this document that we believe are reasonable under the circumstances. We cannot assure you that the assumptions used in the preparation of the unaudited pro forma condensed consolidated financial information will prove to be correct.

The unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the accompanying notes thereto, and with the information contained in “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and related notes thereto included elsewhere in this prospectus.

Unaudited Pro Forma Condensed Consolidated Statement of Operations


	Fiscal Year 2005
	American Tire Historical Fiscal Quarter Ended April 2, 2005			American Tire Pro Forma Adjustments			American Tire Pro Forma			Holdings Historical Nine Months Ended December 31, 2005			Holdings Pro Forma Adjustments			Holdings Pro Forma
	(dollars in thousands)
Net sales	$	354,339		$	—		$	354,339		$	1,150,944		$	—		$	1,505,283
Cost of goods sold		290,488			—			290,488			939,325			(4,692	)(5)		1,225,121

Gross profit		63,851			—			63,851			211,619			(4,692	)		280,162
Selling, general and administrative expenses		52,653			3,103	(1)		55,756			172,605			—			228,361
Transaction expenses		28,211			(28,211	)(2)		—			95			(95	)(2)		—

Operating income		(17,013	)		25,108			8,095			38,919			4,787			51,801
Other income (expense), net:
Interest expense		(3,682	)		(6,158	)(3)		(9,840	)		(41,359	)		(1,882	)(3)		(53,081	)
Other income, net		(252	)		—			(252	)		111			—			(141	)

Income (loss) from continuing operations before income taxes		(20,947	)		18,950			(1,997	)		(2,329	)		2,905			(1,421	)
Provision (benefit) for income taxes		(6,620	)		7,580	(4)		960			(728	)		1,162	(4)		1,394

Income (loss) from continuing operations	$	(14,327	)	$	11,370		$	(2,957	)	$	(1,601	)	$	1,743			(2,815	)

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations

(dollars in thousands)

The Unaudited Pro Forma Condensed Consolidated Statement of Operations reflects the results for the Company for the fiscal year ended December 31, 2005 and does not include the following charges since they are not expected to have a continuing impact on the statement of operations: the non-cash inventory adjustment that increased cost of goods sold during the approximately three month period after the closing of the acquisition and related transactions during which our inventory on hand at the time of the closing was sold and compensation expense relating to payment of various bonuses and other transaction costs incurred by us. The pro forma adjustments for the acquisition and related transactions are more fully described in the notes below.

(1)

Adjustment relates to the following:


Adjustment to management fees (i)	$	1,447
Adjustment to amortization (ii)		2,796
Management bonuses (iii)		(1,140	)

Adjustment to selling, general and administrative expense	$	3,103

(i)

American Tire entered into an agreement with Investcorp and its co-sponsors (or their respective affiliates), pursuant to which American Tire paid Investcorp and its co-sponsors (or their respective affiliates) a management fee of $8,000 at closing which will be amortized over a five year period, on a basis consistent with the services provided, pursuant to the terms of the agreement, at $6,000 for the first year and $500 each year thereafter. American Tire’s former equity sponsor was paid a management fee of $200 which ceased as part of the acquisition and related transactions.


New management fees	$1,500
Management fees paid to our former equity sponsors	(53	)

Adjustment to management fees	$1,447

(ii)

Reflects the adjustment to historical amortization expense to reflect new amortization from finite-lived intangibles:


New amortization of finite-lived intangible (a)	$	3,006
Less: Historical amortization		(210	)

Adjustment to amortization	$	2,796

(a)

The new amortization of finite-lived intangible assets represents estimated quarterly amortization of $204,352 identifiable intangible assets representing customer lists ($204,275) over their estimated useful life of approximately seventeen years and technology ($77) over the estimated useful life of ten years. A $20,000 increase or decrease in the portion of the purchase price allocated to identifiable intangibles would increase or decrease amortization expense by approximately $1,200 per year. Additionally, a one year increase or decrease in the estimated average life of intangibles as presented would decrease or increase normal amortization expense by approximately $1,000. The unaudited pro forma consolidated statement of operations has been prepared to reflect the application of purchase accounting under SFAS No. 141, “Business Combinations” for the acquisition and related transactions. The adjustment represents the change in amortization expense resulting from the revaluation of the intangible assets based on the valuation as of the acquisition and related transactions closing date and the elimination of the historical amortization expense.

This valuation is currently based on estimates made by management.

The following reconciles historical depreciation and amortization to adjusted annual depreciation and amortization:


American Tire historical depreciation and amortization	$	1,738
Holdings historical depreciation and amortization		16,409
Pro forma adjustments:
Adjustment to amortization		2,796

Adjusted depreciation and amortization	$	20,943

(iii)

Reflects non-recurring bonuses that were paid to management by the respective sellers in connection with the acquisition and related transactions.

(2)

Reflects the following non-recurring transaction expenses recorded in connection with the acquisition:


Seller transaction fees	$	(8,079	)
Accrued transaction bonuses and other related change in control payments		(11,431	)
Stock-based compensation expense (a)		(8,584	)
Other acquisition related expenses		(212	)

Total transaction expense	$	(28,306	)

(a)

Represents compensation expense recorded due to the acceleration of certain management stock option vesting schedules.

(3)

Represents adjustments to interest expense for the new debt incurred, calculated as follows:


Interest on amended and restated credit facility of $155,655 principal amount of borrowings at a variable interest rate of average 3 month LIBOR plus 1.5% per annum (for pro forma interest calculation a LIBOR Rate of 3.0% has been assumed) and a .30% commitment fee on the unused portion of the undrawn funds under the amended and restated credit facility of $144,345	$	1,859
Interest on $140,000 principal amount of floating rate notes offered at a variable interest rate of average 3 month LIBOR plus 6.25% per annum (for pro forma interest calculation a LIBOR Rate of 3.0% has been assumed)		3,238
Interest on $150,000 principal amount of the fixed rate notes offered at a rate of 10.75% per annum		4,030
Amortization of $16,775 of debt issuance costs arising from our amended and restated credit facility and the issuance of the notes offered		449
Interest expense on assumed capital leases ($542) and interest reductions from the change in the value of the interest rate swap ($278)		264

Total pro forma interest expense at American Tire	$	9,840


Less: Interest expense on existing debt		(3,682	)

Pro forma adjustment of interest expense at American Tire	$	6,158

Interest on $40,003 principal amount on Holdings senior discount notes offered with a yield of 13.0% which accrete to $51,380 by April 1, 2007 after which cash interest payments accrue at 13% per annum		1,308
Interest on $20,000 of 8% cumulative mandatorily redeemable preferred stock at Holdings		400
Accretion of 8% cumulative mandatorily redeemable preferred stock		110
Amortization of $1,300 of debt issuance costs arising from Holdings senior discount notes offered and the 8% cumulative mandatorily redeemable preferred stock		64

Pro forma adjustment of interest expense at Holdings	$	1,882

Total pro forma adjustment of interest expense	$	8,040

A 0.125% change in the interest rates on our amended and restated credit facility and the floating rate notes would change pro forma interest expense by approximately $200.

Amortization expense of debt issuance costs of $18,075 is calculated based on the five year term of the amended and restated credit facility, the seven year term of the floating rate notes, the eight year term of the fixed rate notes, the eight and a half year term of the Holdings senior discount notes and the ten and a half year term of the 8% cumulative mandatorily redeemable preferred stock.

(4)

The tax effect of the pro forma adjustments was calculated using an estimated statutory tax rate of 40%.

(5)

Represents a non-cash charge related to the inventory fair value adjustment recorded in connection with the acquisition.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table sets forth American Tire’s selected historical consolidated financial data for the periods indicated as restated for the presentation of Winston Tire Company, its retail segment that was sold in May 2001, as a discontinued operation. Selected historical financial data as of the end of and for the fiscal years 2000 through 2004 is derived from American Tire’s consolidated financial statements as of and for those years. Our fiscal year is based on either a 52 or 53 week period ending on the Saturday closest to each December 31. Therefore, the financial results of certain fiscal years will not be exactly comparable to the prior or subsequent fiscal years. The 2004 fiscal year (ended January 1, 2005) contains operating results for 53 weeks. The 2003 fiscal year (ended December 27, 2003), the 2002 fiscal year (ended December 28, 2002) and the 2001 fiscal year (ended December 29, 2001) all contain operating results for 52 weeks. Selected historical data for the fiscal quarter ended April 2, 2005 is derived from American Tire’s consolidated financial statements as of and for that period. Selected historical data for the period of April 2, 2005 through December 31, 2005 is derived from the successor company and reflects the acquisition and related transactions. The fiscal quarter ended April 2, 2005 contains operating results for 13 weeks and the period of April 2, 2005 through December 31, 2005 contains operating results for 39 weeks. The following selected historical consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	Fiscal Year												Fiscal Quarter Ended April 2, 2005			Successor Company Period from April 2, 2005 – December 31, 2005 (2)
Statement of Operations Data:	2001			2002			2003			2004 (1)			Fiscal Quarter Ended April 2, 2005
	(dollars in thousands, except ratio data)
Net sales (3)	$	1,108,892		$	1,062,015		$	1,114,410		$	1,282,069		$	354,339		$	1,150,944
Cost of goods sold		904,235			868,750			910,905			1,043,793			290,488			939,325

Gross profit		204,657			193,265			203,505			238,276			63,851			211,619
Selling, general and administrative expense		200,578			161,914			162,351			183,235			52,653			172,605
Transaction expense		—			—			—			—			28,211			95

Operating income		4,079			31,351			41,154			55,041			(17,013	)		38,919
Other income (expense), net
Interest expense		(28,639	)		(18,705	)		(14,071	)		(13,371	)		(3,682	)		(41,359	)
Gain on repurchase of Series D senior notes		—			49,759			—			—			—			—
Other income, (expense) net		762			288			93			(393	)		(252	)		111

Income (loss) from continuing operations before income taxes		(23,798	)		62,693			27,176			41,277			(20,947	)		(2,329	)
Provision (benefit) for income taxes		(6,243	)		24,783			11,089			16,236			(6,620	)		(728	)

Income (loss) from continuing operations		(17,555	)		37,910			16,087			25,041			(14,327	)		(1,601	)
Loss from discontinued operations, net of income tax benefit		(769	)		(483	)		(82	)		—			—			—
Loss on disposal of discontinued operations, net of income tax benefit		(12,616	)		—			—			—			—			—

Net income (loss)	$	(30,940	)	$	37,427		$	16,005		$	25,041		$	(14,327	)	$	(1,601	)


Balance Sheet Data:
Cash and cash equivalents	$	4,131		$	2,693		$	3,326		$	3,334					$	5,545
Working capital from continuing operations (7)		93,670			83,073			98,997			133,720						201,820
Total assets		443,020			411,270			419,003			556,295						1,127,751
Total debt (8)		283,185			196,400			182,716			233,919						545,245
Total redeemable preferred stock		24,115			11,035			10,535			9,535						18,559
Total shareholders’ (deficit) equity		(63,536	)		16,489			32,494			57,765						220,806

Other Financial Data:
Cash flows provided by (used in):
Operating activities	$	(1,766	)	$	15,265		$	17,657		$	25,709		$	9,871		$	(34,654	)
Investing activities		8,183			13,413			(1,929	)		(63,302	)		(1,438	)		(468,815	)
Financing activities		456			(30,116	)		(15,095	)		37,601			(8,624	)		505,511
Depreciation and amortization (4)		17,532			8,610			6,957			6,781			1,738			16,409
Capital expenditures (5)		6,060			2,059			2,491			4,379			1,574			6,086
Indenture EBITDA (9)		22,580			40,327			48,491			64,194			13,865			64,964
Ratio of earnings to fixed charges (6)		—			3.3	x		2.2	x		2.9	x		—			—

(1)

In July 2004, American Tire acquired Big State and in September 2004, it acquired Target Tire. Each transaction was accounted for using the purchase method of accounting.

(2)

(3)

Net sales include approximately $15.8 million and $60.6 million of inter-segment sales from us to Winston for fiscal 2001 and 2000, respectively.

(4)

American Tire adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002 and, accordingly, goodwill amortization was discontinued.

(5)

Excludes capital expenditures financed by debt.

(6)

For purposes of these ratios, (i) earnings have been calculated by adding interest expense and the estimated interest portion of rental expense to earnings before income taxes and (ii) fixed charges are comprised of interest expense and capitalized interest, if any. In first quarter fiscal 2005 and the period from April 2, 2005 through December 31, 2005, earnings were insufficient to cover fixed charges by approximately $20.9 million and $2.3 million, respectively.

(7)

Working capital is defined as current assets less current liabilities.

(8)

Total debt is the sum of current maturities of long-term debt, non-current portion of long-term and capital lease obligations.

(9)

The covenants under our floating and fixed rate notes and Holdings’ senior discount notes are tied to ratios based on Indenture EBITDA, referred to as Consolidated Cash Flows in the indenture, and restrict our ability to incur additional indebtedness and to issue preferred stock. The presentation of Indenture EBITDA, a non-GAAP financial measure, and ratios based thereon do not comply with accounting principles generally accepted in the United States because they are adjusted to exclude certain cash expenses, including recurring expenses. We present Indenture EBITDA as it is used to determine our compliance with covenants contained in the related indentures governing our notes. Indenture EBITDA as used herein represents income (loss) from continuing operations before interest expense, provision (benefit) for income taxes, depreciation and amortization and is further adjusted to exclude certain non-recurring and other adjustments permitted in calculating covenant compliance under the indentures (see Consolidated Cash Flow under “Certain Definitions” in the Description of Notes). We believe that the inclusion of this supplementary information is necessary for investors to understand our ability to comply with the financial covenants and debt service of the notes. The table below reconciles Indenture EBITDA to the most directly comparable GAAP measure, net cash provided by operating activities.


	Fiscal Year												Fiscal Quarter Ended April 2, 2005			Successor Company Period from April 2, 2005 – December 31, 2005
	2001			2002			2003			2004			Fiscal Quarter Ended April 2, 2005
Net cash provided by operating activities:	$	(1,766	)	$	15,265		$	17,657		$	25,709		$	9,871		$	(34,654	)
Changes in assets and liabilities		1,036			2,491			14,323			9,345			(12,375	)		60,753
Deferred income tax expense		6,809			(22,570	)		(6,915	)		(1,847	)		(658	)		2,413
Interest expense		28,639			18,705			14,071			13,371			3,682			41,359
Income taxes		(6,243	)		24,783			11,089			16,236			(6,620	)		(728	)
Provision for doubtful accounts		(1,695	)		(2,036	)		(907	)		(320	)		(279	)		(1,091	)
Amortization of other assets		(1,247	)		(1,221	)		(1,208	)		(1,156	)		(232	)		(4,091	)
Stock-based compensation expense		—			—			—			—			(8,584	)		—
Provision for obsolete inventory		(3,160	)		4,832			12			91			(332	)		501
Transaction expenses		—			—			—			—			28,211			95
Accretion of interest		—			—			—			—			—			(4,331	)
Other		207			78			369			2,765			1,181			4,738

Indenture EBITDA	$	22,580		$	40,327		$	48,491		$	64,194		$	13,865		$	64,964

Indenture EBITDA for the aggregate twelve-month period of 2005 does not include $1.3 million of benefit related to a reduction in the liquidation value of our Series B Preferred Stock held by Goodyear that would have been included in Indenture EBITDA during the period except for certain purchase accounting adjustments made as part of the acquisition of the Predecessor company in March. Historically, previous reductions in such liquidation value would have been included in Indenture EBITDA. We currently believe that there will be future reductions in such liquidation value which, if achieved, will be included in Indenture EBITDA in those future periods up to a maximum of $1.6 million through June 2007, although no assurances can be given as to the amount or timing of such reductions, if any. Accordingly, we believe the amount of this benefit is meaningful to an understanding of the results for the 2005 period.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2005,

THE QUARTER ENDED APRIL 2, 2005 AND FISCAL YEAR 2004

In this section below, the terms “Company,” “Successor,” “we,” “us,” “our,” and similar terms refer to American Tire Distributors Holdings, Inc., and its subsidiaries, unless the context indicates otherwise. The term “ATD” or “Predecessor” refers to American Tire Distributors, Inc. and its subsidiaries. The following discussion and analysis of our results of operations, financial condition and liquidity should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus.

Our fiscal year is based on either a 52 or 53-week period ending on the Saturday closest to each December 31. Therefore, the financial results of certain fiscal years will not be exactly comparable to the prior or subsequent fiscal years. The aggregate twelve-month period ended December 31, 2005 and the 2003 fiscal year (ended December 27, 2003) contain operating results for 52 weeks. The 2004 fiscal year (ended January 1, 2005) contains operating results for 53 weeks.

Overview

We are the leading distributor of tires to the U.S. replacement tire market, a $26.5 billion industry in 2005. The U.S. replacement market is stable and has been growing at approximately 2% to 3% annually over the past ten years. Growth has historically been driven by several positive industry trends such as an increase in the number of vehicles on the road, an increase in the number of licensed drivers, an increase in the number of miles driven, and an increase in the average age of vehicles.

The industry has recently experienced growth from an increase in high and ultra-high performance and larger rim diameter tires, proliferation of larger vehicles such as SUVs, and shorter tire replacement cycles. Our high and ultra-high performance tires are our highest profit products and also have relatively shorter replacement cycles. High and ultra-high performance tires have shown significant sales growth as compared to the overall market. According to Modern Tire Dealer magazine, industry wide, the number of units sold in this subcategory increased by 8.0% from 2004 to 2005. We expect the trend of selling more high and ultra-high performance tires as well as larger auto rim diameter tires to be an ongoing area of strategic focus for us, and the industry as a whole. Due to our breadth and depth of product offering, we believe that we are well positioned to handle this new demand.

Our revenues are primarily generated from sales of passenger car and light truck tires, which represent approximately 74.3% of our total net sales in the aggregate twelve-month period of 2005. The remainder of net sales is derived from other tire sales (12.5%), custom wheels (6.9%), automotive service equipment (3.9%), and other products (2.4%). We sell our products to a variety of customers and geographic markets. We have continued to expand and geographically diversify our operations in the recent years by executing a strategy that includes both organic growth and growth through acquisitions. Over the past two years, we have successfully acquired and integrated three businesses representing approximately $178.0 million in annual net sales. The acquisition of Wholesale Tire Distributors, Inc., Wholesale Tire Distributors of Wyoming, Inc., and Wholesale Tire Distributors of Idaho, Inc. (collectively “Wholesale Tire”) expanded our operations into Utah, Idaho, and Wyoming as well as parts of Nevada, Colorado, Nebraska and South Dakota. The acquisition of Texas Market Tire Holdings I, Inc., d/b/a Big State Tire Supply (“Big State”) expanded our operations into Texas, New Mexico and Oklahoma, while the acquisition of Target Tire, Inc. (“Target Tire”) strengthened our presence with retailers in the Southeast, a region where we already have a strong market presence. As we continue to expand our market presence, we have been able to effectively leverage our scalable distribution infrastructure to achieve higher growth and increased margins.

We are currently in the process of further enhancing our pricing discipline and expense control through a strategic segmentation of our customer base. This initiative is expected to provide incentives for smaller customers to provide us with a larger share of their business and by focusing on larger, more profitable customers.

On February 4, 2005, Holdings, an investment vehicle formed by affiliates of Investcorp S.A., entered into a merger agreement with ATD, which was amended and restated on March 7, 2005. Pursuant to the merger agreement, and in exchange for an aggregate purchase price of $710.0 million in cash, less the amount of ATD’s debt (net of cash on hand) and certain dividends payable to holders of ATD’s preferred stock, ATD’s incurred transaction expenses and certain payments to ATD’s management, ATD MergerSub (“MergerSub”), a subsidiary of Holdings, merged with and into ATD. We refer to this transaction throughout this section of the prospectus as the “Merger” or the “Acquisition.” The Acquisition of ATD by Holdings was accounted for under the purchase method of accounting and accordingly, the purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values, with the remainder being allocated to goodwill. The increase in the basis of these assets will result in increased amortization and depreciation charges in future periods. In addition, our interest expense has increased significantly as a result of the Acquisition. As part of the Acquisition, ATD generated substantial tax deductions relating to the exercise of stock options, which Holdings assumed the benefits of in the Merger.

On August 23, 2005, we completed the purchase of all the outstanding stock of Wholesale Tire. The purchase price, subject to adjustment was $4.5 million, consisting of $4.4 million in cash and $0.1 million in direct acquisition costs. The acquisition was financed using ATD’s revolving credit facility and has been accounted for using the purchase method of accounting. Accordingly, results of operations for the acquired business have been included in the consolidated statements of operations from the acquisition date.

Results of Operations

Nine Months Ended December 31, 2005 for the Successor and Three Months Ended April 2, 2005 for the Predecessor Compared to the Year Ended January 1, 2005 for the Predecessor

As a result of the Acquisition and related change in control, we are required to present separately our operating results for the Successor nine-month period ended December 31, 2005 and the Predecessor quarter ended April 2, 2005. In the following discussion, the combined results of operations for the Predecessor quarter ended April 2, 2005 and Successor nine-month period ended December 31, 2005 are compared to the Predecessor year ended January 1, 2005. Management believes this is the most practical way to comment on the results of operations.

The following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales (dollars in thousands):


	Predecessor For the Year Ended			Predecessor For the Quarter Ended			Successor For the Nine Months Ended			Predecessor		Predecessor		Successor
	Predecessor For the Year Ended			Predecessor For the Quarter Ended			Successor For the Nine Months Ended			Results as a Percentage of Net Sales for Each Period Ended
	January 1, 2005			April 2, 2005			December 31, 2005			January 1, 2005		April 2, 2005		December 31, 2005
Net sales	$	1,282,069		$	354,339		$	1,150,944		100.0	%	100.0	%	100.0	%
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		1,043,793			290,488			939,325		81.4		82.0		81.6

Gross profit		238,276			63,851			211,619		18.6		18.0		18.4
Selling, general and administrative expenses		183,235			52,653			172,605		14.3		14.8		15.0
Transaction expenses		—			28,211			95		0.0		8.0		0.0

Operating income (loss)		55,041			(17,013	)		38,919		4.3		(4.8	)	3.4
Other income (expense):
Interest expense		(13,371	)		(3,682	)		(41,359	)	1.1		(1.0	)	(3.6	)
Other, net		(393	)		(252	)		111		0.0		(0.1	)	0.0

Income (loss) from operations before income taxes		41,277			(20,947	)		(2,329	)	3.2		(5.9	)	(0.2	)
Provision (benefit) for income taxes		16,236			(6,620	)		(728	)	1.2		(1.9	)	(0.1	)

Net income (loss)	$	25,041		$	(14,327	)	$	(1,601	)	2.0	%	(4.0	)%	(0.01	)%

Net Sales

Net sales for the aggregate twelve-month period of 2005 increased $223.2 million, or 17.4%, to $1,505.3 million from $1,282.1 million in fiscal 2004. The increase is primarily attributable to an increase in unit sales of passenger, light truck and medium truck tires of $119.5 million. The increase in unit sales was aided by the acquisition of Big State and Target Tire, in the later part of 2004, and Wholesale Tire, in August 2005. The operations acquired from Big State and Wholesale Tire contributed to a net sales increase of $60.7 million and $6.7 million, respectively. We cannot determine the precise effect on sales of the Target Tire acquisition due to the integration of all but one of their distribution centers into our existing facilities. Higher average per unit selling prices contributed approximately $87.4 million to the increase in sales. The increase in average per unit selling prices is primarily due to manufacturer price increases that have been passed through to our customers. The inclusion of an additional week of sales in first quarter 2004 of approximately $19.0 million partially offsets the increases noted above.

Gross Profit

Gross profit increased $37.2 million to $275.5 million for the aggregate twelve-month period of 2005 from $238.3 million in fiscal 2004. This increase is primarily due to increased sales resulting from higher unit sales volume, the acquisitions of Wholesale Tire, Big State and Target Tire and from higher average per unit selling prices. The increase in gross profit was partially offset by an increase in cost of goods sold due to $4.7 million of inventory fair value step-up that was recorded in connection with the Acquisition and charged to cost of goods sold as inventory was turned (see Note 1 in Notes to Consolidated Financial Statements beginning on page F-8 of this prospectus for further information).

Gross profit as a percentage of sales decreased 0.3 percentage points from 18.6% in fiscal 2004 to 18.3% in the aggregate twelve-month period of 2005. The decrease is primarily due to the inventory fair value step-up discussed above.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the aggregate twelve-month period of 2005 increased $42.1 million to $225.3 million from $183.2 million in fiscal 2004. The increase is due, in part, to the inclusion of acquired operations. Employee related expenses increased $14.5 million primarily due to the inclusion of Big State and Wholesale Tire (collectively $5.6 million), incentive based compensation and increased costs associated with an increase in the employee headcount that is a result of the Target Tire acquisition. Increased medical costs are also contributing to the rise in employee related expenses. We cannot determine the precise effect on selling, general and administrative expenses, other than employee related expenses, for the Target Tire acquisition due to the integration of all but one of their distribution centers into our existing facilities. Amortization expense increased $8.5 million primarily as a result of a customer list intangible asset that was recorded in connection with the Acquisition. We also experienced an increase in depreciation expense of $2.8 million that was primarily a result of the revaluation of our property and equipment in connection with the Acquisition. Other operating expenses increased $4.5 million due to the amortization of prepaid management advisory fees that were paid in connection with the Acquisition. Rising fuel costs negatively impact selling, general and administrative expenses. Fuel costs were up $3.2 million, or approximately 57% over prior year, $0.8 of which was a result of the recent acquisitions. As noted in the Risk Factors section “Our business could be adversely affected by increases in the price of fuel,” because we use a fleet of trucks to deliver our products to our customers, increases in the price of fuel may cause us to incur additional cost in operating our fleet, which may have an adverse effect on our business, financial condition and results of operations. The inclusion of an additional week in first quarter 2004 partially offsets the increases noted above.

Transaction Expenses

In connection with the Acquisition, the Predecessor incurred $28.2 million of transaction expenses in the first quarter of 2005 that related to change in control and bonus payments, stock option compensation cost for accelerated vesting, and payment of it’s direct acquisition costs. These direct acquisition costs include investment banking, legal, accounting, and other fees for professional services in connection with the Acquisition that cannot be included in purchase accounting.

