10-K

________________________________________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 1999

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            .

Commission file number 1-12297

UNITED AUTO GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

375 Park Avenue

New York, New York

(Address of principal executive offices)

22-3086739

(IRS Employer

Identification Number)

10152

(Zip Code)

Registrant’s telephone number, including area code: (212) 223-3300

Securities registered pursuant to Section 12(b) of the Act:

	Name of each Exchange
Title of each class	on which registered
Voting Common Stock, par value $0.0001 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X]  Yes [   ]  No.

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [   ]

     The aggregate market value of the voting common stock held by non-affiliates as of March 22, 2000 was $120,978,314.

      As of March 22, 2000, there were 20,685,859 shares of voting common stock outstanding.

      Portions of the registrant’s proxy statement to be filed in connection with the annual meeting of shareholders, presently scheduled to be held on May 9, 2000, are incorporated by reference in Part III of this Form 10-K.

TABLE OF CONTENTS

TABLE OF CONTENTS

		Page
	PART I
Item  1.	Business		1
Item  2.	Properties		4
Item  3.	Legal Proceedings		4
Item  4.	Submission of Matters to a Vote of Securityholders		4
	PART II
Item  5.	Market for Registrant’s Common Equity and Related Stockholder Matters		5
Item  6.	Selected Consolidated Financial Data		6
Item  7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
Item  7A.	Quantitative and Qualitative Disclosures about Market Risk		14
Item  8.	Financial Statements and Supplementary Data		14
Item  9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		14
	PART III
Item  10.	Directors and Executive Officers of the Registrant		15
Item  11.	Executive Compensation		15
Item  12.	Security Ownership of Certain Beneficial Owners and Management		15
Item  13.	Related Party Transactions and Section 16(a) Beneficial Ownership Reporting Compliance		15
	PART IV
Item  14.	Exhibits, Financial Statement Schedules and Reports on Form  8-K		17

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PART I

ITEM 1.  BUSINESS

Overview

      United Auto Group, Inc. (“UAG” or the “Company”) is a leading acquirer, consolidator and operator of franchised automobile and light truck dealerships and related businesses. At the end of 1999, the Company operated franchises located in 16 states and Puerto Rico. In addition, the Company made an investment in two retail automotive dealerships in Brazil in November 1999. As an integral part of its dealership operations, UAG also sells used vehicles. All of UAG’s franchised dealerships include integrated service and parts operations, which are an important source of recurring revenues. In addition, UAG dealerships market a complete line of aftermarket automotive products and services through its wholly owned subsidiaries United Auto Care, Inc. (“UAC”) and United Auto Care Products, Inc. (“UAC Products”).

      UAG was incorporated in the State of Delaware in December 1990 and commenced dealership operations in October 1992. Unless the context otherwise requires, references herein to “Common Stock” are to the Company’s Voting Common Stock, par value $0.0001 per share.

      The Company was formed to capitalize on consolidation opportunities within the highly fragmented automotive retailing industry by acquiring, consolidating and operating large automobile retailers and related businesses. As capital requirements to operate dealerships continue to increase and many owners who were granted franchises in the 1950s and 1960s approach retirement age, many individual dealers are seeking exit opportunities. These conditions present attractive consolidation opportunities for larger automobile retailers such as UAG.

      UAG purchases substantially all of its new car inventories directly from manufacturers. Each of the Company’s dealerships operates pursuant to a franchise agreement between the applicable manufacturer and the subsidiary of the Company that operates such dealership. In accordance with the individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of manufacturers to influence the operations of a dealership, or the loss of a franchise agreement, could have a negative impact on the Company’s operating results. Manufacturers allocate inventory based on the size and location of dealerships, but actual shipments result from negotiations with individual dealers. The Company believes that larger dealers, such as UAG, are better positioned to secure favorable inventory shipments and optimize manufacturers’ allocations. UAG finances its inventory purchases through revolving credit arrangements known in the industry as floor plan facilities.

Business Strategy

      UAG seeks to be a leader in the consolidation of the automotive retailing industry and to increase stockholder value through a business strategy that includes the following principal elements:

Acquire and Integrate Profitable Dealership Operations

      UAG seeks to capitalize on the continuing consolidation in the U.S. automotive retailing industry by selectively acquiring dealerships with significant earnings growth potential. The Company principally targets dealerships or dealership groups with established records of profitability as well as with experienced management willing to remain in place. The Company focuses on opportunities in geographic markets with above-average projected population and job growth and attempts to create regional hubs of dealerships that will be able to share administrative and other operations to reduce costs.

      The Company’s acquisition program has been specifically tailored to address dealers’ desire to retain a management role in their businesses while achieving personal liquidity. Owners of acquired dealerships typically continue as dealership managers. The Company believes it provides dealership managers additional management tools, and that its economies of scale, marketing expertise and corporate resources act as catalysts for continual dealership growth. In addition, the dealer may retain an equity interest in the business through the ownership of capital stock and/or stock options of UAG.

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Grow Higher-Margin Operating Businesses

      UAG is focused on increasing higher-margin businesses including the retail sale of used vehicles, aftermarket products, service, parts and collision repair services.

      Used Vehicles. Used vehicle sales by franchised dealers, with average prices approximating 60% of new vehicle prices, typically generate higher gross margins as a percentage of sales value than new car sales because of limited comparability among used vehicles and the somewhat subjective nature of their valuation. Consumer acceptance of used vehicle purchasing has grown, due principally to (i) an increase in the availability of late-model, low-mileage used vehicles due in part to the large supply of vehicles coming off short-term leases, (ii) improvements in the quality of motor vehicles and (iii) increases in the prices of new vehicles.

      UAG believes that through its new vehicle franchises, it enjoys significant advantages in sourcing used vehicles over both independent and chain used-vehicle companies. Specifically, the Company has access to (i) a steady supply of used vehicles accepted as trade-ins for new vehicle purchases, (ii) off-lease vehicles that were originally leased through the new vehicle franchise and (iii) used vehicle auctions open only to new vehicle dealers. In addition, only new vehicle franchises are able to sell used vehicles certified by the manufacturer under programs through which the manufacturer supports specific high-quality used cars with extended warranties and attractive financing options.

      Aftermarket Products. Each sale of a new or used vehicle provides the opportunity for the Company to sell aftermarket products. Aftermarket products include finance, warranty, extended service and maintenance contracts, as well as accessories such as radios, cellular phones, alarms, custom wheels, paint sealants and fabric protectors. In addition, the Company receives fees for placing financing and lease contracts.

      Service and Parts. Each of UAG’s new vehicle dealerships offers a fully integrated service and parts department. The service and parts business provides an important recurring revenue stream to the Company’s dealerships, which may help to mitigate the effects of downturns in the automobile sales cycle. Unlike independent service shops or used car dealerships with service operations, UAG is qualified to perform work covered by manufacturer warranties. Since warranty service work is paid for by the manufacturer, consumers are motivated to service their vehicles at a dealership for the warranty period. In recent years, manufacturers have generally lengthened standard warranty coverage on new cars and introduced warranty coverage on used cars, further enhancing customer retention opportunities in the service area. To increase the service and parts businesses, UAG dealerships have implemented programs to track maintenance records of customers and contact them regarding dealership promotions and maintenance schedules. In addition, the Company actively markets warranty-covered services to potential customers such as municipalities and corporations with large fleets of automobiles located near certain of its dealerships. The Company is able to offer repair services to such customers on a more efficient and less costly basis than such customers generally can perform themselves. The Company also believes that its market share will grow at the expense of independent mechanics shops, which may be unable to address the increased mechanical and electronic sophistication of today’s motor vehicles and the increased expenses of compliance with more stringent environmental regulations.

      Collision Repair Centers. The Company currently owns 17 collision repair centers, each of which is operated as an integral part of a new vehicle franchise. In light of the recurring stream of referral work from the Company’s new vehicle franchises and the higher margins associated with repair center revenues, the Company has embarked on an effort to increase such revenues. As such, the Company is currently exploring the possibility of constructing several new regional repair centers to act as central collision repair centers in geographic hubs. If constructed, the Company believes that these centers will increase the recurring stream of non-vehicle sales revenues, which may help to mitigate the effects on the Company of downturns in the automobile sales cycle. There can be no assurances that if the Company does construct the collision repair centers and there is a downturn in the automobile sales cycle that such collision repair centers will help mitigate the effects of such downturn on the Company.

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      Implement “Best Practices”. The Company’s senior executives and dealership managers meet periodically to review the operating performance of individual dealerships, as well as to examine important industry trends and, where appropriate, recommend specific operating improvements. This facilitates implementation of successful strategies throughout the organization so that each dealership can benefit from the successes of the others, as well as from the knowledge and experience of UAG’s senior management. Dealership management also attends various industry sponsored leadership and management seminars and receives continuing education in products, marketing strategies and management information systems. The Company shares training techniques across its dealership base and has made increasing revenues from the sale of used cars, aftermarket products, service, parts and collision repair centers a Company-wide focus.

      Emphasize Customer Service. Central to UAG’s overall philosophy is customer-oriented service designed to meet the needs of an increasingly sophisticated and demanding automotive consumer through “one-stop” shopping convenience, competitive pricing and a sales staff that is knowledgeable about product offerings and responsive to a customer’s particular needs. The Company’s goal is to establish lasting relationships with its customers, which enhance its reputation in the community and create the opportunity for significant repeat and referral business.

      The quality of customer service provided by dealerships sales and service departments is measured by customer satisfaction index (“CSI”) scores, which are derived from data accumulated by manufacturers through individual customer surveys. UAG relies on this data to track the performance of dealership operations and uses it as a factor in determining the compensation of general managers and sales and service personnel in its dealerships. The Company’s most recent CSI scores indicate that a majority of its dealerships’ CSI scores were at or above the average CSI scores for the applicable regions.

Competition

      The automotive retailing industry is extremely competitive. In large metropolitan areas, consumers have a number of choices in deciding where to purchase a new or used vehicle and where to have such a vehicle serviced.

      For new vehicle sales, the Company competes with other franchised dealers in each of its marketing areas. The Company does not have any cost advantage in purchasing new vehicles from the manufacturer, and typically relies on advertising and merchandising, sales expertise, service reputation and location of its dealerships to sell new vehicles. In recent years, automobile dealers have also faced increased competition in the sale of new vehicles from independent leasing companies and on-line purchasing services and warehouse clubs. Due to lower overhead and sales costs, these companies may be capable of operating on smaller gross margins and offering lower sales prices than franchised dealers. In addition, the Company may face competition in the future from partnerships between manufacturers and dealers.

      For used vehicle sales, the Company competes with other franchised dealers, independent used vehicle dealers, automobile rental agencies, private parties and used vehicle “superstores” for supply and resale of used vehicles.

      The Company believes that the principal competitive factors in vehicle sales are the marketing campaigns conducted by manufacturers, the ability of dealerships to offer a wide selection of the most popular vehicles, the location of dealerships and the quality of customer service. Other competitive factors include customer preference for particular brands of automobiles, pricing (including manufacturer rebates and other special offers) and warranties. The Company believes that its dealerships are competitive in all of these areas.

      The Company competes against other franchised dealers to perform warranty repairs and against other automobile dealers, service center chains, and independent garages for non-warranty repair and routine maintenance business. The Company competes with other automobile dealers, service stores and auto parts retailers in its parts operations. The Company believes that the principal competitive factors in parts and service sales are price, the use of factory-approved replacement parts, the familiarity with a manufacturer’s brands and models and the quality of customer service.

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      A number of regional or national chains offer selected parts and services at prices that may be lower than the Company’s prices.

Employees and Labor Relations

      As of December 31, 1999, UAG employed approximately 5,800 people, approximately 270 of whom are covered by collective bargaining agreements with labor unions. Relations with employees are considered by the Company to be satisfactory. The Company’s policy is to motivate its key managers through, among other things, variable compensation programs tied principally to dealership profitability and grants of stock options.

Environmental Matters

      As with automobile dealerships generally, and service, parts and body shop operations in particular, the Company’s business involves the use, handling and contracting for recycling or disposal of hazardous or toxic substances or wastes, including environmentally sensitive materials such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, refrigerant, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel fuels. The Company’s business also involves the past and current operation and/or removal of aboveground and underground storage tanks containing such substances or wastes. Accordingly, the Company is subject to regulation by federal, state and local authorities that establish health and environmental quality standards and impose penalties for violations of those standards. The Company is also subject to laws, ordinances and regulations governing remediation of contamination at facilities it operates or to which it sends hazardous or toxic substances or wastes for treatment, recycling or disposal.

      The Company believes that it does not have any material environmental liabilities and that compliance with environmental laws, ordinances and regulations will not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations or financial condition. However, soil and groundwater contamination has been known to exist at certain properties leased by the Company. Furthermore, environmental laws and regulations are complex and subject to frequent change. There can be no assurance that compliance with amended, new or more stringent laws or regulations, stricter interpretations of existing laws or the future discovery of environmental conditions will not require additional expenditures by the Company, or that such expenditures would not be material.

ITEM 2.  PROPERTIES

      The Company seeks to structure its operations so as to avoid the ownership of real property. As a result, the Company leases substantially all of its facilities, including dealerships and office space used for corporate activities. As of December 31, 1999, the Company has leases at the majority of its dealerships, which can include facilities for (i) new and used vehicle sales, (ii) vehicle service operations, (iii) retail and wholesale parts operations, (iv) collision repair centers, (v) storage and (vi) general office use. Such leases are generally for a period of between five and twenty years and typically include renewal options for an additional five to ten years in favor of the Company. In addition, the Company leases office space in New York, NY, Rochester, NY, Jersey City, NJ and Secaucus, NJ for its administrative headquarters and other corporate related activities. The Company is currently renovating the Secaucus, NJ offices and intends to consolidate the administrative functions currently housed in New York, NY, Rochester, NY and Jersey City, NJ in Secaucus, NJ. The renovation of the Secaucus office space is expected to be complete by May 2000.

ITEM 3.  LEGAL PROCEEDINGS

      The Company and its subsidiaries are involved in litigation that has arisen in the ordinary course of business. None of these matters, either individually or in the aggregate, are expected to have a material adverse effect on the Company’s results of operations or financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      There were no matters submitted to a vote of security holders during the fourth quarter of 1999.

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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company’s Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “UAG.” There were 112 holders of record of the Common Stock as of March 22, 2000.

      The following table sets forth the high and low sales prices of the Common Stock as reported on the NYSE during each fiscal quarter during 1999 and 1998.

	1999						1998
Quarter Ended	High			Low			High			Low
March 31		11	1/2		5	13/16		24	1/8		10	1/4
June 30		10	3/4		8	1/2		21	7/8		13	5/8
September 30		13	3/16		10	1/8		26	5/16		11	5/16
December 31		13			8	1/16		15			8	7/8

      The Company has never declared or paid dividends on its Common Stock. The Company intends to retain future earnings, if any, to finance the development and expansion of its business and, therefore, does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. The decision whether to pay dividends will be made by the Board of Directors of the Company in light of conditions then existing, including the Company’s results of operations, financial condition and requirements, business conditions and other factors.

      The indentures governing the Notes (as hereinafter defined) limit the Company’s ability to pay dividends based on a formula, which takes into account, among other things, the Company’s consolidated net income.

      The Company is a holding company whose assets consist primarily of the capital stock of its operating subsidiaries. Consequently, the Company’s ability to pay dividends is dependent upon the earnings of its subsidiaries and their ability to distribute earnings and make other advances and payments to the Company.

      Pursuant to the automobile franchise agreements to which the Company’s dealerships are subject, all dealerships are required to maintain a certain minimum working capital, and some dealerships are also required to maintain a certain minimum net worth. These requirements may restrict the ability of the Company’s operating subsidiaries to make dividend payments, which in turn may restrict the Company’s ability to make dividend payments.

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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

      The following table sets forth selected historical consolidated financial and other data of the Company as of and for the five years in the period ended December 31, 1999. Such financial information has been derived from the Company’s consolidated financial statements. During the five year period, the Company made a number of acquisitions, each of which has been accounted for using the purchase method of accounting. Accordingly, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. As a result, the Company’s period to period results of operations vary depending on the dates of such acquisitions. The selected consolidated financial data should be read in conjunction with the Company’s consolidated financial statements and related footnotes included elsewhere herein.

SELECTED CONSOLIDATED FINANCIAL DATA(1)(2)

	Years Ended December 31,
	1999		1998(3)(4)			1997(5)(6)			1996(7)		1995(8)
	(Dollars in thousands, except per share data)
Statement of Operations Data:
Total revenues	$	4,022,517	$	3,343,147		$	2,092,593		$	1,302,031	$	805,621
Gross profit		549,437		455,617			276,359			158,150		94,348
Income (loss) from continuing operations		26,710		13,378			(7,936	)		8,976		(2,760	)
Net income (loss)		27,488		(797	)		(10,140	)		3,047		(3,654	)
Income (loss) from continuing operations per diluted common share		1.01		0.64			(0.44	)		0.82		(0.52	)
Net income (loss) per diluted common  share		1.04		(0.04	)		(0.56	)		0.28		(0.67	)
Other Data:
Gross profit margin		13.7%		13.6%			13.2%			12.1%		11.7%
New cars sold at retail		93,259		77,403			50,985			36,802		25,138
Used cars sold at retail		52,027		46,724			31,253			18,344		8,953
Balance Sheet Data:
Intangible assets, net	$	494,957	$	482,049		$	326,774		$	177,194	$	48,774
Total assets		1,279,337		1,184,194			971,064			525,373		235,146
Long-term debt, including current portion		228,924		313,021			248,531			16,565		27,242
Total stockholders’ equity		430,865		341,650			300,557			284,501		51,699

(1)	During 1998, the Company discontinued the auto finance business of its wholly owned subsidiary, United Auto Finance, Inc. (“UAF”). As a result, UAF no longer engages in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation for all periods presented. See footnotes to consolidated financial statements.
(2)	During 1997, the Company changed its method of accounting for new vehicle inventories from LIFO to the specific identification method. The effect of the change in accounting for new vehicle inventories was to increase net income and income before extraordinary item by $573 ($0.05 per diluted share) in 1996 and decrease net income and income before extraordinary item by $188 ($0.03 per diluted share) in 1995.
(3)	Includes a $12,550 pre-tax charge for estimated future repair costs under the terms of approximately 51,000 warranty and extended service contracts sold from January 1, 1997 to October 31, 1998. See footnotes to consolidated financial statements.
(4)	Includes the results of the Skelton Group, the Young Group, the Classic Group, Graceland Dodge, Pioneer Ford, the San Diego dealerships and Citrus Dodge from their respective dates of acquisition.
(5)	Includes a $31,660 charge recorded during 1997 to realign certain elements of the Company’s business. See footnotes to consolidated financial statements.

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(6)	Includes the results of Crown Automotive, Hanna Nissan, the Staluppi Automotive Group, the Gene Reed Automotive Group, the Lance Landers dealerships, Stone Mountain Jeep Eagle, Shreveport Dodge, Central Ford, Covington Pike Dodge and the Triangle Group from their respective dates of acquisition
(7)	Includes the results of Atlanta Toyota, United Nissan (GA), Peachtree Nissan, the Sun Automotive Group, the Evans Group and United Nissan (TN) from their respective dates of acquisition.
(8)	Includes the results of Landers Auto from its date of acquisition.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

      As an integral part of its dealership operations, the Company retails new and used automobiles and light trucks, operates service and parts departments, operates collision repair centers and sells various aftermarket products, including finance, warranty, extended service and insurance contracts.

      New vehicle revenues include sales to retail and fleet customers and to leasing companies providing consumer automobile leasing. Used vehicle revenues include amounts received for used vehicles sold to retail customers, leasing companies providing consumer leasing, other dealers and wholesalers. Finance and insurance revenues are generated from sales of accessories, finance contracts, warranty policies, extended service contracts and credit insurance policies, as well as fees for placing finance and lease contracts. Service, parts and collision repair revenues include fees paid for repair and maintenance service, the sale of replacement parts and body shop repairs.

      The Company’s selling expenses consist of advertising and compensation for sales department personnel, including commissions and related bonuses. General and administrative expenses include compensation for administration, finance, legal and general management personnel, depreciation, amortization, rent, insurance, utilities and other outside services. Other interest expense consists of interest charges on all of the Company’s interest-bearing debt, other than interest relating to floor plan inventory financing.

      Between January 1, 1997 and October 31, 1998, the Company sold approximately 51,000 warranty and extended service contracts. The repair obligations for these contracts had been contractually assumed by Trace International Holdings, Inc. (“Trace”) and its subsidiary Alpha Automotive, Inc. (“Alpha”). As a result of uncertainty about Trace and Alpha’s ability to perform their contractual obligations, the Company entered into an insurance agreement under which the repair obligations relating to the 51,000 warranty and extended service contracts were assumed by the insurance company in exchange for a fixed premium payable over time. As a result, the Company has no further financial obligations related to these contracts other than to make specified premium payments. During 1998, the Company recorded a $12.6 million pre-tax charge (the “Alpha Charge”), which represents the estimated present value of those payments. Trace and Alpha remain liable with respect to the warranty and extended service contracts sold prior to November 1, 1998. Future recoveries from Trace and Alpha will reduce the cost of the insurance agreement. On July 21, 1999, Trace and its subsidiaries filed for protection in the bankruptcy court for the Southern District of New York. The case was converted from a Chapter 11 to a Chapter 7 bankruptcy proceeding on January 24, 2000. As a result, further recoveries from Trace are unlikely.

      During 1998, the Company discontinued its auto finance business. As a result, UAF will no longer engage in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation for all periods presented in the accompanying consolidated statements of operations.

      During 1997, the Company recorded a pre-tax charge of $31.7 million (the “1997 Charge”). The charge included costs associated with (i) the divestiture of automotive franchises, (ii) the closure of three stand-alone used vehicle satellite locations in Arkansas and the disposal of related inventory, (iii) the implementation of a new policy to more efficiently manage the Company’s working capital invested in retail inventory, (iv) excess real estate, (v) the write-off of non-performing assets and (vi) certain corporate consulting agreements. Costs associated with the 1997 Charge amounting to $9.8 million and $20.9 million have been

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reflected in cost of goods sold and selling, general and administrative expenses, respectively, in the accompanying financial statements. In addition, $1.0 million was reflected in discontinued operations.

      Also, the Company made a number of dealership acquisitions in 1999, 1998 and 1997. Each of these acquisitions has been accounted for using the purchase method of accounting and as a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition.

Results of Operations

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

      Revenues. Revenues increased by $679.4 million, or 20.3%, from $3.3 billion to $4.0 billion. The overall increase in revenues is due primarily to (i) an aggregate 12.9% increase in retail revenues at dealerships owned prior to January 1, 1998 and (ii) dealership acquisitions made subsequent to January 1, 1998, partially offset by a decrease in revenues resulting from the divestiture of certain dealerships. The overall increase in retail revenues at dealerships owned prior to January 1, 1998 reflects 13.2%, 11.7%, 25.0% and 9.6% increases in new retail vehicle sales, used retail vehicle sales, finance and insurance and service and parts revenues, respectively.

      Sales of new vehicles increased by $459.0 million, or 23.4%, from $2.0 billion to $2.4 billion. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1998 is due primarily to an 11.0% increase in retail unit sales and an increase in the comparative average selling price per vehicle. Aggregate retail unit sales of new vehicles increased by 20.5%, due principally to the net increase at dealerships owned prior to January 1, 1998 and acquisitions, offset by the decrease due to divested dealerships. The Company retailed 93,259 new vehicles (64.2% of total retail vehicle sales) during the year ended December 31, 1999, compared with 77,403 new vehicles (62.4% of total retail vehicle sales) during the year ended December 31, 1998.

      Sales of used vehicles increased by $117.2 million, or 12.7%, from $922.8 million to $1.0 billion. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1998 is due primarily to a 6.0% increase in retail unit sales and an increase in the comparative average selling price per vehicle. Aggregate retail unit sales of used vehicles increased by 11.3%, due principally to the net increase at dealerships owned prior to January 1, 1998 and acquisitions, offset by the decrease due to divested dealerships. The Company retailed 52,027 used vehicles (35.8% of total retail vehicle sales) during the year ended December 31, 1999, compared with 46,724 used vehicles (37.6% of total retail vehicle sales) during the year ended December 31, 1998.

      Finance and insurance revenues increased by $38.3 million, or 30.1%, from $127.4 million to $165.8 million. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998, (ii) a 27.4% increase in revenues at UAC and (iii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships.

      Service and parts revenues increased by $64.8 million, or 19.4%, from $334.1 million to $398.8 million. The increase is due primarily to (i) the net increase at dealerships owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships.