Interest Expense

Total interest expense for the aggregate twelve-month period of 2005 increased $31.6 million to $45.0 million from $13.4 million in fiscal 2004. The increase in interest expense is due primarily to increased debt levels associated with the issuance of the Holdings senior discount notes, the fixed rate notes, and the floating rate notes issued in connection with the Acquisition, which accounted for approximately $26.5 million of the increase. In addition, the Successor recorded additional interest expense relating to the change in fair value of the interest rate swap agreement of $0.2 million in the nine-month period ended December 31, 2005 and the Predecessor recorded a net reduction in interest expense of $0.2 million in first quarter 2005 as compared to a net reduction of $0.5 million in interest expense recorded by the Predecessor in fiscal 2004.

Interest expense for the aggregate twelve-month period of 2005 of $45.0 million exceeds cash payments for interest during the same period of $27.9 million principally due to non-cash amortization of debt issuance costs and accretion of interest on the Senior Discount Notes as well as interest accrued but not yet paid.

Provision (Benefit) for Income Taxes

The Successor recognized an income tax benefit of $0.7 million in the nine-month period ended December 31, 2005 based on a pre-tax loss of $2.3 million. The Predecessor recognized an income tax benefit of

$6.6 million in first quarter 2005 due primarily to the transaction expenses incurred in connection with the Merger, which generated a pre-tax loss of $20.9 million. During fiscal 2004, the Predecessor recognized an income tax provision of $16.2 million. The effective tax rate for the nine-month period ended December 31, 2005 was approximately 31% for the Successor, approximately 32% for first quarter 2005 for the Predecessor, and approximately 39% for fiscal 2004 for the Predecessor.

Net Income (loss)

Total aggregate net loss for the twelve-month period of 2005 was $(15.9) million, a change of $40.9 million from income of $25.0 million in fiscal 2004. The loss is due primarily to transaction expenses of $28.2 million and higher interest expense incurred in connection with the Merger as well as higher depreciation and amortization and the $4.7 million adjustment in basis of our inventory resulting from the Acquisition. In addition, first quarter 2004 included an additional week of business activity. The decrease in net income was partially offset by an increase in the income tax benefit.

Year Ended January 1, 2005 for the Predecessor Compared to Year Ended December 27, 2003 for the Predecessor

The following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales for the Predecessor:


	Fiscal Year						Period Over Period Change			Period Over Period Percentage Change		Results as a Percentage of Net Sales for Fiscal Year
	2003			2004			Favorable (unfavorable)			Favorable (unfavorable)		2003		2004
	(dollars in thousands)
Net sales	$	1,114,410		$	1,282,069		$	167,659		15.0	%	100.0	%	100.0	%
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		910,905			1,043,793			(132,888	)	(14.6	)	81.7		81.4

Gross profit		203,505			238,276			34,771		17.1		18.3		18.6
Selling, general and administrative expenses		162,351			183,235			(20,884	)	(12.9	)	14.6		14.3

Operating income		41,154			55,041			13,887		33.7		3.7		4.3
Other income (expense):
Interest expense		(14,071	)		(13,371	)		700		5.0		1.3		1.1
Other, net		93			(393	)		(486	)	(522.6	)	0.0		0.0

Income from continuing operations before income taxes		27,176			41,277			14,101		51.9		2.4		3.2
Provision for income taxes		11,089			16,236			(5,147	)	(46.4	)	1.0		1.2

Income from continuing operations		16,087			25,041			8,954		55.7		1.4		2.0
Loss from discontinued operations, net of income tax benefit of $57 and $0		(82	)		—			82		100.0		0.0		0.0

Net income	$	16,005		$	25,041		$	9,036		56.4	%	1.4	%	2.0	%

Net Sales

Net sales increased $167.7 million, or 15.0%, from $1,114.4 million in fiscal 2003 to $1,282.1 million in fiscal 2004. The operations acquired from Big State accounted for $24.0 million of the increase in net sales. The inclusion of an additional week of sales in fiscal 2004 contributed approximately $19.0 million to the increase. The increase in net sales is also a result of increased volume in our existing distribution centers due to the consolidation of the Target Tire locations, and from higher average per unit selling prices and a continuing trend of selling more high performance, higher priced tires. We cannot determine the precise effect on sales of the acquisition of Target Tire after the consolidation date, as operations acquired from Target Tire were merged into our existing facilities, with the exception of one facility. The higher average selling prices are a result of manufacturer price increases that were part of an overall industry increase. Increased wheel, light truck, and medium truck tire sales have also contributed to higher sales dollars.

Gross Profit

The increase in gross profit in fiscal 2004 is primarily due to increased sales resulting from higher volume, the acquisitions of Big State and Target Tire and from higher gross margins. The increase in margin percentage of 0.3% was a result of improved product mix and purchasing efficiencies. Big State and Target Tire, prior to the consolidation of Target Tire’s distribution centers, contributed $7.9 million in gross profit.

Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses is due, in part, to the inclusion of acquired operations. Of the $20.9 million increase, the acquisitions of Big State and Target Tire accounted for approximately $7.6 million, prior to the consolidation of Target Tire’s distribution centers. Employee related expenses increased $11.9 million primarily due to incentive based compensation associated with an increase in sales and profits and the inclusion of an additional week in fiscal 2004. The remaining net increase in selling, general, and administrative expenses is primarily due to costs related to the Big State and Target Tire acquisitions and the acquisition by Holdings. The increase in selling, general and administrative expenses in 2004 was offset by a $0.9 million reduction in medical insurance reserves.

Interest Expense

The decrease in interest expense is due primarily to a decline in interest rates during the first half of fiscal 2004, a reduction in “other long-term debt” levels and a $0.3 million net reduction in interest expense relating to the change in fair value of the interest rate swap agreement, partially offset by increased borrowings on ATD’s credit facility as a result of the two acquisitions completed in third quarter 2004.

Income Tax Expense

We recognized an income tax provision of $16.2 million in fiscal 2004 compared to $11.1 million in fiscal 2003. The effective tax rate for fiscal 2004 is approximately 39% compared to 41% in fiscal 2003.

Discontinued Operations

We did not record a loss from discontinued operations in fiscal 2004. The loss from discontinued operations in fiscal year 2003 is primarily due to adjustments to estimated liabilities on leases, for which we are a guarantor. For more information see, “—Contractual Commitments.”

Net Income

The increase in net income is due primarily to the increase in operating income partially offset by the increase in the income tax provision.

Liquidity and Capital Resources

At December 31, 2005, our total debt, including capital leases, was $545.2 million compared to $233.9 million at January 1, 2005. Total commitments by the lenders under ATD’s credit facility were $300.0 million at December 31, 2005, of which $66.6 million was available for additional borrowings. The amount available to borrow is limited by the Borrowing Base computation, as defined in the credit facility agreement.

The following table summarizes the cash flows for fiscal years 2003 and 2004 and the quarter ended April 2, 2005 for the Predecessor and the period from April 2, 2005 through December 31, 2005 for the Successor:


	Predecessor									Successor
	2003			2004			Quarter Ended April 2, 2005			Period from April 2, 2005 through December 31, 2005
	(dollars in thousands)
Cash provided by (used in) operating activities	$	17,657		$	25,709		$	9,871		$	(34,654	)
Cash provided by (used in) investing activities		(1,929	)		(63,302	)		(1,438	)		(468,815	)
Cash provided by (used in) financing activities		(15,095	)		37,601			(8,264	)		505,511

Net increase in cash and cash equivalents		633			8			169			2,042
Cash and cash equivalents, beginning of year		2,693			3,326			3,334			3,503

Cash and cash equivalents, end of year	$	3,326		$	3,334		$	3,503		$	5,545

Cash payments for interest	$	13,345		$	12,389		$	3,944		$	23,992
Cash payments (receipts) for taxes, net	$	2,592		$	17,610		$	247		$	(2,340	)
Capital expenditures financed by debt	$	670		$	5,224		$	1,338		$	4,054
Payment of Series D Senior Notes with restricted cash	$	—		$	—		$	—		$	30,506

Operating Activities. Total net cash used in operating activities for the aggregate twelve-month period of 2005 increased $50.5 million to $24.8 million compared to net cash provided by operating activities of $25.7 million in fiscal 2004. The increase in cash used in operating activities was primarily due to an increase in our net working capital requirements as a result of increased business activity and the acquisition of Big State and Target Tire in third quarter 2004 and Wholesale Tire in third quarter 2005, partially offset be a decrease in our profitability. Net working capital at December 31, 2005 totaled $201.8 million compared to $133.7 million at January 1, 2005, an increase of $68.1 million. This increase primarily relates to an increase in inventory and the income tax receivable, prepaid management advisory fees and seller transaction costs recorded in connection with the Acquisition (see Notes 2 and 3 in Notes to Consolidated Financial Statements beginning on page F-16 of this prospectus for further details). The increase in inventory is primarily in response to announced future and expected price increases by the tire manufacturers as well as to protect our supply position from potential supply shortages of raw materials announced by tire manufacturers in the wake of recent storm activity. The acquisition of Wholesale Tire resulted in $3.9 million of additional inventory.

Net cash provided by operating activities for fiscal 2004 increased $8.0 million to $25.7 million compared to $17.7 million in fiscal 2003. The increase in cash provided by operating activities for fiscal 2004 was primarily due to improvements in our gross profit margins and an overall increase in our profitability partially offset by an increase in our net working capital requirements as a result of increased business activity and the acquisition of Big State and Target Tire. In addition, we had an increase in income taxes paid in fiscal 2004, which partially offset the increase in cash provided by operating activities. The increase in income taxes paid is due to the utilization of net operating loss carryforwards in fiscal 2003, which were not available in fiscal 2004.

Investing Activities. Total net cash used in investing activities increased $407.0 million to $470.3 million in the aggregate twelve-month period of 2005 compared to $63.3 million in fiscal 2004. The increase in cash used in investing activities was due primarily to cash paid for the Acquisition in first quarter 2005 (See Note 2 in the Notes to Consolidated Financial Statements beginning on page F-16 of this prospectus for further details) and the acquisition of Wholesale Tire in third quarter 2005. Total capital expenditures for the aggregate twelve-month period of 2005 increased $3.3 million to $7.7 million compared to $4.4 million in fiscal 2004. Capital expenditures during the period from April 2, 2005 through December 31, 2005 for the Successor and first quarter 2005 for the Predecessor were primarily for information technology upgrades, warehouse racking, and leasehold improvements. During the aggregate twelve-month period of 2005, we also had total aggregate capital expenditures financed by debt of $5.4 million relating to information technology.

Net cash used in investing activities for fiscal 2004 increased $61.4 million to $63.3 million compared to $1.9 million in fiscal 2003. The increase was due primarily to the acquisition of Big State and Target Tire in third quarter 2004. Capital expenditures increased $1.9 million to $4.4 million in fiscal 2004 compared to $2.5 million in fiscal 2003. Capital expenditures during fiscal 2004 were primarily for information technology upgrades, warehouse racking, and leasehold improvements. During fiscal 2004, we also had capital expenditures financed by debt of $5.2 million relating to information technology upgrades.

Financing Activities. Total net cash provided by financing activities for the aggregate twelve-month period of 2005 increased $459.6 million to $497.2 million compared to $37.6 million in fiscal 2004. The increase in cash provided by financing activities was primarily due to proceeds generated from the issuance of senior notes, including the floating rate notes of $330.0 million and proceeds of $211.5 million received from the issuance of common stock. These increases were partially offset by $30.5 million of cash that was restricted for the payment of the Series D senior notes and payments of $35.4 million for deferred financing costs incurred in connection with financing activity surrounding the Acquisition. See Note 2 and 5 in the Notes to the Consolidated Financial Statements beginning on page F-16 of this prospectus for further details.

Net cash provided by financing activities for fiscal 2004 increased $52.7 million to $37.6 million compared to net cash used in financing activities of $(15.1) million in fiscal 2003. The increase was primarily due to increased borrowings on ATD’s Revolver as a result of the two acquisitions completed in third quarter 2004, partially offset by payments of other long-term debt and the partial redemption of the Series A preferred stock.

Revolving Credit Facility. In connection with the Merger, ATD entered into the Fourth Amended and Restated Loan and Security Agreement (“Revolver”) on March 31, 2005. The Borrowers to the Revolver are ATD and its subsidiaries. The revolving credit facility provides for a five-year senior secured revolving credit facility of up to $300.0 million (of which up to $25.0 million may be utilized in the form of commercial and standby letters of credit), subject to a borrowing base. The Revolver is secured primarily by ATD’s inventories and accounts receivable.

Borrowings under the Revolver bear interest, at ATD’s option, at either (i) the Base Rate, as defined, or (ii) the Eurodollar Rate, as defined, plus the applicable margin (1.50% as of December 31, 2005). At December 31, 2005, borrowings under the Revolver were at a weighted average interest rate of 6.2%. Beginning six months after closing, the applicable margin for the loans will vary based upon a performance based grid, as defined in the agreement.

All obligations under the Revolver are guaranteed by Holdings and each of ATD’s existing and future direct and indirect domestic subsidiaries that are not direct obligors thereunder. Obligations under the Revolver are secured by a pledge of substantially all assets of the obligors, including all shares of ATD’s capital stock and that of ATD’s subsidiaries, subject to certain limitations.

The Revolver contains covenants which, among other things, require ATD to meet a fixed charge coverage ratio if ATD does not have at least $25.0 million available to be drawn under the Revolver (subject to a cure);

restricts ATD’s ability to incur additional debt; enter into guarantees; make loans and investments; declare dividends; modify certain material agreements or constitutive documents relating to preferred stock; and change the business we conduct, as well as other customary covenants. The Revolver expires March 31, 2010.

Indenture EBITDA. We evaluate liquidity based on several factors, of which the primary financial measure is Indenture EBITDA. The presentation of Indenture EBITDA, a non-GAAP financial measure, and ratios based thereon, do not comply with accounting principles generally accepted in the United States because they are adjusted to exclude certain cash expenses, including recurring expenses. We present Indenture EBITDA as it is used to determine our compliance with covenants contained in the related indentures governing our notes. The covenants are tied to ratios based on Indenture EBITDA, referred to as Consolidated Cash Flows in the indenture agreement, and restrict our ability to incur additional indebtedness and to issue preferred stock. Indenture EBITDA as used herein represents earnings before interest, taxes, depreciation and amortization and further adjusted to exclude certain non-recurring and other adjustments permitted in calculating covenant compliance under the indentures. We believe that the inclusion of this supplementary information is necessary for investors to understand our ability to comply with the financial covenants and debt service of the notes. Indenture EBITDA should not be considered an alternative to, or more meaningful than, cash flow as determined in accordance with accounting principles generally accepted in the United States. The following table is a reconciliation of the most directly comparable GAAP measure, net cash provided by (used in) operating activities, to Indenture EBITDA:


	Predecessor									Successor
	Fiscal Year 2003			Fiscal Year 2004			Quarter Ended April 2, 2005			Period from April 2, 2005 through December 31, 2005
	(dollars in thousands)
Net cash provided by (used in) operating activities	$	17,657		$	25,709		$	9,871		$	(34,654	)
Changes in assets and liabilities		14,323			9,345			(12,375	)		60,753
Provision for deferred income taxes		(6,915	)		(1,847	)		(658	)		2,413
Interest expense		14,071			13,371			3,682			41,359
Provision for (benefit of) income taxes		11,089			16,236			(6,620	)		(728	)
Provision for doubtful accounts		(907	)		(320	)		(279	)		(1,091	)
Provision for obsolete inventory		12			91			(332	)		501
Amortization of other assets		(1,208	)		(1,156	)		(232	)		(4,091	)
Stock-based compensation expense		—			—			(8,584	)		—
Transaction expenses		—			—			28,211			95
Accretion of interest		—			—			—			(4,331	)
Other		369			2,765			1,181			4,738

Indenture EBITDA	$	48,491		$	64,194		$	13,865		$	64,964

Total Indenture EBITDA for the aggregate twelve-month period of 2005 increased $14.6 million to $78.8 million compared to $64.2 million in fiscal 2004. Indenture EBITDA for the aggregate twelve-month period of 2005 does not include $1.3 million of benefit related to a reduction in the liquidation value of our Series B Preferred Stock held by Goodyear that would have been included in Indenture EBITDA during the period except for certain purchase accounting adjustments made as part of the acquisition of the Predecessor company in March. Historically, previous reductions in such liquidation value would have been included in Indenture EBITDA. We currently believe that there will be future reductions in such liquidation value which, if achieved, will be included in Indenture EBITDA in those future periods up to a maximum of $1.6 million through June 2007, although no assurances can be given as to the amount or timing of such reductions, if any. Accordingly, we believe the amount of this benefit is meaningful to an understanding of the results for the 2005 period.

The increase in Indenture EBITDA is due primarily to the increase in sales, partially offset by the increase in selling, general and administrative expenses and the inclusion of an additional week in the first quarter 2004. We estimate the additional week in 2004 contributed approximately $1.6 million to Indenture EBITDA. The acquisition of Big State in August of 2004 contributed $2.5 million to the increase. The acquired operations of Wholesale Tire did not have a material impact on Indenture EBITDA.

Indenture EBITDA increased $15.7 million to $64.2 million in fiscal 2004 compared to $48.5 million in fiscal 2003. The increase in EBITDA is due primarily to the increase in sales and improvements in our gross profit margins, partially offset by the increase in selling, general and administrative expenses. Indenture EBITDA from the acquired operations of Big State and Target Tire, prior to the consolidation of Target Tire’s distribution centers, accounted for approximately $1.2 million of this increase.

We anticipate that our principal use of cash going forward will be to meet working capital and debt service requirements, to make capital expenditures, and to fund acquisitions. Based upon current and anticipated levels of operations, we believe that our cash flow from operations, together with amounts available under ATD’s Revolver, will be adequate to meet our anticipated requirements.

Contractual Commitments

As of December 31, 2005, the Successor had certain cash obligations associated with contractual commitments. The amounts due under these commitments are as follows (dollars in millions):


	Total		2006		2007		2008		2009		2010		Thereafter
Long-term debt (variable rate)	$	329.5	$	—	$	—	$	—	$	—	$	189.5	$	140.0
Long-term debt (fixed rate)		201.3		4.3		2.1		0.5		0.1		—		194.3
Estimated interest payments (1)		341.9		45.0		48.3		51.6		51.6		42.7		102.7
Operating leases, net of sublease income		156.9		26.7		25.0		22.8		19.8		14.9		47.7
8% cumulative mandatorily redeemable preferred stock		45.9		—		—		—		—		—		45.9
Capital leases		0.4		0.4		—		—		—		—		—
Other long-term liabilities		5.2		0.2		0.2		0.2		0.1		0.4		4.1

Total contractual cash obligations	$	1,081.1	$	76.6	$	75.6	$	75.1	$	71.6	$	247.5	$	534.7

(1)

Represents the annual interest expense on fixed and variable rate debt. Projections of interest expense on variable rate debt are based on current interest rates.

In addition, the only significant remaining liability related to Winston Tire Company (“Winston”), our retail business that was sold in 2001, is the exposure related to leases that we have guaranteed. As of December 31, 2005, our total obligations, as guarantor on the Winston leases, are approximately $10.1 million extending over 13 years. However, we have secured assignments or sublease agreements for the vast majority of these commitments with contractually assigned or subleased rental of approximately $9.6 million. A provision has been made for the net present value of the estimated shortfall. The accrual for lease liabilities could be materially affected by factors such as the credit worthiness of lessors, assignees and sublessees and our success at negotiating early termination agreements with lessors. These factors are significantly dependent on general economic conditions. While we believe that our current estimates of these liabilities are adequate, it is possible that future events could require significant adjustments to those estimates.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions (see Note 1 in the Notes to Consolidated Financial Statements included elsewhere in this prospectus). We consider certain accounting policies, as described below, to be critical policies due to the high degree of judgment and complexity involved in each.

Revenue Recognition

We recognize revenue when title and risk of loss pass to the customer, which is upon delivery under free on board (“FOB”) destination terms. We also permit customers from time to time to return certain products but there is no contractual right of return. We continuously monitor and track such returns and record an estimate of such future returns, which is based on historical experience of actual returns. While such returns have historically been within management’s expectations and the provisions established have been adequate, we cannot guarantee that we will continue to experience the same return rates that we have in the past. If future returns increase significantly, operating results would be adversely affected.

The allowance for doubtful accounts provides for estimated losses inherent within our accounts receivable balance. Management evaluates both the creditworthiness of specific customers and the overall probability of losses based upon an analysis of the overall aging of receivables, past collection trends, and general economic conditions. Management believes, based on our review, that the allowance for doubtful accounts is adequate to cover potential losses. Actual results may vary as a result of unforeseen economic events and the impact those events could have on our customers.

Inventories

Inventories are valued at the lower of cost, determined on the first-in, first-out (“FIFO”) method, or market. We perform periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and record necessary provisions to reduce such inventories to net realizable value. If actual market conditions are less favorable than those projected by management, additional inventory provisions may be required.

Vendor Rebates

We receive rebates from our vendors under a number of different programs. These rebates are recorded in accordance with Emerging Issues Task Force (“EITF”) Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Cash Considerations Received from a Vendor.” Many of the vendor programs provide for us to receive rebates when any of a number of measures is achieved, generally related to the volume of purchases. These rebates are accounted for as a reduction to the price of the product, which reduces the carrying value of inventory until the product is sold. Throughout the year, the amount earned for annual rebates is based on purchases management considers probable for the full year. These estimates are continually revised to reflect rebates earned based on actual purchase levels. Historically, actual rebates have been within the expectations used in the estimates.

If market conditions were to change, vendors may change the terms of some or all of these programs. Although these changes would not affect the amounts that have been recorded related to product already purchased, it may impact gross margins on products sold or revenues earned in future periods to the extent that the changes are not passed along to the customer.

Customer Rebates

We offer rebates to our customers under a number of different programs. These rebates are recorded in accordance with EITF Issue No. 01-9, “ Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products).” The majority of these programs provide for the customer to receive rebates, generally in form of a reduction in the related accounts receivable balance, when certain measures are achieved, generally related to the volume of product purchased from the Company. These rebates are recorded as a reduction of the related price of the product, which reduces the amount of revenue recorded. Throughout the year, the amount of rebates is estimated based on the expected level of purchases to be made by customers that participate in the rebate programs. These estimates are periodically revised to reflect rebates earned by customers based on actual purchases made. Historically, actual rebates paid have been within the expectations used in the estimates.

Cooperative Advertising and Marketing Programs

We participate in cooperative advertising and marketing programs (“co-op”) with our vendors. Co-op funds are provided to the Company generally based on the volume of purchases made with vendors that offer such programs. A portion of the funds received must be used for specific advertising and marketing expenditures incurred by the Company or its customers. The co-op funds received by the Company from its vendors are accounted for in accordance with EITF Issue No. 02-16, which requires that we record the funds received as a reduction of cost of sales or as an offset to specific costs incurred in selling the vendor’s products. The co-op funds that are provided to the Company’s customers are accounted for in accordance with EITF Issue 01-9, which requires that the Company record the funds paid as a reduction of revenue since no separate indentifiable benefit is received by the Company.

Post Retirement Benefits

We account for post retirement benefits in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 106, “Employers’ Accounting for Post Retirement Benefits Other than Pensions.” SFAS No. 106 requires us to accrue the cost of post retirement benefit obligations based on a number of actuarial assumptions including assumptions about the discount rate and health care cost trend rates. See Note 6 in Notes to Consolidated Financial Statements beginning on page F-28 of this prospectus for further information. The actuarial assumptions used may differ materially from actual results, which may have a significant impact on the amount of post retirement expenses to be recognized in future periods.

Valuation of Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 revises the accounting for purchased goodwill and intangible assets. Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but are tested for impairment annually and more frequently in the event of an impairment indicator. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives and reviewed whenever events or circumstances indicate an impairment may exist. We adopted the provisions of SFAS No. 142 effective first quarter of fiscal 2002. In accordance with SFAS No. 142, we performed the required annual impairment test in fourth quarter of fiscal years 2005, 2004 and 2003 and determined that no goodwill or indefinite lived intangible asset impairment existed. Fair value was computed by utilizing a variety of methods including discounted cash flow and market multiple models. We will continue to perform goodwill and intangible asset impairment reviews annually or more frequently if facts or circumstances warrant a review. Future adverse developments in market conditions or our current or projected operating results could cause the fair value of our goodwill to fall below the carrying value, requiring an impairment charge.

Recently Issued Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” The amendments made by SFAS No. 151 will improve financial reporting by requiring that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) be recognized as current-period charges and by requiring the allocation of fixed production overheads to inventory based on the normal capacity of production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not expect the adoption of SFAS No. 151 to have a material impact on our consolidated financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”). For non-public companies, as defined, the provisions of SFAS 123R are effective for reporting periods beginning after December 15, 2005. The new statement requires compensation expense associated with share-based payments to employees to be recognized in the financial statements based on their fair values. We are currently accounting for stock option grants in accordance with Accounting Principles Board Opinion No. 25

(“APB No. 25”) and its related interpretations. Upon the adoption of SFAS 123R, we will be required to apply the provisions of the statement prospectively for any newly issued, modified or settled award after the date of initial adoption. We adopted the provisions of SFAS 123R on January 1, 2006. We do not expect the adoption of SFAS No. 123R to have a material impact on our consolidated financial position or results of operations.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces APB No. 20 “Accounting Changes” and SFAS No. 3 “Reporting Accounting Changes in Interim Financial Statements—An Amendment of APB Opinion No. 28.” SFAS 154 provides guidance on the accounting for, and reporting of, accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

Quantitative and Qualitative Disclosure About Market Risk.

Our results of operations are exposed to changes in interest rates primarily with respect to ATD’s credit facility and our senior floating rate notes. Interest on the credit facility is tied to the Base Rate, as defined in the agreement, or LIBOR. Interest on the senior floating rate notes is tied to the three-month LIBOR. At December 31, 2005, we had $329.5 million outstanding under ATD’s credit facility and our senior floating rate notes, of which $244.5 million was not hedged by an interest rate swap agreement and was thus subject to exposure to interest rate changes. An increase of 1% in such interest rate percentages would increase our annual interest expense by $2.4 million, based on the outstanding balance of the credit facility and senior floating rate notes that have not been hedged at December 31, 2005.

On October 11, 2005, the Company entered into an interest rate swap agreement (“New Swap”) to manage exposure to fluctuations in interest rates. The New Swap represents a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without exchange of the underlying notional amount. The notional amount of the New Swap is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. At December 31, 2005, the New Swap in place covers a notional amount of $85.0 million of the $140.0 million senior floating rate notes at a fixed interest rate of 4.79% and expires on September 30, 2010. This New Swap has been designated for hedge accounting treatment. Accordingly, the Company recognizes the fair value of the New Swap in the accompanying consolidated balance sheets and any changes in the fair value are recorded as adjustments to other comprehensive income. The fair value of the New Swap is the estimated amount that the Company would pay or receive to terminate the agreement at the reporting date. The fair value of the New Swap was a liability of $0.2 million at December 31, 2005, and is included in other liabilities in the accompanying consolidated balance sheets with the offset included in other comprehensive loss, net of tax.

During second quarter 2003, ATD entered into an interest rate swap agreement (“2003 Swap”) to manage exposure to fluctuations in interest rates. The 2003 Swap covered a notional amount of $50.0 million of indebtedness at a fixed interest rate of 2.14%. The 2003 Swap had not been designated for hedge accounting treatment. Accordingly, ATD recognized the fair value of the 2003 Swap in the accompanying consolidated balance sheets and any changes in the fair value were recorded as adjustments to interest expense in the accompanying consolidated statements of operations. The fair value of the 2003 Swap was the estimated amount that ATD would pay or receive to terminate the agreement at the reporting date. The fair value of the 2003 Swap was an asset of $0.8 million at January 1, 2005, and is included in other assets in the accompanying consolidated balance sheets. As a result of the change in fair value, the Successor recorded an increase in interest expense of $0.2 million for the nine months ended December 31, 2005. The Predecessor recorded a reduction in interest expense of $0.2 million, $0.5 million and $0.2 million for the quarter ended April 2, 2005, year ended January 1, 2005 and year ended December 27, 2003, respectively. On October 6, 2005 and in connection with the New Swap discussed above, ATD terminated the 2003 Swap contract and received proceeds of $0.8 million.

BUSINESS

Our Company

We were founded in North Carolina as The J.H. Heafner Company, Inc. in 1935. In 1999, we reincorporated in Delaware and changed our name to Heafner Tire Group, Inc. In 2002, we changed our name to American Tire Distributors, Inc. The new name was part of our transition from a collection of companies joined through acquisition, into a single unified company. In the two years that followed, we divested our retail operations in order to concentrate on our core wholesale tire distribution business.

Holdings

Holdings is a newly created company that has no significant assets or operations other than its ownership of American Tire.

Competitive Strengths

We believe our key competitive strengths include:

position, combined with the fact that we, unlike our principal competitors, do not own retail businesses that compete with our customers, enhances our ability to increase sales to existing customers, attract new customers and enter into new markets.

Broad Product Offering. We believe we offer the most comprehensive selection of tires in the industry, with timely access to approximately 60,000 SKUs. We supply 11 of the top 12 leading tire brands and we carry the flag brands of all four of the largest tire manufacturers: Bridgestone, Continental, Goodyear and Michelin. We also offer a number of high quality, private label product lines. In addition to branded and private label tires, we also sell associate brand tires, custom wheels and accessories and related service equipment. We believe that our broad product offering has been a significant factor in attracting and retaining many of our customers.

Superior and Distinctive Technology. We have invested in sophisticated ordering and logistics technology that provides order processing, warehousing and fulfillment functions, which we believe to be the most efficient in the industry. Our Heafnet system, introduced in 1996, offers customers instant online access to our inventory, allowing dealers to check the price and availability of products and place orders on a 24/7 basis. Approximately 49.0% of our orders in 2005 were placed online using Heafnet, up from 37.0% in 2004. We have also invested in our logistics technology, including routing and global positioning software systems, to capture additional distribution efficiencies.

Experienced Senior Management Team. Our senior management team, led by our Chief Executive Officer, Dick Johnson, and our President, Bill Berry, is comprised of seasoned industry professionals and veterans of our company. Our senior management has an average of over 20 years of distribution experience and over 15 years with our predecessor companies or us. Our senior management team collectively holds approximately 0.5% of the capital stock of our parent company.

Business Strategy

We intend to continue to expand our business, enhance our market position and increase our revenues and cash flow by focusing on the following:

we enhanced our long standing relationship with Goodyear by obtaining distribution rights for the Goodyear brand. In 2004, we established new relationships with Continental, General and Cooper. According to Modern Tire Dealer, these four brands have a combined market share of over 25.0% in the U.S. passenger car and light truck tire market. We expect to generate additional revenue from these brands through full distribution across our broad geographic footprint.

Leverage Our Existing Infrastructure to Expand into Underserved Customer Markets. Our distribution infrastructure provides considerable operating leverage because the cost of adding additional customers that can be served by an existing distribution center, through the addition of truck routes or stops, is low. For example, we successfully rolled out a program with General Motors (“GM”) which continues to expand and will continue in 2006. These GM dealerships can be serviced by our existing distribution centers and are not currently expected to require any additional truck routes. Our technology platform is also fully scalable to accommodate additional distribution centers as necessary to expand efficiently into a new region. In addition, we plan to continue increasing our fill-in business at national and regional chains and tire manufacturer owned stores.

Selectively Pursue Acquisitions. We believe we are well suited to capitalize on opportunities to acquire smaller companies with key customer relationships. Our acquisition strategy consists of increasing our share in existing markets, adding distribution in new or complementary regions and utilizing our scale to realize cost savings. In addition, we believe acquisitions in our existing geographic markets provide the opportunity for significant cost savings. Over the past two years, we have successfully acquired and integrated three businesses representing $178.0 million in annual net sales. In addition, on January 27, 2006 we successfully acquired Silver State Tire Company and Golden State Tire Distributors (collectively “Silver State”), an additional business representing approximately $26 million in annual net sales. We believe that this experience will help us to pursue suitable acquisition opportunities in the future and integrate them successfully. Consistent with this strategy, we continue to evaluate potential acquisition targets.

Products

We sell a broad selection of flag, associate and private label tires, as well as custom wheels and accessories and related service equipment. In the aggregate twelve-month period of 2005, tire sales accounted for approximately 86.8% of net sales, custom wheels accounted for 6.9% and related service equipment accounted for 6.3%.

Tires

Our net tire sales were $1,306.6 million, $1,100.6 million and $958.1 million, respectively, in the aggregate twelve-month period of 2005, 2004 and 2003. In 2005, approximately 86.8% of our net tire sales were for

passenger cars and light trucks. We also sell tires for medium trucks, farm vehicles and other specialty tires, as well as tire tubes. We carry 11 of the top 12 leading brands, with the 12th being one of our competitor’s private labels.

Flag brands. Our flag brands have high consumer recognition and generate higher per tire profit than associate or private label brands. We believe we are the only distributor that carries the flag brands from all four of the largest tire manufacturers: Bridgestone, Continental, Goodyear and Michelin. As a part of our flag brand portfolio, we also carry high and ultra high performance tires, including such brands as Nitto and Pirelli.

We believe that our ability to effectively distribute a wide variety of SKUs for our flag brands is key to our success. The overall replacement tire market is highly fragmented and, according to Tire Review Magazine, the top ten passenger car tire brands account for less than 60.0% of total replacement units. We believe this is the result of two factors. First, automobile manufacturers utilize a wide variety of tire brands and sizes for original equipment. Second, owner loyalty to original equipment is relatively high, as approximately one half of all new passenger car and light truck owners replace their tires with the same equipment. As a result, in order to be competitive, tire dealers, and particularly independent tire outlets, must be able to access a broad range of inventory quickly. Our customers can use our wide product offering to sell a comprehensive product lineup that they would be unable to provide on a stand alone basis due to working capital constraints and limited warehouse capacity.

Our high and ultra high performance tires are our highest profit products and also have relatively shorter replacement cycles. For the same reasons as other flag brands, but to an even greater degree, we believe working capital and inventory constraints make these tires difficult for dealers to efficiently stock. High and ultra high performance tires have shown significant growth as compared to the overall market. According to Modern Tire Dealer magazine, the number of units sold in this subcategory increased by 8.0% industry wide from 2004 to 2005.

Associate brands. Associate brands are primarily lower priced tires, manufactured by well known manufacturers. Our associate brands include Dayton and Gillette. These products allow us to offer tires in a wider price range. In addition, associate brands are attractive to our dealers because they may count towards the various manufacturer incentive programs.

Private label brands. Private label brands are lower priced tires made by tire manufacturers exclusively for and marketed by independent tire wholesale distributors and/or retailers. The private label brands we own include DynaTrac, Regul, Winston and Wynstar. Our private labels allow us to sell differently branded tires to locally competitive dealers, increasing our overall market penetration.

Custom Wheels and Accessories

We offer over 200 different styles of wheels in 26 different brands resulting in over 9,000 total SKUs. In addition to branded wheel products, we distribute high quality custom wheels under brands owned by us, including ICW, Pacer, Drifz, CruiserAlloys and OE Performance. In addition to being a relatively high margin product, custom wheels are complementary to our tire products. According to Modern Tire Dealer magazine, 72.0% of custom wheel consumers purchase tires when purchasing wheels. Customers can order custom wheels from us along with their regular tire shipments without the added complexity of being serviced by an additional vendor. Our net sales of custom wheels in the aggregate twelve-month period of 2005 was $103.5 million.

Equipment, Tools and Supplies

We supply our customers with tire service equipment, tools and supplies from leading manufacturers. This equipment includes wheel alignment, tire changer and automotive lift machinery. These products broaden our portfolio and leverage our customer relationships. We distribute alignment service equipment manufactured by Hunter Engineering Company and tire changers and balancers built by Hennessey Industries, Inc. (a division of

the Danaher Corporation), both leading manufacturers in their respective fields. Net sales of equipment, tools and supplies in the aggregate twelve-month period ended December 31, 2005 were $85.7 million.

Distribution System

We have designed our distribution system to deliver products from a wide variety of vendors to our highly fragmented customer base. We believe that as tire manufacturers have reduced the number of direct customers they serve, we have become a more critical link between those two groups.

We utilize a sophisticated inventory and delivery system to distribute most of our products to our customers on a same or next day basis. In most of our 73 distribution facilities, we have sophisticated bin locator systems, material handling equipment and routing software that tie customer orders, inventory and delivery routes in a seamless manner. We believe this system, which is integrated with our Heafnet online ordering system, gives us a competitive advantage by allowing us to ship customer orders quickly while reducing labor costs. Our logistics and routing technology uses UPS software packages and GPS systems to optimize route design and delivery capacity. Coupled with our fleet of over 700 delivery vehicles, this technology enables us to make multiple daily or weekly shipments to customers, as necessary. With this distribution infrastructure, we believe we fulfill approximately 88.0% of our customers’ orders on a same or next day basis.

Approximately 80.0% of our products are shipped directly by tire manufacturers to our distribution centers. The remaining 20.0% of our products are shipped by suppliers to our mixing centers in Maiden, North Carolina and Lincoln, Nebraska. These mixing centers allow us to warehouse slower moving and foreign manufactured products, which are forwarded to the distribution centers as needed.

Marketing and Customer Service

Our marketing efforts are focused on driving growth through customer service, additional product placement and market expansion. We market our products and services through a number of methods, including online initiatives and specialized sales teams. We have organized our sales organization to best service our existing customers and develop new prospective customers. As the manufacturers have reduced their own sales staffs, our sales force has assumed the consultative role manufacturers previously provided. Additionally, we have established a segmented pricing system that allows us to effectively manage pricing across our customer base.

Sales Force

Our tire sales force consists of sales personnel located at each distribution center and an administrative group located at our field support center in Huntersville, North Carolina. The sales personnel located at each distribution center consist of outside and inside sales people as well as customer service representatives. This sales team focuses on local independent dealer customers. The outside sales people visit their targeted customers to advance our business, while the inside sales people remain on site, making client contact by telephone to advance specific products or programs. The customer service representatives take orders from tire dealers. The administrative tire sales organization handles national accounts, including automobile dealerships, to maximize the benefits of centralized sales organization. This administrative tire sales organization also includes brand managers that coordinate the major tire manufacturers’ programs with our distribution center sales force. We also have a call center to handle calls at peak call times of the day to minimize customer wait time.

Our custom wheel sales group has sales and technical support personnel in the field and performance specialists in each region. The sales force’s responsibilities include cultivating new prospective wheel customers and coordinating with tire sales professionals to cover existing accounts. The technical support professionals provide answers to customer questions regarding style and fitment. We also have established a dedicated equipment, tools and supplies sales force that works with the administrative tire sales force specifically to sell related service equipment, tools and supplies.

Heafnet and Wheel Wizard

Heafnet provides our customers with web-based online ordering and 24/7 access to our inventory availability and pricing. The orders are automatically processed and printed in the appropriate distribution center within minutes of entry. Heafnet allows customers to track their account balances and we are enhancing its capability so that users can also track expected deliveries. As this system represents a lower cost method of order entry, we have encouraged our customers to use it. In 2005, approximately 49.0% of our orders were placed online using Heafnet, up from 37.0% in 2004.

In addition to providing customer service around our suppliers’ incentive programs, we offer Heafnet Rewards for Heafnet online users. Dealers earn rewards points each time an order is placed online with us. Rewards points can be redeemed for airline tickets, gifts, vacation packages and other awards, depending on the point value of the prize chosen.

Wheel Wizard is a web-based program that serves as both a marketing tool and technical resource for our customers. As a marketing tool, it allows our customers’ clients to visualize our wheels on their cars, which we believe helps to encourage sales. As a technical resource, it provides detailed wheel mounting and other installation related data to assist our dealers in properly selling custom wheels.

Manufacturer Programs

Individual manufacturers offer a variety of programs for dealers that sell their products, such as Michelin’s Alliance, Goodyear’s Advantage, Continental’s Gold and Bridgestone’s Tirestarz. These programs, which are relatively complex, provide cooperative advertising funds, volume discounts and other incentives. As part of our service to our customers, we manage these programs for the manufacturers and enhance these programs through dedicated staff to assist dealers in managing their participation. We believe these enhancements, combined with our customer service, provide significant value our customers.

In 2000, we introduced AutoEdge, a proprietary marketing program through which dealers can offer consumers the convenience of nationwide tire and service warranties (through third party warranty providers) and a nationally accepted credit card. In 2004, as a result of our acquisition of Target Tire, we acquired membership in the American Car Care organization for several areas we serve. This organization operates programs similar to AutoEdge throughout much of the country.

Our Xpress Performance program, also introduced in 2000, provides dealers with ultra high performance products shipped via UPS. In addition, Xpress Performance offers the technical knowledge to answer tire and wheel fitment questions and the ability to decrease inventory investment. By offering a business-to-business direct shipment program featuring performance tires, wheels and suspension products, dealers have the ability to better offer these premium products to their customers.

Customers

We distribute tires and related automotive products principally to independent tire outlets. Our other customers include national and regional retail chains, service stations, general automotive repair facilities, auto parts stores, automobile dealers and specialty automotive repair facilities. In 2005, our operations served approximately 36,000 customers each month in 37 states. Our customers are principally located in the mid-Atlantic, lower Midwestern and Southern states as well as California and Arizona. Our largest customer and its subsidiaries accounted for less than 1.2%, and our top ten customers accounted for less than 7.0%, of net sales.

Car dealerships are focused on growing their service business in an effort to expand profitability and we believe they view having replacement tire capabilities as an important service element. According to Modern Tire Dealer magazine, car dealers account for 3.5% of all replacement tire sales. We successfully rolled out a

program with General Motors which continues to expand and will continue in 2006. We are currently in discussions with other car manufacturers to implement similar programs with them and their network of dealerships.

Suppliers

We purchase our tires from several sources, including the four largest tire manufacturers: Bridgestone, Continental, Goodyear and Michelin. These companies also make many of our private label brands. For example, Winston tires are manufactured exclusively by Goodyear and Regul tires are manufactured by Michelin.

Our supply arrangements with our major suppliers are generally oral or written arrangements, which are renegotiated annually, with the exception of a long term contract with Kelly Springfield, a division of Goodyear. Although we can make no assurance that these arrangements will be renewed, or renewed on favorable terms, we have conducted business with our major tire suppliers for many years and we believe that we have good relationships with all of our major suppliers. We purchased approximately 56.0% of our tire products in 2005 from three tire suppliers and we do not have long term supply agreements with these vendors for purchases of the vendor’s branded products. Our operating results could be adversely affected if we were unable to purchase tires from these three suppliers.

There are a number of worldwide manufacturers of wheels and other automotive products and equipment. Most of the wheels we purchase are private label custom brands, namely Pacer, CruiserAlloys, Drifz, OE Performance and ICW, and are produced by a variety of manufacturers. We purchase equipment and other products from multiple sources, including industry leaders such as Hunter Engineering and Hennessey Industries.

Competition

The industry in which we operate is highly competitive and fragmented. Tire manufacturers distribute tires to the retail market by direct shipments to independent tire outlets, national retail chains and manufacturer owned retail stores, as well as through shipments to independent wholesale distributors like us. There are approximately 200 independent wholesale distributors in the United States. We compete with a number of tire distributors on a regional basis. Our main competitors include: TCI Tire Centers, Carroll and Am-Pac Tire, some of whom have retail operations which compete with their distribution customers. We also face some competition from mail order and smaller regional companies.

We believe that the principal competitive factors in our business are reputation, breadth of product offering, delivery frequency, price and service. We believe that we compete effectively in all aspects of our business due to our ability to offer a broad selection of flag and private label branded products, our competitive prices and our ability to provide quality services in a timely manner.

Information Systems

Our main computer system consists of programs developed in-house by our programming staff. The main functions of the system include order entry, invoicing, inventory control, procurement, accounts payable, accounts receivable and warehouse management. We are currently implementing a three year program conversion to Oracle in order to accommodate our integrated operations and increased volume of business. We have already implemented the general ledger as well as a portion of accounts payable and inventory functions on Oracle. We expect to complete the conversion to Oracle in 2007. For more information, see “Risk Factors—Risks Relating to Our Company—We are currently converting from our legacy software platform to Oracle. If this transition is not successful, our business and operations could be disrupted and our operating results would be harmed.”

Trademarks

The private label brand names under which we market our products are trademarks of our company. Those private label brand names are considered to be important to our business because they develop brand identification and foster customer loyalty. All of our trademarks are of perpetual duration as long as they are periodically renewed. We currently intend to maintain all of them in force. The principal private label brand names under which we market our products are:

•

DYNATRAC^® tires;

•

REGUL^® tires;

•

WINSTON^® tires;

•

WYNSTAR^® tires;

•

Cruiser Wire^® custom wheels;

•

DRIFZ^® custom wheels;

•

ICW^® custom wheels;

•

PACER^® custom wheels; and

•

MAGNUM^® automotive lifts.

Our other trademarks include:

•

AMERICAN TIRE DISTRIBUTORS^®;

•

HEAFNET^®; and

•

WHEEL WIZARD^®.

Seasonality and Inventory

We typically experience our highest sales levels from March through October of each fiscal year, while sales levels are generally lower during the period from November through February. Our inventories generally fluctuate with anticipated seasonal sales volumes. We believe that we maintain levels of inventory that are adequate to meet our customers’ needs on short notice. Since customers look to us to fulfill their needs on short notice, backlog of orders is not a meaningful statistic for us.

Environmental Matters

Our operations and properties are subject to federal, state and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, release, discharge and disposal of hazardous materials, substances and wastes and relating to the investigation and clean up of contaminated properties, including off-site disposal locations. We do not incur significant costs complying with environmental laws and regulations. However, we could be subject to material environmental costs, liabilities or claims in the future, especially in the event of changes in existing laws and regulations or in their interpretation.

Employees

As of December 31, 2005, our continuing operations employed approximately 2,127 people. None of our employees are represented by a union. We believe our employee relations are satisfactory.

Description of Properties

Our principal properties are geographically situated to meet sales and operating requirements. All of our properties are considered to be adequate to meet current operating requirements. As of December 31, 2005, we

had a total of 73 warehouse distribution centers located in 26 states, aggregating approximately 5.7 million square feet. Of these centers, two are owned and the remainder are leased.

We also lease our principal executive office, located in Huntersville, North Carolina. This lease will expire in 2010.

Many of our leases contain provisions prohibiting a change in control of the lessee or permitting the landlord to terminate the lease or increase rent upon a change in control of the lessee. These provisions will be applicable to the acquisition and related transactions. Based primarily upon our belief that (i) we maintain good relations with the substantial majority of our landlords, (ii) most of our leases are at market rates and (iii) we have historically been able to secure suitable leased property at market rates when needed, we believe that these provisions will not have a material adverse effect on our business or financial position.

Legal Proceedings

We are involved from time to time in various lawsuits, including alleged class action lawsuits arising out of the ordinary conduct of our business. Although no assurances can be given, we do not expect that any of these matters will have a material adverse effect on our business or financial condition. We are also involved in various proceedings incidental to the ordinary course of our business. We believe, based on consultation with legal counsel, that none of these will have a material adverse effect on our financial condition or results of operations.

A previously disclosed claim by a local tire distributor in Texas, also named American Tire Distributors, Inc., alleging that our name infringes their use of their trademark and seeking various remedies has been resolved and dismissed.

MANAGEMENT

Directors and Executive Officers

The following table contains information regarding our directors and executive officers as of the date of this prospectus. The board of directors and executive officers of Holdings are identical to American Tire. Directors hold their positions until the annual meeting of the stockholders, at which time their term expires, or until their respective successors are elected and qualified. Executive officers hold their positions until the annual meeting of the board of directors or until their respective successors are elected and qualified.


Name	Age	Position
Richard P. Johnson	58	Chairman, Chief Executive Officer and Director
William E. Berry	51	President and Chief Operating Officer
J. Michael Gaither	53	Executive Vice President, General Counsel and Secretary
David L. Dyckman	41	Senior Vice President and Chief Financial Officer
Daniel K. Brown	52	Senior Vice President—Procurement
Phillip E. Marrett	55	Senior Vice President—Sales and Marketing
Christopher Stadler	41	Director
David Tayeh	38	Director
Donald Hardie	38	Director
Alain Redheuil	57	Director
Randy Peeler	41	Director
Joel Beckman	50	Director
Joseph P. Donlan	59	Director
James O. Egan	57	Director

Richard P. Johnson—Chairman, Chief Executive Officer and Director. Mr. Johnson became Chairman and Chief Executive Officer in May 2003. Mr. Johnson had been our President and Chief Executive Officer since January 2001 and prior to that time, served as President of our Southeast Division. He joined ITCO Logistics Corporation (which merged with us in 1998) as President and Chief Operating Officer in February 1997. He served as Senior Vice President of Albert Fisher Distribution from 1991 to 1994, and as its President and Chief Operating Officer from 1994 to 1996. Prior to that time, Mr. Johnson held a variety of management positions with Leprino Foods, Sargento Cheese and Kraft Foods. He holds an A.A. from Palm Beach College.

William E. Berry—President and Chief Operating Officer. Mr. Berry became President and Chief Operating Officer in May 2003. Prior to that time and since January 2002, Mr. Berry had been our Executive Vice President and Chief Financial Officer. Mr. Berry joined us in May 1998 as a result of the merger with ITCO and served as Senior Vice President of Finance for the Southeast Division. Prior to that, he joined ITCO Tire Company as Controller in 1984 and served as its Senior Vice President of Finance until 1996. From 1996 to the merger with us, he served as ITCO’s Executive Vice President in charge of business development and sales and marketing. Prior to that, Mr. Berry held a variety of financial management positions for a subsidiary of the Dr. Pepper Company and also spent three years in a public accounting firm. He holds a B.S. in Business Administration from Virginia Tech.

J. Michael Gaither—Executive Vice President, General Counsel and Secretary. Mr. Gaither became Executive Vice President in May 1999, and prior to that time since joining us in 1991, served as our Senior Vice President, General Counsel and Secretary. He served as Treasurer from February 2001 to June 2003. Prior to that time, he was a lawyer in private practice for several years. He holds a B.A. from Duke University and a J.D. from the University of North Carolina-Chapel Hill.

David L. Dyckman—Mr. Dyckman joined the Company in January 2006. Prior to that, Mr. Dyckman served as Executive Vice President and Chief Financial Officer of Thermadyne Holdings Corporation from January

2005 to December 2005. From April 1998 to December 2004, Mr. Dyckman served as Chief Financial Officer and Vice President of Corporate Development for NN, Inc. Mr. Dyckman holds a Masters of Business Administration from Cornell University in Ithica, NY.

Daniel K. Brown—Senior Vice President—Procurement. Mr. Brown joined us in 1975 and held various field sales assignments before becoming Marketing Manager in 1979. He advanced to Director of Marketing and to Vice President of Marketing during the 1980’s and was named Vice President of Sales and Marketing in 1991, assuming responsibility for distribution center operations. In 1997 he was named Senior Vice President of Sales and Marketing with responsibility for vendor relations and program negotiations as well as our sales and marketing activities. Mr. Brown holds a B.A. from Western Carolina University.

Phillip E. Marrett—Senior Vice President—Sales and Marketing. Mr. Marrett joined us in 1998 as Regional Vice President in the Southeast Division. Prior to joining us, Mr. Marrett worked for ITCO Tire from 1997 to 1998 and Dunlop Tire from 1976 to 1996.

Christopher Stadler—Director. Mr. Stadler became a Director following the acquisition and related transactions. He is an executive officer of Investcorp or one or more of its wholly owned subsidiaries. Mr. Stadler joined Investcorp in 1996. Prior to joining Investcorp, Mr. Stadler was Director of Corporate Finance at Credit Suisse First Boston and prior to Credit Suisse First Boston, Mr. Stadler was Managing Director of private equity investments for the Davis Companies. From 1986 to 1995, he worked as a Managing Director at Bankers Trust. Mr. Stadler holds a B.A. in Economics from Drew University and an M.B.A. in Finance from Columbia University, New York.

David Tayeh—Director. Mr. Tayeh became a Director in 2005. He is an executive officer of Investcorp or one or more of its wholly owned subsidiaries. Mr. Tayeh joined Investcorp in 1999 and in 2003 joined Jostens, a company previously controlled by Investcorp, as Chief Financial Officer. In 2005, Tayeh returned to Investcorp. Prior to joining Investcorp, Mr. Tayeh was a Vice President of Investment Banking at Donaldson, Lufkin & Jenrette. Mr. Tayeh holds a B.A. from The University of Chicago and an M.B.A. from The Wharton School of the University of Pennsylvania.

Donald Hardie—Director. Mr. Hardie became a Director following the acquisition and related transactions. He is an executive officer of Investcorp or one or more of its wholly owned subsidiaries. Mr. Hardie joined Investcorp in 2002. Prior to joining Investcorp, Mr. Hardie was a principal with 212 Ventures. Prior to 212 Ventures, Mr. Hardie worked as a Vice President in the Leveraged Finance and Sponsor Coverage Groups of Deutsche Bank and held a similar position at Credit Suisse First Boston. Prior to that, Mr. Hardie was an Associate with White & Case LLP. Mr. Hardie holds a B.A. in English Literature and Finance from the University of Virginia and a J.D. from New York University School of Law.