      Gross Profit. Gross profit increased by $93.8 million, or 20.6%, from $455.6 million to $549.4 million. The increase in gross profit is due to (i) an aggregate 11.1% increase in retail gross profit at stores owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues increased from 13.6% to 13.7%. The increase in gross profit as a percentage of revenues is primarily attributable to (i) an increase in higher margin finance and insurance and service and parts revenues as a percentage of total revenues during 1999, (ii) the impact of the Alpha Charge on gross profit in 1998 and (iii) improved gross profit margins on

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service and parts revenues, partially offset by (i) a decrease in gross profit margins on new and used retail vehicle sales revenues and (ii) a decrease in gross profit margins on finance and insurance revenues.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $70.1 million, or 18.7%, from $375.0 million to $445.1 million. Such expenses as a percentage of revenue decreased from 11.2% to 11.1%, and such expenses as a percentage of gross profit decreased from 82.3% to 81.0%. The aggregate increase in selling, general and administrative expenses is due principally to (i) a 12.9% increase at stores owned prior to January 1, 1998 (ii) acquisitions made subsequent to January 1, 1998, and (iii) $2.5 million of compensation expense arising from contractual commitments associated with the issuance by the Company of equity securities in the second and third quarters of 1999, offset by a decrease resulting from the divestiture of certain dealerships. The increase in selling, general and administrative expenses at stores owned prior to January 1, 1998 is due in large part to increased selling expenses, including increased variable compensation, as a result of the increase in gross profit compared with the prior year.

      Floor Plan Interest Expense. Floor plan interest expense of $28.7 million was consistent with the prior year. Factors influencing floor plan interest expense include higher average outstanding borrowings during 1999, offset by lower average borrowing rates.

      Other Interest Expense. Other interest expense decreased by $2.1 million, from $31.5 million to $29.3 million. The decrease is due primarily to the paydown of indebtedness with proceeds from equity offerings and the effect of refinancing a portion of the Notes with lower interest borrowings under the Credit Agreement (as hereinafter defined), offset in part by an increase in the Company’s average borrowing rate during 1999.

      Other Income (Expense), Net. Other income (expense), net decreased by $2.2 million, or 46.4%, from $4.8 million to $2.6 million. Other income relates to management agreements entered into by the Company with certain dealerships where the acquisition of such dealerships by the Company waited final manufacturer approval. Pursuant to the agreements, the Company manages all aspects of such dealership’s operation. The decrease in other income (expense), net is due primarily to the completion of the acquisition in 1999 of certain of the dealerships being operated pursuant to management agreements.

      Income Tax Provision. The 1999 income tax provision increased by $9.9 million from $11.6 million to $21.4 million. The increase is due to an increase in pre-tax income in 1999 compared with 1998, partially offset by a decrease in the Company’s annual effective income tax rate. The decrease in the Company’s annual effective income tax rate is due primarily to a decrease in the Company’s effective state tax rate.

      Extraordinary Item. The $0.7 million extraordinary item in 1999 represents a net after tax gain on the retirement of $49.0 million of the Notes, offset in part by a net after tax loss resulting from the write-off of the unamortized deferred financing costs related to the Company’s previous credit facility. The $1.2 million extraordinary item in 1998 represents the net after tax loss resulting from the write-off of unamortized deferred financing costs relating to a previous credit facility.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

      Revenues. Revenues increased by $1.3 billion, or 59.8%, from $2.1 billion to $3.3 billion. The overall increase in revenues is due primarily to (i) dealership acquisitions made subsequent to January 1, 1997 and (ii) an overall 5.2% increase in retail revenues at dealerships owned prior to January 1, 1997, partially offset by (i) a decrease in retail vehicle sales revenues and finance and insurance revenues at dealerships in the Atlanta marketplace and (ii) a decrease in revenues resulting from the divestiture of certain dealerships. The overall increase in retail revenues at dealerships owned prior to January 1, 1997 reflects 4.9%, 2.9%, 19.5% and 7.7% increases in new retail vehicle sales, used retail vehicle sales, finance and insurance and service and parts revenues, respectively.

      Sales of new vehicles increased by $720.4 million, or 58.2%, from $1.2 billion to $2.0 billion. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1,

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1997 is due to an increase in the comparative average selling price per vehicle, partially offset by a 1.2% decrease in retail unit sales. Aggregate unit retail sales of new vehicles increased by 51.8%, due principally to acquisitions, offset by (i) the net decrease at dealerships owned prior to January 1, 1997 and (ii) the decrease due to divested dealerships. The Company sold 77,403 new vehicles (62.4% of total retail vehicle sales) during the year ended December 31, 1998, compared with 50,985 new vehicles (62.0% of total retail vehicle sales) during the year ended December 31, 1997.

      Sales of used vehicles increased by $333.7 million, or 56.7%, from $598.1 million to $922.8 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1997 is due to an increase in the comparative average selling price per vehicle, partially offset by a 5.2% decrease in retail unit sales. Aggregate unit retail sales of used vehicles increased by 49.5%, due principally to acquisitions, offset by (i) the net decrease at dealerships owned prior to January 1, 1997 and (ii) the decrease due to divested dealerships. The Company sold 46,724 used vehicles (37.6% of total retail vehicle sales) during the year ended December 31, 1998, compared with 31,253 used vehicles (38.0% of total retail vehicle sales) during the year ended December 31, 1997.

      Finance and insurance revenues increased by $53.2 million, or 71.7%, from $74.2 million to $127.4 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997, (ii) the net increase at dealerships owned prior to January 1, 1997 and (iii) an increase in revenues at UAC, offset by (i) the decrease in the Atlanta marketplace and (ii) a decrease resulting from the divestiture of certain dealerships.

      Service and parts revenues increased by $143.3 million, or 75.1%, from $190.8 million to $334.1 million. The increase is due primarily to (i) acquisitions made subsequent to January 1, 1997 and (ii) the net increase at dealerships owned prior to January 1, 1997, offset by a decrease resulting from the divestiture of certain dealerships.

      Gross Profit.  Gross profit increased by $179.3 million, or 64.9%, from $276.4 million to $455.6 million. The increase in gross profit is due to (i) acquisitions made subsequent to January 1, 1997, (ii) an aggregate increase in total gross profit generated at stores owned prior to January 1, 1997 (iii) the increase in revenues at UAC and (iv) the impact of the 1997 Charge on gross profit in 1997, offset by (i) the impact of the Alpha Charge on gross profit in 1998 and (ii) a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues increased from 13.2% to 13.6%. The increase in gross profit as a percentage of revenues is primarily attributable to (i) the increase in higher margin finance and insurance and service and parts revenues as a percentage of total revenues, (ii) improved gross profit margins on new and used retail vehicle sales revenues, (iii) improved gross profit margins on finance and insurance revenues and (iv) improved gross profit margins on service and parts revenues.

      Selling, General and Administrative Expenses.  Selling, general and administrative expenses increased by $120.0 million, or 47.0%, from $255.1 million to $375.0 million. The increase in selling, general and administrative expenses is due principally to (i) acquisitions made subsequent to January 1, 1997, (ii) an increase at stores owned prior to January 1, 1997, offset in part by the impact of the 1997 Charge on selling general and administrative expenses in 1997. Such expenses as a percentage of revenue decreased from 12.2% to 11.2%.

      Floor Plan Interest Expense.  Floor plan interest expense increased by $9.4 million, or 48.8%, from $19.3 million to $28.7 million. The increase in floor plan interest expense is due principally to acquisitions made subsequent to January 1, 1997.

      Other Interest Expense.  Other interest expense increased by $17.4 million, from $14.1 million to $31.5 million. The increase is due to (i) the issuance of the Notes and (ii) the incurrence of acquisition related debt.

      Other Income (Expense), Net.  Other income (expense), net increased by $4.5 million, due primarily to $4.8 million of income earned pursuant to dealership management agreements during 1998.

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      Income Tax Provision.  The 1998 income tax provision increased $15.5 million from a benefit of $4.0 million to a provision of $11.6 million. The increase is due to an increase in pre-tax income in 1998 compared with 1997, coupled with an increase in the Company’s annual effective income tax rate during 1998.

      Loss from Discontinued Operations.  Loss from discontinued operations increased by $10.7 million from $2.2 million to $12.9 million. The increase in loss from discontinued operations is due primarily to (i) an increase in UAF’s 1998 operating loss and (ii) the recording of a $14.4 million loss on disposal, offset by the impact of the 1997 Charge on loss from discontinued operations in 1997. The increase in UAF’s 1998 operating loss was due primarily to (i) losses incurred on the sale of loans in private non-securitized transactions, (ii) losses in connection with exiting interest rate management transactions and (iii) asset impairment relating to finance assets. The loss on disposal consists of (i) $5.9 million relating to contractual commitments, the write-off of certain fixed assets, severance and other administrative expenses, (ii) $3.8 million of asset impairment and losses incurred on the sale of loans in private non-securitized transactions, (iii) $3.9 million of estimated future costs associated with servicing its securitized portfolio of retail automotive loans and (iv) $0.8 million relating to the write-off of deferred financing fees in connection with the closure of UAF’s warehouse lines.

      Extraordinary Item.  The $1.2 million extraordinary item in 1998, represents the net after tax loss resulting from the write-off of unamortized deferred financing costs relating to a previous credit facility.

Liquidity and Capital Resources

      The cash requirements of the Company are primarily for the acquisition of new dealerships, working capital and the expansion of existing facilities. Historically, these cash requirements have been met through issuances of equity and debt instruments and cash flow from operations. At December 31, 1999, the Company had working capital of $97.0 million.

      On April 12, 1999, the Company and International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (“IMCG II”), Delaware limited liability companies controlled by Penske Capital Partners, L.L.C. (together, the “Purchaser”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Purchaser agreed to purchase (i) an aggregate of 7,903.124 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), (ii) an aggregate of 396.876 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (iii) warrants (the “Warrants”) to purchase (a) 3,898,665 shares of the Company’s Common Stock, and (b) 1,101,335 shares of the Company’s non-voting common stock, par value $0.0001 per share (the “Non-Voting Common Stock”) for $83.0 million. The Series A Preferred Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and the Series B Preferred Stock is convertible into an aggregate of 396,876 shares of Non-Voting Common Stock. The Warrants are exercisable at a price of $12.50 per share for the thirty months following the date of issuance, and $15.50 per share thereafter until May 2, 2004.

      The transaction was consummated in two steps: first, the acquisition of approximately $33.5 million of Series A Preferred Stock and, second, the acquisition of approximately $49.5 million of Series A Preferred Stock, Series B Preferred Stock and Warrants. The first step of the transaction closed on May 3, 1999. The Series A Preferred Stock issued on May 3, 1999 was subject to mandatory redemption by the Company at the Purchaser’s option prior to the second closing. On August 3, 1999, the transaction was approved by the Company’s stockholders, after which the second step of the transaction closed. Proceeds from the issuance of the securities pursuant to the Securities Purchase Agreement were used to prepay the remaining $44.4 million of term loans and $18.4 million of revolving loan commitments outstanding under the Company’s credit agreement, to pay approximately $6.8 million of fees incurred in connection with the execution of the Securities Purchase Agreement and fund certain acquisition related costs. The balance of the proceeds were deposited in interest bearing accounts.

      The shares of Series A Preferred Stock and Series B Preferred Stock entitle the Purchaser to dividends at a rate of 6.5% per year. Dividends are payable in kind for the first two years. In February 2000, in accordance with the Certificate of Designation governing the preferred stock, the Board of Directors declared and paid to

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the Purchasers a pay-in-kind dividend consisting of 220.622 shares of Series A Preferred Stock and 62.324 shares of Series B Preferred Stock representing accrued and unpaid dividends through December 31, 1999 in respect of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock. Such shares are convertible into 220,622 shares of Common Stock and 62,324 shares of Non-Voting Common Stock, respectively.

      The Company finances all of its new and a portion of its used vehicle inventory under revolving floor plan financing arrangements with various lenders. The Company makes monthly interest payments on the amount financed, but is not required to make loan principal repayments prior to the sale of new and used vehicles. Substantially all of the assets of the Company’s dealerships, including vehicles and related sales proceeds, are subject to security interests granted to their floor plan lending sources. As of December 31, 1999 approximately $478 million of floor plan borrowing was outstanding. Interest rates on the floor plan agreements are variable and increase or decrease based on movements in prime or LIBOR borrowing rates.

      On October 8, 1999, the Company entered into a new credit agreement, dated as of August 3, 1999, as amended (the “Credit Agreement”), which provides for up to $360.0 million in revolving loans to be used for acquisitions, working capital, the repurchase of Notes, the repurchase of Common Stock, letters of credit and general corporate purposes. Borrowings under the Credit Agreement bear interest at LIBOR plus 2.00%, other then borrowings to repurchase the Notes which bear interest at LIBOR plus 3.00%. The Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries. The Credit Agreement contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, repurchase capital stock, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. In addition, substantially all of the assets of the Company’s dealerships not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement. The Company was in compliance with all of its debt covenants at December 31, 1999.

      During 1997 the Company issued $200.0 million aggregate principal amount of 11% Senior Subordinated Notes due 2007 (the “Notes”). The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental debt. The indentures governing the Notes also limit the Company’s ability to pay dividends based on a formula which take into account, among other things, the Company’s consolidated net income. The indentures also contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions. The Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries. During 1999 the Company repurchased and retired $49.0 million of the Notes. As of March 22, 2000, there was $151.0 million principal amount of Notes outstanding.

      The indentures governing the Notes contain a provision which requires the Company to offer to purchase all of the then outstanding Notes at a purchase price in cash equal to 101% of their principal amount in the event of a change in control. A change in control will be deemed to have occurred if a purchaser, as defined, beneficially obtains 40% of the voting power, as defined, of the voting stock of the Company. In December 1999, the Company announced its plan to repurchase up to 10% of the total outstanding Common Stock of the Company. The shares of Common Stock may be acquired from time to time over a two-year period either through open market purchases, negotiated transactions, or other means based upon market conditions. The repurchase of shares of Common Stock by the Company has increased the beneficial ownership interest of the Purchaser above 40% of the total ownership of the Company. As a result, the Company plans to make an offer to purchase the outstanding Notes at a change of control redemption price of 101% of par. The Company has sufficient availability under the Credit Agreement to finance the repurchase of the Notes.

      During 1999, cash flow from operations amounted to $40.8 million. Net cash used in investing activities during the year ended December 31, 1999 totaled $50.4 million, relating to dealership acquisitions and capital

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expenditures. Net cash used in financing activities during the year ended December 31, 1999, relating primarily to the net proceeds from the placement of preferred stock, offset by a net retirement of long-term debt, totaled $18.7 million. In addition, the Company received distributions amounting to $9.7 million from its wholly-owned subsidiary, United Auto Finance, Inc.

      At December 31, 1999, the Company had approximately $19.8 million of cash available to fund operations and future acquisitions. In addition, $226.9 million, $110.0 million of which is restricted to the repurchase of Notes, is available for borrowing under the Credit Agreement as of March 22, 2000. The Company is a holding company whose assets consist primarily of the capital stock of its operating subsidiaries. Consequently, the Company’s ability to pay dividends is dependent upon the earnings of its subsidiaries and their ability to distribute earnings to the Company and to make other advances and payments by such subsidiaries to the Company.

      The Company’s principal source of growth has come from acquisitions of automobile dealerships. The Company believes that its existing capital resources will be sufficient to fund its current operations and commitments. To the extent the Company pursues additional significant acquisitions, it may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional bank borrowings. A public equity offering would require the prior approval of certain automobile manufacturers.

Cyclicality

      Unit sales of motor vehicles, particularly new vehicles, historically have been cyclical, fluctuating with general economic cycles. During economic downturns, the automotive retailing industry tends to experience similar periods of decline and recession as the general economy. The Company believes that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, interest rates and credit availability.

Seasonality

      The Company’s combined business is modestly seasonal overall. The greatest seasonalities exist with the dealerships in the northeast United States, for which the second and third quarters are the strongest with respect to vehicle related sales. The service and parts business at all dealerships experience relatively modest seasonal fluctuations.

Effects of Inflation

      The Company believes that the relatively moderate rates of inflation over the last few years have not had a significant impact on revenue or profitability. The Company does not expect inflation to have any near-term material effects on the sale of its products and services. However, there can be no assurance that there will be no such effect in the future.

      The Company finances substantially all of its inventory through various revolving floor plan arrangements with interest rates that vary based on the prime rate or LIBOR. Such rates have historically increased during periods of increasing inflation. The Company does not believe that it would be placed at a competitive disadvantage should interest rates increase due to increased inflation since most other automobile dealers have similar floating rate borrowing arrangements.

Forward Looking Statements

      Certain portions of this Annual Report on Form 10-K contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Annual Report or incorporated herein by reference regarding the Company’s financial position and business strategy may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations

13

will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations, some of which are described in greater detail elsewhere in this Annual Report, include the following: (i) the Company is subject to the influence of various manufacturers whose franchises it holds; (ii) the Company is leveraged and subject to restrictions imposed by the terms of its indebtedness; (iii) the Company’s growth depends in large part on the Company’s ability to manage expansion, control costs in its operations and consummate and consolidate dealership acquisitions; (iv) many of the Company’s franchise agreements impose restrictions on the transferability of the Company’s Common Stock; (v) the Company will require substantial additional capital to acquire automobile dealerships and purchase inventory; (vi) unit sales of motor vehicles historically have been cyclical; (vii) the automotive retailing industry is highly competitive; (viii) the automotive retailing industry is a mature industry; (ix) the Company’s success depends to a significant extent on key members of its management; and (x) the Company’s business is seasonal. In light of the foregoing, readers of this Annual Report are cautioned not to place undue reliance on the forward-looking statements contained herein.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Foreign Currency Exchange Rates. Substantially all of the Company’s business is conducted in the United States where its revenues and expenses are transacted in U.S. dollars. As a result, the majority of the Company’s results of operations are not subject to foreign exchange rate fluctuations. The Company does not hedge against foreign exchange rate fluctuations due to the limited financial exposure it faces with respect to such risk. In common with other automobile retailers, the Company purchases certain of its new car inventories from foreign manufacturers. The Company’s business in this regard is subject to certain risks, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions and foreign exchange rate volatility. The Company’s future results could be materially and adversely impacted by changes in these or other factors.

      Interest Rates. The Company is exposed to market risk from changes in the interest rates on a significant portion of its outstanding indebtedness. Outstanding balances under the Credit Agreement bear interest at a variable rate based on a margin over LIBOR. Based on the amount outstanding as of March 22, 2000, a 100 basis point change in interest rates would result in an approximate $1.3 million change to the Company’s annual interest expense. Similarly, amounts outstanding under floor plan financing arrangements bear interest at a variable rate based on a margin over LIBOR. Based on the average aggregate outstanding amounts under floor plan financing arrangements during the year ended December 31, 1999, a 100 basis point change in interest rates would result in an approximate $4.3 million change to the Company’s annual floor plan interest expense. During January 2000, the Company entered into swap agreements pursuant to which a notional $200.0 million of the Company’s floating rate debt has been exchanged for fixed rate debt. The fixed rate interest to be paid by the Company is based on LIBOR, as adjusted, and amounts to approximately 7.1%. For fixed rate debt including the Notes, certain seller financed promissory notes and obligations under certain capital leases, interest rate changes affect the fair market value of such debt, but do not impact the Company’s earnings or cash flows.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See the consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements for the information required by this item.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      On May 19, 1999, the Company dismissed PricewaterhouseCoopers LLP, which served as the Company’s independent public accountants since 1992. The reports issued by PricewaterhouseCoopers LLP on the financial statements of the Company for the past two fiscal years did not contain an adverse opinion nor a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. Based on the recommendation of the Audit Committee, the Company’s Board of Directors approved the decision to change independent public accountants. In connection with its audits for the two

14

most recent fiscal years and through May 19, 1999, there were no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference thereto in their report on the financial statements for such years or such interim periods.

      The Company engaged Deloitte & Touche LLP as its new independent public accountants as of May 19, 1999. The Company’s Board of Directors approved this on May 19, 1999. During the two most recent fiscal years and through May 19, 1999, the Company has not consulted with Deloitte & Touche LLP regarding either:

      (i)  the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements; or

      (ii)  any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to this Item) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K and related instructions to this Item).

PART III

      The information required by Items 10 through 13 is included in the Company’s definitive proxy statement under the captions “Compensation of Directors” “Election of Directors,” “Executive Officers,” “Executive Compensation”, “Security Ownership of Certain Beneficial Owners and Management”, “Related Party Transactions,” and “Section 16(a) Beneficial Ownership Reporting Compliance”. Such information is incorporated herein by reference, pursuant to General Instruction G(3).

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      The following is a list of the officers and directors of the Company, including their principal occupation:

Name	Office	Occupation
Roger S. Penske	Director, Chairman and Chief Executive Officer of the Company	Chairman of the Board and Chief Executive Officer of Penske Corporation
Samuel X. DiFeo	Director, President and Chief Operating Officer of the Company	President and Chief Operating Officer of the Company
James A. Hislop	Director	President and Chief Executive Officer of Penske Capital Partners, LLC
Richard J. Peters	Director	President of Penske Corporation
Eustace W. Mita	Director	President and Chief Executive Officer of HAC Group, LLC
Donald J. Hofmann, Jr.	Director	General Partner of Chase Capital Partners
Marshall S. Cogan	Director	Consultant
Michael R. Eisenson	Director	Managing Director and Chief Executive Officer of Charlesbank
John J. Hannan	Director	Principal of Apollo Advisors, L.P. and Apollo Real Estate Advisors, L.P.
James R. Davidson	Executive Vice President – Finance of the Company	—
Robert H. Kurnick, Jr.	Executive Vice President – General Counsel and Secretary of the Company	Executive Vice President of Penske Corporation
Paul H. Walters	Executive Vice President – Administration of the Company	Executive Vice President — Administration of Penske Corporation

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PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      (a)  Financial Statements

      The consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.

      (b)  Reports on Form 8-K.

      The Company did not file any Current Reports on Form 8-K during the three month period ended December 31, 1999.

      (c)  Exhibits

3.1(l)	Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999
3.2(b)	Restated Bylaws
4.1(b)	Specimen Common Stock Certificate
4.2(f)	Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee
4.4(f)	Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee
4.5(k)	Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999
10.1(k)	Stockholders Agreement, dated as of May 3, 1999, by and among AIF II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Trace International Holdings, Inc., and the Company
10.1.1(b)	Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996
10.1.4(b)	Form of Warrant
10.1.8(b)	Stock Option Plan of the Company
10.1.8.1(i)	Amendment to Stock Option Plan of the Company
10.1.11(b)	Letter, dated July 24, 1996, between the Company and Toyota Motor Sales U.S.A., Inc.
10.1.13(b)	Non-employee Director Compensation Plan of the Company
10.1.14(b)	Form of Agreement among the Company, certain of its affiliates and American Honda Motor Co., Inc.
10.1.15(b)	Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo
10.1.18(d)	Consulting Agreement, dated March 3, 1997, between the Company and Carl Spielvogel
10.1.19.1(a)	Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent

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10.1.19.2(a)	First Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent
10.1.19.3(a)	Second Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent
10.2(k)	Non-Competition and Standstill Agreement, dated as of April  12, 1999 by and between Marshall S. Cogan and the Company
10.2.1(b)	Honda Automobile Dealer Sales and Service Agreement, including Standard Provisions
10.2.2(b)	Lexus Dealer Agreement, including Standard Provisions
10.2.3(b)	Mitsubishi Dealer Sales and Services Agreement, including Standard Provisions
10.2.4(b)	BMW of North America, Inc., Dealer Agreement, including Standard Provisions
10.2.5(b)	Suzuki Term Dealer Sales and Service Agreement, including Standard Provisions
10.2.6(b)	Toyota Dealer Agreement, including Standard Provisions
10.2.7(b)	General Motors Dealer Sales and Service Agreement, including Standard Provisions
10.2.9(b)	Nissan Dealer Sales and Service Agreement, including Standard Provisions
10.2.10(b)	Chrysler Corporation Term Sales and Service Agreement, including Standard Provisions
10.2.15(b)	Hyundai Motor America Dealer Sales and Service Agreement, including Standard Provisions
10.2.21 and 22(b)	Isuzu Dealer Sales and Service Agreement, including Standard Provisions
10.2.26(b)	Settlement Agreement, dated as of October 3, 1996, among the Company and certain of its affiliates, on the one hand, and Samuel X. DiFeo, Joseph C. DiFeo and certain of their affiliates, on the other hand
10.3(l)	Stock Option Agreement, dated as of August 3, 1999, between the Company and Roger S. Penske
10.3.1(g)	Ford Sales and Service Agreement, including Standard Provisions
10.4(l)	Stock Option Agreement, dated as of August 3, 1999 between the Company and Marshall S. Cogan
10.4.5(b)	Employment Agreement, dated as of August 1, 1995, between Landers Auto Sales, Inc., and Steve Landers
10.5.13(b)	Employment Agreement, dated as of January 16, 1996, among the Company, UAG Atlanta, Inc. and John Smith
10.8.1(b)	Stock Purchase Agreement, dated as of June 6, 1996, among the Company, UAG West, Inc., Scottsdale Jaguar, LTD., SA Automotive, LTD., SL Automotive, LTD., SPA Automotive, LTD., LRP, LTD., Sun BMW, LTD., Scottsdale Management Group, LTD., 6725 Dealership LTD., and certain parties named therein, as amended on October 21, 1996 by Amendment No. 1, Amendment No. 2 and Amendment No. 3
10.8.3(b)	Form of Employment Agreement between the Company, UAG West, Inc., and Steven Knappenberger
10.8.5(b)	Audi Dealer Agreement, including Standard Provisions
10.8.6(b)	Acura Automobile Dealer Sales and Service Agreement, including Standard Provisions
10.8.8(b)	Porsche Sales and Service Agreement, including Standard Provisions
10.8.9(b)	Land Rover North America, Inc. Dealer Agreement, including Standard Provisions
10.8.21(e)	Rolls-Royce Dealer Agreement
10.11.1(c)	Agreement and Plan of Merger, dated December 16, 1996, among Crown Jeep Eagle, Inc., Berylson, Inc., Shannon Automotive, Ltd., Kevin J. Coffey, Paul J. Rhodes, the Company, UAG Texas, Inc., and UAG Texas II, Inc.