Alain Redheuil—Director. Mr. Redheuil became a Director following the acquisition and related transactions. He is an executive officer of Investcorp or one or more of its wholly owned subsidiaries. Mr. Redheuil joined Investcorp in 2004. Prior to joining Investcorp, Mr. Redheuil was chief executive at Rexel SA and prior to Rexel SA, Mr. Redheuil was a member of the executive committee of Pinault-Printemps-Redoute for six years. Mr. Redheuil worked for 12 years at Michelin as COO for Europe sales marketing and distribution, Vice President and CFO of Michelin Canada and Plant Manager in Nigeria and France.

Randy Peeler—Director. Mr. Peeler became a Director following the acquisition and related transactions. He is a Managing Director of Berkshire Partners. Mr. Peeler joined Berkshire Partners in 1996. From 1994 to 1996, Mr. Peeler was responsible for new business ventures at Health Advances. Prior to that time, Mr. Peeler served as Chief of Staff to the Assistant Secretary for Economic Policy at the U.S. Department of the Treasury. Prior to that, Mr. Peeler was a consultant with Cannon Associates.

Joel Beckman—Director. Mr. Beckman became a Director following the acquisition and related transactions. He is a founder and Managing Partner of Greenbriar Equity Group LLC. Prior to founding

Greenbriar in 2000, Mr. Beckman was a Managing Director and Partner of Goldman, Sachs & Co., which he joined in 1981.

Joseph P. Donlan—Director. Mr. Donlan has been our Director since May 1997. He is Managing Director of Brown Brothers Harriman & Co. and Co-Manager of its 1818 Mezzanine Fund, L.P., and 1818 Mezzanine Fund II, L.P. Mr. Donlan joined Brown Brothers Harriman & Co. in 1970 in the firm’s Trade Finance Group. Prior to organizing the 1818 Mezzanine Fund, L.P., Mr. Donlan managed Brown Brothers Harriman & Co.’s New York commercial banking activities. Previously, Mr. Donlan served as the firm’s Senior Credit Officer and became a member of the firm’s Credit Committee on which he continues to serve. Mr. Donlan holds a B.A. from Georgetown University and received an M.B.A. from Rutgers University.

James O. Egan—Director. Mr. Egan became a Director following the acquisition and related transactions. He is an executive of Investcorp or one of its wholly owned subsidiaries. Mr. Egan joined Investcorp in 1998. Prior to joining Investcorp, Mr. Egan was a partner in the accounting firm of KPMG from October 1997 to December 1998. Prior to that, he served as Senior Vice President and Chief Financial Officer of Riverwood International, a paperboard, packaging and machinery company from May 1996 to August 1997. Prior to that, he was a partner in the accounting firm of Coopers & Lybrand L.L.P. (predecessor firm to PricewaterhouseCoopers LLP).

Executive Compensation

The following table contains information concerning the compensation for services in all capacities to the Company for the fiscal years 2005, 2004 and 2003 of the following “Named Executive Officers,” who are those persons who (a) served during the fiscal year ended December 31, 2005 as our Chief Executive Officer and, (b) were, at December 31, 2005, our other four most highly compensated executive officers who earned more than $100,000 in salary and bonus in 2005.


		Annual Compensation			Long-Term Compensation
Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)	Other Annual Compensation ($) (a)	Securities Underlying Options/SARs (#)(b)	All Other Compensation ($) (c)
Richard P. Johnson Chairman, Chief Executive Officer	2005 2004 2003	525,000 500,000 500,000	1,100,000 554,400 145,745	— — —	62,620 22,213 —	3,974,183 33,500 32,885
William E. Berry President and Chief Operating Officer	2005 2004 2003	325,000 300,000 300,000	660,000 247,500 72,409	— — —	41,746 22,213 —	3,209,751 25,999 22,500
J. Michael Gaither Executive Vice President, General Counsel and Secretary	2005 2004 2003	280,000 270,000 270,000	302,500 148,500 72,409	— — —	14,756 — —	2,586,534 23,499 22,500
Daniel K. Brown Senior Vice President—Procurement	2005 2004 2003	250,000 250,000 250,000	302,500 148,500 72,409	— — —	6,306 — —	22,240 21,760 22,000
Phillip E. Marrett Senior Vice President— Sales and Marketing	2005 2004 2003	235,000 225,000 225,000	302,500 148,500 72,409	— — —	6,306 — —	15,500 15,076 15,288

(a)

The aggregate amount of any compensation in the form of perquisites and other personal benefits paid in each of the years presented did not exceed the reporting threshold of $50,000 or 10% of total annual salary and bonus for any of the named executive officers.

(b)

The numbers in this column related to the 2005 fiscal year reflect options to purchase shares of common stock of American Tire Distributors Holdings, Inc. granted in connection with the acquisition and related transactions under our 2005 Management Stock Incentive Plan. The numbers in this column related to the 2004 and 2003 fiscal years reflect grants of options to purchase shares of American Tire Distributors, Inc.,

the Predecessor. Such options were settled in connection with the acquisition and related transactions. 33,199 options granted in 2005 vested as of December 31, 2005. The remaining options vest as described in “—Stock Option Plans” below.

(c)

This column includes Company contributions to qualified 401(k) and deferred compensation plans. In fiscal 2005, for each of Messrs. Johnson, Berry and Gaither, the amount includes change in control payments of $3,938,183, $3,180,751, and $2,561,034, respectively.

Option/SAR Grants in 2005

No stock appreciation rights were granted during 2005. The following table contains information concerning the grant of stock options to each of the Named Executive Officers during 2005:


	Individual Grants
Name	Number of Securities Underlying Options Granted (a)		Percent of Total Options Granted to Employees in Fiscal Year		Exercise or Base Price ($/Sh)		Fair Market Value on Date of Grant ($/Sh)		Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (e)
Name	Number of Securities Underlying Options Granted (a)				Exercise or Base Price ($/Sh)		Fair Market Value on Date of Grant ($/Sh)		Expiration Date	5% ($)		10% ($)
Richard P. Johnson	27,524	(b)	15.0	%	$	211.50	$	211.50	6/22/12	$	2,409,927	$	5,631,429
	19,773	(c)	10.8			211.50		211.50	6/22/12		1,731,270		4,045,569
	15,323	(d)	8.4			15.73		211.50	6/12/12		4,397,661		6,288,627
William E. Berry	18,349	(b)	10.0			211.50		211.50	6/22/12		1,606,589		3,754,218
	13,182	(c)	7.2			211.50		211.50	6/22/12		1,154,180		2,697,046
	10,215	(d)	5.6			15.73		211.50	6/12/12		2,931,678		4,192,281
J. Michael Gaither	4,129	(b)	2.3			211.50		211.50	6/22/12		361,524		844,796
	2,966	(c)	1.6			211.50		211.50	6/22/12		259,695		606,846
	7,661	(d)	4.2			15.73		211.50	6/12/12		2,198,687		3,144,108
Daniel K. Brown	3,670	(b)	2.0			211.50		211.50	6/22/12		321,335		750,885
	2,636	(c)	1.4			211.50		211.50	6/22/12		230,801		539,327
Phillip E. Marrett	3,670	(b)	2.0			211.50		211.50	6/22/12		321,335		750,885
	2,636	(c)	1.4			211.50		211.50	6/22/12		230,801		539,327

(a)

The securities underlying the options, which were granted under the 2005 Management Stock Incentive Plan (the “2005 Plan”), are shares of Series A common stock.

(b)

Represents options that become exercisable based on the Company meeting specified performance goals, the passage of time or upon the occurrence of certain events (“Base Options”). The options shall expire no later than 7 years and 30 calendar days from the date of grant. As of December 31, 2005, there were no vested Base Options.

(c)

Represents options that become exercisable in connection with the future sale of the Company (“Incentive Options”) if the majority shareholders earn at least a twenty-five percent (25%) annual internal rate of return on the investment in the Company. The options shall expire no later than 7 years and 30 calendar days from the date of grant. As of December 31, 2005, there were no vested Incentive Options.

(d)

Represents non-qualified options (“the Rollover Options”) that were granted in connection with the acquisition and related transactions, in exchange for the assignment and transfer to the Company of options to purchase ATD common stock under the previously existing ATD stock option plan. All Rollover Options granted under the 2005 Plan are fully vested as of December 31, 2005.

(e)

The potential realizable value columns illustrate the value that might be realized upon exercise of the options immediately prior to the expiration of their term, assuming the specified compound rates of appreciation of the Series A common stock over the term of the options. These amounts represent certain assumed rates of appreciation only, assuming a fair market value on the date of grant of $211.50 per share. Because the Series A common stock is privately held, a per-share fair market value on the date of grant of the options equal to $211.50 was assumed based on information available to the Board of Directors as of March 2005. Actual gains on the exercise of the options are dependent on the future performance of the Series A common stock. The potential values reflected in this table may not be the actual values ultimately realized. All amounts have been rounded to the nearest whole dollar.

Aggregated Option Exercises in Fiscal Year Ended December 31, 2005 and Fiscal Year-End Option Values

The following table contains information concerning the number and value of all exercised and unexercised options held by each of the Named Executive Officers at the end of fiscal 2005:


				Number of Securities Underlying Unexercised Options at Fiscal Year End		Value of Unexercised In-The-Money Options at Fiscal Year End
Name	Shares Acquired on Exercise (#) (a)	Value Realized ($)		Exercisable (b)	Unexercisable (c)	Exercisable (d)		Unexercisable
Richard P. Johnson	662,712	$	11,488,823	15,323	47,297	$	2,999,784	—
William E. Berry	523,084		9,054,884	10,215	31,531		1,999,791	—
J. Michael Gaither	382,186		6,669,613	7,661	7,095		1,499,794	—
Daniel K. Brown	320,491		5,594,171	—	6,306		—	—
Phillip E. Marrett	295,491		5,150,881	—	6,306		—	—

(a)

The number of shares set forth in this column result from stock options to purchase shares of common stock under the previously existing ATD stock option plan, which were settled in connection with the acquisition and related transactions.

(b)

This column reflects Rollover Options that were granted in connection with the acquisition and related transactions in exchange for the assignment and transfer to the Company of options to purchase ATD common stock under the previously existing ATD stock option plan.

(c)

This column reflects stock options to purchase shares of American Tire Distributors Holdings, Inc. (“Successor”) Series A common stock granted in connection with the acquisition and related transactions under our 2005 Plan.

(d)

The amount set forth in this column represents the difference between the Rollover Options’ assumed fair market value on the date of grant of $211.50 less the exercise price of $15.73. The exercise price of all remaining options issued to the Named Executive Officers was equal to the assumed fair market value on the date of grant.

Stock Option Plans

Prior to the acquisition and related transactions, we had three stock option plans, the Amended and Restated 1997 Stock Option Plan, the 1999 Stock Option Plan and the 2002 Stock Option Plan, all of which provided for the grant to designated employees, officers, directors and independent contractors of options to purchase shares of Class A common stock.

On March 31, 2005, as a result of the acquisition and related transactions, a majority of unvested options outstanding under the existing option plans and outstanding immediately prior to the acquisition and related transactions and related transactions became vested. ATD stock options that were vested (excluding certain management options that were exchanged for Holdings’ options in connection with the acquisition and related transactions—see below) were settled in exchange for cash consideration for each share of Class A common stock underlying such option equal to the per share merger consideration (approximately $18.83 per share) minus the exercise price of such option. As a consequence, subsequent to March 31, 2005, the date of the completion of the acquisition and related transactions, all options to purchase previously existing ATD common stock ceased to exist and ATD’s existing stock option plans were terminated.

In connection with the Merger, on March 31, 2005 the Company granted, in exchange for the assignment and transfer to the Company of 372,888 options to purchase ATD common stock under the previously existing ATD stock option plan, non-qualified options (“the Rollover Options”) to purchase 33,199 shares of Series A Common Stock, $0.01 par value per share, of the Company. All Rollover Options granted under the 2005 Plan are fully vested.

Following the acquisition and related transactions, the Company adopted the 2005 Management Stock Incentive Plan (the “2005 Plan”) in order to attract, retain and motivate directors, officers, employees and consultants of the Company and its subsidiaries. The 2005 Plan authorizes the issuance of up to 190,857 shares

of common stock under terms and conditions to be set by the Company’s Board of Directors. A committee appointed by the Company’s Board of Directors shall administer the plan. The committee has sole authority to select those individuals to whom options may be granted and to determine the number of shares of Series A Common Stock that will be issuable upon exercise of the options granted. The purchase price for shares of Series A Common Stock issuable upon exercise of the options granted is fixed by the committee, but cannot be less than the fair market value of the Series A Common Stock, as determined in good faith by our Board of Directors, if the corresponding option is intended to qualify as an incentive stock option under the Internal Revenue Code. As of December 31, 2005, options to purchase an aggregate of 176,704 shares of Series A Common Stock, at prices of $15.73 and $211.50 per share, were outstanding under the stock option plan.

All options granted under the 2005 Plan are subject to the terms and conditions of a stock option agreement entered into by each option recipient. The stock option agreement generally requires each recipient to be bound by the terms of a stockholder agreement with us in the event the recipient elects to exercise options. Options granted under the 2005 Plan generally vest based on performance or the occurrence of specified events, such as an initial public offering or company sale. Performance based options vest at the end of each year based on the achievement of annual or cumulative EBITDA targets for the year. Options that vest on the basis of events such as an initial public offering or company sale do so only to the extent that the initial shareholders have earned a specified return on its initial investment in our shares. Options granted under the 2005 Plan are generally not transferable by the recipient other than by a will or by the laws of descent and distribution and, during the recipient’s lifetime, may only be exercised by the recipient. Under the terms of the 2005 Plan, options expire no later than 30 days after the tenth anniversary of the date of grant for non-qualified options and no later than the tenth anniversary of the date of grant for incentive stock options. Options are also subject to adjustment to avoid dilution in the event of stock splits, stock dividends and reclassifications.

Upon the termination of an option holder’s employment, the stock option agreement typically provides that all or a portion of the option lapses unless exercised by the option holder or his or her personal representative within a specified period of time after the termination.

Restricted Stock

Following the acquisition and related transactions, we terminated all previously existing restricted stock plans and created the 2005 Plan. The securities issued in respect of exercised options under the 2005 Plan are shares of restricted stock. All shares of restricted stock are subject to the terms and conditions of a securities purchase and stockholders’ agreement entered into by each recipient. Pursuant to the restricted stock agreement, prior to the earlier of (a) one hundred eighty (180) calendar days following an Initial Public Offering or (b) an Approved Sale (as defined in the restricted stock agreement), the restricted stock shall not be transferable or transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) except for transfers:

•

to spouse, child, estate, personal representative, heir or successor or to a trust for the benefit of the employee or his spouse, child, heir and/or successor, or

•

as provided for in the Certificate of Incorporation.

We have the right to repurchase all or any portion of a participating stockholder’s shares upon the termination of that stockholder’s employment for any reason prior to an Initial Public Offering or Approved Sale (each as defined in the restricted stock agreement). The repurchase price for shares of stock subject to the restricted stock agreement is generally their fair market value as of the date of the stockholder’s termination of employment, as determined in good faith by the Company’s Board of Directors.

Compensation of Directors

During fiscal year 2005, no compensation was paid to our directors.

Compensation Committee Interlocks and Insider Participation

During 2005, Christopher Stadler, Donald Hardie and Randy Peeler served on a compensation committee of our Board of Directors, which reviewed and recommended executive compensation for the Named Executive Officers and our other executives. All compensation recommendations of the executive committee were reviewed by and subject to the approval of our full Board of Directors.

Indemnification of Officers and Directors

Our articles of incorporation provide for the release of any person serving as our director from liability to us or our stockholders for damages for breach of fiduciary duty and for the indemnification by us of any person serving as a director, officer, employee or agent or other authorized person to the fullest extent permissible under the Delaware General Corporation Law. In addition, we have purchased a directors’ and officers’ insurance policy covering our officers and directors for liabilities that they may incur as a result of any action, or failure to act, by such officers and directors in their capacity as officers and directors.

Employment and Severance Agreements

Upon consummation of the acquisition and related transactions, we entered into new employment agreements with each of Messrs. Johnson, Berry, Gaither, Brown and Marret and Mr. Scott Deininger, our former Senior Vice President of Finance and Administration and Treasurer, which superseded their existing severance agreements. The employment agreements provide for the payment of an annual base salary and bonus opportunities, as well as participation by the employee in the benefit plans and programs generally maintained by us for senior executives from time to time. On September 19, 2005, Mr. Deininger notified the Company of his resignation, effective October 7, 2005 and on December 6, 2005, the Board of Directors appointed David L. Dyckman as the Company’s Senior Vice President and Chief Financial Officer effective January 2006. At such time, Mr. Dyckman entered into an employment agreement that provides for the payment of an annual base salary and bonus, as well as participation in the benefit plans and programs generally maintained by us for senior executives from time to time. No employment or severance agreements are currently in effect for Mr. Deininger.

We or the employee may terminate the applicable employment agreement at any time. In the event Mr. Johnson is terminated without “cause” or resigns for “good reason,” each as defined in his employment agreement, we will pay him a monthly sum equal to his monthly base salary in effect at such time plus $41,667.67 for a period of three years. In addition, unless Mr. Johnson is terminated for “cause,” he and his family are entitled to continued health benefits until he reaches the age of 65. In the event Mr. Berry is terminated without “cause” or resigns for “good reason,” each as defined in his employment agreement, we will pay or provide him: (i) a monthly sum equal to his monthly base salary in effect at such time plus $25,000 for a period of two years and (ii) continuation of health benefits for a period of two years. In the event Mr. Gaither is terminated without “cause” or resigns for “good reason,” each as defined in his employment agreement, we will pay or provide him: (i) a monthly sum equal to his monthly base salary in effect at such time plus $22,222.22 for a period of 18 months and (ii) continuation of health benefits for a period of 18 months. In the event Mr. Dyckman is terminated without “cause” or resigns for “good reason,” each as defined in his employment agreement, we will pay or provide him: (i) a monthly sum equal to his monthly base salary in effect at such time plus $20,833.34 for a period of 12 months and (ii) continuation of health benefits for a period of 12 months. The employee or we may terminate the severance agreements at any time. Upon termination of employment for any reason, the employee is entitled to receive a basic termination payment equal to (i) his base salary earned through the date of termination and (ii) the previous year’s bonus if the termination is after December 31 and before bonus has been awarded. If we terminate the employee without cause or if the employee leaves for good reason (each as defined in his severance agreement), he is entitled to an additional severance payment based on a multiple of his base salary and plan bonus. The multiple used for determining the additional severance payment is increased if termination occurs in connection with a change of control (as defined in his severance agreement).

In the event Messrs. Brown or Marret is terminated without “cause”, as defined in their respective employment agreements, we will pay each a monthly sum equal to two times his respective monthly base salary in effect at such time for a period of one year. In addition, unless Messrs. Brown or Marret is terminated for “cause”, each is entitled to continued health benefits for a period of one year.

The severance agreements each contain confidentiality and noncompete provisions.

Executive Bonus Plan

Bonuses are paid on the basis of our and/or the individual regional profitability results versus pre-established targets. The compensation committee of the board of directors recommends the performance based targets for these bonuses and for each participant or group of participants in the divisions. The board of directors must approve these targets.

The program consists of specific payment levels 0-IV. Within each level, there are established percentage payouts, which will not begin until the threshold performance is met. As our performance increases over the threshold, the payout percentage also increases until performance reaches 100% of the plan. Once our performance reaches 100% of the planned performance, the payout percentage will continue to increase proportionally until a maximum is reached.

Deferred Compensation Plan

In 1999, we established a deferred compensation plan for our top executives and regional employees covered by the executive bonus plan to encourage each participant to promote our long-term interests. Each participant is allowed to defer portions of their annual salary as well as bonuses received into the plan. In addition to employee deferrals, we make contributions on behalf of our top executives and certain of the regional employees in varying amounts. The plan provides that an employee who becomes a participant on or before November 23, 1998, shall be fully vested in all amounts credited to such participant’s account. The plan provides that an employee who becomes a participant after November 23, 1998 shall be at all times fully vested in elective deferrals into such participant’s account and as to contributions made by us, shall vest at a rate of twenty percent (20%) per year as long as such participant is an employee on January 1 of each year. The deferred compensation plan may be altered and amended by our Board of Directors.

Upon consummation of the acquisition and related transactions, all balances under the 1999 Company Deferred Compensation Plan became vested and payable.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

All of American Tire’s equity is owned by Holdings. Holdings is authorized to issue shares of four series of common stock, each with a par value of $0.01 per share, including Series A common stock, Series B common stock, Series D common stock and common stock. Only Series B common stock, Series D common stock and common stock have the right to vote. Holders of Series A common stock do not have any voting rights, except that the holders of such series of common stock will have the right to vote as a series to the extent required under the laws of the State of Delaware.

There are 1,500 shares of Series D common stock and 307,328 shares of Series B common stock outstanding. No shares of common stock are outstanding. Holders of Series D common stock are entitled to 468 votes per share on all matters as to which stockholders may be entitled to vote pursuant to the Delaware General Corporation Law. Holders of Series B common stock are entitled to one vote per share on all matters as to which stockholders may be entitled to vote pursuant to the Delaware General Corporation Law.

As a result of the consummation of the acquisition and related transactions, Investcorp and its co-investors beneficially own all of the outstanding Series D common stock, constituting approximately 69.6% of our outstanding voting power and the co-sponsors will beneficially own all of the outstanding Series B common stock, constituting approximately 30.4% of our outstanding voting power. Investcorp, its co-investors and certain members of our management beneficially own outstanding shares of Series A common stock, all of which are non-voting stock.

The following tables set forth certain information regarding the beneficial ownership of the voting stock of Holdings as of March 15, 2006. The table sets forth:

•

each person that beneficially owns more than 5% of any series of its voting stock,

•

each person who was one of our directors or one of our named executive officer who beneficially owns shares of our voting stock, and

•

all of our directors and executive officers as a group.

None of our directors or executive officers own shares of our Series D common stock or Series B common stock. Unless otherwise indicated, each of the stockholders shown in the table below have sole voting power, if any, and investment power with respect to the shares beneficially owned.

Series A Common Stock

(Non-Voting Stock)


Name and Address of Beneficial Owner(1)	Number of Shares Beneficially Owned (2)		Percent of Series (3)
1818 Mezzanine Fund	21,895	(4)	3.1
Richard P. Johnson	15,323	(5)	2.2
William E. Berry	10,215	(5)	1.5
J. Michael Gaither	7,661	(5)	1.1
Daniel K. Brown	2,364		0.3
Phillip E. Marrett	2,364		0.3
All of our directors and executive officers as a group (6 persons)	59,822		8.0

Series B Common Stock

(30.4% of Voting Power)


Name and Address of Beneficial Owner(1)	Number of Shares Beneficially Owned (2)	Percent of Series (3)
Berkshire Investors LLC (6)	2,616	0.9	%
Berkshire Fund VI Limited Partnership (6)	221,969	72.2
Greenbriar Equity Fund L.P (7)	81,125	26.4
Greenbriar Coinvestment Partners, L.P (7)	1,617	0.5

Series D Common Stock

(69.6% of Voting Power)


Name and Address of Beneficial Owner(1)	Number of Shares Beneficially Owned (2)	Percent of Series (3)
Investcorp S.A. (8)(9)	1,500	100.0	%
Ballet Limited (9)	138	9.2
Denary Limited (9)	138	9.2
Gleam Limited (9)	138	9.2
Highlands Limited (9)	138	9.2
Nobel Limited (9)	138	9.2
Outrigger Limited (9)	138	9.2
Quill Limited (9)	138	9.2
Radial Limited (9)	138	9.2
Shoreline Limited (9)	138	9.2
Zinnia Limited (9)	138	9.2
Investcorp Investment Equity Limited (9)	120	8.0

(1)

Unless otherwise indicated, the address for each person listed in the table is in care of American Tire Distributors Holdings, Inc., 12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078.

(2)

For purposes of computing the percentage of outstanding shares held by each person or group of persons named in this table, any securities which that person or group of persons has the right to acquire within 60 days of March 15, 2006 are deemed to be outstanding for purposes of computing the percentage ownership of such person or persons, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

(3)

This number reflects the percentage of the number of outstanding shares of such series of our stock, after giving effect to the exercise of options and/or warrants owned by such person or persons.

(4)

Represents shares issuable upon the exercise of warrants. Mr. Donlan is the co-manager of The 1818 Mezzanine Fund, L.P. and in that capacity will have authority to exercise investment power over the shares. See “Certain Relationships and Related Transactions.”

(5)

Represents shares of Series A common stock issuable upon the exercise of options.

(6)

In care of Berkshire Partners LLC, One Boston Place, 33^rd Floor, Boston, MA 02108.

(7)

In care of Greenbriar Equity Group LLC, 555 Theodore Fremd Avenue, Suite A-201, Rye, New York 10580.

(8)

Investcorp S.A. does not directly own any of our stock but may be deemed to share beneficial ownership as described below. The number of shares of stock shown as owned by Investcorp S.A. includes all of the shares owned by Investcorp Investment Equity Limited. Investcorp S.A. owns no stock in Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline Limited, Zinnia Limited, or in the beneficial owners of these entities. Investcorp may be deemed to share beneficial ownership of the shares of voting stock held by these entities because the

entities have entered into revocable management services or similar agreements with an affiliate of Investcorp, pursuant to which each such entities has granted such affiliate the authority to direct the voting and disposition of our voting stock owned by such entity for so long as such agreement is in effect. Investcorp is a Luxembourg corporation with its address at 37 rue Notre-Dame, Luxembourg.

(9)

Investcorp Investment Equity Limited is a Cayman Islands corporation, and a wholly-owned subsidiary of Investcorp, with its address at P.O. Box 1111, West Wind Building, George Town, Grand Cayman, Cayman Islands. SIPCO Limited may be deemed to control Investcorp through its ownership of a majority of a company’s stock that indirectly owns a majority of Investcorp’s shares. SIPCO Limited’s address is P.O. Box 1111, West Wind Building, George Town, Grand Cayman, Cayman Islands. CIP Limited (“CIP”) owns none of our stock. CIP indirectly owns less than 0.1% of the stock of each of Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline Limited and Zinnia Limited. CIP may be deemed to share beneficial ownership of our shares of voting stock held by such entities because CIP acts as a director of such entities and the ultimate beneficial shareholders of each of those entities have granted to CIP revocable proxies in companies that own those entities’ stock. None of the ultimate beneficial owners of such entities beneficially owns individually more than 5% of our voting stock. Each of CIP Limited, Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline Limited and Zinnia Limited is a Cayman Islands corporation with its address at P.O. Box 2197, West Wind Building, GeorgeTown, Grand Cayman, Cayman Islands.

SELLING NOTEHOLDERS

We originally issued the floating rate notes in a private placement which closed on March 31, 2005. One of the selling noteholders, Banc of America Securities LLC, was an initial purchaser of the floating rate notes in that transaction. The floating rate notes that may be offered by this prospectus will be offered by the selling noteholders. Our registration for resale of the floating rate notes does not necessarily mean that the selling noteholders will sell all or any of the floating rate notes described below.

The following table sets forth certain information regarding the beneficial ownership of the floating rate notes by the selling noteholders. All information contained in the table below is based upon beneficial ownership as of May 1, 2006 as reported to us by the respective selling noteholders.


	Amount of Notes Beneficially Owned Prior to the Offering		Amount of Notes Being Offered	Amount of Notes Beneficially Owned After the Offering (1)
Name of Beneficial Owner	Amount	%	Amount of Notes Being Offered	Amount	%

(1)

This table assumes that all notes owned by the selling noteholders which are offered by this prospectus are being sold. The selling noteholders reserve the right to accept or reject, in whole or in part, any proposed sale of notes. The selling noteholders also may offer and sell less than the number of notes indicated. The selling noteholders are not making any representation that any notes covered by this prospectus will or will not be offered for sale.

Banc of America Securities LLC, one of the selling noteholders, has engaged in investment banking and other commercial dealings in the ordinary course of business with us, including an affiliate of Banc of America Securities LLC serving as the administrative agent to the lender parties to our amended and restated credit facility. Banc of America Securities LLC received customary fees and commissions for its services. Affiliates of Banc of America Securities LLC may in the future engage in investment banking and other commercial dealings with us.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Acquisition and Related Transactions

Advisory Fees

In connection with obtaining the financing for the acquisition and related transactions, American Tire paid one or more of Investcorp and its co-sponsors (or their respective affiliates), transaction fees of approximately $13.0 million. In addition, in connection with the closing of the acquisition and related transactions, American Tire entered into an agreement with one or more of Investcorp and its co-sponsors (or their respective affiliates) to which it prepaid one or more of Investcorp and its co-sponsors (or their respective affiliates) a management fee of $8.0 million at closing for services to be rendered over a period of five years following closing.

Series B Preferred Stock Exchange

In exchange for American Tire’s existing Series B preferred stock, Holdings issued Series B preferred stock. The Series B preferred stock was issued with an initial aggregate liquidation preference of $4.0 million, which amount will be reduced depending upon the number of tires purchased from Kelly-Springfield, bears cash dividends of up to the prime rate to the extent that the number of tires we purchase are below specified thresholds and must be redeemed at 100% of liquidation preference in June 2007. Holdings’ preferred stock is subject to earlier redemption upon change of control events and upon the early termination of the Kelly-Springfield tire supply contract.

Interests of Certain Existing Directors and Officers

Our named executive officers are entitled to receive payments in respect of stock options, shares of common stock and various bonus programs up to approximately the following amounts: Mr. Johnson—$19.3 million; Mr. Berry—$14.5 million; Mr. Gaither—$11.1 million; Mr. Brown—$6.0 million; and Mr. Marrett—$5.1 million. Members of management, including each of the named executive officers, have invested up to $8 million in common stock of Holdings as a part of the acquisition and related transactions.

Upon the consummation of the acquisition and the related transactions, we entered into new employment agreements with each of Messrs. Johnson, Berry and Gaither and to issue options to acquire capital stock of Holdings to certain executive officers, including the Messrs. Johnson, Berry and Gaither. In addition, certain executive officers acquired shares of capital stock of Holdings following the acquisition and related transactions.

Pursuant to the merger agreement, for six years after the closing date of the acquisition and related transactions, we will indemnify and hold harmless our present and former officers, directors, employees and agents for acts or omissions occurring before the completion of the acquisition and related transactions to the extent provided under our articles of incorporation and by-laws in effect on the date of the merger agreement. For six years after the completion of the acquisition and related transactions, we will provide officers’ and directors’ or fiduciary liability insurance for acts or omissions occurring before the completion of the acquisition and related transactions covering each such person currently covered by our officers’ and directors’ or fiduciary liability insurance policy on terms with respect to coverage and amount no less favorable than those in effect on the date of the merger agreement.

New Holdings 8% Cumulative Mandatorily Redeemable Preferred

In connection with the acquisition and related transactions, The 1818 Mezzanine Fund II, L.P. purchased $20.0 million of participating 8% cumulative mandatorily redeemable preferred stock of Holdings and received warrants to purchase up to approximately 2.0% of the common equity securities of Holdings. The cumulative preferred stock has a stated value of $1,000 per share and holders will be entitled to receive, when and if declared

by the board of directors, cumulative dividends, payable in cash, at an annual rate of 8.0%. Holdings’ board of directors is not obligated to declare dividends and the preferred stock provides no monetary penalties for a failure to declare dividends. The cumulative preferred stock may be redeemed by Holdings at any time beginning on the first anniversary of the closing and will be required to be redeemed upon a change of control of Holdings and at its maturity in 2015. The warrants have a term of ten years and are exercisable for nominal consideration. Joseph P. Donlan, a member of our board of directors, is a Managing Director of Brown Brothers Harriman & Co., the 1818 Fund’s general partner.

Transactions Prior to the Acquisition and Related Transactions

Warrants

In connection with the incurrence of subordinated debt to finance the acquisition of Winston in May 1997, we issued to the 1818 Fund warrants to purchase shares of our common stock. Joseph P. Donlan, a member of our board of directors, is a Managing Director of Brown Brothers Harriman & Co., the 1818 Fund’s general partner. The warrants are exercisable for 1,034,000 shares of Series A common stock.

We and the 1818 Fund are also parties to a warrant holder agreement, dated as of May 21, 1999, which contains provisions restricting the transferability of the warrants, including a right of first offer in our favor, and grants registration rights with respect to shares of Class A common stock issuable upon exercise of the warrants.

The warrants were cashed out in connection with the acquisition for approximately $19.0 million.

Series C Preferred Stock

On April 2, 2001 we issued 1,333,334 shares of Series C preferred stock for $9.00 per share in exchange for $12.0 million in cash contributed by certain of our principal stockholders. Shares of Series C preferred stock accrue dividends at an annual rate of 12%. However, as long as any shares of Series A preferred stock or Series B preferred stock remain outstanding, no dividends may be paid. On March 27, 2002, the Series C preferred stock conversion rate was changed so that each share would convert into 3 shares of common stock. On October 31, 2003, we amended and restated our articles of incorporation to eliminate the redemption clause of the Series C preferred stock. The preferred stock was redeemed in connection with the acquisition at a price equal to the value thereof or on an as-converted basis.

Series D Preferred Stock

On March 27, 2002, we issued 9,637,592 shares of Series D preferred stock for $3.00 per share in exchange for $28.9 million in cash contributed by certain of our principal stockholders. The proceeds were used to repurchase certain of our Series D senior notes. Shares of Series D preferred stock accrue dividends at an annual rate of 12%. However, as long as any shares of Series A preferred stock or Series B preferred stock remain outstanding, no dividends may be paid. In addition, shares of Series D preferred stock are convertible into common stock at a conversion price of $3.00 per common share. On October 31, 2003, we amended and restated our articles of incorporation to eliminate the redemption clause of the Series D preferred stock. The preferred stock was redeemed in connection with the acquisition at a price equal to the value thereof or on an as-converted basis.

Other Related Party Transactions

On May 25, 2000, we purchased all of the outstanding common stock of T.O. Haas Holding Co., Inc. and T.O. Haas Tire Company, Inc, collectively referred to as Haas, a tire wholesaler and distributor, located in Lincoln, Nebraska, as well as all of the outstanding common stock of Haas Investment Company, or Haas Investment. In connection with the acquisition, we sold certain parcels of real estate, including substantially all of

the assets of Haas Investment, and leased them back in a transaction, which closed on August 8, 2000. Total monthly payments under these leases are approximately $75,000. The leases expire July 31, 2010. Total rent expense of approximately $0.9 million, $0.9 million and $0.9 million is included in the accompanying statements of operations for fiscal years 2004, 2003 and 2002, respectively.

On October 12, 2001, Haas entered into an Asset Purchase Agreement with T.O. Haas, LLC or Haas LLC, for the sale of certain assets. The total purchase price was approximately $5.3 million, of which we received approximately $2.4 million in cash at closing. Haas LLC was formed by, among others, one of the executives of Haas. As of May 2002, this executive is no longer with the company. A portion of the purchase price for the acquisition of Haas in second quarter 2000 is payable to this executive in the form of noncompete and stay put payments. In connection with the sale, such noncompete payments in the amount of $2.4 million were accelerated and such liability was satisfied as a reduction of the purchase price. Approximately $1.0 million of the purchase price is payable in the form of a promissory note due in two equal annual installments, with first such payment paid January 2, 2002. As of January 3, 2003, the promissory note was paid in full. Stay put payments due to the executive of $1.6 million were accelerated to coincide with the schedule of payments due under the promissory note. Liabilities assumed by the buyer totaled $0.8 million, reflecting the remainder of the purchase price.

In connection with the sale described above, we entered into a Supply and Retail Distribution Agreement with Haas LLC. Prior to the executive leaving the company in May 2002, total sales for fiscal 2002 included five months of sales to Haas LLC of $3.7 million. Total sales for fiscal 2001 included three months of sales to Haas LLC of $2.4 million.

We were paying an advisory and monitoring fee not to exceed $200,000 annually to Charlesbank Capital Partners, LLC, or Charlesbank. Following the acquisition, we no longer pay this fee to Charlesbank. As of January 1, 2005, we paid $100,000 of the annual fee to Charlesbank and a liability has been recorded for the remaining payment, which was subsequently paid.

In connection with the acquisition and related transactions, Holdings issued 20,000 shares of 8% cumulative mandatorily redeemable preferred stock and warrants to acquire up to 21,895 shares of Holdings Class A common stock at $.01 per share to The 1818 Fund. Joseph P. Donlan, a member of the Company’s board of directors, is a Managing Director of Brown Brothers Harriman & Co., The 1818 Fund’s general partner.

Advisory fees of $13.9 million were paid to Investcorp and its co-sponsors, Berkshire Partners and Greenbriar Equity Group, in connection with the amended and restated credit facility and the issuance of the senior notes and 8% cumulative mandatorily redeemable preferred stock. These fees are recorded as assets in the Successor balance sheet and are being amortized over the life of the respective debt.

Management advisory fees of $8.0 million were paid to one or more of Investcorp and its co-sponsors (or their respective affiliates) at closing for services to be rendered over a period of five years following the date of acquisition and related transactions. This payment was deferred and is being amortized pursuant to the terms of the agreement and on a basis consistent with the service provided. Accordingly, the Company recorded amortization expense of $4.5 million during the nine months ended December 31, 2005.

Several members of our directors are executive officers of Investcorp and one of our directors is a Managing Director of Berkshire Partners.

DESCRIPTION OF OTHER INDEBTEDNESS

The following is a summary description of the principal terms of the amended and restated credit facility, the Holdings senior discount notes and the fixed rate notes. The description set forth below does not purport to be complete and is qualified in its entirety by reference to the agreements setting forth the principal terms and conditions of such indebtedness. Copies of the amended and restated credit facility and relevant indentures are available as described below under “Where You Can Find Additional Information.”

DESCRIPTION OF THE AMENDED AND RESTATED CREDIT FACILITY

General. American Tire entered into the amended and restated credit facility with a group of lenders led by Bank of America, N.A., as agent, in connection with the acquisition and the related transactions. The amended and restated credit facility provides for a five-year senior secured revolving credit facility of up to $300.0 million (of which up to $25.0 million may be utilized in the form of commercial and standby letters of credit), subject to a borrowing base.

Availability. Advances are also subject to customary borrowing conditions, including the accuracy of representations and warranties (including as to the absence of certain material adverse changes), the absence of a default, and a borrowing base that is equal to the sum of:

•

85.0% of the net amount of eligible accounts receivable plus

•

the lesser of 65.0% of the net amount of eligible tire inventory, $160.0 million and 85.0% of the appraised net orderly liquidation value of the tire inventory; plus

•

the lesser of 50.0% of the net amount of eligible non-tire inventory, $45.0 million and 85.0% of the appraised net orderly liquidation value of such eligible non-tire inventory; less

•

such other reserves, including a letter of credit, dilution reserve and rent reserve.

At December 31, 2005, availability under the revolving credit facility borrowing base was $66.6 million.

Amortization. Advances under the revolving credit facility may be made, and letters of credit may be issued, on a revolving basis, up to the full amount of the revolving credit facility, subject to the revolving credit facility-borrowing base. All remaining unpaid amounts will become due and payable at maturity of the senior secured credit facilities.

Mandatory Prepayments. Advances under the revolving credit facility must be prepaid if the aggregate amount outstanding under the revolving credit facility exceeds the revolving credit facility-borrowing base. In addition, all net cash proceeds from sales of our property and assets (with certain exceptions) must be applied to the senior credit facility, if an event of default or certain other events exist, but without any resulting permanent reduction of the revolving credit facility commitments.

Interest. Advances under the amended and restated credit facility bear interest, at our option, at either the “base rate,” equal to the greater of the federal funds rate plus 0.5% and the Bank of America prime lending rate, or LIBOR plus, in each case, the applicable margin. The applicable margin for the first six months after the closing date for a base rate loan will be 0.0% and for a LIBOR loan will be 1.5%. Thereafter, the applicable margin will be determined based on a performance-based pricing grid. During the continuance of certain events of default under the amended and restated credit facility the applicable margin will be increased by an additional 2.0% per annum.

Certain Fees. American Tire is required to pay to the lenders a commitment fee equal to 0.3% per annum on the committed undrawn amount of the revolver, subject to performance based step-downs after the first six months and letter of credit fees equal to the applicable margin for LIBOR loans on a per annum basis and a fronting fee of 0.125% per annum to be paid to the issuer of letters of credit. It has also agreed to pay certain other fees and expenses of the lenders and the agent.

Guaranties and Security. All obligations under the amended and restated credit facility are guaranteed by us and each of American Tire’s existing and future direct and indirect domestic subsidiaries that are not direct obligors thereunder. Obligations under the amended and restated credit facility are secured by a pledge of substantially all assets of the obligors, including all shares of our capital stock and that of our subsidiaries (but no more than 65% of the stock of any foreign subsidiary).

Covenants. The amended and restated credit facility contains covenants which, among other things, require American Tire to meet a fixed charge coverage ratio if it does not have at least $25.0 million available to be drawn down under the revolving credit facility (subject to a cure); restrict its ability to incur additional debt; enter into guaranties; make loans and investments; declare dividends; engage in mergers, consolidations and asset sales, enter into transactions with affiliates; create or suffer to exist liens and encumbrances; prepay, redeem or repurchase certain debt; enter into sale/leaseback transactions; modify certain material agreements or constitutive documents relating to preferred stock; and change our business. The covenants also require among others, that American Tire provide periodic financial reports to the lenders; observe certain practices and procedures with respect to the collateral pledged as security; comply with applicable laws; maintain and preserve our and our subsidiaries’ properties and corporate existence; and maintain insurance.

Events of Default. The amended and restated credit facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-default, bankruptcy, actual or asserted impairment of any loan documents, failure of security interests, material judgments, ERISA defaults, or the occurrence of a change of control (as defined in the amended and restated credit facility).

DESCRIPTION OF THE 10³/4% SENIOR FIXED RATE NOTES DUE 2013

On March 31, 2005, we issued $150.0 million of our 10³/4% senior fixed rate notes due 2013, or senior fixed rate notes, in a private placement. The senior fixed rate notes are general unsecured obligations of American Tire and are pari passu in right of payment with all of American Tire’s existing and future unsubordinated debt. The senior fixed rate notes are unconditionally guaranteed on a senior basis by our subsidiary guarantors and on a subordinated basis by Holdings.

Interest on the senior fixed rate notes accrues at 10³/4% per annum and is payable, in cash, semi-annually in arrears on April 1 and October 1 of each year, to holders of record on the immediately preceding March 15 and September 15. The senior fixed rate notes will mature on April 1, 2013. On or after April 1, 2009, at our option, we may redeem some or all of the senior fixed rate notes at 105.375% of the principal amount during the twelve-month period beginning on April 1, 2009, 102.688% of the principal amount during the twelve-month period beginning on April 1, 2010 and 100.000% on April 1, 2011 and thereafter, in each case plus accrued and unpaid interest, if any.

The indenture governing the senior fixed rate notes contains specified restrictions with respect to the conduct of our business and specified restrictive covenants, including among other things, limitations on our ability to:

•

pay dividends on or purchase our stock;

•

repurchase or make early payments on subordinated debt;

•

make investments;

•

incur additional indebtedness;

•

incur or assume liens on our assets to secure debt;

•

merge or consolidate with another company;

•

transfer or sell our assets; and

•

enter into transactions with affiliates.

The senior fixed rate notes indenture provides that we will be required to make an offer to repurchase all of the senior fixed rate notes at 101% of the outstanding aggregate principal amount of the notes (plus accrued and unpaid interest, if any) upon the occurrence of a “change of control,” as defined in the senior fixed rate notes indenture. In addition, the senior fixed rate notes indenture provides that we will offer to repurchase the senior fixed rate notes at 100% of the principal amount, plus accrued and unpaid interest, if any, from the net cash proceeds of certain asset sales if those proceeds are not reinvested or used to repay certain indebtedness.

The senior fixed rate notes indenture also specifies a number of events of default, including, among others, a failure to make timely principal or interest payments or to comply with covenants contained therein. If an event of default, other than an event of default arising from certain events of bankruptcy or insolvency, occurs and is continuing, the trustee under the senior fixed rate notes indenture or the holders of at least 25% in principal amount of the then outstanding notes may declare all the senior fixed rate notes to be due and payable immediately. If an event of default arising from certain events of bankruptcy occurs, the senior fixed rate notes will become due and payable immediately.

DESCRIPTION OF THE HOLDINGS 13% SENIOR DISCOUNT NOTES DUE 2013

On March 31, 2005, Holdings issued $51,480,000 principal amount of maturity of its 13% senior discount notes due 2013, or Holdings senior discount notes, in a private placement. The Holdings senior discount notes are general unsecured obligations and are pari passu in right of payment with all existing and future unsubordinated debt of Holdings but effectively junior to all liabilities of American Tire or American Tire’s subsidiaries.

Prior to April 1, 2007, no cash interest will accrue on the Holdings senior discount notes, rather the accreted value of the notes accretes at a rate of 13% compounded semi-annually to an aggregate accreted value of $51,480,000, the full principal amount at maturity, on April 1, 2007. Thereafter, interest will accrue at 13% per annum and will be payable on April 1 and October 1 of each year, commencing on October 1, 2007 to holders of record on the immediately preceding March 15 and September 15. The Holdings senior discount notes will mature on October 1, 2013. On or after April 1, 2007, at our option, we may redeem some or all of the Holdings senior discount notes at prices starting at 105.0% of the accreted value as of April 1, 2007 and declining to 103.0% at April 1, 2009, 101.0% at April 1, 2010 and 100.0% at April 1, 2011 and thereafter.

The indenture governing the Holdings senior discount notes contains specified restrictions with respect to the conduct of Holdings’ business and specified restrictive covenants, including among other things, limitations on its ability to:

•

pay dividends on or purchase its stock;

•

repurchase or make early payments on subordinated debt;

•

make investments;

•

incur additional indebtedness;

•

incur or assume liens on its assets to secure debt;

•

merge or consolidate with another company;

•

transfer or sell its assets; and

•

enter into transactions with affiliates.

The Holdings senior discount notes indenture provides that it will be required to make an offer to repurchase all of the Holdings senior discount notes at 101% of the accreted value of the notes (plus accrued and unpaid interest thereon, if any, if after April 1, 2007) upon the occurrence of a “change of control,” as defined in the Holdings senior discount notes indenture. In addition, the Holdings senior discount notes indenture provides that

it will offer to repurchase all or a portion of the Holdings senior discount notes at 100% of the accreted value, plus accrued and unpaid interest (if after April 1, 2007), from the net cash proceeds of certain asset sales if those proceeds are not reinvested or used to repay certain indebtedness.

The Holdings senior discount notes indenture also specifies a number of events of default, including, among others, a failure to make timely principal or interest payments or to comply with covenants contained therein. If an event of default, other than an event of default arising from certain events of bankruptcy or insolvency, occurs and is continuing, the trustee under the Holdings senior discount notes indenture or the holders of at least 25% in principal amount at maturity of the then outstanding notes may declare all the Holdings senior discount notes to be due and payable immediately. If an event of default arising from certain events of bankruptcy or insolvency occurs, the Holdings senior discount notes will become due and payable immediately.

DESCRIPTION OF THE NOTES

The following description is a summary of the material provisions of the indenture governing the floating rate notes. Such indenture will be referred to in this section as “the indenture”. We urge you to read the indenture because it, and not this description, defines your rights as holders of the notes. A Copy of the indenture has been filed as an exhibit to the registration statement on Form S-1 of which this prospectus forms a part and is available as set forth below under “Where You Can Find Additional Information.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the indenture.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

General

This description describes American Tire’s Senior Floating Rate Notes due 2012 (the “floating rate notes”) offered hereby and references herein to the “notes” include only the floating rate notes and do not include the fixed rate notes or the Holdings senior discount notes due 2013.

You can find the definitions of certain terms used in this description under the subheading “—Certain Definitions.” Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the indenture. All references in this Description of the Notes to the “Issuer” are limited to American Tire Distributors, Inc. and do not include any of its Subsidiaries.

The floating rate notes have been issued under an indenture among the Issuer, the Guarantors and Wachovia Bank, National Association, as trustee. The indenture governs any outstanding notes and all notes outstanding thereunder will be treated as one class of securities thereunder. The terms of the notes include those stated 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”). The notes are subject to all such terms pursuant to the provisions of the indenture, and holders of notes are referred to the indenture and the Trust Indenture Act for a statement thereof.

Initially, all of the Issuer’s Subsidiaries are Restricted Subsidiaries. However, under certain circumstances described below under the caption “—Certain Covenants—Limitations on Designations of Unrestricted Subsidiaries,” the Issuer is able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the indenture.

Brief Description of the Notes and the Note Guarantees

The Notes

The notes:

•

are general unsecured obligations of the Issuer;

•

are pari passu in right of payment with all existing and future unsubordinated Debt of the Issuer;

•

are senior in right of payment to any existing or future Subordinated Debt of the Issuer;

•

are effectively junior to all secured Debt of the Issuer to the extent of the value of the collateral; and

•

are unconditionally guaranteed on a senior basis by the Subsidiary Guarantors and on a subordinated basis by Holdings.

The Note Guarantees

The notes are jointly and severally guaranteed by American Tire Distributors Holdings, Inc. (“Holdings”), the Issuer’s direct parent company, and each of the Issuer’s existing and future Domestic Restricted Subsidiaries (“Subsidiary Guarantors”), other than any Immaterial Subsidiaries or future Receivables Subsidiaries of the Issuer, and by certain other Restricted Subsidiaries that may guarantee the notes in the future as described in more detail below.

The Note Guarantees of the notes:

•

are general unsecured obligations of each Subsidiary Guarantor and are subordinated obligations of Holdings;

•

are pari passu in right of payment with all existing and future unsubordinated Debt of the Subsidiary Guarantors but rank junior to all existing and future Senior Debt of Holdings;

•

are senior in right of payment to any future Subordinated Debt of each Subsidiary Guarantor; and

•

are effectively junior to all secured Debt of the Guarantors to the extent of the value of the collateral.

Principal, Maturity and Interest

The floating rate notes were issued on March 31, 2005 and are limited in aggregate principal amount to $140.0 million. The floating rate notes will mature on April 1, 2012. Interest on the floating rate notes accrues at a rate equal to the Applicable Eurodollar Rate (which will be reset quarterly) plus 6.25%, except that the interest rate on the floating rate notes for prior to July 1, 2005 was 9.34%. Interest on the floating rate notes accrues from the Issue Date or, if interest has been paid, from the date through which interest has been paid. Interest on the floating rate notes is payable, in cash, quarterly in arrears on every January 1, April 1, July 1 and October 1, to the holders of record on the December 15, March 15, June 15 and September 15 immediately preceding the next interest payment date.

The amount of interest for each day that the notes are outstanding (the “Daily Interest Amount”) is calculated by dividing the interest rate in effect for such day by 365 and multiplying the result by the principal amount of the notes. The amount of interest to be paid on the notes for each interest period is calculated by adding the Daily Interest Amounts for each day in the interest period.

All percentages resulting from any of the above calculations are rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point being rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and all dollar amounts used in resulting from such calculations are rounded to the nearest cent (with one-half cent being rounded upwards).

The interest rate on the notes will be in no event higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application.

Additional Notes

The indenture provides for the issuance of additional notes under such indenture having identical terms and conditions to the notes offered hereby, subject to compliance with the covenants contained in the indenture. Any additional notes will be part of the same issue as the notes offered hereby and will vote on all matters with the notes. For purposes of this “Description of the Notes,” reference to the notes includes additional notes except as otherwise indicated.

Methods of Receiving Payment on the Notes

Principal, premium, if any, and interest on the notes are payable at the office or agency of the Issuer maintained for such purpose (the “Paying Agent”) or, at the option of the Issuer, payment of interest may be

made by check mailed to the holders of the notes at their respective addresses set forth in the register of holders related to such notes; provided that all payments of principal, premium, if any, and interest with respect to any notes the holders of which have given wire transfer instructions to the Issuer are required to be made by wire transfer of immediately available funds to the accounts specified by the holders thereof. Until otherwise designated by the Issuer, the Issuer’s office or agency is the office of the trustee maintained for such purpose. The notes are issued in denominations of $1,000 and integral multiples thereof.

Note Guarantees

The Issuer’s payment obligations under the notes are guaranteed on a full, unconditional and joint and several basis by Holdings and each of the Issuer’s Domestic Restricted Subsidiaries, other than any Immaterial Subsidiaries and Receivables Subsidiaries. Each Note Guarantee by a Subsidiary Guarantor is limited to an amount not to exceed the maximum amount that can be Guaranteed by that Subsidiary without rendering the Note Guarantee, as it relates to such Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. See “Risk Factors—Risks Relating to the Notes—Fraudulent transfer statutes may limit your rights as a holder of the notes.”