18

10.13.1(d)	Stock Purchase Agreement, dated February 19, 1997, among the Company, UAG East, Inc., Amity Auto Plaza, Ltd., Massapequa Imports Ltd., Westbury Nissan Ltd., Westbury Superstore Ltd., J&S Auto Refinishing Ltd., Florida Chrysler Plymouth Jeep Eagle Inc., Palm Auto Plaza, Inc., West Palm Infiniti Inc., West Palm Nissan Inc., Northlake Auto Finish Inc., John A. Staluppi and John A. Staluppi, Jr., as amended April 7, 1997 and April 30, 1997
10.15.1(e)	Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet–Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William B. Bradshaw, as amended May 31, 1997
10.18.1(f)	Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended)
10.19.1.1(f)	Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein
10.19.1.2(f)	Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein
10.19.1.3(h)	Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein
10.19.1.4(h)	Amendment to Agreement and Plan of Merger, dated January 31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein
10.20.1(j)	Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.
10.20.2(j)	Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.3(j)	Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.
10.20.4(j)	Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.7(k)	Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.21(a)	Severance Agreement, dated May 3, 1999 between the Company and Robert Nelson.
10.22(a)	Severance Agreement, dated August 2, 1999 between the Company and James Davidson.
10.23(a)	Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.
21.1(a)	Subsidiaries of the Company
23.1(a)	Consent of PricewaterhouseCoopers, LLP
23.2(a)	Consent of Deloitte & Touche, LLP

19

27.1(a)	December 31, 1999 Financial Data Schedule
27.2(a)	September 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.3(a)	June 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.4(a)	March 31, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.5(a)	December 31, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.6(a)	September 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.7(a)	June 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.8(a)	March 31,1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.9(a)	December 31, 1997 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.

(a)	Filed herewith
(b)	Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429
(c)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December  24, 1996, File No. 001-12297
(d)	Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297
(e)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297
(f)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297
(g)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No.  001-12297
(h)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February  20, 1998, File No. 001-12297
(i)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No.  001-12297
(j)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297
(k)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297
(l)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297

(d)  Schedules — No Financial Statement Schedules are required to be filed as part of this Annual Report on Form 10-K.

20

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York on March 27, 2000.

UNITED AUTO GROUP, INC.

By:  /s/ ROGER S. PENSKE

Roger S. Penske

Chairman of the Board and

Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on its behalf by the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ ROGER S. PENSKE Roger S. Penske	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 27, 2000
/s/ SAMUEL X. DIFEO Samuel X. DiFeo	President, Chief Operating Officer and Director	March 27, 2000
/s/ JAMES R. DAVIDSON James R. Davidson	Executive Vice President — Finance (Principal Financial and Accounting Officer)	March 27, 2000
/s/ DONALD J. HOFMANN, JR. Donald J. Hofmann, Jr.	Director	March 27, 2000
/s/ EUSTACE W. MITA Eustace W. Mita	Director	March 27, 2000
/s/ RICHARD J. PETERS Richard J. Peters	Director	March 27, 2000
/s/ JAMES A. HISLOP James A. Hislop	Director	March 27, 2000
/s/ MICHAEL R. EISENSON Michael R. Eisenson	Director	March 27, 2000
/s/ JOHN J. HANNAN John J. Hannan	Director	March 27, 2000
/s/ MARSHALL S. COGAN Marshall S. Cogan	Director	March 27, 2000

21

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

United Auto Group, Inc.
	Reports of Independent Accountants	F-2
	Consolidated Balance Sheets as of December 31, 1999 and 1998	F-4
	Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997	F-5
	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 1999, 1998, 1997 and 1996	F-6
	Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997	F-7
	Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of United Auto Group, Inc.

New York, New York

      We have audited the accompanying consolidated balance sheet of United Auto Group, Inc. (the “Company”) and subsidiaries as of December 31, 1999, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 1999. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit.

      We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 1999, and the results of their operations and their cash flows for the year ended December 31, 1999 in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

New York, New York

February 1, 2000

F-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of United Auto Group, Inc.:

      In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of United Auto Group, Inc. (the “Company”) at December 31, 1998, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. We have not audited the consolidated financial statements of the Company for any period subsequent to December 31, 1998.

/s/ PRICEWATERHOUSECOOPERS LLP

Princeton, New Jersey

March 29, 1999

F-3

UNITED AUTO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

			December 31,
			1999		1998
			(Dollars in thousands)
ASSETS
	Cash and cash equivalents		$	19,847	$	38,538
	Accounts receivable, net			140,473		125,460
	Inventories			508,289		410,295
	Other current assets			10,723		16,420
		Total current assets		679,332		590,713
Property and equipment, net				68,232		51,483
Intangible assets, net				494,957		482,049
Net assets of discontinued operations				13,747		23,323
Other assets				23,069		36,626
		Total Assets	$	1,279,337	$	1,184,194
LIABILITIES AND STOCKHOLDERS’ EQUITY
	Floor plan notes payable		$	478,460	$	397,234
	Accounts payable			47,113		38,435
	Accrued expenses			46,328		45,104
	Current portion of long-term debt			10,389		24,756
		Total current liabilities		582,290		505,529
Long-term debt				218,535		288,265
Other long-term liabilities				47,647		48,750
		Total Liabilities		848,472		842,544
Commitments and contingent liabilities
Stockholders’ Equity
	Preferred Stock			—		—
	Common Stock			2		2
	Additional paid-in-capital			414,318		352,591
	Retained earnings (accumulated deficit)			16,545		(10,943	)
		Total Stockholders’ Equity		430,865		341,650
		Total Liabilities and Stockholders’ Equity	$	1,279,337	$	1,184,194

See Notes to Consolidated Financial Statements.

F-4

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

		Year Ended December 31,
		1999			1998			1997
		(In thousands, except per share amounts)
New vehicle sales		$	2,417,906		$	1,958,885		$	1,238,530
Used vehicle sales			1,040,026			922,793			589,079
Finance and insurance			165,751			127,405			74,199
Service and parts			398,834			334,064			190,785
	Total revenues		4,022,517			3,343,147			2,092,593
Cost of sales			3,473,080			2,887,530			1,816,234
	Gross profit		549,437			455,617			276,359
Selling, general and administrative expenses			445,142			375,043			255,066
Operating income			104,295			80,574			21,293
Floor plan interest expense			(28,676	)		(28,718	)		(19,297	)
Other interest expense			(29,344	)		(31,462	)		(14,071	)
Other income (expense), net			2,571			4,800			297
Income (loss) from continuing operations before minority interests, income tax (provision) benefit and extraordinary item			48,846			25,194			(11,778	)
Minority interests			(722	)		(262	)		(138	)
Income tax (provision) benefit			(21,414	)		(11,554	)		3,980
Income (loss) from continuing operations			26,710			13,378			(7,936	)
Income (loss) from discontinued operations, net of income taxes			46			(12,940	)		(2,204	)
Income (loss) before extraordinary item			26,756			438			(10,140	)
Extraordinary item (net of income tax provision of $605 in 1999 and income tax benefit of $859 in 1998)			732			(1,235	)		—
Net income (loss)		$	27,488		$	(797	)	$	(10,140	)
Basic income (loss) from continuing operations per common share		$	1.10		$	0.66		$	(0.44	)
Basic net income (loss) per common share		$	1.14		$	(0.04	)	$	(0.56	)
Income (loss) from continuing operations per diluted common share		$	1.01		$	0.64		$	(0.44	)
Net income (loss) per diluted common share		$	1.04		$	(0.04	)	$	(0.56	)
Shares used in computing basic per share data			21,950			20,377			18,227
Shares used in computing diluted per share data			26,526			20,932			18,607

See Notes to Consolidated Financial Statements

F-5

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Class A				Class B				Voting and
	Convertible				Convertible				Non-voting
	Preferred Stock				Preferred Stock				Common Stock
														Additional			Retained
	Issued				Issued				Issued					Paid-in			Earnings
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			(Deficit)			Total
	(Dollars in thousands)
Balances, December 31, 1996		—	$	—		—	$	—		17,294,928		$	2	$	284,502		$	(3	)	$	284,501
Issuance of stock for acquisitions		—		—		—		—		1,497,218			—		27,986			—			27,986
Issuance of stock — exercise of stock options		—		—		—		—		503,000			—		6,706						6,706
Repurchase of common stock		—		—		—		—		(397,000	)		—		(8,821	)		—			(8,821	)
Unrealized gain on marketable securities — UAF		—		—		—		—		—			—		—			325			325
Net loss		—		—		—		—		—			—		—			(10,140	)		(10,140	)
Balances, December 31, 1997		—		—		—		—		18,898,146			2		310,373			(9,818	)		300,557
Issuance of stock for acquisitions		—		—		—		—		1,683,638			—		39,632			—			39,632
Issuance of stock — exercise of stock options		—		—		—		—		156,600			—		2,586			—			2,586
Unrealized loss on marketable securities — UAF		—		—		—		—		—			—		—			(328	)		(328	)
Net loss		—		—		—		—		—			—		—			(797	)		(797	)
Balances, December 31, 1998		—		—		—		—		20,738,384			2		352,591			(10,943	)		341,650
Issuance of stock for acquisitions		—		—		—		—		1,261,327			—		(16,210	)		—			(16,210	)
Issuance of options		—		—		—		—		—			—		2,250			—			2,250
Repurchase of common stock		—		—		—		—		(118,000	)		—		(992	)		—			(992	)
Issuance of preferred stock and warrants		7,904		—		397		—		—			—		76,679			—			76,679
Net income		—		—		—		—		—			—		—			27,488			27,488
Balances, December 31, 1999		7,904	$	—		397	$	—		21,881,711		$	2	$	414,318		$	16,545		$	430,865

See Notes to Consolidated Financial Statements.

F-6

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Year Ended December 31,
				1999			1998			1997
				(Dollars in thousands)
Operating Activities:
	Net income (loss)			$	27,488		$	(797	)	$	(10,140	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations:
		Depreciation and amortization			19,131			16,464			9,100
		Unusual items			—			12,550			30,660
		Non-cash compensation expense			2,250			—			—
		(Income) loss from discontinued operations			(46	)		12,940			2,204
		Deferred income taxes			10,007			8,561			(9,193	)
		Minority interests			722			262			138
	Changes in operating assets and liabilities:
		Accounts receivable			(11,090	)		(4,709	)		(8,317	)
		Inventories			(73,687	)		39,648			(39,280	)
		Floor plan notes payable			59,371			(29,587	)		37,210
		Accounts payable and accrued expenses			2,690			9,138			2,433
		Other			3,922			(9,422	)		3,474
			Net cash provided by operating activities of continuing operations		40,758			55,048			18,289
Investing Activities:
	Purchase of equipment and improvements				(22,161	)		(12,085	)		(11,915	)
	Dealership acquisitions				(28,251	)		(138,139	)		(139,639	)
			Net cash used in investing activities of continuing operations		(50,412	)		(150,224	)		(151,554	)
Financing Activities:
	Proceeds from borrowings of long-term debt				65,000			68,400			252,999
	Payments of long-term debt and capital leases				(159,147	)		(17,956	)		(54,850	)
	Net proceeds from issuance of common stock, preferred stock and warrants				76,679			2,020			4,772
	Repurchase of common stock				(992	)		—			(8,821	)
	Deferred financing costs				(227	)		(1,842	)		(10,689	)
	Other				—			—			(1,118	)
			Net cash provided by (used in) financing activities of continuing operations		(18,687	)		50,622			182,293
			Net cash distributed by (invested in) discontinued operations		9,650			(11,343	)		(21,468	)
			Net increase (decrease) in cash and cash equivalents		(18,691	)		(55,897	)		27,560
Cash and cash equivalents, beginning of year					38,538			94,435			66,875
Cash and cash equivalents, end of year				$	19,847		$	38,538		$	94,435

See Notes to Consolidated Financial Statements

F-7

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands, Except Per Share Amounts)

1.  Organization and Summary of Significant Accounting Policies

      United Auto Group, Inc. (“UAG” or the “Company”) is engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, parts and collision repair, finance and insurance products and other aftermarket products. The Company operates dealerships under franchise agreements with a number of automotive manufacturers. In accordance with the individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a franchise agreement, could have a negative impact on the Company’s operating results.

      As discussed in Note 12, the Company entered into a Securities Purchase Agreement during 1999, pursuant to which it received $83,000 in cash in exchange for the issuance of convertible preferred stock and warrants. Also, as discussed in Note 3, the Company discontinued its auto finance business during 1998. As a result, the Company’s wholly owned subsidiary, United Auto Finance, Inc. (“UAF”), is presented as a discontinued operation in the accompanying financial statements.

      As discussed in Note 4, the Company completed a number of acquisitions during the three years in the period ended December 31, 1999. Each of these acquisitions has been accounted for using the purchase method of accounting. As a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition.

Principles of Consolidation

      The consolidated financial statements include all significant majority-owned subsidiaries. All material intercompany accounts and transactions among the consolidated subsidiaries have been eliminated.

Cash and Cash Equivalents

      Cash and cash equivalents include all highly-liquid investments that have an original maturity of three months or less at the date of purchase.

Fair Value of Financial Instruments

      Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and debt, including floor plan notes payable. Other than the 11% Senior Subordinated Notes due 2007 (the “Notes”), the carrying amount of financial instruments approximates fair value due either to length of maturity or the existence of variable interest rates that approximate prevailing market rates. The fair value of long-term debt is estimated using discounted cash flows based on the Company’s incremental borrowing rates for similar types of borrowings. As of December 31, 1999, the estimated fair value of the outstanding Notes was $143,667.

Revenue Recognition

      Revenue is generally recognized when vehicles are delivered to consumers, when motor vehicle service work is performed, or when parts are delivered. Finance and insurance revenues are recognized upon the sale of the finance or insurance contract or other aftermarket products. An allowance for chargebacks against revenue relating to the sale of customer finance contracts or other aftermarket products is established when the related revenue is recognized.

F-8

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

Inventory Valuation

      Inventories are stated at the lower of cost or market. Cost for new and used vehicle inventories is determined using the specific identification method. Cost for parts, accessories and other inventories is based on factory list prices.

Property and Equipment

      Property and equipment are recorded at cost and depreciated over estimated useful lives, primarily using the straight-line method. Useful lives for purposes of computing depreciation for assets other than leasehold improvements and equipment under capital lease are between 5 and 10 years. Leasehold improvements and equipment under capital lease are depreciated over the term of the lease or the estimated useful life of the asset, whichever is shorter.

      Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income.

Income Taxes

      Deferred tax assets or liabilities are computed based upon the difference between financial reporting and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is provided when it is more likely than not that taxable income will not be sufficient to fully realize deferred tax assets.

Intangible Assets

      Intangible assets of $494,957, consisting primarily of the excess of cost over the fair value of net assets acquired in purchase business combinations, are being amortized on a straight-line basis over periods not exceeding 40 years. Accumulated amortization at December 31, 1999 amounted to $34,412. Amortization expense for the years ended December 31, 1999, 1998 and 1997 was $12,996, $11,560 and $6,300, respectively.

Impairment of Long-Lived Assets

      The carrying value of long-lived assets, including intangibles, is reviewed if the facts and circumstances, such as significant declines in revenues, earnings or cash flows or material adverse changes in the business climate, indicate that it may be impaired. The Company performs its review by comparing the carrying amounts of long-lived assets to the estimated undiscounted cash flows relating to such assets. If any impairment in the value of the long-lived assets is indicated, the carrying value of the long-lived assets is adjusted to reflect such impairment calculated based on the discounted cash flows or the fair value of the impaired assets.

Defined Contribution Plans

      The Company sponsors a number of defined contribution plans covering a significant majority of the Company’s employees. Contributions under these plans are discretionary and typically based on the level of compensation and contributions of plan participants. The Company incurred expenses of $1,315, $600 and $402 relating to such plans during the years ended December 31, 1999, 1998 and 1997, respectively.

Estimates

      The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and

F-9

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts which require the use of significant estimates are accounts receivable, inventories, income taxes, intangible assets, and certain accrued expenses.

Advertising

      Advertising costs are expensed as incurred. The Company incurred advertising costs of $43,165, $37,318 and $25,075 during the years ended December 31, 1999, 1998 and 1997, respectively.

Net Income (Loss) Per Common Share

      Income available to common shareholders used in the computation of basic earnings per share data was computed based on income from continuing operations and net income, each as adjusted to reflect accrued dividends relating to outstanding preferred stock. Basic earnings per share data was computed based on the weighted average number of common shares outstanding. Diluted earnings per share data was computed based on the weighted average number of shares of the Company’s common stock (“Common Stock”) outstanding, adjusted for the dilutive effect of stock options, convertible preferred stock and warrants. The 1998 computation of diluted earnings per share also included the dilutive effect of the minimum share price guarantee on 1,040,039 shares of common stock issued in connection with the acquisition of the Young Automotive Group in 1998.

	Year Ended December 31,
	1999		1998		1997
Weighted average number of common shares outstanding		21,950		20,377		18,277
Effect of stock options, preferred stock and warrants		4,576		77		330
Effect of minimum share price guarantee		—		478		—
Weighted average number of common shares outstanding, including effect of dilutive securities		26,526		20,932		18,607

Reclassifications

      In order to maintain consistency and comparability of financial information between periods presented, certain reclassifications have been made to the Company’s December 31, 1998 financial statements to conform to the current year presentation.

2.  Unusual Items

      Between January 1, 1997 and October 31, 1998, the Company sold approximately 51,000 warranty and extended service contracts. The repair obligations for these contracts had been contractually assumed by Trace International Holdings, Inc. (“Trace”) and its subsidiary Alpha Automotive, Inc. (“Alpha”). As a result of uncertainty about Trace and Alpha’s ability to perform their contractual obligations, the Company entered into an insurance agreement under which the repair obligations relating to the 51,000 warranty and extended service contracts were assumed by the insurance company in exchange for a fixed premium payable over time. As a result, the Company has no further financial obligations related to these contracts other than to make specified premium payments. During 1998, the Company recorded a $12,550 pre-tax charge which represents the estimated present value of those payments. Trace and Alpha remain liable with respect to the warranty and extended service contracts sold prior to November 1, 1998. Future recoveries from Trace and Alpha will reduce the cost of the insurance agreement. On July 21, 1999, Trace and its subsidiaries filed for protection in the bankruptcy court for the Southern District of New York. The case was converted from a Chapter 11 to a Chapter 7 bankruptcy proceeding on January 24, 2000. As a result, further recoveries from Trace are unlikely.

F-10

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

      During the fourth quarter of 1997, the Company recorded a $31,660 pre-tax charge. The charge included costs associated with (i) the divestiture of automotive franchises, (ii) the closure of three stand-alone used vehicle satellite locations in Arkansas and the disposal of related inventory, (iii) the implementation of a new policy to more efficiently manage the Company’s working capital invested in retail inventory, (iv) excess real estate, (v) the write-off of non-performing assets and (vi) certain corporate consulting agreements. Costs associated with the pre-tax charge amounting to $9,757 and $20,903 have been reflected in cost of goods sold and selling, general and administrative expenses, respectively, in the consolidated statements of operations. In addition, $1,000 has been reflected in discontinued operations.

3.  Discontinued Operations

      During 1998, the Company discontinued its auto finance business. As a result, UAF no longer engages in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation in the accompanying consolidated statements of operations. In addition, the remaining net assets of UAF have been presented as a non-current asset on the consolidated balance sheets.

      Summarized financial information of UAF follows:

	Year Ended December 31,
	1999		1998			1997
Revenues	$	3,482	$	5,108		$	2,615
Income (loss) from operations, net of taxes of $26, $2,089 and $1,531 in 1999, 1998 and 1997, respectively		46		(3,714	)		(2,204	)
Loss on disposal, net of taxes of $5,189		—		(9,226	)		—
Net income (loss)		46		(12,940	)		(2,204	)
Net (income) loss per diluted common share		—		(0.62	)		(0.12	)

	As of December 31,
	1999		1998
Cash and cash equivalents	$	2,852	$	3,615
Restricted cash		4		1,009
Finance assets, net		12,883		26,947
Other assets		429		967
Short-term debt, accrued liabilities and other liabilities		2,421		9,215

      The loss on disposal in 1998 consisted of (i) $5,888 relating to contractual commitments, the write-off of certain fixed assets, severance and other administrative expenses, (ii) $3,803 of asset impairment and losses incurred on the sale of loans in private non-securitized transactions, (iii) $3,912 of estimated future costs associated with servicing its securitized portfolio of retail automotive loans and (iv) $812 relating to the write-off of deferred financing fees in connection with the closure of UAF’s warehouse lines.

4.  Business Combinations

      During 1999 and 1998, the Company completed a number of acquisitions. Each of these acquisitions has been accounted for using the purchase method of accounting. As a result, the Company’s financial statements include the results of operations of the acquired dealerships only from the date of acquisition. Acquisitions during 1999 were not material.

      In January 1998, the Company acquired the Skelton Automotive Group, located in Memphis Tennessee. Consideration for the purchase amounted to $16,500, including $14,700 in cash and $1,800 of seller financed promissory notes.

F-11

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

      In February 1998, the Company acquired the Young Automotive Group, with operations in Indiana, Illinois, North Carolina, South Carolina and Florida. The aggregate consideration for the acquisition amounted to $84,000, consisting of $50,000 in cash, 1,040,039 shares of UAG Common Stock and $7,000 of seller financed promissory notes. The Company agreed to make a contingent payment in cash or Common Stock to the extent the Common Stock issued in connection with this transaction had an aggregate market value of less than $27,000 on the dates it became freely tradable. In February 1999, the Company settled a portion of this obligation with respect to 444,987 shares by issuing 1,156,689 additional shares of Common Stock. The remaining 595,052 shares became freely tradable in June 1999 and the Company settled its obligation with a cash payment of $8,582.

      In February 1998, the Company acquired the Classic Automotive Group in New Jersey. The aggregate consideration for the acquisition was $28,700, consisting of $28,000 in cash and $700 of Common Stock. The Company agreed to make a contingent payment in cash or Common Stock to the extent the Common Stock issued in connection with this transaction had an aggregate market value of less than $759 on the date it became freely tradable. In March 1999, the Company settled its obligation with respect to the share price guarantee by paying $306 in cash.

      During the year ended December 31, 1998, the Company also acquired (i) Graceland Dodge, located in Memphis Tennessee, (ii) Pioneer Ford, located in Phoenix Arizona, (iii) a group of dealerships which operated Toyota, Lexus, Dodge and Mazda franchises in San Diego California and (iv) a 70% interest in Citrus Dodge, located in Dade City Florida. The aggregate consideration for such acquisitions amounted to $50,859, consisting of $39,059 in cash, $8,400 of Common Stock and $3,400 of seller financed promissory notes. The Company agreed to make contingent payments in cash to the extent the Common Stock issued in connection with these transactions had an aggregate market value of less than $8,400 in July 1999. The Company settled its obligations with respect to these transactions with cash payments amounting to $4,371.

      In addition, the Company has agreed to make a contingent payment in cash to the extent that 375,404 shares of Common Stock issued in connection with an acquisition that took place prior to 1998 have an aggregate market value of less than $9,400.

Pro Forma Results of Operations

      The following unaudited consolidated pro forma results of operations of the Company for the year ended December 31, 1998 give effect to (i) acquisitions consummated during 1998, (ii) the divestiture of certain dealerships during 1998, (iii) the discontinuation of the Company’s auto finance operations and (iv) the offering of the Notes as if they had occurred on January 1, 1998.

	Year Ended
	1998
Revenues	$	3,520,594
Income from continuing operations before minority interests and income tax provision		27,371
Net income		14,792
Net income per diluted common share		0.71

F-12

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

5.  Inventories

      Inventories consisted of the following:

		December 31,
		1999		1998
New vehicles		$	378,311	$	284,343
Used vehicles			102,332		99,411
Parts, accessories and other			27,646		26,541
	Total Inventories	$	508,289	$	410,295

6.  Property and Equipment

      Property and equipment consisted of the following:

				December 31,
				1999		1998
Furniture, fixtures and equipment				$	30,615	$	30,658
Equipment under capital lease					11,328		7,191
Leasehold improvements					42,531		28,048
	Total				84,474		65,897
		Less: Accumulated depreciation and amortization			16,242		14,414
			Property and equipment, net	$	68,232	$	51,483

      Depreciation and amortization expense for the years ended December 31, 1999, 1998 and 1997 was $6,135, $4,904 and $2,800, respectively. Accumulated amortization at December 31, 1999 and 1998 on equipment under capital lease, included in accumulated depreciation and amortization above, amounted to $1,806 and $1,614, respectively.