The indenture provides that no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person (other than the Issuer or, in the case of a Subsidiary Guarantor, another Subsidiary Guarantor) unless:

(1)

subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the trustee, under the notes issued under the indenture and the registration rights agreement; and

(2)

immediately after giving effect to such transaction, no Default exists.

In the event of:

(i)

a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or

(ii)

the sale or other disposition of Capital Stock of any Subsidiary Guarantor if as a result of such disposition, such Person ceases to be a Subsidiary of the Issuer,

then the Person acquiring such assets (in the case of clause (i)) or such Guarantor (in the case of clause (ii)) will be automatically released and relieved of any obligations under its Note Guarantee and the indenture; provided that such sale or other disposition is in compliance with the indenture, including the covenant described under “—Repurchase at the Option of Holders —Asset Sales” (it being understood that only such portion of the Net Proceeds as is or is required to be applied on or before the date of such release in accordance with the terms of the indenture needs to be so applied).

In addition, any Subsidiary Guarantor that becomes an Immaterial Subsidiary will be released from its Note Guarantee of the notes and the indenture in accordance with the provisions of the indenture and each Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in accordance with the provisions of the indenture will be automatically released from its Note Guarantee and the indenture upon effectiveness of such designation.

Ranking

Notes and Subsidiary Note Guarantees

The notes and the related Subsidiary Note Guarantees rank equally in right of payment with all unsubordinated obligations of the Issuer and the Subsidiary Guarantors, but are effectively subordinated to all of

their secured obligations, including indebtedness under the Amended and Restated Credit Facility, to the extent of the value of the assets securing such indebtedness. Debt under the Amended and Restated Credit Facility is secured by a lien on substantially all of the assets of the Issuer and the Guarantors, including the capital stock of the Issuer and inventory and accounts receivable. In addition, the Issuer and its subsidiaries have granted purchase money liens on their inventory to certain of their most significant vendors to secure obligations to pay for such inventory. Although the indenture limits the incurrence of Liens, the limitation does not apply to Liens in favor of such vendors and is subject to a number of significant exceptions. As of December 31, 2005, the Issuer and the Guarantors had approximately $211.2 million of secured indebtedness outstanding and $45.9 million of secured trade payables.

The notes and the Subsidiary Note Guarantees also effectively rank junior to all claims of creditors of future non-guarantor Subsidiaries, including trade creditors, secured creditors and creditors holding debt and guarantees issued by those Subsidiaries, and claims of preferred stockholders (if any) of those subsidiaries. Although the indenture limits the incurrence of Debt and preferred stock of Restricted Subsidiaries, the limitation is subject to a number of significant exceptions. Moreover, the indenture does not impose any limitations on the incurrence by Restricted Subsidiaries of liabilities that are not considered Debt under the indenture.

Subordination of Holdings’ Note Guarantee

Holdings’ Note Guarantee of the payment of principal, interest and premium on the notes is subordinated to the prior payment in full of all Senior Debt of Holdings, including Senior Debt of Holdings incurred after the Issue Date.

The holders of Senior Debt of Holdings are entitled to receive payment in full of all Obligations due in respect of Senior Debt of Holdings (including interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt of Holdings) before the holders of the notes will be entitled to receive any payment with respect to Holdings’ Note Guarantee (except that holders may receive and retain Permitted Junior Securities and payments made from the trusts described under “—Satisfaction and Discharge” and “—Legal Defeasance and Covenant Defeasance”), in the event of any distribution to creditors of Holdings:

(1)

in a liquidation or dissolution of Holdings;

(2)

in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to Holdings or its property;

(3)

in an assignment for the benefit of creditors; or

(4)

in any marshaling of Holdings’ assets and liabilities.

Holdings also may not make any payment in respect of its Note Guarantee of the notes (except in Permitted Junior Securities or from the trusts described under “—Satisfaction and Discharge” and “—Legal Defeasance and Covenant Defeasance”) if:

(1)

a payment default on Designated Senior Debt of Holdings occurs and is continuing beyond any applicable grace period; or

(2)

any other default occurs and is continuing beyond any applicable grace period on any series of Designated Senior Debt of Holdings (a “nonpayment default”) that permits holders of that series of Designated Senior Debt of Holdings to accelerate its maturity and the trustee receives a notice of such default (a “Payment Blockage Notice”) from the holders of any Designated Senior Debt of Holdings or any agent, trustee or other representative therefor.

Payments on Holdings’ Note Guarantee of the notes may and shall be resumed:

(1)

in the case of a payment default on Designated Senior Debt of Holdings, upon the date on which such default is cured or waived; and

(2)

in the case of a nonpayment default, on the earlier of the date on which such default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of such Designated Senior Debt of Holdings has been accelerated.

No new Payment Blockage Notice may be delivered unless and until:

(1)

360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and

(2)

all scheduled payments of principal, interest and premium, if any, on the notes that have come due have been paid in full in cash.

No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice.

If the trustee or any holder of the notes receives a payment from Holdings in respect of Holdings’ Note Guarantee (except in Permitted Junior Securities or from the trusts described under “—Satisfaction and Discharge” and “—Legal Defeasance and Covenant Defeasance”) when:

(1)

the payment is prohibited by these subordination provisions; and

(2)

the Trustee or the holders have actual knowledge that the payment is prohibited;

the trustee or the holders, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of Holdings. Upon the proper written request of the holders of Senior Debt of Holdings, the trustee or the holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of Holdings or their proper representative.

Holdings must promptly notify holders of its Senior Debt if payment of the notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of Holdings, holders of notes may recover less ratably upon Holdings’ Note Guarantee than creditors of Holdings who are holders of Senior Debt or unsubordinated obligations of Holdings.

“Designated Senior Debt” means:

(1)

any Debt outstanding under the Amended and Restated Credit Facility;

(2)

the Holdings senior discount notes; and

(3)

any other Senior Debt permitted under the indenture, the principal amount of which is $20.0 million or more and that has been designated by Holdings as “Designated Senior Debt.”

“Permitted Junior Securities” means:

(1)

Equity Interests in Holdings; or

(2)

debt securities of Holdings that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than Holdings’ Note Guarantee is subordinated to Senior Debt under the indenture.

“Senior Debt” means:

(1)

all Debt of Holdings outstanding under Credit Facilities and all Hedging Obligations with respect thereto;

(2)

the Holdings senior discount notes;

(3)

any other Debt of Holdings (including Acquired Debt), unless the instrument under which such Debt is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Holdings’ Note Guarantee; and

(4)

all Obligations with respect to the items listed in the preceding clauses (1), (2) and (3).

Notwithstanding anything to the contrary in the preceding, Senior Debt will not include:

(1)

any liability for federal, state, local or other taxes owed or owing by Holdings;

(2)

any Debt of Holdings to any of Holdings’ Subsidiaries or other Affiliates (other than Debt under a Credit Facility to any Affiliate); or

(3)

any trade payables.

Holdings has no assets other than its equity ownership of the Issuer. In addition, all of its debt, including the Holdings senior discount notes and its Guarantee of the Amended and Restated Credit Agreement, will constitute Senior Debt. Accordingly, you should not expect that Holdings will be able to participate in debt service upon the notes and it is unlikely that it would have any funds to satisfy its Note Guarantee in the event of a default.

Optional Redemption

General

Except as described in the following paragraphs, the notes are not redeemable at the Issuer’s option prior to April 1, 2007. Thereafter, the notes will be subject to redemption at any time at the option of the Issuer, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest if any, to the applicable redemption date (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on April 1 of the years indicated below:


Year	Percentage
2007	102.000	%
2008	101.000	%
2009 and thereafter	100.000	%

Upon Certain Equity Offerings

In addition, at any time and from time to time, prior to April 1, 2007, the Issuer may redeem up to 35% of the sum of (1) the original aggregate principal amount of floating rate notes initially issued and (2) the original aggregate principal amount of any additional floating rate notes issued under the related indenture, if any, at a redemption price of 100% of the principal amount thereof, plus a premium per $1,000 amount of such notes equal to the then-current interest rate on the floating rate notes (expressed as a percentage) multiplied by $1,000, plus accrued and unpaid interest if any, to the redemption date (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds of a public offering of common stock of the Issuer or a public offering of common stock of Holdings, the proceeds of which are contributed as common equity capital to the Issuer; provided that

(1)

at least 65% of the sum of (a) the original aggregate principal amount of floating rate notes initially issued and (b) the original aggregate principal amount of any additional floating rate notes, if any, issued under the related indenture, remains outstanding immediately after the occurrence of any such redemption; and

(2)

such redemption shall occur within 90 days of the date of the closing of such public offering.

Upon a Change of Control

At any time on or prior to April 1, 2007, the floating rate notes may be redeemed as a whole but not in part at the option of the Issuer upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days’ prior notice (but in no event may any such redemption occur more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each holder’s registered address. The redemption price will be equal to (i) 100% of the principal amount of the floating rate notes, plus (ii) accrued interest to the redemption date (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date), plus (iii) the Applicable Floating Rate Note Premium, if any.

Selection and Notice

If less than all of the notes are to be redeemed at any time, selection of notes for redemption shall be made by the trustee in compliance with the requirements of the principal national securities exchange, if any, on which such notes are listed, or, if such notes are not so listed, on a pro rata basis (among the notes issued on the Issue Date (and any new notes issued in exchange therefor) and any additional notes of such series issued under the indenture after the Issue Date, if any, as one class), by lot or by such method as the trustee shall deem fair and appropriate; provided that no notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. If any note is to be redeemed in part only, the notice of redemption that relates to such note shall state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note shall be issued in the name of the holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. If the redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the note is registered at the close of business, on such record date. On and after the redemption date, unless the Issuer defaults in payment of the redemption price, interest if any, ceases to accrue on notes or portions of them called for redemption.

Mandatory Redemption

Except as set forth below under “—Repurchase at the Option of Holders” the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the notes.

Repurchase at the Option of Holders

Change of Control

The indenture provides that upon the occurrence of a Change of Control, unless all notes issued thereunder have been called for redemption pursuant to the provisions described above under the caption “—Optional Redemption,” each holder of notes issued thereunder will have the right to require the Issuer to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder’s notes pursuant to an offer on the terms set forth in the indenture (the “Change of Control Offer”). In the Change of Control Offer, the Issuer shall offer a payment in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the “Change of Control Payment”), subject to the rights of noteholders on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, unless notice of redemption of all notes of a series has then been given pursuant to the provisions described under the caption “—Optional Redemption” above, the Issuer shall mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required

by the indenture and described in such notice. The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of any notes as a result of a Change of Control. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of this covenant, the Issuer shall comply with such securities laws and regulations and will not be deemed to have breached its obligations under this paragraph by virtue thereof.

On the Change of Control Payment Date, the Issuer shall, to the extent lawful:

(1)

accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control Offer;

(2)

deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all notes or portions thereof so tendered; and

(3)

deliver or cause to be delivered to the trustee the notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of notes or portions thereof being purchased by the Issuer.

The Paying Agent shall promptly mail to each holder of notes so tendered the Change of Control Payment for such notes, and the trustee shall promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of the note surrendered, if any; provided that each such new note shall be in a principal amount of $1,000 or an integral multiple thereof. The Issuer shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. For the purposes of the preceding sentence, it shall be sufficient for the Issuer to publish the results of the Change of Control on its website.

The Change of Control provisions described above are applicable whether or not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the holders of the notes to require that the Issuer repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. The Change of Control purchase feature is a result of negotiations between the Issuer and the Initial Purchasers. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Issuer would decide to do so in the future. Subject to the limitations discussed below, the Issuer could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the indenture, but that could materially increase the amount of Debt outstanding at such time or otherwise affect the Issuer’s capital structure or credit ratings.

The Amended and Restated Credit Facility limits the ability of the Issuer to purchase any notes, and also provides that certain change of control events with respect to the Issuer would constitute a default thereunder. Any future credit agreements or other agreements to which the Issuer becomes a party or that may be entered into by Subsidiaries of the Issuer may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Issuer is prohibited from purchasing notes, the Issuer could seek the consent of its lenders to purchase notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from purchasing notes. In such case, the Issuer’s failure to purchase tendered notes would constitute an Event of Default under the indenture which would, in turn, constitute a default under the Amended and Restated Credit Facility or any future credit facility or other agreement.

The Issuer is not required to make a Change of Control Offer upon a Change of Control if a third party makes and consummates a Change of Control Offer in a manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by the Issuer and purchases all notes validly tendered and not withdrawn under the Change of Control Offer.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Issuer and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require the Issuer to repurchase such notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Issuer and its Subsidiaries taken as a whole to another Person or group may be uncertain.

Asset Sales

The indenture provides that the Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1)

the Issuer (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2)

at least 75% of the consideration therefor received by the Issuer or such Restricted Subsidiary is in the form of

(x)

cash or Cash Equivalents; or

(y)

(a) all or substantially all of the assets of, or the majority of the Voting Stock of, another Person that thereupon becomes a Restricted Subsidiary engaging in, a Permitted Business or

(b) assets that are used or useful in a Permitted Business.

For purposes of this clause (2) (a) a lease entered into in connection with a sale-leaseback transaction shall not constitute part of the proceeds of such transaction and (b) each of the following are deemed to be cash:

(i)

any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet), of the Issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes issued under the indenture or, in the case of liabilities of a Guarantor, the Note Guarantee of such Guarantor) that are assumed by the transferee of any such assets; and

(ii)

any securities, notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash (to the extent of the cash received) within 90 days after receipt.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Issuer (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds, at its option:

(1)

to repay Secured Debt, Debt of any Restricted Subsidiary (other than a Guarantor) or Pari Passu Debt (in each case other than Debt owed to the Issuer or a Subsidiary of the Issuer); provided that if the Issuer or any Restricted Subsidiary shall so reduce Pari Passu Debt, it shall equally and ratably make an Asset Sale Offer to the holders of the notes (in accordance with the procedures set forth below for an Asset Sale Offer);

(2)

to make capital expenditures or to acquire properties or assets that will be used or useful in the Permitted Business of the Issuer or any of its Restricted Subsidiaries; or

(3)

to acquire a controlling interest in a Person engaged in a Permitted Business;

provided that if during such 365-day period the Issuer or a Restricted Subsidiary enters into a definitive agreement committing it to apply such Net Proceeds in accordance with the requirements of clause (2) or (3) or if the application of such Net Proceeds is part of a project authorized by the Board of Directors that will take longer than 365 days to complete, such 365 day period shall be extended with respect to the amount of Net Proceeds so

committed until required to be paid in accordance with such agreement (or, if earlier, until termination of such agreement) or, until completion of such project, as the case may be. Pending the final application of any Net Proceeds, the Issuer or any Restricted Subsidiary may temporarily reduce borrowing under a Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of the preceding paragraph shall be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, with respect to the notes the Issuer shall:

(1)

make an offer (an “Asset Sale Offer”) to all holders of the notes; and

(2)

prepay, purchase or redeem (or make an offer to do so) any other Pari Passu Debt of the Issuer in accordance with provisions governing such Debt requiring the Issuer to prepay, purchase or redeem such Debt with the proceeds from any Asset Sales (or offer to do so),

pro rata in proportion to the respective principal amounts of the notes and such other Debt required to be prepaid, purchased or redeemed or tendered for pursuant to such offer to purchase the maximum principal amount of notes that may be purchased out of such pro rata portion of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of their principal amount plus accrued and unpaid interest to the date of purchase subject to the right of holders of record on a record date to receive interest on the relevant interest payment date in accordance with the procedures set forth in the indenture.

If any Excess Proceeds remain after completion of an Asset Sale Offer and, if applicable, any prepayment, purchase, redemption or tender of or for Pari Passu Debt, the Issuer and the Restricted Subsidiaries may use any remaining Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes surrendered by holders thereof exceeds the pro rata portion of such Excess Proceeds to be used to purchase notes, the trustee shall select the notes to be purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. Notwithstanding the foregoing, the Issuer may commence an Asset Sale Offer prior to the expiration of 365 days after the occurrence of an Asset Sale.

The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the notes pursuant to an Asset Sale Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with the provisions of the indenture, the Issuer shall comply with such securities laws and regulations and shall not be deemed to have breached its obligations described in the indenture by virtue thereof.

Certain Covenants

The indenture contains various restrictive covenants, including the covenants described below.

Restricted Payments

The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1)

declare or pay any dividend or make any other distribution (including any payment by the Issuer or any Restricted Subsidiary in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (other than dividends or distributions payable in Equity Interests (other than Disqualified Equity Interests) of the Issuer and dividends payable to the Issuer or any Restricted Subsidiary);

(2)

purchase, redeem or otherwise acquire or retire for value (including any acquisition or retirement by the Issuer or any Restricted Subsidiary in connection with any merger or consolidation) any Equity Interests of the Issuer or any Holding Company held by Persons other than the Issuer or any Restricted Subsidiary;

(3)

make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Debt of the Issuer or any Subsidiary Guarantor (excluding any intercompany Debt between the Issuer and any of its Restricted Subsidiaries), except (a) a payment of interest, principal or other related Obligations at Stated Maturity and (b) the purchase, repurchase or other acquisition or retirement of Subordinated Debt of the Issuer or any Subsidiary Guarantor in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or other acquisition or retirement; or

(4)

make any Restricted Investment,

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

(a)

no Default shall have occurred and be continuing; and

(b)

the Issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Debt pursuant to the Coverage Ratio Exception; and

(c)

such Restricted Payment, together with (without duplication) the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries on or after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3)(A), (4), (5), (7) and (8) and excluding 50% of any Restricted Payments under clause (9) (to the extent such payment is not deducted in calculating Consolidated Net Income) or 100% of such payment under clause (9) if such payment is deducted in calculating Consolidated Net Income) of the next succeeding paragraph), is less than the sum (without duplication) (the “Restricted Payments Basket”) of:

(i)

50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) from the beginning of the fiscal quarter during which the Issue Date occurs to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(ii)

100% of the aggregate net cash proceeds received by the Issuer from the issue or sale (other than to a Subsidiary) of, or from capital contributions with respect to, Equity Interests of the Issuer (other than Disqualified Equity Interests and Excluded Cash Contributions), in either case after the Issue Date; plus

(iii)

the amount by which the aggregate principal amount (or accreted value, if less) of Debt of the Issuer or any Restricted Subsidiary is reduced on the Issuer’s consolidated balance sheet upon the conversion or exchange after the Issue Date of that Debt for Equity Interests (other than Disqualified Stock) of the Issuer, together with the net cash proceeds received by the Issuer at the time of such conversion or exchange, if any, less the amount of any cash, or the fair market value of any property (other than such Equity Interests), distributed by the Issuer upon such conversion or exchange; plus

(iv)

100% of the aggregate net cash proceeds received by the Issuer or a Restricted Subsidiary of the Issuer since the Issue Date from (A) Restricted Investments, whether through interest payments, principal payments, dividends or other distributions and payments, or the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) thereof made by the Issuer and its Restricted Subsidiaries and (B) a cash dividend from, or the sale (other than to the Issuer or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary, in each case to the extent not otherwise included in Consolidated Net Income of the Issuer for such period; plus

(v)

upon the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of the Investments of the Issuer and its Restricted Subsidiaries (other than such Subsidiary) in such Subsidiary as of the date of such redesignation.

The foregoing provisions will not prohibit:

(1)

the payment of any dividend within 60 days after the date of declaration thereof, if at such date of declaration such payment would have complied with the provisions of the indenture;

(2)

the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment are designated in an Officer’s Certificate as Excluded Cash Contributions and shall not increase the Restricted Payments Basket;

(3)

the redemption, repurchase, retirement, defeasance or other acquisition of Subordinated Debt or Disqualified Stock of the Issuer or any Subsidiary Guarantor (A) made by an exchange for, or with the net cash proceeds from a substantially concurrent incurrence of, Permitted Refinancing Debt or (B) upon a Change of Control or Asset Sale to the extent required by the agreement governing such Subordinated Debt but only if the Issuer shall have complied with the covenants described under the heading “Change of Control” or, as the case may be, “Asset Sales” and purchased all notes validly tendered pursuant to the relevant offer prior to purchasing or repaying such Subordinated Debt;

(4)

the payment of any dividend (or any similar distribution) by a Restricted Subsidiary of the Issuer to the holders of its common Equity Interests on a pro rata basis;

(5)

to the extent constituting Restricted Payments, the Specified Affiliate Payments;

(6)

Restricted Payments in an aggregate amount not to exceed $15.0 million;

(7)

payments to existing holders of the Issuer’s Equity Interests (including payments to dissenting shareholders, optionholders and warrantholders), in each case as described in the Merger Agreement, payment of The 1818 Mezzanine Fund II, L.P.’s transaction expenses and payment of the Issuer’s and its Affiliates’ transaction expenses, including fees payable to members of the Initial Control Group (to the extent constituting Restricted Payments) and payments to the Issuer’s officers and employees, in each case (except as to payments to dissenters and payment of The 1818 Mezzanine Fund II, L.P.’s transaction expenses) as described in this prospectus under the headings “The Acquisition,” “Use of Proceeds” and “Certain Relationships and Related Transactions”;

(8)

so long as no Default or Event of Default shall have occurred and be continuing, payments of dividends to Holdings to fund (a)(i) interest payments, at their Stated Maturity, on the Holdings senior discount notes outstanding at the Issue Date (or any Holdings senior discount notes issued in exchange therefor in the exchange offer), at the rate specified in such Holdings senior discount notes (or Holdings senior discount notes, as applicable) as in effect on the Issue Date, and (ii) mandatory redemption of a portion of such Holdings senior discount notes (or Holdings senior discount notes, as applicable) in 2010 pursuant to the terms of Holdings senior discount notes (or Holdings senior discount notes, as applicable) as in effect on the Issue Date, (b) dividends or redemption payments by Holdings with respect to the shares of Series B Preferred Stock of Holdings outstanding on the Issue Date to the extent required to be paid by Holdings pursuant to the certificates of designations relating to such stock as in effect on the Issue Date; and (c) an offer to purchase upon a Change of Control or Asset Sale to the extent required by the terms of such Holdings senior discount notes (or Holdings senior discount notes, as applicable), but only if the Issuer shall have complied with the covenants described above under the heading “—Change of Control” or “—Asset Sales,” as the case may be and purchased all notes validly tendered pursuant to the relevant offer prior to paying any such dividend to Holdings; and

(9)

so long as no Default or Event of Default shall have occurred and be continuing, cash dividends or other Restricted Payments to Holdings in an amount sufficient to enable Holdings to make payments of cash interest on any Qualified Holdco Debt; provided that any such dividend or other Restricted Payment is used promptly by Holdings to make such payment.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors of the Issuer.

In addition, if any Person (other than an Unrestricted Subsidiary) in which an Investment is made, which Investment constituted a Restricted Payment when made, thereafter becomes a Restricted Subsidiary, such Investments previously made in such Person shall no longer be counted as Restricted Payments for purposes of calculating the aggregate amount of Restricted Payments pursuant to clause (c) of the first paragraph of this covenant to the extent that such Investments would not have been Restricted Payments had such Person been a Restricted Subsidiary at the time such Investments were made.

In making the computations required by this covenant:

(a)

the Issuer or the relevant Restricted Subsidiary may use audited financial statements for the portions of the relevant period for which audited financial statements are available on the date of determination and unaudited financial statements and other current financial data based on the books and records of the Issuer for the remaining portion of such period; and

(b)

the Issuer or the relevant Restricted Subsidiary will be permitted to rely in good faith on the financial statements and other financial data derived from the books and records of the Issuer and the Restricted Subsidiary that are available on the date of determination.

If the Issuer makes a Restricted Payment that, at the time of the making of such Restricted Payment, would in the good faith determination of the Issuer or any Restricted Subsidiary be permitted under the requirements of the indenture, such Restricted Payment will be deemed to have been made in compliance with the indenture notwithstanding any subsequent adjustments made in good faith to the Issuer’s or any Restricted Subsidiary’s financial statements, affecting Consolidated Net Income of the Issuer for any period.

For the avoidance of doubt, it is expressly agreed that no payment or other transaction permitted by clauses (1) or (5) of the second paragraph of the covenant described under “—Certain Covenants—Transactions with Affiliates,” below, shall be considered a Restricted Payment for purposes of, or otherwise restricted by, the indenture.

Incurrence of Debt and Issuance of Preferred Stock

The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Debt (including Acquired Debt) and the Issuer shall not permit any of its Restricted Subsidiaries that are not Guarantors to issue any shares of Preferred Stock; provided, however, that the Issuer and any Subsidiary Guarantor may incur Debt (including Acquired Debt) if the Consolidated Coverage Ratio for the Issuer’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Debt is incurred would have been at least 2.00 to 1.00 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Debt had been incurred at the beginning of such four-quarter period (the “Coverage Ratio Exception”).

The provisions of the first paragraph of this covenant do not apply to any of the following items of Debt or Preferred Stock (collectively, “Permitted Debt”):

(1)

the incurrence by the Issuer or any of its Restricted Subsidiaries of Debt (with letters of credit being deemed to have a principal amount equal to the undrawn face amount thereof) under Credit Facilities (including Guarantees of such Debt by the Issuer or any of its Subsidiaries); provided that the aggregate principal amount of such Debt outstanding pursuant to this clause (1) without duplication, does not exceed an amount equal to the greater of (a) $325.0 million and (b) the Borrowing Base at the

time such Debt is incurred, in each case less the aggregate amount of purchase commitments (determined as of the date of any incurrence of Debt under this clause (1)) under any Qualified Receivables Transaction that involves the transfer of assets by the Issuer or Restricted Subsidiaries in a manner that does not constitute the incurrence of Debt (other than Debt permitted under clause (6) below); provided that such reduction shall no longer apply upon termination of such Qualified Receivables Transaction;

(2)

the incurrence by the Issuer and its Restricted Subsidiaries of Existing Debt;

(3)

the incurrence by the Issuer of Debt represented by the notes issued on the Issue Date (or any new notes issued in exchange therefor in the exchange offer pursuant to the registration rights agreement relating to the notes) and by the Subsidiary Guarantors of Debt represented by the related Note Guarantees (or any guarantees issued in exchange therefor in such exchange offer);

(4)

the incurrence by the Issuer or any of its Restricted Subsidiaries of (a) Acquired Debt or (b) Debt (including Capital Lease Obligations, including those under sale-leaseback transactions) or Preferred Stock for the purpose of financing or refinancing all or any part of the purchase price or cost of construction or improvement of any property, plant or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and whether such Debt or Preferred Stock is owed or issued to the seller or Person carrying out such construction or improvement or to any third party), in an aggregate principal amount at the date of such incurrence (including all Permitted Refinancing Debt incurred to refund, refinance or replace any other Debt incurred pursuant to this clause (4)) not to exceed an amount equal to the greater of (x) $25.0 million and (y) 5.0% of Total Assets at any one time outstanding; provided that, such Debt exists at the date of such purchase or transaction or is created within 180 days thereafter;

(5)

the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Debt in exchange for, or the net proceeds of which are used to refund, refinance or replace Debt incurred pursuant to clauses (2) (other than Existing Debt of the types referred to in clauses (6) and (7)), (3), (4) or (5);

(6)

the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Debt or Preferred Stock owed or issued to and held by the Issuer and any of its Restricted Subsidiaries including any Debt arising in connection with a Qualified Receivables Transaction, provided, however, that (a) any such Debt of the Issuer shall be subordinated and junior in right of payment to the notes and (b)(i) any subsequent issuance or transfer of Equity Interests or other action that results in any such Debt or Preferred Stock being held by a Person other than the Issuer or a Restricted Subsidiary and (ii) any sale or other transfer of any such Debt or Preferred Stock to a Person that is not either the Issuer or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Debt or issuance of such Preferred Stock by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7)

the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations that are incurred (a) principally for the purpose of fixing or hedging interest rate risk with respect to any Debt that is permitted by the terms of the indenture to be outstanding or (b) principally for the purpose of fixing or hedging currency exchange rate risk or commodity price risk incurred in the ordinary course of business;

(8)

the incurrence of any Guarantee by the Issuer or any Subsidiary Guarantor of Debt of the Issuer or a Restricted Subsidiary (other than an Immaterial Subsidiary that is not a Guarantor) of the Issuer that was permitted to be incurred by another provision of this covenant and the incurrence of any Guarantee by any Foreign Restricted Subsidiary of Debt of another Foreign Restricted Subsidiary;

(9)

the incurrence by the Issuer or any of its Restricted Subsidiaries of additional Debt (which may comprise Debt under the Amended and Restated Credit Facility) in an aggregate principal amount (or

accreted value, as applicable), and the issuance by Restricted Subsidiaries that are not Guarantors of Preferred Stock with a liquidation preference, at any time outstanding, pursuant to this clause (9) not to exceed an amount equal to $25.0 million.

Notwithstanding any other provision in this covenant, the maximum amount of Debt that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies.

For purposes of determining compliance with this covenant:

(1)

the outstanding principal amount of any particular Debt shall be counted only once such that (without limitation) any obligation arising under any guarantee, Lien, letter of credit or similar instrument supporting such Debt (to the extent such guarantee, Lien, letter of credit or similar instrument is otherwise permitted to be incurred) shall be disregarded;

(2)

in the event that an item of Debt meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) of the definition of Permitted Debt above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer shall, in its sole discretion, classify (and may, from time to time, re-classify) such item of Debt in any manner that complies with this covenant and such item of Debt will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof; provided that all outstanding Debt under the Amended and Restated Credit Facility immediately following the Transactions will be deemed to have been incurred pursuant to clause (1) of the definition of Permitted Debt;

(3)

accrual of interest or dividends (including the issuance of “pay in kind” securities in respect of such accrued interest or dividends), the accretion of accreted value or liquidation preference and the extension of maturity will not be deemed to be an incurrence of Debt or issuance of Preferred Stock; provided, in each such case, that the amount thereof is included in Consolidated Interest Expense of the Issuer as accrued; and

(4)

any Qualified Holdco Debt incurred in reliance upon the Issuer’s ability to incur Permitted Debt will be deemed to be incurred by the Issuer for purposes of determining whether additional Permitted Debt can be incurred for so long as such Qualified Holdco Debt remains outstanding.

Liens

The indenture provides that the Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Debt (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the indenture and the notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by such Lien or such other obligations are no longer obligations of the Issuer or any of its Restricted Subsidiaries; provided that:

(1)

if such other Debt constitutes Subordinated Debt or is otherwise subordinate or junior in right of payment to the Obligations under the indenture, the notes or the Note Guarantee, as the case may be, such Lien is expressly made prior and senior in priority to the Lien securing such other Debt; or

(2)

in any other case, such Lien ranks equally and ratably with or prior to the Lien securing the other Debt or obligations so secured.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1)

(i) pay dividends or make any other distributions to the Issuer or any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Debt owed to the Issuer or any of its Restricted Subsidiaries;

(2)

make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

(3)

transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions do not apply to encumbrances or restrictions:

(a)

under contracts in effect on the Issue Date, including the Amended and Restated Credit Facility and other Existing Debt and the related documentation;

(b)

under the notes, the indenture, the fixed rate notes, the Holdings senior discount notes, the indentures governing the fixed rate notes and the Holdings senior discount notes and any other related agreement entered into after the Issue Dates, provided that the encumbrances or restrictions in any such other agreement are not materially more restrictive, taken as a whole, than those contained in the indenture and the notes;

(c)

under any agreement or other instrument of a Person acquired by the Issuer or any of its Restricted Subsidiaries as in effect at the time of such acquisition (but not created in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;

(d)

existing under or by reason of purchase money obligations (including Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (3) above on the property so acquired;

(e)

created in connection with any Qualified Receivables Transaction that, in the good faith determination of the Board of Directors or senior management of the Issuer, are necessary or advisable to effect such Qualified Receivables Transaction;

(f)

in the case of clause (3) above, (i) that restrict in a customary manner the subletting, assignment, or transfer of any property or asset that is subject to a lease, license or similar contract, (ii) by virtue of any transfer of, agreement to transfer, option or right with respect to any property or assets of the Issuer or any Restricted Subsidiary not otherwise prohibited by the indenture, (iii) contained in security agreements or mortgages securing Debt to the extent such encumbrances or restrictions restrict the transfer of the property subject to such security agreements or mortgages, or (iv) any Lien on property or assets of the Issuer or any Restricted Subsidiary not otherwise prohibited by the indenture;

(g)

existing under or by reason of contracts for the sale of assets, including any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(h)

on cash or other deposits or net worth imposed by leases and customer contracts entered into in the ordinary course of business;

(i)

in customary form under joint venture agreements and other similar agreements which limitations are only applicable to the Person or assets that are the subject of such agreements (and any assets of such Person);

(j)

any encumbrances or restrictions required by any governmental, local or regulatory authority having jurisdiction over the Issuer or any of its Restricted Subsidiaries or any of their businesses;

(k)

contained in the terms governing any Debt of any Restricted Subsidiary otherwise permitted to be incurred under the indenture if (as determined in good faith by the Board of Directors of the Issuer) (i) the encumbrances or restrictions are ordinary and customary for a financing of that type and (ii) the encumbrances or restrictions would not, at the time agreed to, be expected to materially adversely affect the ability of Issuer to make payments on the notes; or

(l)

under any Permitted Refinancing Debt or any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (k) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings, taken as a whole, are, in the good faith judgment of the Issuer, not materially more restrictive with respect to such encumbrances or restrictions than those contained in the Debt, contracts, instruments or obligations prior to the incurrence of such Debt or such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Transactions with Affiliates

The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any contract, agreement, understanding, loan, advance, guarantee or other transaction with, or for the benefit of, any Person that, prior to such transaction, was an Affiliate of the Issuer (each of the foregoing, an “Affiliate Transaction”), unless:

(1)

such Affiliate Transaction is on terms that, taken as a whole, are not materially less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person; and

(2)

the Issuer delivers to the trustee:

(i)

with respect to any Affiliate Transaction entered into after the Issue Date involving aggregate consideration in excess of $7.5 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and that such Affiliate Transaction has been approved by the Board of Directors; and

(ii)

with respect to any Affiliate Transaction involving aggregate consideration in excess of $20.0 million, an opinion as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an investment banking, appraisal or accounting firm of national standing.

Notwithstanding the foregoing, none of the following shall be prohibited by this covenant (or be deemed to be Affiliate Transactions):

(1)

any employment agreements, consulting agreements, non-competition agreements, stock purchase or option agreements, collective bargaining agreements, employee benefit plans or arrangements (including vacation plans, health and life insurance plans, deferred compensation plans, stock loan programs, long term incentive plans, directors’ and officers’ indemnification agreements and retirement, savings or similar plans), related trust agreements or any similar arrangements, in each case in respect of employees, officers, directors or consultants that are natural persons and entered into in the ordinary course of business, any payments or other transactions contemplated by any of the foregoing and any other payments of compensation to employees, officers, directors or consultants that are natural persons in the ordinary course of business or in connection with the Issuer’s transition to new ownership;

(2)

transactions between or among (i) the Issuer and/or its Restricted Subsidiaries or (ii) the Issuer and/or one or more of its Restricted Subsidiaries and any joint venture; provided, in the case of this clause (ii), no Affiliate of the Issuer (other than a Restricted Subsidiary) owns any of the Capital Stock of any such joint venture;

(3)

Permitted Investments and Restricted Payments (including Specified Affiliate Payments, even if not Restricted Payments) that are permitted by the provisions of the indenture described above under the caption “—Restricted Payments;”

(4)

transactions in connection with any Qualified Receivables Transaction;

(5)

payments to Investcorp, Berkshire Partners, Greenbriar or any other holder of Capital Stock or any of their respective Affiliates (whether or not such Persons are Affiliates of the Issuer) for (a) any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities and related expenses, including in connection with acquisitions, divestitures or a Change of Control, which payments are on arm’s length terms and approved by the Board of Directors of the Issuer in good faith and (b) any annual management, consulting and advisory fees and related expenses, but excluding any such fees payable prior to the fifth anniversary of the Issue Date (other than the prepayment of annual management fees on or about the Issue Date as disclosed in this prospectus);

(6)

any agreement as in effect on the Issue Date (including the Merger Agreement and the advisory agreements with members of the Initial Control Group) or any amendment thereto (so long as any such amendment is not disadvantageous to the holders in any material respect) or any transaction contemplated thereby;

(7)

transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the indenture which are fair to the Issuer or its Restricted Subsidiaries, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, in each case in the reasonable determination of the Board of Directors of the Issuer or the senior management thereof;

(8)

the issuance of Equity Interests (other than Disqualified Stock) of the Issuer or Holdings or any capital contribution to the Issuer;

(9)

the issuance of Permitted Debt permitted by clause (9) of the definition of “Permitted Debt” to any Affiliate on terms that, taken as a whole, are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction with an unrelated Person, or, if there is no comparable transaction, have been negotiated in good faith by the parties thereto; and

(10)

any transaction in which the Issuer or any of its Restricted Subsidiaries delivers to the trustee a letter issued by an investment banking, appraisal or accounting firm of national standing stating that such transaction is fair from a financial point of view or meets the requirements of clause (1) of the first paragraph of this covenant.

Limitations on Designations of Unrestricted Subsidiaries

The Board of Directors may designate (a “Designation”) any Restricted Subsidiary (including any newly acquired or newly formed Subsidiary of the Issuer) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Issuer or any Restricted Subsidiary which is not simultaneously being designated an Unrestricted Subsidiary, so long as such Designation would not cause a Default, provided that:

(1)

any then existing Guarantee by the Issuer or any Restricted Subsidiary of any Debt of the Subsidiary being so designated shall be deemed an “incurrence” of such Debt at the time of such Designation; and

(2)

the “incurrence” of Debt referred to in clause (1) of this provision would be permitted under the “—Incurrence of Debt and Issuance of Preferred Stock” covenant described above.

For purposes of making the determination of whether such Designation would cause a Default, all outstanding Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated, will be deemed made at the time of such Designation. The amount of such outstanding Investments will be equal to the portion of the fair market value of the net assets of any Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary that is represented by the interest of the Issuer and its Restricted Subsidiaries in such Subsidiary, in each case as determined in good faith by the Board of

Directors of the Issuer. Such Designation will only be permitted if any such Investment would be permitted at such time.

The Board of Directors may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a “Revocation”), provided that:

(1)

no Default shall have occurred and be continuing at the time of or after giving effect to such Revocation; and

(2)

all Liens and Debt of such Unrestricted Subsidiary outstanding immediately after such Revocation would, if incurred at such time, have been permitted to be incurred (and shall be deemed to have been incurred) for all purposes of the indenture.

Any such Designation or Revocation by the Board of Directors after the Issue Date shall be evidenced to the trustee by promptly filing with the trustee a copy of the resolution of the Board of Directors giving effect to such Designation or Revocation and an Officers’ Certificate certifying that such Designation or Revocation complied with the foregoing provisions.

Additional Note Guarantees

If the Issuer or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary (other than a Receivable Subsidiary) after the Issue Date, then that newly acquired or created Domestic Restricted Subsidiary shall become a Guarantor and execute a Note Guarantee in accordance with the provisions of the indenture within 10 business days of the date on which it was acquired or created; provided that any Domestic Restricted Subsidiary that constitutes an Immaterial Subsidiary need not become a Guarantor until 10 business days after it ceases to be an Immaterial Subsidiary. Notwithstanding the foregoing, any Restricted Subsidiary that is not required to be a Guarantor may at any time become a Guarantor at its election by executing a Note Guarantee in accordance with the provisions of the indenture. In addition, if any Restricted Subsidiary of the Issuer that is not a Guarantor shall Guarantee any Debt of the Issuer or any Guarantor while the notes are outstanding, then such Subsidiary shall become a Guarantor under the indenture and shall execute a Note Guarantee in accordance with the provisions of the indenture. Any Note Guarantee given by any Restricted Subsidiary that was not previously a Guarantor pursuant to the immediately preceding sentence shall be automatically released upon the release by the holders of the Debt of the Issuer or Guarantor described in the immediately preceding sentence or their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Debt), which resulted in the notes being guaranteed by such Restricted Subsidiary, at such time as (A) no other Debt of the Issuer and the other Guarantors has been guaranteed by such Restricted Subsidiary or (B) the holders of all such other Debt which is guaranteed by such Restricted Subsidiary also release their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Debt).

Payments for Consent

The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.

Business Activities

The Issuer shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as is not material to the Issuer and its Restricted Subsidiaries taken as a whole.

Reports

Whether or not required by the Commission’s rules and regulations, so long as any notes are outstanding, the Issuer shall file with the Commission (unless the Commission will not accept such a filing) and furnish to the holders of notes (which may be by posting on the Issuer’s website) or cause the trustee to furnish to the holders of the notes, in each case within the time periods specified in the Commission’s rules and regulations for registrants that are not accelerated filers (unless the Issuer is required by Commission rules and regulations to be an accelerated filer at such time):

(1)

all quarterly and annual reports that would be required to be filed with the Commission on Forms 10-Q and 10-K if the Issuer were required to file such Forms; and

(2)

all current reports that would be required to be filed with the Commission on Form 8-K if the Issuer were required to file such reports.

If at any time after the Issue Date (a) Holdings or any other Holding Company becomes subject to the reporting obligations of Section 13 or 15(d) of the Exchange Act, (b) the rules and regulations of the Commission permit the Issuer and Holdings or any such other Holding Company to report at the level of Holdings or such Holding Company on a consolidated basis and (c) Holdings or such Holding Company is not engaged in any business in any material respect other than incidental to its direct or indirect ownership of the Capital Stock of the Issuer, such consolidated reporting at such Holdings or other Holding Company level in a manner consistent with that described in this covenant for the Issuer will satisfy this covenant; provided that Holdings or such other Holding Company includes in its reports information about the Issuer that is required to be provided by a parent guaranteeing debt of an operating company subsidiary pursuant to Rule 3-10 of Regulation S-X or any successor rule then in effect.

In addition, the Issuer agrees, that, for so long as any notes remain outstanding, at any time it is not required to file the reports required by the preceding paragraphs with the Commission, it shall furnish to the holders of the notes, upon their request, or any prospective purchaser designated by any such holder, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act of 1933 (the “Securities Act”) to permit resales of notes pursuant to Rule 144A under the Securities Act.

Merger, Consolidation, or Sale of All or Substantially All Assets

The Issuer may not directly or indirectly consolidate or merge with or into (whether or not the Issuer is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless:

(1)

the Issuer is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia; provided that if such surviving person is not a corporation, a corporate Wholly Owned Restricted Subsidiary of such Person organized under the laws of the United States, any state or the District of Columbia becomes a co-issuer of the notes in connection therewith;

(2)

the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Issuer under the notes, the indenture and the registration rights agreement pursuant to a supplemental indenture in a form reasonably satisfactory to the trustee;

(3)

immediately after such transaction no Default exists;

(4)

the Issuer or the Person formed by or surviving any such consolidation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such

transaction had occurred at the beginning of the applicable four-quarter period, either (i) be permitted to incur at least $1.00 of additional Debt pursuant to the Coverage Ratio Exception or (ii) have a Consolidated Coverage Ratio at least equal to the Consolidated Coverage Ratio of the Issuer for such four-quarter reference period; and

(5)

the Issuer shall have delivered to the trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, conveyance or other disposition and such supplemental indenture (if any) comply with the indenture.

In addition, the Issuer may not, directly or indirectly, lease all or substantially all of its and the Restricted Subsidiaries’ properties or assets in one or more related transactions, to any other Person.

Notwithstanding the foregoing, clauses (3) and (4) (and, in the case of clause (b) below, clause (5)) of the covenant described above will not apply to:

(a)

the merger of the Issuer and ATD Merger Sub occurring on the Issue Date pursuant to the Merger Agreement;

(b)

the consolidation or merger of the Issuer with or into a Restricted Subsidiary or the consolidation or merger of a Restricted Subsidiary with or into the Issuer; and

(c)

any merger or consolidation of the Issuer with an Affiliate formed solely for the purpose of reforming the Issuer in another jurisdiction or solely for the purpose of facilitating the formation of a Holding Company.

For purposes of this covenant, the sale, assignment, transfer, conveyance or other disposition (including by way of merger or consolidation) of all or substantially all of the properties and assets of one or more Subsidiaries of the Issuer, which property or assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.

Upon any consolidation or merger or any transfer (other than a lease) of all or substantially all of the assets of the Issuer in accordance with the foregoing, the successor entity formed by such consolidation or into which the Issuer is merged or to which such transfer is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the indenture with the same effect as if such successor entity had been named in the indenture as the Issuer, and the Issuer (except in the case of a transfer of less than all of the assets of the Issuer) shall be released from the obligations under the notes, the indenture and the registration rights agreement.

Events of Default and Remedies

Each of the following constitutes an Event of Default under the indenture:

(1)

default for 30 days in the payment when due of interest on the notes;

(2)

default in payment when due of the principal of or premium, if any, on the notes, and any failure of the Issuer to make a Change of Control Offer or Asset Sale Offer when required or to purchase notes required to be purchased in connection therewith;

(3)

failure by the Issuer to comply with the provision of the indenture described under “—Certain Covenants—Merger, Consolidation, or Sale of All or Substantially All Assets”;

(4)

failure by the Issuer for 30 days after receipt of notice from the trustee or the holders of at least 25% in principal amount of the then outstanding notes specifying such failure to comply with the provisions of the indenture described under the captions “—Certain Covenants—Restricted Payments,” or “—Certain Covenants—Incurrence of Debt and Issuance of Preferred Stock”;

100

(5)

failure by the Issuer for 60 days after receipt of notice given to the Issuer by the trustee or to the Issuer and the trustee by the holders of at least 25% in aggregate principal amount of the notes outstanding specifying such failure to comply with any of its other agreements in the indenture or the notes;

(6)

the failure by the Issuer or any Restricted Subsidiary that is a Significant Subsidiary to pay any Debt within any applicable grace period after final maturity or acceleration by the holders thereof because of a default if the total amount of such Debt unpaid or accelerated at the time exceeds $15.0 million;

(7)

any judgment or decree for the payment of money in excess of $15.0 million (net of any insurance or indemnity payments actually received in respect thereof prior to or within 60 days from the entry thereof, or which are covered by insurance (unless the Issuer’s insurance carriers have denied coverage in respect thereof) in the event any appeal thereof shall be unsuccessful) is entered against the Issuer or any Restricted Subsidiary that is a Significant Subsidiary and is not discharged, waived or stayed and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed;

(8)

except as permitted by the indenture, any Note Guarantee issued thereunder by a Guarantor that is a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Note Guarantee; and

(9)

certain events of bankruptcy or insolvency with respect to the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary.

If any Event of Default occurs and is continuing with respect to the notes, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare the notes to be due and payable. Upon such a declaration, the amount of the then outstanding notes shall be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Issuer all then outstanding notes will become due and payable without further action or notice.

The holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may on behalf of the holders of the notes waive any existing Default and its consequences under the indenture except a continuing Event of Default in the payment of interest on, or the principal of, the notes.

Subject to the provisions of the indenture relating to the duties of the trustee, in case an Event of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders unless such holders have offered to the trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, interest when due, no holder may pursue any remedy with respect to the indenture or the notes unless:

(1)

such holder has previously given the trustee notice that an Event of Default is continuing;

(2)

holders of at least 25% in aggregate principal amount of the then outstanding notes have requested the trustee to pursue the remedy;

(3)

such holders have offered the trustee reasonable security or indemnity against any loss, liability or expense;

(4)

the trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5)

the holders of a majority in aggregate principal amount of the then outstanding notes have not given the trustee a direction inconsistent with such request within such 60-day period.

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Subject to certain restrictions, the holders of a majority in principal amount of the then outstanding notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or of exercising any trust or power conferred on the trustee. The indenture provides that if an Event of Default has occurred and is continuing, the trustee is required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs.

The trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the trustee determines is unduly prejudicial to the rights of any other holder or that would involve the trustee in personal liability. Prior to taking any action under the indenture, the trustee is entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

Subject to the next sentence, if a Default occurs and is continuing under an indenture and is known to the trustee, the trustee must mail to each holder of notes issued thereunder notice of the Default. Except in the case of a Default in the payment of principal of, or premium, if any, or interest on any note, the trustee may withhold notice if and so long as a committee of its trust officers in good faith determines that withholding notice is in the interests of holders of notes. In addition, the Issuer is required to deliver to the trustee, within 120 days after the end of each fiscal year (other than fiscal years ending prior to the Issue Date), an Officer’s Certificate indicating whether the signers thereof actually know of any Default that occurred during the previous year. The Issuer also is required to deliver to the trustee, forthwith upon any Senior Officer obtaining actual knowledge of any such Default under the indenture, written notice of any event which would constitute a Default, its status and what action the Issuer is taking or proposes to take in respect thereof.

No Personal Liability of Directors, Officers, Employees and Stockholders

No past, present or future director, officer, employee, incorporator, agent or stockholder or Affiliate of the Issuer, as such, shall have any liability for any obligations of the Issuer under the notes, the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. No past, present or future director, officer, employee, incorporator, agent or stockholder or Affiliate of any of the Guarantors, as such, shall have any liability for any obligations of the Guarantors under the Note Guarantees, the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes and Note Guarantees by accepting a note and a Note Guarantee waives and releases all such liabilities. The waiver and release are part of the consideration for issuance of the notes and the Note Guarantees. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy.

Satisfaction and Discharge

Upon the request of the Issuer, the indenture shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the notes, as expressly provided for in the indenture) and the trustee, at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the indenture and the Note Guarantees issued thereunder and the notes issued thereunder when:

(1)

either:

(a)

all the notes theretofore authenticated and delivered under the indenture (other than destroyed, lost or stolen notes that have been replaced or paid) have been delivered to the trustee for cancellation; or

(b)

all notes issued under the indenture not theretofore delivered to the trustee for cancellation:

(i)

have become due and payable;

(ii)

will become due and payable at maturity within one year; or

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(iii)

are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of the Issuer, and the Issuer has irrevocably deposited or caused to be deposited with the trustee funds in trust for the purpose in an amount sufficient to pay and discharge the entire Debt on such notes not theretofore delivered to the trustee for cancellation, for principal (and premium, if any, on) and interest on the notes to the date of such deposit (in case of notes that have become due and payable) or to the Stated Maturity or redemption date, as the case may be;

(2)

the Issuer has paid or caused to be paid all sums payable under the indenture by the Issuer; and

(3)

the Issuer has delivered to the trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions), each stating that all conditions precedent provided in the indenture relating to the satisfaction and discharge of the indenture, the Note Guarantees and the notes have been complied with.

Legal Defeasance and Covenant Defeasance

The Issuer may, at its option and at any time, elect to have all of its and the Guarantors’ obligations discharged with respect to the notes and any related Note Guarantees, as the case may be (“Legal Defeasance”) except for:

(1)

the rights of holders of outstanding notes to receive payments in respect of the principal of, and premium, if any, and interest on such notes when such payments are due from the trust referred to below;

(2)

the Issuer’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for note payments held in trust;

(3)

the rights, powers, trusts, duties and immunities of the trustee, and the Issuer’s and the Guarantors’ obligations in connection therewith; and

(4)

the Legal Defeasance provisions of the indenture.

In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released with respect to certain covenants that are described in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default with respect to the notes and the Note Guarantees. In the event Covenant Defeasance occurs, certain events (not including non-payment, and, solely with respect to the Issuer, bankruptcy and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the notes. In addition, upon covenant defeasance, the Note Guarantees of each Guarantor will be released.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1)

the Issuer or the Guarantors must irrevocably deposit with the trustee (or other qualifying trustee, collectively for this purpose, the “trustee”), in trust, for the benefit of the holders of the notes cash in U.S. dollars, Government Notes, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment banking firm, appraisal firm, or firm of independent public accountants, to pay the principal of, and premium, if any, and interest on the notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer and the Guarantors must specify whether the notes are being defeased to maturity or to a particular redemption date;

(2)

in the case of Legal Defeasance, the Issuer or the Guarantors shall have delivered to the trustee an Opinion of Counsel in the United States reasonably acceptable to the trustee confirming that, subject to customary assumptions and exclusions:

(a)

the Issuer and the Guarantors have received from, or there has been published by, the Internal Revenue Service a ruling; or

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(b)

since the Issue Date, there has been a change in the applicable federal income tax law,

and, in either case, to the effect that the holders of the notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3)

in the case of Covenant Defeasance, the Issuer shall have delivered to the trustee an Opinion of Counsel in the United States reasonably acceptable to the trustee confirming that, subject to customary assumptions and exclusions, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4)

no Default (other than a Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) shall have occurred and be continuing on the date of such deposit;

(5)

such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound;

(6)

the Issuer must have delivered to the trustee an Opinion of Counsel (subject to customary assumptions and qualifications) to the effect that, assuming no intervening bankruptcy of the Issuer or any Guarantor between the date of deposit and the 123^rd day following the deposit and assuming that no holder of such notes is an “insider” of the Issuer under applicable bankruptcy law, after the 123^rd day following the deposit, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or any analogous New York State law provision;

(7)

the Issuer or the Guarantors must deliver to the trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of the notes over the other creditors of the Issuer or the Guarantors, as applicable, with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or the Guarantors, as applicable, or others; and

(8)

the Issuer must deliver to the trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions), each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance (other than the expiration of the 123-day period referred to above) have been complied with.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders are required to pay all taxes due on transfer. The Issuer is not required to transfer or exchange any note selected for redemption or repurchase. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed or before any repurchase offer.