7.  Floor Plan Notes Payable

      The Company finances its purchases of automobile inventory through floor plan financing arrangements with a variety of lenders. Outstanding borrowings under floor plan financing arrangements amounted to $478,460 and $397,234 as of December 31, 1999 and 1998, respectively. The floor plan agreements grant a security interest in the financed vehicles, as well as the related sales proceeds, and require repayment after a vehicle’s sale. Interest rates on the floor plan agreements are variable and increase or decrease based on movements in prime or LIBOR borrowing rates. Floor plan interest expense for the years ended December 31, 1999, 1998 and 1997 was $28,676, $28,718 and $19,297, respectively. The weighted average interest rate on floor plan borrowings was 7.33%, 7.60% and 8.20% for the years ended December 31, 1999, 1998 and 1997, respectively.

F-13

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

8.  Long-Term Debt

      Long-term debt consisted of the following:

			December 31,
			1999		1998
Series A and B Senior Subordinated Notes due 2007, less net unamortized discount of $1,044 and $1,572 at December  31, 1999 and 1998, respectively			$	149,956	$	198,428
Credit Agreement, weighted average interest — 8.97% and 9.24% at December 31, 1999 and 1998, respectively				54,580		68,400
Seller financed promissory notes payable through 2002, weighted average interest — 7.23% and 7.53% at December  31, 1999 and 1998, respectively				12,681		28,510
Term loans, weighted average interest — 7.72% and 8.24% at December 31, 1999 and 1998, respectively				4,014		5,776
Capitalized lease obligations				7,211		7,908
Other				482		3,999
	Total long-term debt			228,924		313,021
		Less: Current portion		10,389		24,756
	Net long-term debt		$	218,535	$	288,265

      Scheduled maturities of long-term debt for each of the next five years and thereafter are as follows:

2000		$	10,389
2001			6,848
2002			2,973
2003			1,268
2004			802
2005 and thereafter			206,644
	Total long-term debt	$	228,924

      On October 8, 1999, the Company entered into a new credit agreement, dated as of August 3, 1999 as amended (the “Credit Agreement”), which provides for up to $360,000 in revolving loans to be used for acquisitions, working capital, the repurchase of Notes, the repurchase of Common Stock, letters of credit and general corporate purposes. Borrowings under the Credit Agreement bear interest at LIBOR plus 2.00%, other than borrowings to repurchase Notes which bear interest at LIBOR plus 3.00%. Outstanding letters of credit under the Credit Agreement as of December 31, 1999 amounted to $1,600. The Credit Agreement replaced the Company’s previous bank borrowing facility, which was terminated upon the effective date of the Credit Agreement. The Company recorded an extraordinary charge during 1999 of $494 ($0.02 per diluted share), net of income taxes of $396, resulting from the write-off of unamortized deferred financing costs relating to the Company’s previous bank borrowing facility. The Company recorded an extraordinary charge during 1998 of $1,235 ($0.06 per diluted share), net of income taxes of $859, relating to the write-off of unamortized deferred financing costs relating to a previous borrowing facility.

      The Credit Agreement contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, repurchase capital stock, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit

F-14

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. Substantially all of the assets of the Company’s dealerships not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement.

      During 1997, the Company issued $200,000 aggregate principal amount of the Notes. The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental debt. The indentures also contain a provision which requires the Company to offer to purchase all of the then outstanding Notes at a purchase price in cash equal to 101% of their principal amount in the event of a change in control. A change in control will be deemed to have occurred if a purchaser, as defined, beneficially obtains 40% of the voting power, as defined, of the voting stock of the Company. The indentures also limit the Company’s ability to pay dividends based on a formula which takes into account, among other things, the Company’s consolidated net income. The indentures also contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions.

      As of March 22, 2000, the Purchaser (as hereinafter defined) has beneficial ownership in excess of 40.0% of the voting stock of the Company. As a result, the Company plans to make an offer to purchase the outstanding Notes at a change of control redemption price of 101% of par.

      During 1999, the Company repurchased and retired $49,000 of the Notes. As a result, the Company recorded an extraordinary gain of $1,226 ($0.04 per diluted share), net of $1,001 of tax.

      The Credit Agreement and the Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries (the “Note Guarantors”). Separate financial information of the Note Guarantors has been omitted because the Company is a holding company with no independent operations.

9.  Operating Lease Obligations

      The Company leases its dealership facilities and administrative offices under non-cancelable operating lease agreements with expiration dates through 2018, including all option periods available to the Company. Minimum future rental payments required under non-cancelable operating leases in effect as of December 31, 1999 follows:

2000	$	33,013
2001		32,163
2002		30,592
2003		28,819
2004		27,564
2005 and thereafter		276,966
	$	429,117

      Rent expense for the years ended December 31, 1999, 1998, and 1997 amounted to $29,493, $26,917 and $17,674, respectively. A number of the dealership leases are with former owners who continue to operate the dealerships as employees of the Company. Of the total rental payments, $8,466, $11,140 and $10,911, respectively, were made to related parties during 1999, 1998, and 1997, respectively.

10.  Related Party Transactions

      As noted above, the Company is the tenant under a number of non-cancelable lease agreements with employees of the Company, all of whom are former owners of dealerships purchased by the Company. The

F-15

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

terms of these leases were negotiated prior to acquisition and the Company believes all such leases are on terms no less favorable to the Company than would be obtained through arm’s-length negotiations with unaffiliated third parties.

      The Company entered into management agreements at certain dealerships for which the closing of the acquisition of such dealerships awaited final manufacturer approval. Pursuant to such management agreements, the Company was paid a monthly fee for managing all aspects of the dealerships’ operations. Aggregate income relating to such management fees of $2,571 and $4,800 for the years ending December 31, 1999 and 1998, respectively, has been included in other income (expense), net in the accompanying consolidated statements of operations.

      As discussed in Note 2, the Company was party to an agreement whereby the Company’s exposures with respect to the majority of the extended service contracts sold by UAC during the period from January 1, 1997 through October 31, 1998 were assumed by Trace and Alpha in exchange for certain fees. During the period covered by the agreement, the Company remitted approximately $7,729 to Alpha. Such remittances reflect approximately $10,111 in fees for the assumption of obligations with respect to the 51,000 warranty and extended service contracts, offset by approximately $2,383 of claims payments relating to such contracts.

      From time to time, the Company pays and/or receives fees from the Purchaser and its affiliates for services rendered in the normal course of business. These transactions reflect the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions are on terms at least as favorable as those which could be obtained from an unrelated third party. Aggregate expense relating to such transactions of $311 for the year ended December 31, 1999 has been reflected in selling, general and administrative expenses in the accompanying financial statements.

      From time to time, the Company paid and/or received fees from Trace and its affiliates for services rendered in the normal course of business. The Company no longer engages in such transactions. These transactions reflected the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions were on terms at least as favorable as those which would have been obtained from an unrelated third party. Aggregate (income) expense relating to such transactions of $131, $260 and $(2,118) for the years ending December 31, 1999, 1998 and 1997, respectively, has been reflected in selling, general and administrative expenses in the accompanying financial statements. As of December 31, 1999 and 1998, the Company owes $256 and $200, respectively, for such services.

11. Stock Compensation Plans

      During 1996, the Company’s Board of Directors and stockholders adopted a Stock Option Plan. Under the Stock Option Plan, all full-time employees of the Company and its subsidiaries and affiliates are eligible to participate. During 1999, the Company granted options to purchase 332,790 shares at the fair market value of the Common Stock on the date of the grant. Options granted under the Stock Option Plan have a ten year life and typically vest on a pro-rata basis over periods not in excess of five years. As of December 31, 1999, the aggregate number of shares of Common Stock for which stock options may be granted under the Stock Option Plan may not exceed 2,000,838. As of December 31, 1999, 233,618 shares of Common Stock were available

F-16

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

for the grant of options under the Stock Option Plan. Presented below is a summary of the status of stock options held by eligible employees during 1999 and 1998 under the Stock Option Plan:

	Year Ended December 31,
	1999				1998				1997
			Weighted				Weighted				Weighted
			Average				Average				Average
			Exercise				Exercise				Exercise
Stock Options	Shares		Price		Shares		Price		Shares		Price
Options outstanding at beginning of year		1,227,390	$	18.06		1,078,975	$	18.45		1,026,500	$	13.90
Granted		332,790		7.23		492,390		17.67		594,800		18.98
Exercised		—		—		186,600		11.50		503,000		10.34
Forfeited		78,386		20.25		157,375		25.82		39,325		11.41
Options outstanding at end of year		1,431,794	$	15.16		1,227,390	$	18.06		1,078,975	$	18.45

      The following table summarizes the status of UAG’s employee stock options outstanding and exercisable at January 1, 2000:

				Weighted
				Average		Weighted				Weighted
Range of		Stock		Remaining		Average		Stock		Average
Exercise		Options		Contractual		Exercise		Options		Exercise
Prices		Outstanding		Life		Price		Exercisable		Price
	$7 to $10		490,800		8.07	$	8.07		135,440	$	10.00
	$10 to $22		840,994		7.92		17.54		233,449		17.58
	$30		100,000		6.75		30		60,000		30.00
			1,431,794						428,889

      The Company has adopted the disclosure only provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (“SFAS 123”). Had the Company elected to recognize compensation expense for stock options based on the fair value at the grant dates of awards, net income and earnings per share would have been as follows:

	Year Ended December 31,
	1999		1998			1997
Income (loss) from continuing operations	$	24,516	$	12,253		$	(8,556	)
Income (loss) from continuing operations per diluted share		0.92		0.59			(0.47	)
Net income (loss)		25,294		(1,922	)		(10,760	)
Net income (loss) per diluted share		0.95		(0.09	)		(0.59	)

      The weighted average fair value of the Company’s stock options was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: no dividend yield; expected volatility of 49.7% in 1999 and 30.0% in 1998 and 1997; risk-free interest rate of 8.0% in 1999 and 7.0% in 1998 and 1997; and expected lives of five years. The weighted average fair value of options granted during the years ended December 31, 1999, 1998 and 1997 is $3.85, $6.99 and $4.74 per share, respectively.

      In connection with the Securities Purchase Agreement, the Company issued 800,000 options during 1999 to purchase Common Stock with an exercise price of $10.00 per share. The Company recorded $2,250 in compensation expense during 1999 relating to the issuance of such options.

F-17

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

12.  Stockholders’ Equity

      At December 31, 1999 and 1998, the following classes of stock are authorized, issued or outstanding (share amounts in thousands):

Series A Preferred Stock, $0.0001 par value; 10 shares authorized, 8 issued and outstanding		$	—	$	—
Series B Preferred Stock, $0.0001 par value; 10 shares authorized, 1 issued and outstanding			—		—
Common Stock, $0.0001 par value, 40,000 shares authorized; 21,882 shares issued, including 561 treasury shares, at December 31, 1999; 20,133 shares issued, including 443 treasury shares, at December 31, 1998			2		2
Non-voting Common Stock, $0.0001 par value; 7,125 shares authorized, none issued and outstanding, at December 31, 1999; 1,125 shares authorized, 605 issued and outstanding, at December 31, 1998			—		—
Class C Common Stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding			—		—
Additional paid-in-capital			414,318		352,591
Retained earnings (accumulated deficit)			16,545		(10,943	)
	Total stockholders’ equity	$	430,865	$	341,650

      On April 12, 1999, the Company and International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (“IMCG II”), Delaware limited liability companies controlled by Penske Capital Partners, L.L.C. (together, the “Purchaser”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Purchaser agreed to purchase (i) an aggregate of 7,903.124 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), (ii) an aggregate of 396.876 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (iii) warrants (the “Warrants”) to purchase (a) 3,898,665 shares of the Company’s voting Common Stock, par value $0.0001 per share (the “Common Stock”), and (b) 1,101,335 shares of the Company’s non-voting Common Stock, par value $0.0001 per share (the “Non-Voting Common Stock”) for $83,000. The shares of Series A Preferred Stock and Series B Preferred Stock entitle the Purchaser to dividends at a rate of 6.5% per year, payable in kind for the first two years, except that IMCG II’s dividends will be paid in shares of Series B Preferred Stock. The Series A Preferred Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and the Series B Preferred Stock is convertible into an aggregate of 396,876 shares of Non-Voting Common Stock. The Warrants are exercisable at a price of $12.50 per share for the thirty months following the date of issuance, and $15.50 per share thereafter until May 2, 2004.

      The transaction was consummated in two steps: first, the acquisition of approximately $33,550 of Series A Preferred Stock and, second, the acquisition of approximately $49,450 of Series A Preferred Stock, Series B Preferred Stock and Warrants. The first step of the transaction closed on May 3, 1999. The Series A Preferred Stock issued on May 3, 1999 was subject to mandatory redemption by the Company at the Purchaser’s option under certain circumstances prior to the second closing. On August 3, 1999, the transaction was approved by the Company’s stockholders, after which the second step of the transaction closed. Proceeds from the issuance of the securities pursuant to the Securities Purchase Agreement were used to prepay the remaining $44,400 of term loans and $18,400 of revolving loan commitments outstanding under the Company’s credit agreement, to pay approximately $6,800 of fees incurred in connection with the execution of the Securities Purchase Agreement and fund certain acquisition related costs.

F-18

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

13.  Income Taxes

      The income tax (provision) benefit relating to income (loss) from continuing operations consisted of the following:

			Year Ended December 31,
			1999			1998			1997
Current:
	Federal		$	(7,091	)	$	(278	)	$	—
	State and local			(3,352	)		(3,687	)		(1,879	)
	Foreign			(964	)		(228	)		(53	)
		Total current		(11,407	)		(4,193	)		(1,932	)
Deferred:
	Federal			(9,085	)		(4,733	)		3,149
	State and local			(517	)		(1,937	)		2,763
	Foreign			(405	)		(691	)		—
		Total deferred		(10,007	)		(7,361	)		5,912
Income tax (provision) benefit relating to continuing operations			$	(21,414	)	$	(11,554	)	$	3,980

      The income tax (provision) benefit relating to income (loss) from continuing operations varied from the U.S. federal statutory income tax rate due to the following:

	Year Ended December 31,
	1999			1998			1997
Income tax (provision) benefit relating to continuing operations at Federal statutory rate of 35%	$	(17,096	)	$	(8,818	)	$	4,122
State and local income taxes, net of federal benefit		(2,516	)		(1,994	)		496
Impact of change in effective state rate on temporary differences, net of federal benefit		—			(1,641	)		—
Valuation allowance		—			1,700			—
Non-deductible amortization of goodwill		(1,330	)		(1,412	)		(750	)
Revision to estimated liabilities		—			903			—
Other		(472	)		(292	)		112
Income tax (provision) benefit relating to continuing operations	$	(21,414	)	$	(11,554	)	$	3,980

F-19

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

      The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS 109”). Under SFAS 109, deferred income taxes reflect the estimated tax effect of temporary differences between assets and liabilities reported for financial accounting purposes and those amounts as measured by tax laws and regulations. The components of deferred tax assets and liabilities at December 31, 1999 and 1998 were as follows:

		1999			1998
Deferred Tax Assets
Net operating loss carryforwards		$	2,105		$	4,387
Accrued liabilities			2,534			5,940
Partnership investments			346			866
Capital loss carryforwards			3,007			3,990
Sale of finance receivables and other items			1,913			4,527
Issuance of compensatory stock options			810			—
Other			1,013			2,423
Total deferred tax assets			11,728			22,133
Valuation allowance			(1,490	)		(1,490	)
	Net deferred tax assets	$	10,238		$	20,643
Deferred Tax Liabilities
Depreciation and amortization		$	(15,679	)	$	(10,236	)
	Total deferred tax liabilities		(15,679	)		(10,236	)
	Net deferred tax assets (liabilities)	$	(5,441	)	$	10,407

      At December 31, 1999, the Company has $41,776 of state net operating loss carryforwards that expire at various dates through 2019.

14.  Supplemental Cash Flow Information

      The following table presents supplementary cash flow information:

		1999		1998		1997
Cash paid interest		$	28,397	$	26,683	$	8,016
Cash paid income taxes			9,587		3,234		3,321
Non-cash financing and investing activities:
	Dealership acquisition costs financed by issuance of stock		—		36,100		28,150
	Dealership acquisition cost financed by long-term debt		1,500		12,200		27,104

15. Summary of Quarterly Financial Data (Unaudited)

		First		Second		Third		Fourth
		Quarter		Quarter		Quarter		Quarter
Statements of Operations Data(1)(2):
1999
	Total revenues	$	904,732	$	1,043,598	$	1,085,366	$	988,821
	Gross profit		124,758		141,832		146,484		136,363
	Income from continuing operations		3,698		8,620		8,969		5,423
	Net income		3,698		8,620		9,317		5,853
	Income from continuing operations per diluted common share		0.16		0.35		0.31		0.18
	Net income per diluted common share		0.16		0.35		0.32		0.19

F-20

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

		First		Second		Third		Fourth
		Quarter		Quarter		Quarter		Quarter
Statements of Operations Data(1)(2):
1998(4)
	Total revenues	$	711,709	$	896,419	$	897,006	$	838,013
	Gross profit		96,515		121,092		128,591		109,419
	Income (loss) from continuing operations		2,291		8,027		8,060		(5,000	)
	Net income (loss)		1,064		8,193		8,227		(18,281	)
	Income (loss) from continuing operations per diluted common share		0.12		0.39		0.39		(0.22	)
	Net income (loss) per diluted common share		0.05		0.40		0.40		(0.81	)

(1)	As discussed in Note 3, the results of UAF have been recorded as discontinued operations.
(2)	As discussed in Note 8, the Company recorded an extraordinary gain of $320 in the third quarter of 1999, an extraordinary gain of $412 in the fourth quarter of 1999 and an extraordinary loss of $1,235 in the first quarter of 1998.
(3)	As discussed in Note 2, the Company recorded a $12,550 charge during the fourth quarter of 1998.
(4)	Includes the results of the Skelton Group, the Young Group, the Classic Group, Graceland Dodge, Pioneer Ford, the San Diego dealerships and Citrus Dodge from their respective dates of acquisition.

      The net income (loss) per common share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year net income (loss) per common share amounts.

F-21

Exhibit Index

Exhibit
Number	Description
3.1(l)	Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999
3.2(b)	Restated Bylaws
4.1(b)	Specimen Common Stock Certificate
4.2(f)	Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee
4.4(f)	Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee
4.5(k)	Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999
10.1(k)	Stockholders Agreement, dated as of May 3, 1999, by and among AIF II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Trace International Holdings, Inc., and the Company
10.1.1(b)	Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996
10.1.4(b)	Form of Warrant
10.1.8(b)	Stock Option Plan of the Company
10.1.8.1(i)	Amendment to Stock Option Plan of the Company
10.1.11(b)	Letter, dated July 24, 1996, between the Company and Toyota Motor Sales U.S.A., Inc.
10.1.13(b)	Non-employee Director Compensation Plan of the Company
10.1.14(b)	Form of Agreement among the Company, certain of its affiliates and American Honda Motor Co., Inc.
10.1.15(b)	Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo
10.1.18(d)	Consulting Agreement, dated March 3, 1997, between the Company and Carl Spielvogel
10.1.19.1(a)	Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent
10.1.19.2(a)	First Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent
10.1.19.3(a)	Second Amendment to Credit Agreement dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent
10.2(k)	Non-Competition and Standstill Agreement, dated as of April  12, 1999 by and between Marshall S. Cogan and the Company
10.2.1(b)	Honda Automobile Dealer Sales and Service Agreement, including Standard Provisions
10.2.2(b)	Lexus Dealer Agreement, including Standard Provisions

Exhibit
Number	Description
10.2.3(b)	Mitsubishi Dealer Sales and Services Agreement, including Standard Provisions
10.2.4(b)	BMW of North America, Inc., Dealer Agreement, including Standard Provisions
10.2.5(b)	Suzuki Term Dealer Sales and Service Agreement, including Standard Provisions
10.2.6(b)	Toyota Dealer Agreement, including Standard Provisions
10.2.7(b)	General Motors Dealer Sales and Service Agreement, including Standard Provisions
10.2.9(b)	Nissan Dealer Sales and Service Agreement, including Standard Provisions
10.2.10(b)	Chrysler Corporation Term Sales and Service Agreement, including Standard Provisions
10.2.15(b)	Hyundai Motor America Dealer Sales and Service Agreement, including Standard Provisions
10.2.21 and 22(b)	Isuzu Dealer Sales and Service Agreement, including Standard Provisions
10.2.26(b)	Settlement Agreement, dated as of October 3, 1996, among the Company and certain of its affiliates, on the one hand, and Samuel X. DiFeo, Joseph C. DiFeo and certain of their affiliates, on the other hand
10.3(l)	Stock Option Agreement, dated as of August 3, 1999, between the Company and Roger S. Penske
10.3.1(g)	Ford Sales and Service Agreement, including Standard Provisions
10.4(l)	Stock Option Agreement, dated as of August 3, 1999 between the Company and Marshall S. Cogan
10.4.5(b)	Employment Agreement, dated as of August 1, 1995, between Landers Auto Sales, Inc., and Steve Landers
10.5.13(b)	Employment Agreement, dated as of January 16, 1996, among the Company, UAG Atlanta, Inc. and John Smith
10.8.1(b)	Stock Purchase Agreement, dated as of June 6, 1996, among the Company, UAG West, Inc., Scottsdale Jaguar, LTD., SA Automotive, LTD., SL Automotive, LTD., SPA Automotive, LTD., LRP, LTD., Sun BMW, LTD., Scottsdale Management Group, LTD., 6725 Dealership LTD., and certain parties named therein, as amended on October 21, 1996 by Amendment No. 1, Amendment No. 2 and Amendment No. 3
10.8.3(b)	Form of Employment Agreement between the Company, UAG West, Inc., and Steven Knappenberger
10.8.5(b)	Audi Dealer Agreement, including Standard Provisions
10.8.6(b)	Acura Automobile Dealer Sales and Service Agreement, including Standard Provisions
10.8.8(b)	Porsche Sales and Service Agreement, including Standard Provisions
10.8.9(b)	Land Rover North America, Inc. Dealer Agreement, including Standard Provisions
10.8.21(e)	Rolls-Royce Dealer Agreement
10.11.1(c)	Agreement and Plan of Merger, dated December 16, 1996, among Crown Jeep Eagle, Inc., Berylson, Inc., Shannon Automotive, Ltd., Kevin J. Coffey, Paul J. Rhodes, the Company, UAG Texas, Inc., and UAG Texas II, Inc.
10.13.1(d)	Stock Purchase Agreement, dated February 19, 1997, among the Company, UAG East, Inc., Amity Auto Plaza, Ltd., Massapequa Imports Ltd., Westbury Nissan Ltd., Westbury Superstore Ltd., J&S Auto Refinishing Ltd., Florida Chrysler Plymouth Jeep Eagle Inc., Palm Auto Plaza, Inc., West Palm Infiniti Inc., West Palm Nissan Inc., Northlake Auto Finish Inc., John A. Staluppi and John A. Staluppi, Jr., as amended April 7, 1997 and April 30, 1997

Exhibit
Number	Description
10.15.1(e)	Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet–Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William  B. Bradshaw, as amended May 31, 1997
10.18.1(f)	Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended)
10.19.1.1(f)	Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein
10.19.1.2(f)	Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein
10.19.1.3(h)	Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein
10.19.1.4(h)	Amendment to Agreement and Plan of Merger, dated January  31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein
10.20.1(j)	Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.
10.20.2(j)	Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.3(j)	Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.
10.20.4(j)	Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.7(k)	Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.21(a)	Severance Agreement, dated May 3, 1999 between the Company and Robert Nelson.
10.22(a)	Severance Agreement, dated August 2, 1999 between the Company and James Davidson.
10.23(a)	Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.
21.1(a)	Subsidiaries of the Company
23.1(a)	Consent of PricewaterhouseCoopers, LLP
23.2(a)	Consent of Deloitte & Touche, LLP

Exhibit
Number	Description
27.1(a)	December 31, 1999 Financial Data Schedule
27.2(a)	September 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.3(a)	June 30, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.4(a)	March 31, 1999 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.5(a)	December 31, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.6(a)	September 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.7(a)	June 30, 1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.8(a)	March 31,1998 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.
27.9(a)	December 31, 1997 Financial Data Schedule, restated to reflect the reclassification of floor plan interest expense out of cost of sales.

(a)	Filed herewith
(b)	Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429
(c)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December  24, 1996, File No. 001-12297
(d)	Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297
(e)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297
(f)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297
(g)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No.  001-12297
(h)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February  20, 1998, File No. 001-12297
(i)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No.  001-12297
(j)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297
(k)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297
(l)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297

(d)  Schedules — No Financial Statement Schedules are required to be filed as part of this Annual Report on Form 10-K.