The notes are issued in registered form and the registered holder of a note is treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the indenture, the notes and the Note Guarantees, may be amended or supplemented with the consent of the holders of at least a majority in aggregate principal

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amount of the notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, such notes), and any existing default or compliance with any provision of the indenture, the notes and the Note Guarantees may be waived with the consent of the holders of a majority in principal amount of the then outstanding notes (including consents obtained in connection with a tender offer or exchange offer for the notes).

Notwithstanding the foregoing, without the consent of each holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting holder):

(1)

reduce the principal amount of such notes whose holders must consent to an amendment, supplement or waiver;

(2)

reduce the principal of or change the fixed maturity of any such note, reduce any premium payable upon, or change the dates (to earlier dates) of, redemption of such notes (other than provisions relating to the covenants described above under “—Repurchase at the Option of Holders”);

(3)

reduce the rate of or change the time for payment of interest on any such note;

(4)

waive a Default in the payment of principal of or premium, if any, or interest on such notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of such notes then outstanding and a waiver of the payment default that resulted from such acceleration);

(5)

make any such note payable in money other than that stated in the notes;

(6)

impair the rights of holders of such notes to receive payments of principal of or premium, if any, or interest on such notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such notes;

(7)

after the time a Change of Control Offer or Asset Sale Offer is required to have been made, reduce the purchase amount or price or extend the latest expiration date or purchase date thereunder;

(8)

make any change in the foregoing amendment and waiver provisions; or

(9)

except as permitted by the indenture, release any Note Guarantee.

Notwithstanding the foregoing, without the consent of any holder of notes, the Issuer and the trustee may amend or supplement the indenture or the notes issued thereunder:

(a)

to cure any ambiguity, defect or inconsistency,

(b)

to provide for uncertificated notes in addition to or in place of certificated notes,

(c)

to provide for the assumption of the Issuer’s or any Guarantor’s obligations to holders of such notes in the case of a merger, consolidation or sale of assets,

(d)

to release any Note Guarantee in accordance with the provisions of the indenture,

(e)

to provide for additional guarantors,

(f)

to make any change that would provide any additional rights or benefits to the holders of notes or that, as determined by the Board of Directors in good faith, does not materially adversely affect the legal rights under the indenture of any such holder,

(g)

to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act,

(h)

to conform the indenture, the Note Guarantees or the notes to any provision of this Description of the Notes, or

(i)

to provide for the issuance of additional notes under the indenture in accordance with the limitations set forth in the indenture as of the Issue Date.

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Concerning the Trustee

Wachovia Bank, National Association is acting as trustee for the notes and the fixed rate notes. Wachovia is also the trustee for the Holdings senior discount notes and a lender under the Amended and Restated Credit Facility. An affiliate of Wachovia was an initial purchaser of the outstanding notes.

The indenture contains certain limitations on the rights of the trustee, when the trustee is a creditor of the Issuer, to obtain payment of claims in such capacity in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions with the Company and its affiliates. If the trustee acquires any conflicting interest, as defined in Section 310(b) of the Trust Indenture Act, the trustee must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign.

In case an Event of Default shall occur (which shall not be cured), the trustee shall be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs.

Book-Entry, Delivery and Form

The notes are issued in registered form, without interest coupons, in denominations of $1,000 and integral multiples thereof, in the form of both global notes and certificated notes, as further provided below.

Global Notes

Global notes are deposited with a custodian for DTC, and registered in the name of a nominee of DTC. Beneficial interests in the global notes are shown on records maintained by DTC and its direct and indirect participants. So long as DTC or its nominee is the registered owner or holder of a global note, DTC or such nominee will be considered the sole owner or holder of the Notes represented by such global note for all purposes under the indenture and the notes. No owner of a beneficial interest in a global note will be able to transfer such interest except in accordance with DTC’s applicable procedures and the applicable procedures of its direct and indirect participants.

Any beneficial interest in one global note that is transferred to a Person who takes delivery in the form of an interest in another global note will, upon transfer, cease to be an interest in such global note and become an interest in the other global note.

The Issuer will apply to DTC for acceptance of the global notes in its book-entry settlement system. Investors may hold their beneficial interests in the global notes directly through DTC if they are participants in DTC, or indirectly through organizations which are participants in DTC.

Payments of principal and interest under each global note will be made to DTC’s nominee as the registered owner of such global note. The Issuer expects that the nominee, upon receipt of any such payment, will immediately credit DTC participants’ accounts with payments proportional to their respective beneficial interests in the principal amount of the relevant global note as shown on the records of DTC. The Issuer also expects that payments by DTC participants to owners of beneficial interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants, and none of the Issuer, the trustee, the custodian or any paying agent or registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in any global note or for maintaining or reviewing any records relating to such beneficial interests.

Certificated Notes

If DTC notifies the Issuer that it is unwilling or unable to continue as depositary for a global note and a successor depositary is not appointed by the Issuer within 90 days of such notice, or an Event of Default has

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occurred and the trustee has received a request from DTC, the trustee will exchange each beneficial interest in that global note for one or more certificated notes registered in the name of the owner of such beneficial interest, as identified by DTC. In addition, beneficial interests in a global note may be exchanged for certificated notes upon request by or on behalf of DTC in accordance with customary procedures.

Upon their initial issuance, the notes were eligible for trading in the PORTAL system. However, the notes sold using this prospectus will not be eligible for trading in the PORTAL system and we cannot assure you about the liquidity of or the development of any trading market for the notes. We do not intend to list the notes for trading on any automated interdealer quotation system or national securities exchange.

Certain Definitions

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1)

Debt of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including Debt incurred in connection with, or in contemplation of, such other Person’s merging with or into or becoming a Restricted Subsidiary of such specified Person; and

(2)

Debt secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means:

(1)

any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person;

(2)

any other Person that owns, directly or indirectly, 10% or more of such specified Person’s Voting Stock; or

(3)

solely for purposes of the definition of “Initial Control Group,” any Person who is a director or officer of (a) such Person, (b) any Subsidiary of such Person or (c) any Person described in clause (1) or (2) above.

For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Amended and Restated Credit Facility” means the Fourth Amended and Restated Loan and Security Agreement dated March 31, 2005 among the Issuer and the financial institutions named therein, and any related notes, collateral documents, letters of credit and guarantees, including any appendices, exhibits or schedules to any of the foregoing (as the same may be in effect from time to time), in each case, as such agreements may be amended, modified, supplemented or restated from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid or extended from time to time (whether with the original agents and lenders or other agents or lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise).

“Applicable Eurodollar Rate” means, for each quarterly period during which any floating rate note is outstanding subsequent to the initial quarterly period beginning on the Issue Date and ending June 30, 2005, the rate determined by the Issuer (notice of such rate to be sent to the trustee by the Issuer on the date of

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determination thereof) equal to the applicable British Bankers’ Association LIBOR rate for deposits in U.S. dollars for a period of three months as reported by any generally recognized financial information service as of 11:00 a.m. (London time) two business days prior to the first day of such quarterly period; provided that, if no such British Bankers’ Association LIBOR rate is available to the Issuer, the Applicable Eurodollar Rate for the relevant quarterly period shall instead be the rate at which Banc of America Securities LLC or one of its affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market for a period of three months at approximately 11:00 a.m. (London time) two business days prior to the first day of such quarterly period, in amounts equal to $1.0 million.

“Applicable Floating Rate Note Premium” means, with respect to a floating rate note at any redemption date, the greater of (i) 1.0% of the principal amount of such note or (ii) the excess of (A) the present value at such time of (1) the redemption price of such note at April 1, 2007 (such redemption price being set forth in the table of the first paragraph under the subheading “—Optional Redemption”) plus (2) all required interest payments (calculated assuming that the Applicable Eurodollar Rate in effect on the date of such redemption is in effect at all times until April 1, 2007) due on such note through April 1, 2007 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such note.

“Asset Sale” means:

(1)

the sale, lease, conveyance or other disposition of any assets or rights (including by way of merger or consolidation or a sale and leaseback); provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of All or Substantially all Assets” and not by the provisions of the Asset Sale covenant, and

(2)

the issue or sale by the Issuer or any of its Restricted Subsidiaries of Equity Interests of any of the Issuer’s Subsidiaries (other than director’s qualifying shares),

in the case of either clause (1) or (2), whether in a single transaction or a series of related transactions that have a fair market value in excess of, or for Net Proceeds in excess of $5.0 million.

Notwithstanding the foregoing, the following shall not be Asset Sales:

(a)

a transfer of assets or an issuance of Equity Interests by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary or a transfer of assets by the Issuer to a Restricted Subsidiary;

(b)

a Restricted Payment or Permitted Investment that is permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments” (including any formation of or contribution of assets to a Subsidiary or joint venture);

(c)

any disposition of property or assets (including inventory and accounts receivable) of the Issuer or any of its Subsidiaries in the ordinary course of business, or that in the reasonable judgment of the Issuer, have become uneconomic, obsolete or worn out;

(d)

the disposition of Cash Equivalents or cash;

(e)

the sale or factoring of receivables or related assets (or a fractional undivided interest therein) on customary market terms pursuant to Credit Facilities or in a Qualified Receivables Transaction but only if the proceeds thereof received by the Issuer and its Restricted Subsidiaries, in the judgment of the Board of Directors, represent the fair market value of such receivables and other assets (net of customary discounts); and

(f)

the sale or other disposition of Equity Interests of, or other Investments in, an Unrestricted Subsidiary.

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“Beneficial Owner,” “Beneficially Own” and “Beneficial Ownership” have the meanings assigned to such terms in Rule 13d-3 and Rule 13d-5, under the Exchange Act, except that in calculating the Beneficial Ownership of any particular “person” or “group”, as such terms are used in Section 13(d)(3) of the Exchange Act, (i) such person or group shall be deemed to have beneficial ownership of all shares of Capital Stock that such person or group has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition and (ii) in the case of a “group” pursuant to Rule 13d-5(b)(1) of the Exchange Act which group includes one or more members of the Initial Control Group (or one or more members of the Initial Control Group are deemed to share beneficial ownership with one or more other persons of any shares of Capital Stock), (a) such “group” shall be deemed not to have Beneficial Ownership of any shares held by a member of the Initial Control Group forming a part of such group and (b) any person (other than a member of the Initial Control Group) that is a member of such group (or sharing such Beneficial Ownership) shall be deemed not to have Beneficial Ownership of any shares held by a member of the Initial Control Group that is a part of such group (or in which such person shares beneficial ownership).

“Berkshire Partners” means Berkshire Partners LLC.

“Board of Directors” means:

(1)

with respect to a corporation, the board of directors of the corporation or (except if used in the definition of “Change of Control”) any authorized committee of the Board of Directors of such Person;

(2)

with respect to a partnership, the Board of Directors of the general partner of the partnership; and

(3)

with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrowing Base” means, as of any date, an amount equal to the sum of:

(1)

85% of the aggregate book value of all accounts receivable of the Issuer and its Restricted Subsidiaries; and

(2)

65% of the aggregate book value of all inventory owned by the Issuer and its Restricted Subsidiaries;

all calculated on a consolidated basis in accordance with GAAP.

To the extent that information is not available as to the amount of accounts receivable or inventory as of a specific date, the Issuer shall use the most recent available information for purposes of calculating the Borrowing Base.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. The Stated Maturity of any Capital Lease Obligation is the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Capital Stock” means:

(1)

in the case of a corporation, corporate stock;

(2)

in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(3)

in the case of an association or other business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock.

“Cash Equivalents” means:

(1)

securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition;

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(2)

certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank or trust company having capital and surplus in excess of $300 million;

(3)

repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above or whose unsecured long-term Debt is rated not less than “A” by S&P or “A2” by Moody’s at the time such Investment is made or any Affiliate of any such financial institution;

(4)

commercial paper rated “A 2” or better by S&P or “P 2” or better by Moody’s and in each case maturing within one year after the date of acquisition;

(5)

readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P;

(6)

Debt with a rating of “A” or higher from S&P or “A2” or higher from Moody’s having a maturity not more than one year from the date of acquisition; and

(7)

investment funds investing at least 95% of their assets in securities of the types described in clauses (1)-(6) above.

“Change of Control” means the occurrence of any of the following events:

(1)

any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more members of the Initial Control Group, becomes the Beneficial Owner, directly or indirectly (whether as a result of the issuance of securities of the Issuer or Holdings, as the case may be, any merger, consolidation, liquidation or dissolution of the Issuer or Holdings, as the case may be, any direct or indirect transfer of securities by the Initial Control Group or otherwise), of more than 50% of the total voting power of the Voting Stock of the Issuer or Holdings as the case may be, and the Initial Control Group does not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Issuer or Holdings, as the case may be;

(2)

the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries, taken as a whole, to any “person” or “group” other than a member of the Initial Control Group;

(3)

at any time after the first public offering of common stock of the Issuer or Holdings, as the case may be, any person other than the Initial Control Group (or their designated board members), (a)(i) nominates one or more individuals for election to the Board of Directors of the Issuer or Holdings, as the case may be, which individuals have not been approved for election by the Initial Control Group or a vote by the majority of the Board of Directors then in office and (ii) solicits proxies, authorizations or consents in connection therewith and (b) such number of nominees elected to serve on the Board of Directors in such election and all previous elections after the Issue Date and not so approved represents a majority of the Board of Directors of the Issuer or Holdings as the case may be, following such election; or

(4)

Holdings ceases to beneficially own, directly or indirectly, all of the Equity Interests of the Issuer (other than as a result of a merger, consolidation or transfer of all or substantially all the Issuer’s assets permitted by the provisions of the indenture covenant described above under the caption “—Merger, Consolidation or Sale of All or Substantially All Assets”).

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“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the Securities and Exchange Commission or any successor agency.

“Commodity Hedging Agreements” means any futures contract or other similar agreement or arrangement designed to protect the Issuer or any Restricted Subsidiary against fluctuations in commodities prices.

“Consolidated Cash Flow” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:

(1)

plus, without duplication, to the extent deducted in computing such Consolidated Net Income:

(a)

Consolidated Interest Expense (including, without duplication, interest expense of Holdings to the extent related to the Holdings senior discount notes due 2013) and the amortization of deferred financing costs of such Person and its Restricted Subsidiaries for such period;

(b)

provision for taxes based on income, profits or capital (including franchise taxes) of such Person and its Restricted Subsidiaries for such period;

(c)

depreciation and amortization expense, including amortization of inventory write-up under SFAS 141, amortization or write-off of intangibles (including goodwill and the non-cash costs of Interest Rate Agreements, Commodity Hedging Agreements or Currency Agreements, license agreements and non-competition agreements) and non-cash amortization of Capital Lease Obligations;

(d)

expenses and charges related to any equity offering, incurrence of Debt, Investment or acquisition or divestiture (including any such expenses or charges relating to the Transactions);

(e)

the amount of any restructuring or unusual charge or reserve;

(f)

any non-cash charge or expense (excluding any such non-cash expense to the extent that it represents amortization of a prepaid cash expense that was paid in a prior period), including unrealized gains (or less any losses) from hedging, foreign currency or commodities translations and transactions and any write-downs, write-offs, and other non-cash charges, items and expenses;

(g)

the amount of any expense relating to any minority interest of Restricted Subsidiaries;

(h)

expenses consisting of internal software development costs that are expensed during the period but could have been capitalized in accordance with GAAP;

(i)

with respect to periods prior to the Issue Date, all items reflected in the calculation of Adjusted EBITDA set forth in footnote (4) to “Summary Historical and Unaudited Pro Forma Consolidated Financial Data”; and

(j)

costs of surety bonds in connection with financing activities;

(2)

minus any cash payment for which a reserve or charge of the kind described in clauses (f) or (g) of subclause (1) above was taken during such period.

“Consolidated Coverage Ratio” means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period. In the event that (i) the Issuer or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Debt (other than revolving credit borrowings or revolving advances under any Qualified Receivables Transaction) or issues or redeems Preferred Stock or (ii) any Qualified Holdco Debt of Holdings or the Holdings senior discount notes are incurred, assumed or redeemed, in each case subsequent to the commencement of the period for which the Consolidated Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Coverage Ratio is made (the “Calculation Date”), then the Consolidated Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Debt, or such issuance or

111

redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter reference period, provided that no pro forma effect shall be given to the incurrence of any Permitted Debt incurred on the Calculation Date or the discharge on the Calculation Date of any Debt from the proceeds of any such Permitted Debt.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers and consolidations that have been made by the Issuer or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, and discontinued operations determined in accordance with GAAP on or prior to the Calculation Date, shall be given effect on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers and consolidations or discontinued operations (and the reduction or increase of any associated Consolidated Interest Expense, and the change in Consolidated Cash Flow, resulting therefrom, including as a result of any Pro Forma Cost Savings) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger or consolidation or discontinued an operation, that would have required adjustment pursuant to this definition, then the Consolidated Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger or consolidation or discontinued operations had occurred at the beginning of the applicable four-quarter period.

For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a financial or accounting officer of the Issuer. If any Debt to which pro forma effect is given bears interest at a floating rate, the interest expense on such Debt shall be calculated as if the rate in effect on the Calculation Date had been the applicable interest rate for the entire period (taking into account any Interest Rate Agreement in effect on the Calculation Date). Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Issuer to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP. Interest on Debt that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(1)

the consolidated net interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including amortization of original issue discount, non-cash interest expense, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings or any Qualified Receivables Transaction, and net payments (if any) pursuant to Hedging Obligations relating to Interest Rate Agreements or Currency Agreements with respect to Debt, excluding, however, (a) amortization or write-off of debt issuance costs, commissions, fees and expenses and (b) any transaction fees and charges;

(2)

the consolidated capitalized interest of such Person and its Restricted Subsidiaries for that period, whether paid or accrued;

(3)

any interest expense on Debt of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;

(4)

all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock of such Person or any of its Restricted Subsidiaries or any series of preferred stock of any of its Restricted Subsidiaries (other than Guarantors), other than dividends on Equity Interests payable solely

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in Equity Interests of the Issuer (other than Disqualified Equity Interests) or to the Issuer or a Restricted Subsidiary of the Issuer; and

(5)

in the case of the Issuer, any interest expense of Holdings to the extent related to Qualified Holdco Debt or the Holdings senior discount notes and, without duplication, the amount of any dividends made to Holdings pursuant to clause (8) under “—Certain Covenants—Restricted Payments” during the applicable period;

in each case, determined on a consolidated basis and in accordance with GAAP.

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (without duplication); provided that:

(1)

the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary of such Person and the net losses of any such Person shall only be included to the extent funded with cash from the Issuer or any Restricted Subsidiary;

(2)

the Net Income of any Restricted Subsidiary (other than a Foreign Restricted Subsidiary) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, prohibited by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders unless such restriction with respect to the payment of dividends has been waived;

(3)

the cumulative effect of a change in accounting principles shall be excluded (effected either through cumulative effect adjustment or a retroactive application, in each case, in accordance with GAAP);

(4)

any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Issuer or any Restricted Subsidiary shall be excluded, provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Issuer (other than Disqualified Stock);

(5)

to the extent deducted in determining Net Income, the (a) fees, expenses and other costs incurred in connection with the Transactions on or about the Issue Date, in each case, to the extent that such fee, expense, cost or payment is disclosed in this prospectus, (b) any amortization or write-off of goodwill or other intangible assets and (c) any increased depreciation or amortization expense or one-time non-cash charges arising solely from the Transactions or any acquisition consummated after the Issue Date (or resulting from purchase accounting in connection therewith) shall in each case be excluded;

(6)

any net after tax gain or loss from discontinued operations and any net after tax gain or loss on disposal of discontinued operations shall be excluded; and

(7)

in the case of the Issuer, any interest expense of Holdings to the extent related to the Holdings senior discount notes shall be deducted therefrom.

“Coverage Ratio Exception” shall have the meaning set forth in the first paragraph of the covenant described under the caption “—Certain Covenants—Incurrence of Debt and Issuance of Preferred Stock.”

“Credit Facilities” means, with respect to the Issuer and its Restricted Subsidiaries, one or more debt facilities (including the Amended and Restated Credit Facility), receivables facilities (including all Qualified Receivables Transactions) or commercial paper facilities with banks, insurance companies or other institutional lenders providing for revolving credit loans, term loans, notes, factoring or other receivables financing (including

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through the sale of receivables to such lenders or to special purpose entities formed to borrow from or issue securities to such lenders against such receivables) or letters of credit or other credit facilities, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement to which the Issuer or any Restricted Subsidiary is a party or of which it is a beneficiary.

“Debt” means, with respect to any Person (without duplication):

(1)

any indebtedness of such Person, whether or not contingent,

(a)

in respect of borrowed money; or

(b)

evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances; or

(c)

representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property (which purchase price is due more than six months after the date of purchase thereof), except any such balance that constitutes an accrued expense or trade payable; or

(d)

representing any Hedging Obligations,

if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP;

(2)

all indebtedness under clause (1) of other Persons secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) provided that the amount of indebtedness of such Person shall be the lesser of:

(a)

the fair market value of such asset at such date of determination; and

(b)

the amount of such indebtedness of such other Persons;

(3)

to the extent not otherwise included, the Guarantee by such Person of any Debt under clause (1) of any other Person; and

(4)

any Disqualified Stock of such Person;

provided, however, that Debt shall not include:

(a)

obligations of the Issuer or any of its Restricted Subsidiaries arising from agreements of the Issuer or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Debt incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that:

(i)

such obligations are not reflected on the balance sheet of the Issuer or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)); and

(ii)

the maximum assumable liability in respect of all such obligations shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition,

(b)

(i) obligations under (or constituting reimbursement obligations with respect to) letters of credit, performance bonds, surety bonds, appeal bonds, completion guarantees or similar instruments issued in

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connection with the ordinary course of a Permitted Business and not in connection with the incurrence of Debt for borrowed money, including letters of credit in respect of workers’ compensation claims, security or lease deposits and self-insurance; provided, however, that upon the drawing of such letters of credit or other instrument, such obligations are reimbursed within 30 days following such drawing, and (ii) obligations arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of day-light overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such obligations are extinguished within three business days of incurrence; or

(c)

customer deposits in the ordinary course of business.

Except as otherwise expressly provided in this definition, or in the definition of “Disqualified Stock” the amount of any Debt outstanding as of any date shall be:

(1)

with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation;

(2)

with respect to any Hedging Obligation, the net amount payable if such Hedging Obligation terminated at that time due to default by such Person;

(3)

the accreted value thereof, in the case of any Debt issued at a discount to par; or

(4)

except as provided above, the principal amount or liquidation preference thereof, in the case of any other Debt.

“Default” means any event that is or with the passage of time or the giving of notice or both would be an Event of Default.

“Disqualified Equity Interests” means Disqualified Stock and all warrants, options or other rights to acquire Disqualified Stock (but excluding any debt security that is convertible into, or exchangeable for, Disqualified Stock).

“Disqualified Stock” means any class or series of Capital Stock of any Person that by its terms or otherwise is:

(1)

required to be redeemed or is redeemable at the option of the holder of such class or series of Capital Stock at any time on or prior to the date that is 91 days after the Stated Maturity of the notes; or

(2)

convertible into or exchangeable at the option of the holder thereof at any time on or prior to the date that is 91 days after the Stated Maturity of the notes for Capital Stock referred to in clause (1) above or Debt.

Notwithstanding the preceding sentence, (A) if such Capital Stock is issued to any plan for the benefit of employees or by any such plan to such employees, in each case in the ordinary course of business of the Issuer or its Subsidiaries, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer in order to satisfy applicable statutory or regulatory obligations; (B) any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments”; and (C) no Capital Stock held by any future, present or former employee, director, officer or consultant of the Issuer (or any of its Restricted Subsidiaries) shall be considered Disqualified Stock because such stock is redeemable or subject to repurchase pursuant to any management equity subscription agreement, stock option agreement, stock ownership plan, put agreement, stockholder agreement or similar agreement that may be in effect from time to

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time if, in the case of Capital Stock of the Issuer or any of its Restricted Subsidiaries, the terms of such Capital Stock provide that the Issuer or such Restricted Subsidiary may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments”.

For purposes hereof, the amount (or principal amount) of any Disqualified Stock shall be equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. The “maximum fixed repurchase price” of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date as of which it shall be required to be determined pursuant to the indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Stock.

“Domestic Restricted Subsidiary” means any Restricted Subsidiary of the Issuer other than a Foreign Restricted Subsidiary.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Cash Contributions” means net cash proceeds or cash contributions designated as such pursuant to clause (2) of the second paragraph of the “Restricted Payments” covenant.

“Existing Debt” means Debt of the Issuer and its Restricted Subsidiaries (other than Debt under the Amended and Restated Credit Facility) in existence on the Issue Date, until such amounts are repaid.

“Foreign Restricted Subsidiary” means any direct or indirect Subsidiary of the Issuer organized under the laws of any jurisdiction other than the United States or any political subdivision thereof.

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in the indenture shall be computed in conformity with GAAP as in effect as of the Issue Date.

“Government Notes” means non-redeemable, direct obligations (or certificates representing an ownership interest in such obligations) of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.

“Greenbriar” means Greenbriar Equity Group LLC.

“Guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Debt.

“Guarantors” means:

(1)

Holdings;

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(2)

each of the Issuer’s Domestic Restricted Subsidiaries on the Issue Date, other than any Immaterial Subsidiaries;

(3)

each Restricted Subsidiary that executes and delivers a Note Guarantee after the Issue Date; and

(4)

their respective successors and assigns,

in each case until released from its Note Guarantee in accordance with the terms of the indenture.

SPEED MERCHANT INC S-1