EX-10.1.19.1 2 CREDIT AGREEMENT DATED AUGUST 3, 1999 1 EXHIBIT 10.1.19.1 ================================================================================ CREDIT AGREEMENT DATED AS OF AUGUST 3, 1999 AMONG UNITED AUTO GROUP, INC., VARIOUS FINANCIAL INSTITUTIONS AND CHRYSLER FINANCIAL COMPANY L.L.C., AS AGENT ================================================================================ 2 TABLE OF CONTENTS SECTION 1 DEFINITIONS .......................................................1 1.1 Definitions ...........................................................1 1.2 Other Interpretive Provisions ........................................11 SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF CREDIT PROCEDURES ................................................12 2.1 Commitments .........................................................12 2.1.1 Revolving Loan Commitment ..................................12 2.1.2 Acquisition Loan Commitment ................................12 2.1.3 L/C Commitment .............................................12 2.2 Loan Procedures .....................................................12 2.3 Letter of Credit Procedures .........................................13 2.3.1 L/C Applications ...........................................13 2.3.2 Participations in Letters of Credit ........................13 2.3.3 Reimbursement Obligations ..................................13 2.3.4 Limitation on Obligations of Issuing Lender ................14 2.3.5 Funding by Lenders to Issuing Lender .......................14 2.4 Commitments Several .................................................15 2.5 Certain Conditions ..................................................15 SECTION 3 NOTES EVIDENCING LOANS ...........................................15 3.1 Notes ..............................................................15 3.2 Recordkeeping ......................................................15 SECTION 4 INTEREST .........................................................15 4.1 Interest Rate ......................................................15 4.2 Interest Payment Dates .............................................15 4.3 Computation of Interest ............................................15 SECTION 5 FEES .............................................................16 5.1 Letter of Credit Fees ..............................................16 SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT AND THE ACQUISITION COMMITMENT AMOUNT; PREPAYMENTS ......................................................16 6.1. Voluntary Reduction or Termination of Commitment Amounts ...........16 6.2 Voluntary Prepayments ..............................................16 SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES ..................16 -i- 3 7.1 Making of Payments ............................................16 7.2 Application of Certain Payments ...............................17 7.3 Due Date Extension ............................................17 7.4 Setoff ........................................................17 7.5 Proration of Payments .........................................17 7.6 Taxes .........................................................17 SECTION 8 WARRANTIES .................................................18 8.1 Organization ..................................................18 8.2 Authorization; No Conflict ....................................19 8.3 Validity and Binding Nature ...................................19 8.4 Financial Condition ...........................................19 8.5 No Material Adverse Change ....................................19 8.6 Litigation and Contingent Liabilities .........................19 8.7 Ownership of Properties; Liens ................................20 8.8 Subsidiaries ..................................................20 8.9 Pension Plans .................................................20 8.10 Investment Company Act ........................................20 8.11 Public Utility Holding Company Act ............................20 8.12 Regulation U ..................................................20 8.13 Taxes .........................................................21 8.14 Solvency, etc. ................................................21 8.15 Environmental Matters .........................................21 8.16 Year 2000 Problem .............................................22 8.17 Insurance .....................................................22 8.18 Information ...................................................22 8.19 Intellectual Property .........................................23 8.20 Burdensome Obligations ........................................23 8.21 Labor Matters .................................................23 8.22 No Default ....................................................23 8.23 Securities Purchase Agreement. ................................23 8.24 Senior Debt ...................................................24 SECTION 9 COVENANTS ..................................................24 9.1 Reports, Certificates and Other Information ..................24 9.1.1 Annual Report .......................................24 9.1.2 Interim Reports .....................................25 9.1.3 Compliance Certificates .............................25 9.1.4 Reports to the SEC and to Shareholders ..............25 9.1.5 Notice of Default, Litigation and ERISA Matters .....25 9.1.6 Management Reports ..................................26 -ii- 4 9.1.7 Subordinated Debt Notices ...........................26 9.1.8 Year 2000 Problem ...................................26 9.1.9 Other Information ...................................26 9.2 Books, Records and Inspections ................................26 9.3 Maintenance of Property; Insurance ............................27 9.4 Compliance with Laws; Payment of Taxes and Liabilities ........27 9.5 Maintenance of Existence, etc. ................................28 9.6 Financial Covenants ...........................................28 9.6.1 Ratio of Funded Debt to Stockholders' Equity ........28 9.6.2 Ratio of Non-Floorplan Debt to Stockholders'Equity...28 9.6.3 Funded Debt to EBITDA Ratio .........................28 9.6.4 Working Capital .....................................28 9.7 Limitations on Debt ...........................................28 9.8 Liens .........................................................29 9.9 Restricted Payments ...........................................30 9.10 Mergers, Consolidations, Sales ................................30 9.11 Modification of Organizational Documents ......................31 9.12 Use of Proceeds ...............................................31 9.13 Further Assurances ............................................31 9.14 Transactions with Affiliates ..................................32 9.15 Employee Benefit Plans ........................................32 9.16 Environmental Matters .........................................32 9.17 Inconsistent Agreements .......................................33 9.18 Business Activities ...........................................33 9.19 Investments ...................................................33 9.20 Restriction of Amendments to Certain Documents ................34 9.21 Limitation on Floor Plan Amendments ...........................34 SECTION 10 EFFECTIVENESS; CONDITIONS OF LENDING, ETC...................34 10.1 Initial Credit Extension ......................................34 10.1.1 Notes .............................................34 10.1.2 Resolutions .......................................34 10.1.3 Consents, etc. ....................................35 10.1.4 Incumbency and Signature Certificates .............35 10.1.5 Guaranty ..........................................35 10.1.6 Security Agreement ................................35 10.1.7 Pledge Agreements .................................35 10.1.8 Subordinated Indenture ............................35 10.1.9 Opinion of Counsel ................................35 10.1.10 Insurance .........................................35 10.1.11 Copies of Documents ...............................35 -iii- 5 10.1.12 Payment of Fees ...................................36 10.1.13 Solvency Certificate ..............................36 10.1.14 Search Results; Lien Terminations .................36 10.1.15 Filings, Registrations and Recordings .............36 10.1.16 Closing Certificate ...............................36 10.1.17 Other .............................................36 10.2 Conditions ...................................................36 10.2.1 Compliance with Warranties, No Default, etc. .......36 10.2.2 Confirmatory Certificate ...........................37 10.3 Further Conditions to Acquisition Loans ......................37 SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT .........................38 11.1 Events of Default ............................................38 11.1.1 Non-Payment of the Loans, etc. ....................38 11.1.2 Non-Payment of Other Debt .........................38 11.1.3 Other Material Obligations ........................38 11.1.4 Bankruptcy, Insolvency, etc. ......................38 11.1.5 Non-Compliance with Loan Documents ................39 11.1.6 Warranties ........................................39 11.1.7 Pension Plans .....................................39 11.1.8 Judgments .........................................39 11.1.9 Invalidity of Guaranty, etc. ......................39 11.1.10 Invalidity of Collateral Documents, etc. ..........39 11.1.11 Invalidity of Subordination Provisions, etc. ......40 11.1.12 Change of Control .................................40 11.2 Effect of Event of Default ...................................40 SECTION 12 THE AGENT ..................................................40 12.1 Appointment and Authorization ................................40 12.2 Delegation of Duties .........................................41 12.3 Liability of Agent ...........................................41 12.4 Reliance by Agent ............................................41 12.5 Notice of Default ............................................42 12.6 Credit Decision ..............................................42 12.7 Indemnification ..............................................42 12.8 Agent in Individual Capacity .................................43 12.9 Successor Agent ..............................................43 12.10 Collateral Matters ...........................................43 12.11 Funding Reliance .............................................44 SECTION 13 GENERAL ....................................................44 -iv- 6 13.1 Waiver; Amendments ............................................44 13.2 Confirmations .................................................45 13.3 Notices .......................................................45 13.4 Computations ..................................................45 13.5 Regulation U ..................................................45 13.6 Costs, Expenses and Taxes .....................................46 13.7 Subsidiary References .........................................46 13.8 Captions ......................................................46 13.9 Assignments; Participations ...................................46 13.9.1 Assignments ........................................46 13.9.2 Participations .....................................47 13.10 Governing Law ................................................48 13.11 Counterparts .................................................48 13.12 Successors and Assigns .......................................48 13.13 Indemnification by the Company ...............................48 13.14 Nonliability of Lenders ......................................49 13.15 Forum Selection and Consent to Jurisdiction ..................49 13.16 Waiver of Jury Trial .........................................50 13.17 CFC Right of First Refusal on Floor Plan Financing ...........50 13.18 Confidentiality ..............................................50 -v- 7 SCHEDULES Pricing Schedule SCHEDULE 2.1 Lenders and Pro Rata Shares SCHEDULE 8.6 Litigation and Contingent Liabilities SCHEDULE 8.8 Subsidiaries SCHEDULE 8.15 Environmental Matters SCHEDULE 8.17 Insurance SCHEDULE 8.20 Burdensome Obligations SCHEDULE 8.21 Labor Matters SCHEDULE 9.7 Permitted Existing Debt SCHEDULE 9.8 Permitted Existing Liens SCHEDULE 9.17 Permitted Restrictions SCHEDULE 9.19 Investments SCHEDULE 10.1 Debt to be Repaid SCHEDULE 13.3 Addresses for Notices -vi- 8 EXHIBITS EXHIBIT A Form of Note (Section 3.1) EXHIBIT B Form of Compliance Certificate (Section 9.1.3) EXHIBIT C Form of Guaranty (Section 1.1) EXHIBIT D Form of Security Agreement (Section 1.1) EXHIBIT E Form of Pledge Agreement (Section 1.1) EXHIBIT F Form of Solvency Certificate (Section 10.1.13) EXHIBIT G Form of Assignment Agreement (Section 13.9.1) EXHIBIT H [Reserved] EXHIBIT I Subordination Terms (Section 1.1) -vii- 9 CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of August 3, 1999 (this "Agreement") is entered into among UNITED AUTO GROUP, INC. (the "Company"), the financial institutions that are or may from time to time become parties hereto (together with their respective successors and assigns, the "Lenders") and CHRYSLER FINANCIAL COMPANY L.L.C. (in its individual capacity, "CFC"), as agent for the Lenders. WHEREAS, the Lenders have agreed to make available to the Company a revolving credit facility (which includes letters of credit) and an acquisition loan facility upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1 DEFINITIONS. 1.1 Definitions. When used herein the following terms shall have the following meanings: Acquisition means an acquisition by the Company or any Subsidiary of all or substantially all the assets of a business unit or a controlling interest in the capital stock or other ownership interests of an Automobile Dealership, whether through a purchase, merger, consolidation or otherwise. Acquisition Commitment Amount means, on any date, (x) $250,000,000, as reduced from time to time pursuant to Section 6.1 minus (y) the Revolving Outstandings on such date. Acquisition Loan - see Section 2.1.2. Affiliate of any Person means (i) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and (ii) any officer or director of such Person. A Person shall be deemed to be "controlled by" any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Agent means CFC in its capacity as agent for the Lenders hereunder and any successor thereto in such capacity. Agreement - see the Preamble. 10 Assignment Agreement - see Section 13.9.1. Attorney Costs means, with respect to any Person, all reasonable fees and charges of any counsel to such Person, the reasonable allocable cost of internal legal services of such Person, all reasonable disbursements of such internal counsel and all court costs and similar legal expenses. Automobile Dealership means a business that operates a dealership or dealerships for the retail sales of new and/or used automobiles or trucks and businesses ancillary to the operation of such dealerships owned or operated by the Company or its Subsidiaries, including service and parts operations, body shops, the sale of finance, extended warranty and insurance products (including after-market items), the financing of the purchase of new and/or used vehicles, the purchase, sale and servicing of finance contracts for new and/or used vehicles and other related businesses. Business Day means any day of the year (other than any Saturday or Sunday) which is not a day on which commercial banks are authorized or required by law to close in Detroit, Michigan. Capital Lease means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person. Cash Collateralize means to deliver cash collateral to the Agent, to be held as cash collateral for outstanding Letters of Credit, pursuant to documentation reasonably satisfactory to the Agent and the Company. Derivatives of such term have corresponding meanings. Cash Equivalent Investment means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case rated at least A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors Service, Inc., (c) any certificate of deposit (or time deposits represented by such certificates of deposit) or banker's acceptance, maturing not more than one year after such time, or overnight Federal Funds transactions that are issued or sold by any Lender or its holding company or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with CFC (or with a commercial banking institution of the stature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of CFC (or commercial banking institution) thereunder, (e) shares of money market mutual funds within the definition of Rule 2a-7 promulgated by the SEC under the Investment Company Act of 1940 and (f) other cash equivalent investments approved by the Agent. 2 11 CERCLA - see Section 8.15. CFC - see the Preamble. Closing Date - see Section 10.1. Code means the Internal Revenue Code of 1986. Collateral Documents means the Security Agreement, each Pledge Agreement and any other agreement or instrument pursuant to which the Company, any Subsidiary or any other Person grants collateral to the Agent for the benefit of the Lenders to secure the obligations hereunder and under the other Loan Documents and any obligations owing by the Company or any Subsidiary to CFC in respect of any Floor Plan Financing. Commitment means, as to any Lender, such Lender's commitment to make Loans, and to issue or participate in Letters of Credit, under this Agreement. The initial amount of each Lender's Pro Rata Share of the Revolving Commitment Amount and the Acquisition Commitment Amount is set forth on Schedule 2.1. Company - see the Preamble. Computation Period means each period of four consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter. Consolidated Net Income means, with respect to the Company and its Subsidiaries for any period, the net income (or loss) of the Company and its Subsidiaries for such period, excluding any gains (or losses) from asset sales, any extraordinary or unusual non-recurring gains (or losses) and any gains (or losses) from discontinued operations. Controlled Group means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA. Debt of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, whether or not evidenced by bonds, debentures, notes or similar instruments, (b) all obligations of such Person as lessee under Capital Leases which have been recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable and accrued expenses in the ordinary course of business), (d) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person, (e) all 3 12 obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn) and banker's acceptances issued for the account of such Person (including the Letters of Credit), (f) all Hedging Obligations of such Person, (g) all Suretyship Liabilities of such Person and (h) except to the extent the terms of such Debt provide that such Person is not liable thereunder, all Debt of any partnership of which such Person is a general partner. Debt to be Repaid means Debt listed on Schedule 10.1. Disposal - see the definition of "Release". Dollar and the sign "$" mean lawful money of the United States of America. EBITDA means, for any period, Consolidated Net Income for such period plus, to the extent deducted in determining such Consolidated Net Income, Interest Expense, income tax expense, depreciation and amortization, franchise taxes and minority interest for such period. Environmental Claims means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. Environmental Laws means all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to Environmental Matters. Environmental Matters means any matter arising out of or relating to health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, release, control or cleanup of any Hazardous Substance. ERISA means the Employee Retirement Income Security Act of 1974. Event of Default means any of the events described in Section 11.1. Excluded Property means all furniture, fixtures, equipment and real property (whether fee or leasehold) of the Company and its Subsidiaries. Federal Funds Rate means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor publication, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so 4 13 published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. Fiscal Quarter means a fiscal quarter of a Fiscal Year. Fiscal Year means the fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal Year 1999") refer to the Fiscal Year ending on December 31 of such calendar year. Floor Plan Financing means a financing undertaken by the Company or any Subsidiary all of the proceeds of which are used to purchase vehicles and/or vehicle parts and supplies to be sold in the ordinary course of business of the Company and the Subsidiaries. Floor Plan Financing Provider means each provider of Floor Plan Financing to the Company and its Subsidiaries. Foreign Investment means any Investment in a Subsidiary or any other Person that is not organized under the laws of the United States (including Puerto Rico) or Canada. Foreign Subsidiary means any Subsidiary of the Company which is not incorporated or organized in the United States or in any State, territory or commonwealth thereof. FRB means the Board of Governors of the Federal Reserve System or any successor thereto. Funded Debt means all Debt of the Company and its Subsidiaries, determined on a consolidated basis, excluding (i) contingent obligations in respect of Suretyship Liabilities (except to the extent constituting Suretyship Liabilities in respect of Debt of a Person other than the Company or any Subsidiary), (ii) Hedging Obligations and (iii) Debt of the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries. Funded Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio of (i) Funded Debt as of such day (minus Debt under Floor Plan Financings and Subordinated Debt and excluding the lesser of (x) all Debt outstanding under Capital Leases and (y) $50,000,000) to (ii) EBITDA for the Computation Period ending on such day. If the Company or any Subsidiary makes any Acquisition during any Computation Period, EBITDA for such Computation Period will be determined on a pro forma basis as if such Acquisition were made, and all Debt incurred in connection therewith was incurred, on the first day thereof. In determining the pro forma adjustments to EBITDA to be made with respect to any Acquisition for periods prior to the acquisition date thereof, actions 5 14 taken by the Company and its Subsidiaries prior to the first anniversary of such acquisition date that results in cost savings with respect to such Acquisition will be deemed to have been taken on the first day of the Computation Period (with the intent that such cost savings be effectively annualized by extrapolation from the demonstrated cost savings since the related acquisition date). GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or organizations with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. Guaranty means a guaranty substantially in the form of Exhibit C. Hazardous Substances - see Section 8.15. Hedging Agreement means any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices. Hedging Obligation means, with respect to any Person, any liability of such Person under any Hedging Agreement. Indemnified Liabilities - see Section 13.13. Interest Expense means for any period the consolidated interest expense of the Company and its Subsidiaries for such period (including all imputed interest on Capital Leases but excluding all interest on Floor Plan Financings). Interest Rate means, for each day, a rate per annum equal to the sum of (a) that rate of interest per annum initially equal to 5.21% and adjusting on the first day of each month during the term of this Agreement (a "Calculation Date"), and for each succeeding day until the date of the next monthly recalculation, the average of (x) the LIBO Rate for such Calculation Date (or, if such date is not a Business Day, for the immediately preceding Business Day) and (y) the LIBO Rate for the 16th day of the immediately preceding month (or, if such date is not a Business Day, for the immediately preceding Business Day) plus (b) (x) if the Company uses the proceeds of any Loans to repurchase any Subordinated Notes, two and one quarter percent (2.25%) per annum on that principal amount of the Revolving Loans up to the principal amount of Subordinated Notes purchased, plus premium if any on such principal amount and (y) otherwise two percent (2.00%) per annum. For purposes of this definition, "LIBO Rate" means, for each date of calculation, (1) the rate of interest (rounded upwards, if necessary, to the next 1/16th of 1%) published in the Wall Street Journal on such day (or the immediately preceding Business Day, if such date is not a Business Day) in its "Money Rates" column 6 15 as the one month London Interbank Offered Rate for United States dollar denominated deposits (if the Wall Street Journal ceases to publish such a rate or substantially changes the methodology used to determine such rate, then the rate shall be the rate of interest (rounded upwards, if necessary, to the next 1/16th of 1%) published by Reuters Monitor Rates Service on such day (or the immediately preceding Business Day, if such date is not a Business Day) as the one month London Interbank Offered Rate for United States dollar denominated deposits or (2) if such rate is not published or available, such rate as shall be otherwise independently determined by the Agent on a basis substantially similar to the methodology used by the Wall Street Journal on the date of this Agreement. Investment means, relative to any Person, any investment in another Person, whether by acquisition of any debt or equity security, by making any loan or advance or by becoming obligated with respect to a Suretyship Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business). Issuing Lender means CFC in its capacity as the issuer of Letters of Credit hereunder and its successors and assigns in such capacity. L/C Application means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by the Issuing Lender at the time of such request for the type of letter of credit requested. Lender - see the Preamble. References to the "Lenders" shall include the Issuing Lender; for purposes of clarification only, to the extent that CFC (or any successor Issuing Lender) may have any rights or obligations in addition to those of the other Lenders due to its status as Issuing Lender, its status as such will be specifically referenced. Letter of Credit - see Section 2.1.3. Lien means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise. Loan Documents means this Agreement, the Notes, the Guaranty, the Letters of Credit and the Collateral Documents. Loan Party means the Company and each Subsidiary party to any Loan Document. Loans means Acquisition Loans and Revolving Loans. 7 16 Margin Stock means any "margin stock" as defined in Regulation U. Material Adverse Effect means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business, properties or prospects of the Company and its Subsidiaries taken as a whole, (b) a material impairment of the ability of the Company or any Subsidiary to perform any of its obligations under any Loan Document or (c) a material adverse effect upon any substantial portion of the collateral under the Collateral Documents or upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary of any Loan Document. Multiemployer Pension Plan means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any member of the Controlled Group may have any liability. Note - see Section 3.1. PBGC means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. Pension Plan means a "pension plan", as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Pension Plan), and to which the Company or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. Penske Capital Partners means, collectively, Penske Capital Partners, L.L.C., International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C., each a Delaware limited liability company. Permitted Restrictions means restrictions on the ability of any Subsidiary to declare or pay any dividend or make other distributions, or to advance or loan funds, to the Company: (i) as set forth on Schedule 9.17 on the Closing Date, including restrictions imposed by existing Floor Plan Financing arrangements; (ii) pursuant to modifications to any Floor Plan Financing arrangement, provided that such modifications are not materially more restrictive; (iii) applicable to a Person at the time such Person becomes a Subsidiary and not created in contemplation of such an event; (iv) resulting from manufacturer-imposed modifications to any franchise agreement; or (v) imposed by applicable law. Person means any natural person, corporation, partnership, joint venture, trust, limited liability company, association, governmental authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity. Pledge Agreement means a pledge agreement in substantially the form of Exhibit E. 8 17 Prime Rate means, on any day, the rate of interest per annum published in the Wall Street Journal in its "Money Rates" column as the Prime Rate for such day. Pro Rata Share means, with respect to any Lender, the percentage specified opposite such Lender's name on Schedule 2.1 hereto, as adjusted from time to time in accordance with the terms hereof. RCRA - see Section 8.15. Refinancing Debt means Debt that refunds or refinances any Debt, including Debt that refinances other Refinancing Debt; provided that (i) the Refinancing Debt has a maturity no earlier than the maturity of the Debt being refinanced, (ii) the Refinancing Debt has a weighted average life to maturity no earlier than the weighted average life to maturity of the Debt being refinanced, (iii) the Refinancing Debt is incurred in an aggregate principal amount (or, if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or, if issued with original issue discount, the aggregate accreted value) then outstanding of the Debt being refinanced and (iv) if the Debt being refinanced is Subordinated Debt, the subordination terms of the Refinancing Debt are at least as favorable to the Lenders as the subordination terms of the Debt being refinanced. Regulation U means Regulation U of the FRB. Release has the meaning specified in CERCLA and the term "Disposal" (or "Disposed") has the meaning specified in RCRA; provided that in the event either CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply as of the effective date of such amendment; and provided, further, that to the extent that the laws of a state wherein any affected property lies establish a meaning for "Release" or "Disposal" which is broader than is specified in either CERCLA or RCRA, such broader meaning shall apply. Required Lenders means Lenders having Pro Rata Shares aggregating more than 50%. Revolving Commitment Amount means $125,000,000, as reduced from time to time pursuant to Section 6.1. Revolving Loan - see Section 2.1.1. Revolving Outstandings means, at any time, the sum of (a) the aggregate principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount of all Letters of Credit. SEC means the Securities and Exchange Commission or any other governmental authority succeeding to any of the principal functions thereof. 9 18 Securities Purchase Agreement means the Securities Purchase Agreement dated as of April 12, 1999 among the Company, International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. Security Agreement means a security agreement substantially in the form of Exhibit D. Seller Subordinated Debt means unsecured indebtedness of the Company that: (a) is subordinated, substantially upon the terms set forth in Exhibit I or other terms that are more favorable to the Agent and the Lenders, in right of payment to the payment in full in cash of the Loans and all other amounts owed under the Loan Documents (whether or not matured or due and payable), including amounts required to provide cash collateral for the Letters of Credit; and (b) represents all or part of the purchase price payable by the Company in connection with an Acquisition permitted under this Agreement. Series A Subordinated Notes means the Senior Subordinated Notes due 2007, in an initial aggregate principal amount of $150,000,000 issued pursuant to the Series A Subordinated Notes Indenture. Series A Subordinated Notes Indenture means the Indenture dated as of July 23, 1997 between the Company and the Trustee. Series B Subordinated Notes means the Senior Subordinated Notes due 2007, in an initial aggregate principal amount of $50,000,000 issued pursuant to the Series B Subordinated Notes Indenture. Series B Subordinated Notes Indenture means the Indenture dated as of September 16, 1997 between the Company and the Trustee. Stated Amount means, with respect to any Letter of Credit at any date of determination, (a) the maximum aggregate amount available for drawing thereunder under any and all circumstances plus (b) the aggregate amount of all unreimbursed payments and disbursements under such Letter of Credit. Stockholders' Equity, of any Person, means the excess of total assets over total liabilities of such Person and its Subsidiaries, as reported on the Company's consolidated financial statements. Subordinated Debt means (i) the Subordinated Notes, (ii) Seller Subordinated Debt and (iii) any other unsecured Debt of the Company which has subordination terms, covenants, pricing and other terms which have been approved in writing by the Required Lenders. 10 19 Subordinated Notes means the Series A Subordinated Notes and the Series B Subordinated Notes. Subordinated Notes Indentures means the Series A Subordinated Notes Indenture and the Series B Subordinated Notes Indenture. Subsidiary means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares or other ownership interests as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company. Suretyship Liability means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any indebtedness, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation in respect of any Suretyship Liability shall (subject to any limitation set forth therein) be deemed to be the principal amount of the debt, obligation or other liability supported thereby. Taxes - see Section 7.6. Termination Date means the earlier to occur of (a) August 3, 2005 or (b) such other date on which the Commitments terminate pursuant to Section 6 or 11. Trustee means The Bank of New York, as trustee under the Subordinated Notes Indentures. Unmatured Event of Default means any event that, if it continues uncured, will, with lapse of time or notice or both, constitute an Event of Default. Wholly-Owned Subsidiary means, as to any Person, another Person all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person. Year 2000 Problem means the risk that computer applications and embedded microchips in non-computing devices may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date after December 31, 1999. 11 20 1.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) The term "including" is not limiting and means "including without limitation." (d) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" "until" each mean "to but excluding", and the word "through" means "to and including." (e) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation. (f) This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms. (g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company, the Lenders and the other parties thereto and are the products of all parties. Accordingly, they shall not be construed against the Agent or the Lenders merely because of the Agent's or Lenders' involvement in their preparation. (h) References herein to the "knowledge" of the Company or any Subsidiary shall mean the actual knowledge of the officers of the Company or such Subsidiary. SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF CREDIT PROCEDURES. 2.1 Commitments. On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make Loans to, and to issue or participate in Letters of Credit for the account of, the Company as follows: 2.1.1 Revolving Loan Commitment. Each Lender will make loans on a revolving basis ("Revolving Loans") from time to time until the Termination Date in such Lender's Pro Rata Share of 12 21 such aggregate amounts as the Company may request from all Lenders; provided that the Revolving Outstandings will not at any time exceed the Revolving Commitment Amount. 2.1.2 Acquisition Loan Commitment. Each Lender will make loans on a revolving basis ("Acquisition Loans") from time to time until the Termination Date in such Lender's Pro Rata Share of such aggregate amounts as the Company may request from all Lenders; provided that the aggregate principal amount of all outstanding Acquisition Loans will not at any time exceed the Acquisition Commitment Amount. 2.1.3 L/C Commitment. (a) The Issuing Lender will issue letters of credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to the Issuing Lender (each a "Letter of Credit"), at the request of and for the account of the Company from time to time before the date which is 30 days prior to the Termination Date and (b) as more fully set forth in Section 2.3.2, each Lender agrees to purchase a participation in each such Letter of Credit; provided that (i) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed $10,000,000 and (ii) the Revolving Outstandings will not at any time exceed the Revolving Commitment Amount. 2.2 Loan Procedures. The Company shall give written notice or telephonic notice (followed immediately by written confirmation thereof) to the Agent of each proposed borrowing not later than 10:00 A.M., Detroit time, on the proposed date of such borrowing. Each such notice shall be effective upon receipt by the Agent, shall be irrevocable, and shall specify the date and amount of borrowing. Promptly upon receipt of such notice, the Agent shall advise each Lender thereof. Not later than 1:00 P.M., Detroit time, on the date of a proposed borrowing, each Lender shall provide the Agent at the office specified by the Agent with immediately available funds covering such Lender's Pro Rata Share of such borrowing and, so long as the Agent has not received written notice that the conditions precedent set forth in Section 10 with respect to such borrowing have not been satisfied, the Agent shall pay over the funds received by the Agent to the Company on the requested borrowing date. Each borrowing shall be on a Business Day. 2.3 Letter of Credit Procedures. 2.3.1 L/C Applications. The Company shall give notice to the Agent and the Issuing Lender of the proposed issuance of each Letter of Credit on a Business Day which is at least three Business Days (or such lesser number of days as the Agent and the Issuing Lender shall agree in any particular instance in their sole discretion) prior to the proposed date of issuance of such Letter of Credit. Each such notice shall be accompanied by an L/C Application, duly executed by the Company and in all respects reasonably satisfactory to the Agent and the Issuing Lender, together with such other documentation as the Agent or the Issuing Lender may reasonably request in support thereof, it being understood that each L/C Application shall specify, among other things, the date on which the proposed Letter of Credit is to be issued, the expiration date of such Letter of Credit (which shall not be later than the 13 22 earlier to occur of (x) one year after the date of issuance thereof and (y) thirty days prior to the scheduled Termination Date) and whether such Letter of Credit is to be transferable in whole or in part. So long as the Issuing Lender has not received written notice that the conditions precedent set forth in Section 10 with respect to the issuance of such Letter of Credit have not been satisfied, the Issuing Lender shall issue such Letter of Credit on the requested issuance date. The Issuing Lender shall promptly advise the Agent of the issuance of each Letter of Credit and of any amendment thereto, extension thereof or event or circumstance changing the amount available for drawing thereunder. In the event of any inconsistency between the terms of any L/C Application and the terms of this Agreement, the terms of this Agreement shall control. 2.3.2 Participations in Letters of Credit. Concurrently with the issuance of each Letter of Credit, the Issuing Lender shall be deemed to have sold and transferred to each other Lender, and each other Lender shall be deemed irrevocably and unconditionally to have purchased and received from the Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such other Lender's Pro Rata Share, in such Letter of Credit and the Company's reimbursement obligations with respect thereto. For the purposes of this Agreement, the unparticipated portion of each Letter of Credit shall be deemed to be the Issuing Lender's "participation" therein. The Issuing Lender hereby agrees, upon request of the Agent or any Lender, to deliver to the Agent or such Lender a list of all outstanding Letters of Credit issued by the Issuing Lender, together with such information related thereto as the Agent or such Lender may reasonably request. 2.3.3 Reimbursement Obligations. The Company hereby unconditionally and irrevocably agrees to reimburse the Issuing Lender for each payment or disbursement made by the Issuing Lender under any Letter of Credit honoring any demand for payment made by the beneficiary thereunder, in each case on the date that such payment or disbursement is made. Any amount not reimbursed on the date of such payment or disbursement shall bear interest from the date of such payment or disbursement to the date that the Issuing Lender is reimbursed by the Company therefor, payable on demand, at a rate per annum equal to the Interest Rate from time to time in effect plus, beginning on the third Business Day after receipt of notice from the Issuing Lender of such payment or disbursement, 2%. The Issuing Lender shall notify the Company and the Agent whenever any demand for payment is made under any Letter of Credit by the beneficiary thereunder; provided that the failure of the Issuing Lender to so notify the Company shall not affect the rights of the Issuing Lender or the Lenders in any manner whatsoever. 2.3.4 Limitation on Obligations of Issuing Lender. In determining whether to pay under any Letter of Credit, the Issuing Lender shall not have any obligation to the Company or any Lender other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Issuing Lender under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence and willful misconduct, shall not impose upon the Issuing Lender any liability to the Company or any Lender and shall not reduce or impair the 14 23 Company's reimbursement obligations set forth in Section 2.3.3 or the obligations of the Lenders pursuant to Section 2.3.5. 2.3.5 Funding by Lenders to Issuing Lender. If the Issuing Lender makes any payment or disbursement under any Letter of Credit and the Company has not reimbursed the Issuing Lender in full for such payment or disbursement by 10:00 A.M., Detroit time, on the date of such payment or disbursement, or if any reimbursement received by the Issuing Lender from the Company is or must be returned or rescinded upon or during any bankruptcy or reorganization of the Company or otherwise, each other Lender shall be obligated to pay to the Agent for the account of the Issuing Lender, in full or partial payment of the purchase price of its participation in such Letter of Credit, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the obligations of the Company under Section 2.3.3), and, upon notice from the Issuing Lender, the Agent shall promptly notify each other Lender thereof. Each other Lender irrevocably and unconditionally agrees to so pay to the Agent in immediately available funds for the Issuing Lender's account the amount of such other Lender's Pro Rata Share of such payment or disbursement. If and to the extent any Lender shall not have made such amount available to the Agent by 2:00 P.M., Detroit time, on the Business Day on which such Lender receives notice from the Agent of such payment or disbursement (it being understood that any such notice received after noon, Detroit time, on any Business Day shall be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to the Agent for the Issuing Lender's account forthwith on demand, for each day from the date such amount was to have been delivered to the Agent to the date such amount is paid, at a rate per annum equal to (a) for the first three days after demand, the Federal Funds Rate from time to time in effect and (b) thereafter, the Interest Rate from time to time in effect. Any Lender's failure to make available to the Agent its Pro Rata Share of any such payment or disbursement shall not relieve any other Lender of its obligation hereunder to make available to the Agent such other Lender's Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to the Agent such other Lender's Pro Rata Share of any such payment or disbursement. 2.4 Commitments Several. The failure of any Lender to make a requested Loan on any date shall not relieve any other Lender of its obligation (if any) to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make any Loan to be made by such other Lender. 2.5 Certain Conditions. Notwithstanding any other provision of this Agreement, no Lender shall have an obligation to make any Loan and the Issuing Lender shall not have any obligation to issue any Letter of Credit, if an Event of Default or Unmatured Event of Default has occurred and is continuing. 15 24 SECTION 3 NOTES EVIDENCING LOANS. 3.1 Notes. The Loans of each Lender shall be evidenced by a promissory note (each a "Note") substantially in the form set forth in Exhibit A, with appropriate insertions, payable to the order of such Lender in a face principal amount equal to the sum of such Lender's Pro Rata Share of the Revolving Commitment Amount and the Acquisition Commitment Amount, in full on the Termination Date. 3.2 Recordkeeping. Each Lender shall record in its records, or at its option on the schedule attached to its Note, the date and amount of each Loan made by such Lender and each repayment thereof. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of the Company hereunder or under any Note to repay the principal amount of the Loans evidenced by such Note together with all interest accruing thereon. SECTION 4 INTEREST. 4.1 Interest Rate. The Company promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until such Loan is paid in full at the Interest Rate. 4.2 Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on the last day of each month and at maturity. After maturity, accrued interest on all Loans shall be payable on demand. 4.3 Computation of Interest. Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days. The Interest Rate shall change simultaneously with each change in the LIBO Rate average referred to in the definition of "Interest Rate." SECTION 5 FEES. 5.1 Letter of Credit Fees. The Company agrees to pay to the Agent for the account of each Lender a fee for each Letter of Credit equal to 0.50% per annum of such Lender's Pro Rata Share (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days). Such letter of credit fee shall be payable in arrears on the last day of each month and on the Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which the Letter of Credit expired or was terminated. 16 25 SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT AND THE ACQUISITION COMMITMENT AMOUNT; PREPAYMENTS. 6.1. Voluntary Reduction or Termination of Commitment Amounts. (a) The Company may from time to time by written notice to the Agent (which shall promptly advise each Lender thereof) permanently reduce the Revolving Commitment Amount to an amount not less than the Revolving Outstandings. Concurrently with any reduction of the Revolving Commitment Amount to zero, the Company shall pay all interest on the Revolving Loans and all letter of credit fees and shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit. (b) The Company may from time to time by written notice to the Agent (which shall promptly advise each Lender thereof) permanently reduce the Acquisition Commitment Amount to an amount not less than the aggregate outstanding principal amount of all Acquisition Loans. (c) All reductions of the Revolving Commitment Amount and the Acquisition Commitment Amount shall reduce the Commitments pro rata among the Lenders according to their respective Pro Rata Shares. 6.2 Voluntary Prepayments. The Company may from time to time prepay the Loans in whole or in part, without premium or penalty. SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES. 7.1 Making of Payments. All payments of principal of or interest on the Notes, and of all fees, shall be made by the Company to the Agent in immediately available funds at the office specified by the Agent not later than noon, Detroit time, on the date due; and funds received after that hour shall be deemed to have been received by the Agent on the following Business Day. The Agent shall promptly remit to each Lender its share of all such payments received in collected funds by the Agent for the account of such Lender. 7.2 Application of Certain Payments. Each payment of principal shall be applied to such Loans as the Company shall direct by notice to be received by the Agent on or before the date of such payment or, in the absence of such notice, first to Revolving Loans used to repurchase Subordinated Notes, next to other Revolving Loans and next to Acquisition Loans. Concurrently with each remittance to any Lender of its share of any such payment, the Agent shall advise such Lender as to the application of such payment. 7.3 Due Date Extension. If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be 17 26 extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension. 7.4 Setoff. The Company agrees that the Agent and each Lender have all rights of set-off provided by applicable law, and in addition thereto, the Company agrees that at any time any Event of Default exists, the Agent and each Lender may apply to the payment of any obligations of the Company hereunder, whether or not then due, any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with the Agent or such Lender. The Agent or the Lender exercising the set-off shall promptly notify the Company thereof after making such exercise; provided that failure to give such notice shall not affect the validity of the set-off. 7.5 Proration of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise, but excluding any payment pursuant to Section 13.9) on account of principal of or interest on any Loan (or on account of its exposure under any Letter of Credit) in excess of its pro rata share of payments and other recoveries obtained by all Lenders on account of principal of and interest on the Loans (or such exposure) then held by them, such Lender shall purchase from the other Lenders such participations in the Loans and Letters of Credit held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery. 7.6 Taxes. All payments of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (all non-excluded items being called "Taxes"). If any withholding or deduction from any payment to be made by the Company hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Company will: (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (c) pay to the Agent for the account of the Lenders such additional amount as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required. 18 27 Moreover, if any Taxes are directly asserted against the Agent or any Lender with respect to any payment received by the Agent or such Lender hereunder, the Agent or such Lender may pay such Taxes and the Company will promptly pay such additional amounts (including any penalty, interest or expense) as is necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had such Taxes not been asserted. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the Company shall indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 7.6, a distribution hereunder by the Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Company. Each Lender that (a) is organized under the laws of a jurisdiction other than the United States of America or a state thereof and (b)(i) is a party hereto on the Closing Date or (ii) becomes an assignee of an interest under this Agreement under Section 13.9.1 after the Closing Date (unless such Lender was already a Lender hereunder immediately prior to such assignment) shall execute and deliver to the Company and the Agent one or more (as the Company or the Agent may reasonably request) United States Internal Revenue Service Form 4224 or Form 1001 or such other forms or documents, appropriately completed, as may be applicable to establish that such Lender is exempt from withholding or deduction of Taxes. The Company shall not be required to pay additional amounts to any Lender pursuant to this Section 7.6 to the extent that the obligation to pay such additional amounts would not have arisen but for the failure of such Lender to comply with this paragraph. SECTION 8 WARRANTIES. To induce the Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans and issue and participate in Letters of Credit hereunder, the Company warrants to the Agent and the Lenders that (provided that none of the following warranties is made as of any time prior to the Closing Date): 8.1 Organization. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware; each Subsidiary is validly existing and in good standing under the laws of the jurisdiction of its organization; and each of the Company and each Subsidiary is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect. 8.2 Authorization; No Conflict. Each of the Company and each other Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, the Company is duly 19 28 authorized to borrow monies hereunder and each of the Company and each other Loan Party is duly authorized to perform its obligations under each Loan Document to which it is a party. The execution, delivery and performance by the Company of this Agreement and by each of the Company and each other Loan Party of each Loan Document to which it is a party, and the borrowings by the Company hereunder, do not and will not (a) require any consent or approval of any governmental agency or authority (other than any consent or approval which has been obtained and is in full force and effect), (b) conflict with (i) any provision of law, (ii) the charter, by-laws or other organizational documents of the Company or any other Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Company or any other Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of the Company, any Subsidiary or any other Loan Party (other than Liens in favor of the Agent created pursuant to the Collateral Documents). 8.3 Validity and Binding Nature. Each of this Agreement and each other Loan Document to which the Company or any other Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity. 8.4 Financial Condition. The audited consolidated financial statements of the Company and its Subsidiaries as at December 31, 1998 and the unaudited consolidated condensed financial statements of the Company and its Subsidiaries as at March 31, 1999, copies of each of which have been delivered to the Agent for distribution to each Lender, were prepared in accordance with GAAP. 8.5 No Material Adverse Change. Since December 31, 1998 there has been no material adverse change in the financial condition, operations, assets, business, properties or prospects of the Company and its Subsidiaries taken as a whole. 8.6 Litigation and Contingent Liabilities. No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Company's knowledge, threatened against the Company or any Subsidiary which might reasonably be expected to have a Material Adverse Effect, except as set forth in Schedule 8.6. Other than any liability incident to such litigation or proceedings, neither the Company nor any Subsidiary has, to the best of the Company's knowledge, any material contingent liabilities not listed on Schedule 8.6 or permitted by Section 9.7. 8.7 Ownership of Properties; Liens. Each of the Company and each Subsidiary owns good and, in the case of real property, marketable title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and the like) except as permitted by Section 9.8. 20 29 8.8 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries other than those listed on Schedule 8.8. 8.9 Pension Plans. (a) During the twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement or the making of any Loan or the issuance of any Letter of Credit, (i) no steps have been taken to terminate any Pension Plan and (ii) no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which could result in the incurrence by the Company of any material liability, fine or penalty. (b) All contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by the Company or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable law; neither the Company nor any member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, might result in a withdrawal or partial withdrawal from any such plan; and neither the Company nor any member of the Controlled Group has received any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent. 8.10 Investment Company Act. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940. 8.11 Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935. 8.12 Regulation U. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. 8.13 Taxes. Each of the Company and each Subsidiary has filed all Federal and other material tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. 21 30 8.14 Solvency, etc. On the Closing Date, and immediately prior to and after giving effect to the issuance of each Letter of Credit and each borrowing hereunder and the use of the proceeds thereof, (a) the assets of the Company and the other Loan Parties, taken as a whole, will exceed the liabilities of the Company and the other Loan Parties, taken as a whole, and (b) the Company and the other Loan Parties, taken as a whole, will be solvent, will be able to pay their debts as they mature, will own property with fair saleable value greater than the amount required to pay their debts and will have capital sufficient to carry on their business as then constituted. 8.15 Environmental Matters. (a) No Violations. Except as set forth on Schedule 8.15, neither the Company nor any Subsidiary, nor any operator of the Company's or any Subsidiary's properties, is in violation, or alleged violation, of any judgment, decree, order, law, permit, license, rule or regulation pertaining to environmental matters, including those arising under the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 or any other Environmental Law which individually or in the aggregate otherwise might reasonably be expected to have a Material Adverse Effect. (b) Notices. Except as set forth on Schedule 8.15 and for matters arising after the Closing Date, in each case none of which could singly or in the aggregate be expected to have a Material Adverse Effect, neither the Company nor any Subsidiary has received notice from any third party, including any Federal, state or local governmental authority: (a) that any one of them has been identified by the U.S. Environmental Protection Agency as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (b) that any hazardous waste, as defined by 42 U.S.C. ss.6903(5), any hazardous substance as defined by 42 U.S.C. ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic substance, oil or hazardous material or other chemical or substance regulated by any Environmental Law (all of the foregoing, "Hazardous Substances") which any one of them has generated, transported or disposed of has been found at any site at which a Federal, state or local agency or other third party has conducted a remedial investigation, removal or other response action pursuant to any Environmental Law; (c) that the Company or any Subsidiary must conduct a remedial investigation, removal, response action or other activity pursuant to any Environmental Law; or (d) of any Environmental Claim. (c) Handling of Hazardous Substances. Except as set forth on Schedule 8.15, (i) no portion of the real property or other assets of the Company or any Subsidiary has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance in all material respects with applicable Environmental Laws and no underground tank or other underground storage receptacle for Hazardous Substances is located on such properties; (ii) in the course of any activities conducted by the Company, any Subsidiary or the operators of any real property of the Company or 22 31 any Subsidiary, no Hazardous Substances have been generated or are being used on such properties except in accordance in all material respects with applicable Environmental Laws; (iii) there have been no Releases or threatened Releases of Hazardous Substances on, upon, into or from any real property or other assets of the Company or any Subsidiary, which Releases singly or in the aggregate might reasonably be expected to have a material adverse effect on the value of such real property or assets; (iv) there have been no Releases on, upon, from or into any real property in the vicinity of the real property or other assets of the Company or any Subsidiary which, through soil or groundwater contamination, may have come to be located on, and which might reasonably be expected to have a material adverse effect on the value of, the real property or other assets of the Company or any Subsidiary; and (v) any Hazardous Substances generated by the Company and its Subsidiaries have been transported offsite only by properly licensed carriers and delivered only to treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are operating in compliance in all material respects with such permits and applicable Environmental Laws. (d) Notwithstanding anything to the contrary herein, the warranties made in Sections 8.15(a), (c)(i), (c)(iii), (c)(iv) and (c)(v) shall be deemed made to the best of the Company's knowledge for a period of one year following the consummation of the transactions in the Securities Purchase Agreement. 8.16 Year 2000 Problem. The Company has taken the steps to address the Year 2000 Problem set forth in the Company's report on Form 10Q filed with the SEC on May 17, 1999. 8.17 Insurance. Set forth on Schedule 8.17 is a complete and accurate summary of the property and casualty insurance program of the Company and its Subsidiaries as of the Closing Date (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, annual premiums, exclusions, deductibles, self-insured retention, and a description in reasonable detail of any self-insurance program, retrospective rating plan, fronting arrangement or other risk assumption arrangement involving the Company or any Subsidiary). 8.18 Information. All information heretofore or contemporaneously herewith furnished in writing by the Company or any Subsidiary to the Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Company or any Subsidiary to the Agent or any Lender pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be materially incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by the Agent and the Lenders that any projections and forecasts provided by the Company are based on good faith estimates and assumptions believed by the Company to be reasonable as of the date of the applicable projections or forecasts and 23 32 that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results). 8.19 Intellectual Property. The Company and each Subsidiary owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights as are necessary for the conduct of the business of the Company and its Subsidiaries, without any infringement upon rights of others, except to the extent that failure to comply with any of the foregoing could not reasonably be expected to have a Material Adverse Effect. 8.20 Burdensome Obligations. Neither the Company nor any Subsidiary is a party to any agreement or contract or subject to any corporate or partnership restriction which might reasonably be expected to have a Material Adverse Effect, excluding those items set forth in Schedule 8.20. 8.21 Labor Matters. Except as set forth on Schedule 8.21, neither the Company nor any Subsidiary is subject to any labor or collective bargaining agreement. There are no existing or threatened strikes, lockouts or other labor disputes involving the Company or any Subsidiary that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Company and its Subsidiaries are not in violation of the Fair Labor Standards Act or any other applicable law, rule or regulation dealing with such matters. 8.22 No Default. No Event of Default or Unmatured Event of Default exists or would result from the incurring by the Company of any Debt hereunder or under any other Loan Document. 8.23 Securities Purchase Agreement. Each of the Company and, to the Company's knowledge, each other party to the Securities Purchase Agreement, has duly taken all necessary corporate, partnership or other organizational action to authorize the execution, delivery and performance of the Securities Purchase Agreement and the consummation of transactions contemplated thereby. (b) The consummation of the transactions contemplated by the Securities Purchase Agreement will comply in all material respects with all applicable legal requirements, and all necessary governmental, regulatory, creditor, shareholder, partner and other material consents, approvals and exemptions required to be obtained by the Company will be, prior to consummation of such transactions, duly obtained and will be in full force and effect. As of the time of consummation of such transactions, all applicable waiting periods with respect to such transactions will have expired without any action being taken by any competent governmental authority which restrains, prevents or imposes material adverse conditions upon the consummation of such transactions. (c) The execution and delivery of the Securities Purchase Agreement did not, and the consummation of the transactions contemplated thereby will not, violate any statute or regulation of the 24 33 United States (including any securities law) or of any state or other applicable jurisdiction, or any order, judgment or decree of any court or governmental body binding on the Company or any Subsidiary or result in a breach of, or constitute a default under, any material agreement, indenture, instrument or other document, or any judgment, order or decree, to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound. (d) No statement or representation made in the Securities Purchase Agreement by the Company or, to the Company's knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading. 8.24 Senior Debt. The obligations of the Company and each Loan Party under the Loan Documents constitute "Senior Debt" of the Company or such Loan Party, as applicable, under and as defined in each Subordinated Notes Indenture. SECTION 9 COVENANTS. Until the expiration or termination of the Commitments and thereafter until all obligations of the Company hereunder and under the other Loan Documents are paid in full and all Letters of Credit have been Cash Collateralized or terminated, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will: 9.1 Reports, Certificates and Other Information. Furnish to the Agent: 9.1.1 Annual Report. Promptly when available and in any event within 90 days after the close of each Fiscal Year: (a) a copy of the annual report of the Company and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of earnings and cash flows of the Company and its Subsidiaries for such Fiscal Year, certified (without any qualification arising from the scope of the audit) by Deloitte & Touche or other independent auditors of recognized standing selected by the Company and reasonably acceptable to the Agent, together with a written statement from such accountants to the effect that in making the examination necessary for the signing of such annual audit report by such accountants, nothing came to their attention that caused them to believe that the Company was not in compliance with any provision of Section 9.6, 9.7 or 9.9 of this Agreement insofar as such provision relates to accounting matters or, if something has come to their attention that caused them to believe that the Company was not in compliance with any such provision, describing such non-compliance in reasonable detail; and (b) consolidating balance sheets of the Company and its Subsidiaries as of the end of such Fiscal Year and a consolidating statement of earnings for the Company and its Subsidiaries for such Fiscal Year. 25 34 9.1.2 Interim Reports. Promptly when available and in any event within 60 days after the end of each Fiscal Quarter (except the last Fiscal Quarter of each Fiscal Year), consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the end of such Fiscal Quarter, together with consolidated and consolidating statements of earnings and cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter, together with a comparison with the corresponding period of the previous Fiscal Year; provided, that so long as the Company is a registrant within the meaning of Rule 1-01 of Regulation S-X of the SEC, the Company may deliver a copy of its report on Form 10Q for such Fiscal Quarter, together with consolidating balance sheets and consolidating statements of earnings for the relevant period, in lieu of the foregoing within such 60-day period. 9.1.3 Compliance Certificates. Contemporaneously with the furnishing of a copy of each annual audit report pursuant to Section 9.1.1 and each set of quarterly statements pursuant to Section 9.1.2, a duly completed compliance certificate in the form of Exhibit B, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by the Chief Financial Officer or the President of the Company, containing a computation of each of the financial ratios and restrictions set forth in Section 9.6 and a statement to the effect that such officer has not become aware of any Event of Default or Unmatured Event of Default that has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it and setting forth all Events of Default that had occurred but were cured or waived during the period covered by the related financial statements. 9.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of the Company or any Subsidiary filed with the SEC; copies of all registration statements of the Company or any Subsidiary filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to security holders generally. 9.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon the Company obtaining knowledge of any of the following, written notice describing the same and the steps being taken by the Company or the Subsidiary affected thereby with respect thereto: (a) the occurrence of an Event of Default or an Unmatured Event of Default; (b) any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Company to the Lenders which has been instituted or, to the knowledge of the Company, is threatened against the Company or any Subsidiary or to which any of the properties of any thereof is subject which might reasonably be expected to have a Material Adverse Effect; 26 35 (c) the institution of any steps by any member of the Controlled Group or any other Person to terminate any Pension Plan, or the failure of any member of the Controlled Group to make a required contribution to any Pension Plan (if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Company furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan or Multiemployer Pension Plan which could result in the incurrence by any member of the Controlled Group of any material liability, fine or penalty (including any claim or demand for withdrawal liability or partial withdrawal from any Multiemployer Pension Plan), or any material increase in the contingent liability of the Company with respect to any post-retirement welfare plan benefit, or any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of an excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent; (d) any cancellation (unless contemporaneously replaced with similar coverage) or material change in any insurance maintained by the Company or any Subsidiary; (e) any material violation of law by the Company or any Subsidiary or any officer or director of the Company or any Subsidiary related to the business of the Company or such Subsidiary; or (f) any other event (including any violation of any Environmental Law or the assertion of any Environmental Claim) which might reasonably be expected to have a Material Adverse Effect. 9.1.6 Management Reports. Promptly upon receipt thereof, copies of all detailed financial and management reports submitted to the Company by independent auditors in connection with each audit made by such auditors of the books of the Company, to the extent such reports identify a material deficiency in the Company's internal controls. 9.1.7 Subordinated Debt Notices. Promptly from time to time, copies of any material notices (including notices of default or acceleration) received from any holder, or any notice from any trustee, of, under or with respect to any Subordinated Debt. 9.1.8 Year 2000 Problem. Promptly upon the request of the Agent or any Lender, such updated information or documentation as may be reasonably requested from time to time regarding the efforts of the Company and its Subsidiaries to address the Year 2000 Problem. 27 36 9.1.9 Other Information. Promptly from time to time, such other information concerning the Company and its Subsidiaries as any Lender or the Agent may reasonably request. 9.2 Books, Records and Inspections. Keep, and cause each Subsidiary to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each Subsidiary to permit, any Lender or the Agent or any representative thereof to inspect the properties and operations of the Company or such Subsidiary; and permit, and cause each Subsidiary to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), any Lender or the Agent or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors, and to examine (and, at the expense of the Agent or any Lender, unless an Event of Default has occurred and is continuing, in which case at the expense of the Company or the applicable Subsidiary, photocopy extracts from) any of its books or other records; and permit, and cause each Subsidiary to permit, the Agent and its representatives to inspect the inventory and other tangible assets of the Company or such Subsidiary and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to inventory, accounts receivable and any other collateral. 9.3 Maintenance of Property; Insurance. (a) Keep, and cause each Subsidiary to keep, all material property necessary in the business of the Company or such Subsidiary in good working order and condition, ordinary wear and tear excepted. (b) Maintain, and cause each Subsidiary to maintain, with responsible insurance companies, such insurance as may be required by any law or governmental regulation or court decree or order applicable to it and such other insurance, to such extent (including customary deductibles) and against such hazards and liabilities, as is customarily maintained by companies similarly situated; and, upon request of the Agent or any Lender, furnish to the Agent or such Lender a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Company and its Subsidiaries. The Company shall cause each issuer of an insurance policy to provide the Agent with an endorsement (i) showing loss payable to the Agent with respect to each policy of property or casualty insurance and naming the Agent and each Lender as an additional insured with respect to each policy of insurance for liability for personal injury or property damage, (ii) providing that 30 days' notice will be given to the Agent prior to any cancellation of, material reduction or change in coverage provided by or other material modification to such policy and (iii) reasonably acceptable in all other respects to the Agent. The Company shall execute and deliver, and shall cause each Subsidiary to execute and deliver, to the Agent a collateral assignment, in form and substance reasonably satisfactory to the Agent, of each business interruption insurance policy maintained by the Company or such Subsidiary. 9.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, except where failure to comply could not reasonably be 28 37 expected to have a Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior to delinquency, all taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, might become a Lien on any of its property; provided that the foregoing shall not require the Company or any Subsidiary to pay any such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP. 9.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to Section 9.10 and to the ability of the Company to dissolve Subsidiaries the dissolution of which could not have a Material Adverse Effect) cause each Subsidiary to maintain and preserve, (a) its existence and good standing in the jurisdiction of its organization and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (except in those instances in which the failure to be qualified or in good standing does not have a Material Adverse Effect). 9.6 Financial Covenants. 9.6.1 Ratio of Funded Debt to Stockholders' Equity. Not permit the ratio of Funded Debt to Stockholders' Equity to be greater than (x) 2.2:1 at any time during the period from the Closing Date through December 31, 2000 and (y) 2.1:1 at any time thereafter. 9.6.2 Ratio of Non-Floorplan Debt to Stockholders' Equity. Not permit the ratio of Funded Debt (less Debt under Floor Plan Financings) to Stockholders' Equity to be greater than 1.1:1 at any time. 9.6.3 Funded Debt to EBITDA Ratio. Not permit the Funded Debt to EBITDA Ratio as of the last day of any Computation Period to exceed 3.75:1. 9.6.4 Working Capital. Cause each Subsidiary to maintain such level of working capital as is necessary to satisfy the requirements of such Subsidiary's franchise agreements. 9.7 Limitations on Debt. Not, and not permit any Subsidiary to, create, incur, assume or suffer to exist any Debt, except: (a) obligations under this Agreement and the other Loan Documents; (b) Debt secured by Liens permitted by Section 9.8(d), and extensions, renewals and refinancings thereof; (c) Debt of Subsidiaries to the Company or to any Subsidiary; 29 38 (d) unsecured Debt of the Company to Subsidiaries; (e) (i) the Subordinated Notes and guaranties thereof provided by the Subsidiaries, each such guaranty thereof subordinated to the obligations of the respective Subsidiary under the Loan Documents on substantially the same basis as the obligations of the Company under the Subordinated Notes are subordinated to the obligations of the Company under the Loan Documents, (ii) other Subordinated Debt and (iii) Refinancing Debt in respect thereof; provided that the aggregate principal amount of all Seller Subordinated Debt at any time outstanding shall not exceed $30,000,000; (f) Hedging Obligations incurred for bona fide hedging purposes and not for speculation; (g) Debt described on Schedule 9.7 and any extension, renewal or refinancing thereof so long as the principal amount thereof is not increased; (h) Debt to be Repaid (so long as such Debt is repaid on or prior to the Closing Date); (i) [Intentionally left blank]; (j) Debt with respect to any Floor Plan Financing provided to the Company or any Subsidiary by GMAC, BMW Finance, Ford Motor Credit or Toyota Motor Credit or any other person to whom CFC, in its sole discretion, consents; (k) Debt to CFC in respect of Floor Plan Financings; (l) Debt with respect to wholesale motor vehicle financing provided by Persons other than CFC provided CFC has declined to provide the same and the financing is provided by such other Person in compliance with Section 13.17; and (m) other Debt, in addition to the Debt listed above, in an aggregate amount not at any time exceeding $20,000,000. 9.8 Liens. Not, and not permit any Subsidiary to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except: (a) Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves; 30 39 (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law and (ii) Liens incurred in connection with worker's compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any deposits or advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves; (c) Liens described on Schedule 9.8; (d) (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), (ii) Liens existing on property at the time of the acquisition thereof by the Company or any Subsidiary (and not created in contemplation of such acquisition) and (iii) Liens that constitute purchase money security interests on any property securing Debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that (x) any such Lien attaches to such property within 60 days of the acquisition thereof and attaches solely to the property so acquired and (y) no such Lien may attach to any Excluded Property; (e) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $10,000,000 arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (f) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary; (g) Liens arising under the Loan Documents; and (h) Liens on any asset of an Automobile Dealership securing Debt permitted by Sections 9.7(j), (k) and (l) (in the case of Debt under Sections 9.7(j) and (l), such Liens may attach only to the inventory floorplanned by such Debt and proceeds thereof). 9.9 Restricted Payments. Not, and not permit any Subsidiary to, (a) make any distribution to any of its shareholders, (b) purchase or redeem any of its capital stock or other equity interests or any warrants, options or other rights in respect thereof, (c) pay any management fees or similar fees to any of its shareholders or any Affiliate thereof, (d) make any redemption, prepayment, defeasance or repurchase of any Subordinated Debt or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make other distributions to the Company or to a 31 40 Wholly-Owned Subsidiary and (ii) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, the Company and its Subsidiaries may (w) pay dividends to its stockholders and purchase or redeem its capital stock, (x) pay management fees to Young Automotive Group, LLC, an Indiana limited liability company ("YAG"), and its Affiliates (collectively, "Young") in connection with joint ventures formed by the Company and its Subsidiaries pursuant to that certain Joint Venture Formation Agreement, dated as of January 31, 1998, among the Company, YAG and certain other parties (the "Young JV Agreement"), in an amount not to exceed 30% of the annual pre-tax income of all Persons in which Investments are made pursuant to the Young JV Agreement, (y) repurchase or redeem up to $25,000,000 of Subordinated Notes or any Refinancing Debt in respect thereof and (z) repurchase or redeem Subordinated Notes or any Refinancing Debt in respect thereof using the proceeds of an offering of equity securities or Refinancing Debt of the Subordinated Debt being repurchased or redeemed, which equity securities and Refinancing Debt are issued by the Company. 9.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to, be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any receivables, except for: (a) any such merger, consolidation, sale, transfer, conveyance, lease or assignment of or by any Subsidiary into the Company or into, with or to any other Subsidiary; (b) any such purchase or other acquisition by the Company or any Subsidiary of the assets or stock of any Subsidiary; (c) any Acquisition by the Company or any Subsidiary if (1) immediately before and after giving effect to such Acquisition, no Event of Default or Unmatured Event of Default shall exist, (2) immediately after giving effect to such Acquisition, the Company is in pro forma compliance with all the financial ratios and restrictions set forth in Section 9.6, (3) in the case of the Acquisition of any Person, the Board of Directors of such Person has approved such Acquisition and all auto manufacturers doing business with such Person have consented to such Acquisition (provided that the auto manufacturers doing business with the acquired Person need not have consented to such Acquisition at the time of consummation thereof if the Company or the Subsidiary making such Acquisition has an irrevocable option, on terms and conditions (including cash escrow) satisfactory to the Agent in its sole discretion, to put the Person acquired in such Acquisition back to the seller thereof for a price in cash at least equal to the total amount of cash consideration paid by the Company or such Subsidiary in such Acquisition (including purchase price, noncompetition payments, earnout payments and other similar consideration) within 180 days if such auto manufacturers have not consented to such Acquisition, which option is otherwise unconditional, and which option must be exercised by the Company or the applicable Subsidiary within such period if such consents are not obtained) and (4) prior to and after such Acquisition, the Chief Financial Officer of the Company has delivered a certificate to the Agent confirming that the conditions set forth in clauses (1) - (3) above will be (in the case of a certificate delivered prior to such Acquisition) or have been (in the case of a certificate delivered after such Acquisition) met; and (d) sales and dispositions ("Dispositions") of assets (including the stock of Subsidiaries) for at least fair market value (as 32 41 determined by the Board of Directors of the Company) so long as the net book value of all assets sold or otherwise disposed of in any Fiscal Year does not exceed $50,000,000 (exclusive of any Disposition the net cash proceeds of which are used within 180 days to purchase another asset performing the same or a similar function as the asset disposed of). 9.11 Modification of Organizational Documents. Not permit the Certificate or Articles of Incorporation, By-Laws or other organizational documents of the Company or any Subsidiary to be amended or modified in any way which might reasonably be expected to materially adversely affect the interests of the Lenders. 9.12 Use of Proceeds. Use the proceeds of the Loans, and the Letters of Credit, solely for working capital, for Acquisitions permitted by Section 9.10, for capital expenditures, to make Investments permitted hereunder and for other general corporate purposes; and not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock. 9.13 Further Assurances. Take, and cause each Subsidiary to take, such actions as are necessary or as the Agent or the Required Lenders may reasonably request from time to time (including the execution and delivery of guaranties, security agreements, pledge agreements, mortgages, deeds of trust, financing statements and other documents, the filing or recording of any of the foregoing, and the delivery of stock certificates and other collateral with respect to which perfection is obtained by possession) to ensure that (a) the obligations of the Company hereunder and under the other Loan Documents (i) are secured by substantially all of the assets (other than Excluded Property) of the Company and (ii) guaranteed by all of its Subsidiaries (including, promptly upon the acquisition or creation thereof, any Subsidiary acquired or created after the date hereof but excluding Foreign Subsidiaries (to the extent that such exclusion is necessary to avoid material adverse tax consequences for the Company)) by execution of a counterpart of the Guaranty and (b) the obligations of each Subsidiary under the Guaranty are secured by substantially all of the assets (other than Excluded Property) of such Subsidiary (other than Foreign Subsidiaries (to the extent that such exclusion is necessary to avoid material adverse tax consequences for the Company)), provided that (i) the pledge by the Company or any Subsidiary (other than a Foreign Subsidiary) of the stock of any Foreign Subsidiary shall be limited to 65% of the stock of such Foreign Subsidiary to the extent the pledge of a greater percentage would have material adverse tax consequences for the Company and (ii) a pledge of the stock of a Subsidiary shall not be required if and to the extent that such pledge would violate a Permitted Restriction in favor of an auto manufacturer. 9.14 Transactions with Affiliates. Not, and not permit any Subsidiary to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its other Affiliates (other than the Company and its Subsidiaries) which is on terms that are less favorable than are obtainable from any Person which is not one of its Affiliates. 33 42 9.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to maintain, each Pension Plan in substantial compliance with all applicable requirements of law and regulations. 9.16 Environmental Matters. (a) If any Release or Disposal of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of the Company or any Subsidiary, the Company shall, or shall cause the applicable Subsidiary to, cause the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets. Without limiting the generality of the foregoing, the Company shall, and shall cause each Subsidiary to, comply with any valid Federal or state judicial or administrative order requiring the performance at any real property of the Company or any Subsidiary of activities in response to the Release or threatened Release of a Hazardous Substance. (b) To the extent that the transportation of "hazardous waste" as defined by RCRA is permitted by this Agreement, the Company shall, and shall cause its Subsidiaries to, dispose of such hazardous waste only at licensed disposal facilities operating in compliance with Environmental Laws. 9.17 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter into any agreement containing any provision which would (a) be violated or breached by any borrowing by the Company hereunder or by the performance by the Company or any Subsidiary of any of its obligations hereunder or under any other Loan Document, (b) prohibit the Company or any Subsidiary from granting to the Agent, for the benefit of the Lenders, a Lien on any of its assets or (c) except for Permitted Restrictions, create or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to the Company or any other applicable Subsidiary, or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to the Company or (iii) transfer any of its assets or properties to the Company. 9.18 Business Activities. Not, and not permit any Subsidiary to, engage in any line of business other than the businesses engaged in on the date hereof and businesses reasonably related thereto. 9.19 Investments. Not, and not permit any Subsidiary to, make or permit to exist any Investment in any other Person, except (without duplication) the following: (a) contributions by the Company to the capital of any of its Subsidiaries, or by any such Subsidiary to the capital of any of its Subsidiaries; (b) in the ordinary course of business, Investments by the Company in any Subsidiary or by any Subsidiary in the Company, by way of intercompany loans, advances or guaranties, all to the extent permitted by Section 9.7; (c) Suretyship Liabilities permitted by Section 9.7; 34 43 (d) Cash Equivalent Investments; (e) bank deposits in the ordinary course of business; (f) Investments in securities of account debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such account debtors; (g) Investments to consummate Acquisitions permitted by Section 9.10; (h) Investments listed on Schedule 9.19; (i) Investments in an aggregate amount not exceeding $15,000,000 at any one time outstanding in Persons engaged in businesses in which the Company and its Subsidiaries are permitted to engage hereunder (provided that any Investment made with the proceeds of any offering of equity securities or Subordinated Debt of the Company shall be disregarded when determining compliance with the aggregate dollar limit in this clause (i)); and (j) such other Investments consented to by the Agent in its sole discretion; provided that (x) any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; (y) no Investment otherwise permitted by clause (b), (c), (g) or (i) shall be permitted to be made if, immediately before or after giving effect thereto, any Event of Default or Unmatured Event of Default exists; and (z) the aggregate amount of Foreign Investments made during the term of this Agreement shall not exceed $25,000,000 (provided that any Investment made with the proceeds of any offering of equity securities or Subordinated Debt of the Company shall be disregarded when determining compliance with the aggregate dollar limit in this clause (z)). 9.20 Restriction of Amendments to Certain Documents. Not amend or otherwise modify, or waive any rights under, either Subordinated Notes Indenture or the Subordinated Notes, in any case, if such amendment, modification or waiver could reasonably be expected to be adverse to the Lenders in any respect. 9.21 Limitation on Floor Plan Amendments. Not modify any Floor Plan Financing arrangement if such modification would have a Material Adverse Effect. 35 44 SECTION 10 EFFECTIVENESS; CONDITIONS OF LENDING, ETC. The obligation of each Lender to make its Loans and of the Issuing Lender to issue Letters of Credit is subject to the following conditions precedent: 10.1 Initial Credit Extension. The obligation of the Lenders to make the initial Loans and the obligation of the Issuing Lender to issue its initial Letter of Credit (whichever first occurs) is, in addition to the conditions precedent specified in Section 10.2, subject to the conditions precedent that (1) all Debt to be Repaid has been (or concurrently with the initial borrowing will be) paid in full, and that all agreements and instruments governing the Debt to be Repaid and that all Liens securing such Debt to be Repaid have been (or concurrently with the initial borrowing will be) terminated and (2) the Agent shall have received (a) evidence, reasonably satisfactory to the Agent, that the Company has received net cash proceeds of not less than $83,000,000 from Penske Capital Partners in connection with the issuance of convertible preferred stock under the Securities Purchase Agreement and that Penske Capital Partners has the ability to elect a majority of the members of the Board of Directors of the Company; and (b) all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent (and the date on which all such conditions precedent have been satisfied or waived in writing by the Agent and the Lenders is called the "Closing Date"): 10.1.1 Notes. The Notes. 10.1.2 Resolutions. Certified copies of resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance by the Company of this Agreement, the Notes and the other Loan Documents to which the Company is a party; and certified copies of resolutions of the Board of Directors of each other Loan Party authorizing the execution, delivery and performance by such Loan Party of each Loan Document to which such entity is a party. 10.1.3 Consents, etc. Certified copies of all documents evidencing any necessary corporate or partnership action, consents and governmental approvals (if any) required for the execution, delivery and performance by the Company and each other Loan Party of the documents referred to in this Section 10. 10.1.4 Incumbency and Signature Certificates. A certificate of the Secretary or an Assistant Secretary (or other appropriate representative) of each Loan Party certifying the names of the officer or officers of such entity authorized to sign the Loan Documents to which such entity is a party, together with a sample of the true signature of each such officer (it being understood that the Agent and each Lender may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein). 36 45 10.1.5 Guaranty. A counterpart of the Guaranty executed by each Subsidiary of the Company (other than Foreign Subsidiaries). 10.1.6 Security Agreement. A counterpart of the Security Agreement executed by the Company and each Subsidiary (other than Foreign Subsidiaries). 10.1.7 Pledge Agreements. Pledge Agreements executed by the Company and Subsidiary which itself owns any Subsidiary, in each case pledging the equity of all of such Person's Subsidiaries to the extent not prohibited by a Permitted Restriction in favor of an auto manufacturer, together with all items required to be delivered in connection therewith. 10.1.8 Opinion of Counsel. An opinion of counsel reasonably satisfactory to the Agent. 10.1.9 Insurance. Evidence satisfactory to the Agent of the existence of insurance required to be maintained pursuant to Section 9.3(b), together with evidence that the Agent has been named as a lender's loss payee and an additional insured on all related insurance policies. 10.1.10 Copies of Documents. Copies, certified by the Secretary or an Assistant Secretary of the Company, of each Subordinated Notes Indenture and the Securities Purchase Agreement. 10.1.11 Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with all Attorney Costs of the Agent to the extent invoiced prior to the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Agent's reasonable estimate of Attorney Costs incurred or to be incurred by the Agent through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between the Company and the Agent). 10.1.12 Solvency Certificate. A Solvency Certificate, substantially in the form of Exhibit F, executed by the Chief Financial Officer of the Company. 10.1.13 Search Results; Lien Terminations. Certified copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party reasonably acceptable to the Agent, dated a date reasonably near to the Closing Date, listing all effective financing statements which name the Company and each other Loan Party (under their present names and any previous names) as debtors and which are filed in the jurisdictions in which filings are to be made pursuant to the Collateral Documents, together with (i) copies of such financing statements, (ii) executed copies of proper Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens and other rights of any Person in any collateral described in the Collateral Documents previously granted by any Person (other than Liens permitted by Section 9.8) and (iii) such other Uniform Commercial Code Form UCC-3 termination statements as the Agent may reasonably request. 37 46 10.4.14 Filings, Registrations and Recordings. The Agent shall have received each document (including Uniform Commercial Code financing statements) required by the Collateral Documents or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create in favor of the Agent, for the benefit of the Lenders, a perfected Lien on the collateral described therein, prior and superior to any other Person, in proper form for filing, registration or recording. 10.1.15 Closing Certificate. A certificate signed by a Vice President of the Company dated as of the Closing Date, affirming the matters set forth in Section 10.2.1 as of the Closing Date. 10.1.16 Other. Such other documents as the Agent or any Lender may reasonably request. 10.2 Conditions. The obligation (a) of each Lender to make each Loan and (b) of the Issuing Lender to issue each Letter of Credit is subject to the following further conditions precedent that: 10.2.1 Compliance with Warranties, No Default, etc. Both before and after giving effect to any borrowing and the issuance of any Letter of Credit, the following statements shall be true and correct: (a) the representations and warranties of the Company and each Subsidiary set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default shall have then occurred and be continuing; and (c) if after giving effect to such borrowing or the issuance of such Letter of Credit, the sum of the aggregate principal amount of all outstanding Loans plus the Stated Amount of all Letters of Credit would exceed the maximum amount of Debt permitted under each of Section 4.04(ii) of the Series A Subordinated Notes Indenture or Section 4.4(ii) of the Series B Subordinated Notes Indenture (or any similar provision in any instrument, indenture or agreement governing Refinancing Debt with respect to the Subordinated Notes (a "Refinancing Agreement") that limits the maximum amount of Debt that the Company may incur under this Agreement or any other senior credit facility of the Company without recourse to any other provision in any such Refinancing Agreement, such as (by way of example and not of limitation) provisions similar or corresponding to Section 4.04 of the Series A Subordinated Notes Indenture (other than clause (ii) thereof) and Section 4.4 of the Series B Subordinated Notes Indenture (other than clause (ii) thereof)), the Agent shall be satisfied that such borrowing or such issuance of a Letter of Credit will not violate either Subordinated Notes Indenture (or any Refinancing Agreement) and that the Company's obligations to the Agent and the Lenders in 38 47 respect of such borrowing or Letter of Credit are "Senior Debt" under and as defined in each Subordinated Notes Indenture (and each Refinancing Agreement). 10.2.2 Confirmatory Certificate. If requested by the Agent or any Lender, the Agent shall have received (in sufficient counterparts to provide one to each Lender) a certificate dated the date of such requested Loan or Letter of Credit and signed by a duly authorized representative of the Company as to the matters set out in Section 10.2.1 (it being understood that each request by the Company for the making of a Loan or the issuance of a Letter of Credit shall be deemed to constitute a warranty by the Company that the conditions precedent set forth in Section 10.2.1 will be satisfied at the time of the making of such Loan or the issuance of such Letter of Credit), together with such other documents as the Agent or any Lender may reasonably request in support thereof. 10.3 Further Conditions to Acquisition Loans. In addition to the conditions set forth in Sections 10.1 and 10.2, the obligation of each Lender to make each Acquisition Loan is subject to the following further conditions precedent that: (a) all of the proceeds of each such Acquisition Loan shall be used to consummate an Acquisition; (b) the Agent shall have received evidence of compliance by the Person to be acquired in such Acquisition with all auto manufacturers' working capital requirements; (c) the Agent shall have received a certificate from the Chief Financial Officer of the Company to the effect that (i) no Event of Default or Unmatured Event of Default shall exist after giving effect to the consummation of such Acquisition and (ii) confirming the matters set forth in clause (a) above. SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT. 11.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement: 11.1.1 Non-Payment of the Loans, etc. Default in the payment when due of the principal of any Loan; or default, and continuance thereof for five Business Days, in the payment when due of any interest, fee, reimbursement obligation with respect to any Letter of Credit or other amount payable by the Company hereunder or under any other Loan Document. 11.1.2 Non-Payment of Other Debt. Any default shall occur under the terms applicable to any Debt of the Company or any Subsidiary in an aggregate amount (for all such Debt so affected) exceeding $20,000,000 and such default shall (a) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit the holder 39 48 or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable prior to its expressed maturity; or any such Debt shall be required to be prepaid or redeemed (other than by a regularly scheduled prepayment or redemption), purchased or defeased or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or any default shall occur under any Floor Plan Financing provided by CFC or any Affiliate of CFC to the Company or any Subsidiary. 11.1.3 Other Material Obligations. Default in the payment when due, or in the performance or observance of, any material obligation of, or condition agreed to by, the Company or any Subsidiary with respect to any material purchase or lease of goods or services, or any agreement with an auto manufacturer, where such default, singly or in the aggregate with all other such defaults, might reasonably be expected to have a Material Adverse Effect or cause the loss of a material franchise. 11.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; or the Company or any Subsidiary applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for the Company or such Subsidiary or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Company or any Subsidiary or for a substantial part of the property of any thereof and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of the Company or any Subsidiary (other than a voluntary dissolution, not under any bankruptcy or insolvency law, of an immaterial Subsidiary), and if such case or proceeding is not commenced by the Company or such Subsidiary, it is consented to or acquiesced in by the Company or such Subsidiary, or remains for 30 days undismissed; or the Company or any Subsidiary takes any action to authorize, or in furtherance of, any of the foregoing. 11.1.5 Non-Compliance with Loan Documents. (a) Failure by the Company to comply with or to perform any covenant set forth in Sections 9.1.5(a), 9.5 through 9.14 (excluding Section 9.6.4), and 9.19 through 9.21; (b) failure by the Company to comply with the covenant set forth in Section 9.6.4 and continuance of such failure for 60 days; or (c) failure by the Company to comply with or to perform any other provision of this Agreement or any other Loan Document (and not constituting an Event of Default under any other provision of this Section 11) and continuance of such failure for 30 days. 11.1.6 Warranties. Any warranty made by the Company or any Subsidiary herein or any other Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by the Company or any Subsidiary to the Agent or any Lender in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified. 40 49 11.1.7 Pension Plans. (i) Institution of any steps by the Company or any other Person to terminate a Pension Plan if as a result of such termination the Company could be required to make a contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan, in excess of $10,000,000; (ii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii) there shall occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans as a result of such withdrawal (including any outstanding withdrawal liability that the Company and the Controlled Group have incurred on the date of such withdrawal) exceeds $10,000,000. 11.1.8 Judgments. Final judgments which exceed an aggregate of $10,000,000 shall be rendered against the Company or any Subsidiary and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within 60 days after entry or filing of such judgments. 11.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in full force and effect with respect to any Subsidiary, other than by virtue of the release of such Subsidiary after sale thereof in a transaction permitted hereunder or the voluntary dissolution of an immaterial Subsidiary; or any Subsidiary (or any Person by, through or on behalf of such Subsidiary) shall contest in any manner the validity, binding nature or enforceability of the Guaranty with respect to such Subsidiary. 11.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document shall cease to be in full force and effect, other than by virtue of the release of such Subsidiary after sale thereof in a transaction permitted hereunder or the voluntary dissolution of an immaterial Subsidiary; or the Company or any Subsidiary (or any Person by, through or on behalf of the Company or any Subsidiary) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document. 11.1.11 Invalidity of Subordination Provisions, etc. Any subordination provision in any document or instrument governing Subordinated Debt, or any subordination provision in any guaranty by any Subsidiary of any Subordinated Debt, shall cease to be in full force and effect, or the Company or any other Person (including the holder of any applicable Subordinated Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision. 11.1.12 Change of Control. Penske Capital Partners shall cease to have the power to elect a majority of the members of the Board of Directors of the Company. 11.2 Effect of Event of Default. If any Event of Default described in Section 11.1.4 shall occur, the Commitments (if they have not theretofore terminated) shall immediately terminate and the Loans and all other obligations hereunder shall become immediately due and payable and the Company shall become immediately obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, 41 50 the Agent (upon written request of the Required Lenders) shall declare the Commitments (if they have not theretofore terminated) to be terminated and/or declare all Loans and all other obligations hereunder to be due and payable and/or demand that the Company immediately Cash Collateralize all Letters of Credit, whereupon the Commitments (if they have not theretofore terminated) shall immediately terminate and/or all Loans and all other obligations hereunder shall become immediately due and payable and/or the Company shall immediately become obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind. The Agent shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration. Notwithstanding the foregoing, the effect as an Event of Default of any event described in Section 11.1.1 or Section 11.1.4 may be waived by the written concurrence of all of the Lenders, and the effect as an Event of Default of any other event described in this Section 11 may be waived by the written concurrence of the Required Lenders. Any cash collateral delivered hereunder shall be held by the Agent (without liability for interest thereon) and applied to reimbursement obligations under the Letters of Credit. After the expiration or termination of the Letters of Credit, such cash collateral shall be applied by the Agent to any remaining obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may elect. SECTION 12 THE AGENT. 12.1 Appointment and Authorization. (a) Each Lender hereby irrevocably (subject to Section 12.9) appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. (b) The Issuing Lender shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith. The Issuing Lender shall have all of the benefits and immunities (i) provided to the Agent in this Section 12 with respect to any acts taken or omissions suffered by the Issuing Lender in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term "Agent", as used in this Section 12, included the Issuing Lender with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the Issuing Lender. 12.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to 42 51 advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 12.3 Liability of Agent. None of the Agent nor any of its directors, officers, employees or agents shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts reasonably selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, confirmation from the Lenders of their obligation to indemnify the Agent against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a "notice of default". The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Required Lenders in accordance with Section 11; provided that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or 43 52 refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of the Lenders. 12.6 Credit Decision. Each Lender acknowledges that the Agent has not made any representation or warranty to it, and that no act by the Agent hereafter taken, including any review of the affairs of the Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also represents that it will, independently and without reliance upon the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial or other condition or creditworthiness of the Company which may come into the possession of the Agent. 12.7 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent and its directors, officers, employees and agents (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, from and against any and all Indemnified Liabilities; provided that no Lender shall be liable for any payment to any such Person of any portion of the Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit, any foreclosure under, or modification, release or discharge of, any or all of the Collateral Documents, termination of this Agreement and the resignation or replacement of the Agent. 12.8 Agent in Individual Capacity. CFC and its Affiliates may make loans to, issue letters of credit for the account of, acquire equity interests in and generally engage in any kind of business with the Company and its Subsidiaries and Affiliates as though CFC were not the Agent hereunder and without 44 53 notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, CFC or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Affiliate) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to their Loans (if any), CFC and its Affiliates shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though CFC were not the Agent, and the terms "Lender" and "Lenders" include CFC and its Affiliates, to the extent applicable, in their individual capacities. 12.9 Successor Agent. The Agent may resign as Agent upon 30 days' notice to the Lenders. If the Agent resigns under this Agreement, the Required Lenders shall, with (so long as no Event of Default exists) the consent of the Company (which shall not be unreasonably withheld or delayed), appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and the Company, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent, and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 12 and Sections 13.6 and 13.13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 12.10 Collateral Matters. The Lenders irrevocably authorize the Agent, at its option and in its discretion, (a) to release any Lien granted to or held by the Agent under any Collateral Document (i) upon termination of the Commitments and payment in full of all Loans and all other obligations of the Company hereunder and the expiration or termination of all Letters of Credit; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; or (iii) subject to Section 13.1, if approved, authorized or ratified in writing by the Required Lenders; or (b) to subordinate its interest in any collateral to any holder of a Lien on such collateral which is permitted by clause (d)(i), (d)(iii) or (h) of Section 9.8. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent's authority to release, or subordinate its interest in, particular types or items of collateral pursuant to this Section 12.10. 12.11 Funding Reliance. (a) Unless the Agent receives notice from a Lender by noon, Detroit time, on the day of a proposed borrowing that such Lender will not make available to the Agent an amount equal to its Pro Rata Share of such borrowing, the Agent may assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make a corresponding amount available to the Company. If and to the extent such Lender has not made such amount available to the Agent, such Lender and the Company jointly and severally agree to repay such amount to the 45 54 Agent forthwith on demand, together with interest thereon at the interest rate applicable to Loans comprising such borrowing or, in the case of any Lender which repays such amount within three Business Days, the Federal Funds Rate. Nothing set forth in this clause (a) shall relieve any Lender of any obligation it may have to make any Loan hereunder. (b) Unless the Agent receives notice from the Company prior to the due date for any payment hereunder that the Company does not intend to make such payment, the Agent may assume that the Company has made such payment and, in reliance upon such assumption, make available to each Lender its share of such payment. If and to the extent that the Company has not made any such payment to the Agent, each Lender which received a share of such payment shall repay such share (or the relevant portion thereof) to the Agent forthwith on demand, together with interest thereon at the Prime Rate (or, in the case of any Lender which repays such amount within three Business Days, the Federal Funds Rate). Nothing set forth in this clause (b) shall relieve the Company of any obligation it may have to make any payment hereunder. SECTION 13 GENERAL. 13.1 Waiver; Amendments. No delay on the part of the Agent or any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be effective unless the same shall be in writing and signed and delivered by Lenders having an aggregate Pro Rata Share of not less than the aggregate Pro Rata Share expressly designated herein with respect thereto or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification, waiver or consent shall change the Pro Rata Share of any Lender without the consent of such Lender. No amendment, modification, waiver or consent shall (i) increase the Revolving Commitment Amount or the Acquisition Commitment Amount, (ii) extend the date for payment of any principal of or interest on the Loans or any fees payable hereunder, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, (iv) release the Guaranty or all or any substantial part of the collateral granted under the Collateral Documents or (v) reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent without, in each case, the consent of all Lenders. No provision of Section 12 or other provision of this Agreement affecting the Agent in its capacity as such shall be amended, modified or waived without the consent of the Agent. No provision of this Agreement relating to the rights or duties of the Issuing Lender in its capacity as such shall be amended, modified or waived without the consent of the Issuing Lender. 13.2 Confirmations. The Company and each holder of a Note agree from time to time, upon written request received by it from the other, to confirm to the other in writing (with a copy of each such 46 55 confirmation to the Agent) the aggregate unpaid principal amount of the Loans then outstanding under such Note. 13.3 Notices. Except as otherwise provided in Section 2.2, all notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Schedule 13.3 or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose. Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received. For purposes of Section 2.2, the Agent shall be entitled to rely on telephonic instructions from any person that the Agent in good faith believes is an authorized officer or employee of the Company, and the Company shall hold the Agent and each other Lender harmless from any loss, cost or expense resulting from any such reliance. 13.4 Computations. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with GAAP, consistently applied; provided that if the Company notifies the Agent that the Company wishes to amend any covenant in Section 9 to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if the Agent notifies the Company that the Required Lenders wish to amend Section 9 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Lenders. 13.5 Regulation U. Each Lender represents that it in good faith is not relying, either directly or indirectly, upon any Margin Stock as collateral security for the extension or maintenance by it of any credit provided for in this Agreement. 13.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent (including Attorney Costs) in connection with the preparation, execution, syndication, delivery and administration of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any amendment, supplement or waiver to any Loan Document), and all out-of-pocket costs and expenses (including Attorney Costs) incurred by the Agent and each Lender after an Event of Default in connection with the enforcement of this Agreement, the other Loan Documents or any such other documents. In addition, the Company agrees to pay, and to save the Agent and the Lenders harmless from all liability for, (a) any stamp or other taxes (excluding income taxes and franchise taxes based on net income) which may be payable in connection with the execution 47 56 and delivery of this Agreement, the borrowings hereunder, the issuance of the Notes or the execution and delivery of any other Loan Document or any other document provided for herein or delivered or to be delivered hereunder or in connection herewith and (b) any fees of the Company's auditors in connection with any reasonable exercise by the Agent and the Lenders of their rights pursuant to Section 9.2. All obligations provided for in this Section 10.6 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit and termination of this Agreement. 13.7 Subsidiary References. The provisions of this Agreement relating to Subsidiaries shall apply only during such times as the Company has one or more Subsidiaries. 13.8 Captions. Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement. 13.9 Assignments; Participations. 13.9.1 Assignments. Any Lender may, with the prior written consents of the Issuing Lender and the Agent and (so long as no Event of Default exists) the Company (which consents shall not be unreasonably delayed or withheld and, in any event, shall not be required for an assignment by a Lender to one of its Affiliates), at any time assign and delegate to one or more commercial banks or other Persons (any Person to whom such an assignment and delegation is to be made being herein called an "Assignee") all or any fraction of such Lender's Loans and Commitment (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans and Commitment) in a minimum aggregate amount equal to the lesser of (i) the amount of the assigning Lender's Pro Rata Share of the Revolving Commitment Amount and the Acquisition Commitment Amount and (ii) $25,000,000; provided that (a) so long as no Event of Default has occurred, CFC shall hold more than 50% of the Loans and Commitments, (b) no assignment and delegation may be made to any Person if, at the time of such assignment and delegation, the Company would be obligated to pay any greater amount under Section 7.6 to the Assignee than the Company is then obligated to pay to the assigning Lender under such Section (and if any assignment is made in violation of the foregoing, the Company will not be required to pay the incremental amounts) and (c) the Company and the Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee until the date when all of the following conditions shall have been met: (x) five Business Days (or such lesser period of time as the Agent and the assigning Lender shall agree) shall have passed after written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee, shall have been given to the Company and the Agent by such assigning Lender and the Assignee, 48 57 (y) the assigning Lender and the Assignee shall have executed and delivered to the Company and the Agent an assignment agreement substantially in the form of Exhibit G (an "Assignment Agreement"), together with any documents required to be delivered thereunder, which Assignment Agreement shall have been accepted by the Agent, and (z) except in the case of an assignment by a Lender to one of its Affiliates, the assigning Lender or the Assignee shall have paid the Agent a processing fee of $3,500. From and after the date on which the conditions described above have been met, (x) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (y) the assigning Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it pursuant to such Assignment Agreement, shall be released from its obligations hereunder. Within five Business Days after effectiveness of any assignment and delegation, the Company shall execute and deliver to the Agent (for delivery to the Assignee). Each such Note shall be dated the effective date of such assignment. The assigning Lender shall mark the predecessor Note "exchanged" and deliver it to the Company. Accrued interest on that part of the predecessor Note being assigned shall be paid as provided in the Assignment Agreement. Accrued interest and fees on that part of the predecessor Note not being assigned shall be paid to the assigning Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement. Any attempted assignment and delegation not made in accordance with this Section 13.9.1 shall be null and void. Notwithstanding the foregoing provisions of this Section 13.9.1 or any other provision of this Agreement, any Lender may at any time assign all or any portion of its Loans and its Note to a Federal Reserve Bank (but no such assignment shall release any Lender from any of its obligations hereunder). 13.9.2 Participations. Any Lender may at any time sell to one or more commercial banks or other Persons participating interests in any Loan owing to such Lender, the Note held by such Lender, the Commitment of such Lender, the interest of such Lender in any Letter of Credit or any other interest of such Lender hereunder (any Person purchasing any such participating interest being herein called a "Participant"). In the event of a sale by a Lender of a participating interest to a Participant, (x) such Lender shall remain the holder of its Note for all purposes of this Agreement, (y) the Company and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations hereunder and (z) all amounts payable by the Company shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender. No Participant shall have any direct or indirect voting rights hereunder except with respect to any of the events described in the fourth sentence of Section 13.1. Each Lender agrees to incorporate the requirements of the preceding sentence into each participation agreement which such Lender enters into with any Participant. The Company agrees that if amounts outstanding under this Agreement and the Notes are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of 49 58 setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or such Note; provided that such right of setoff shall be subject to the obligation of each Participant to share with the Lenders, and the Lenders agree to share with each Participant, as provided in Section 7.5. The Company also agrees that each Participant shall be entitled to the benefits of Section 7.6 as if it were a Lender (provided that no Participant shall receive any greater compensation pursuant to Section 7.6 than would have been paid to the participating Lender if no participation had been sold). 13.10 Governing Law. This Agreement and each Note shall be a contract made under and governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable law. 13.11 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. 13.12 Successors and Assigns. This Agreement shall be binding upon the Company, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders and the Agent and the successors and assigns of the Lenders and the Agent. 13.13 Indemnification by the Company. In consideration of the execution and delivery of this Agreement by the Agent and the Lenders and the agreement to extend the Commitments provided hereunder, the Company hereby agrees to indemnify, exonerate and hold the Agent, each Lender and each of the officers, directors, employees, Affiliates and agents of the Agent and each Lender (each a "Lender Party") free and harmless from and against any and all actions, causes of action, suits, losses, liabilities, damages and expenses, including Attorney Costs (collectively, the "Indemnified Liabilities"), incurred by the Lender Parties or any of them as a result of, or arising out of, or relating to (i) any tender offer, merger, purchase of stock, purchase of assets or other similar transaction financed or proposed to be financed in whole or in part, directly or indirectly, with the proceeds of any of the Loans, (ii) the use, handling, release, emission, discharge, transportation, storage, treatment or disposal of any hazardous substance at any property owned or leased by the Company or any Subsidiary, (iii) any violation of any Environmental Laws with respect to conditions at any property owned or leased by the Company or any Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup or remediation of offsite locations at which the Company or any Subsidiary or their respective predecessors are alleged to have directly or indirectly disposed of hazardous substances or (v) the execution, delivery, performance or 50 59 enforcement of this Agreement or any other Loan Document by any of the Lender Parties, except for any such Indemnified Liabilities arising on account of the applicable Lender Party's gross negligence or willful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section 13.13 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit, any foreclosure under, or any modification, release or discharge of, any or all of the Collateral Documents and termination of this Agreement. 13.14 Nonliability of Lenders. The relationship between the Company on the one hand and the Lenders and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibility to the Company. Neither the Agent nor any Lender undertakes any responsibility to the Company to review or inform the Company or any matter in connection with any phase of the Company's business or operations. The Company agrees that neither the Agent nor any Lender shall have liability to the Company (whether sounding in tort, contract or otherwise) for losses suffered by the Company in connection with, arising out of, or in any way related to the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent nor any Lender shall have any liability with respect to, and the Company hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Company in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 13.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR 51 60 HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 13.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 13.17 CFC Right of First Refusal on Floor Plan Financing. Each Subsidiary that is engaged in the retail sale or lease of motor vehicle inventory shall not obtain any wholesale motor vehicle financing from any Person other than CFC (and other than Floor Plan Financings permitted under Section 9.7(j)) unless and until it shall have submitted a bona fide written proposal (a "Proposal") to CFC for such financing and CFC has declined to provide the same. Each Proposal shall set forth all salient terms of the underlying financing. For purposes hereof, CFC will be deemed to have declined to provide the financing described in a Proposal if it shall have failed to respond to the Subsidiary that submitted the Proposal within ten Business Days of receiving such Proposal. If CFC declines to provide any financing described in a Proposal, the Subsidiary that submitted the Proposal may then obtain the financing described in the Proposal from another Person on terms no more favorable to such Person than those contained in the Proposal and otherwise on terms substantially identical to those in the Proposal. 13.18 Confidentiality. Each Lender agrees to take, and to cause its Affiliates to take, normal and reasonable precautions and exercise due care to maintain the confidentiality of all non-public information provided to it by the Company or any Subsidiary, or by the Agent on the Company's or any Subsidiary's behalf, under this Agreement or any other Loan Document, and neither such Lender nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary, except to the extent such information was or becomes generally available to the public other than as a result of disclosure by such Lender or was or becomes available on a non-confidential basis from a source other than the Company (provided that such source is not bound by a confidentiality agreement with the Company or any Subsidiary known to such Lender); provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any governmental authority to which such Lender is subject or in connection with an examination of such Lender by any such authority, (B) pursuant to subpoena or other court process, when required to do so in accordance with the provisions of any applicable requirement of law, (C) to the extent reasonably required in connection with any litigation or proceeding to which the 52 61 Agent or any Lender or any of their respective Affiliates may be party, (D) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document, (E) to such Lender's independent auditors and other professional advisors, (F) to any participant or assignee, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder, (G) as to any Lender or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Lender or such Affiliate, (H) to its Affiliates and (I) any nationally recognized rating agency that requires access to information about such Lender's investment portfolio in connection with ratings issued to such Lender. Delivered at Detroit, Michigan as of the day and year first above written. 53 62 UNITED AUTO GROUP, INC. By ------------------------------------------ Title ------------------------------------- CHRYSLER FINANCIAL COMPANY L.L.C., as Agent and as a Lender By ------------------------------------------ Title ------------------------------------- 54 63 EXHIBIT A FORM OF NOTE -------,------- Detroit, Michigan The undersigned, for value received, promises to pay to the order of (the "Lender") at the principal office of Chrysler Financial Company L.L.C. (the "Agent") in Southfield, Michigan the aggregate unpaid amount of all Loans made to the undersigned by the Lender pursuant to the Credit Agreement referred to below (as shown on the schedule attached hereto (and any continuation thereof) or in the records of the Lender), such principal amount to be payable on the dates set forth in the Credit Agreement. The undersigned further promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement, dated as of August 3, 1999 (as amended or otherwise modified from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, certain financial institutions (including the Lender) and the Agent, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or its due date accelerated. This Note is made under and governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. UNITED AUTO GROUP, INC. By: -------------------------------- Title: ---------------------------- 64 Schedule attached to Note dated , of UNITED AUTO GROUP, INC. payable to the order of .

Date and Date and Unpaid Amount of Amount of Maturity Principal Notation Loan Repayment Date Balance Made by - ---- --------- ---- ------- ------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------

65 EXHIBIT I SUBORDINATION PROVISIONS APPLICABLE TO SUBORDINATED DEBT The indebtedness evidenced by the subordinated notes shall at all times be wholly subordinate and junior in right or payment to any and all Superior Indebtedness (as defined below) in the manner and with the force and effect hereafter set forth: (a) In the event of any liquidation, dissolution or winding up of the Company, or of any execution sale, receivership, insolvency, bankruptcy, reorganization or other similar proceeding relative to the Company or its property, all principal, interest, fees, reimbursement obligations and other amounts owing on all Superior Indebtedness shall first be paid in full before any payment is made upon the indebtedness evidenced by the subordinated notes; and in any such event any payment or distribution of any kind or character, whether in cash, property or securities (other than in securities or other evidences of indebtedness, the payment of which is subordinated to the same extent as the indebtedness evidenced hereby to the payment of all Superior Indebtedness which may at the time be outstanding) which shall be made upon or in respect of the subordinated notes shall be paid over to the holders of such Superior Indebtedness, pro rata, for application in payment thereof until such Superior Indebtedness shall have been paid or satisfied in full. (b) During the continuance of any default in any agreement pursuant to which any Superior Indebtedness is issued which arises from the failure to pay when due (whether by acceleration or otherwise) any principal of, premium, if any, interest on, fees or other amounts in respect of such Superior Indebtedness (a "Superior Payment Default"), no payment of principal, premium or interest shall be made on the subordinated notes if either (i) notice in writing of such default has been given to the Company by any holder or holders of any Superior Indebtedness or (ii) judicial proceedings shall be pending in respect of such default. (c) During the continuance of any event of default or unmatured event of default in any agreement pursuant to which any Superior Indebtedness is issued other than a Superior Payment Default (a "Superior Non-Payment Default") as to which the Company has received notice in writing from any holder or holders of Superior Indebtedness, no payment of principal, premium or interest shall be made on the subordinated notes for a period (each, a "Payment Blockage Period") commencing on the date of receipt by the Company of such notice and terminating on the earliest to occur of the following dates: (i) the date of acceleration of the Superior Indebtedness, (ii) 180 days after the Company's receipt of such written notice, (iii) the date such Superior Non-Payment Default shall have been cured or waived, or shall have ceased to exist, (iv) the date the Superior Indebtedness shall have been discharged or paid in full in cash or (v) the date such Payment Blockage Period shall have been terminated by written notice to the Company from the holder or holders of Superior Indebtedness initiating such Payment Blockage Period, after which, in the case of clauses (ii), (iii), (iv) and (v), the Company shall resume making payments in respect of the subordinated notes, unless clause (a) or (b) above is then applicable. 66 (d) If the subordinated notes are declared or become due and payable because of the occurrence of any default thereunder or under the agreement or instrument under which they are issued or otherwise than at the option of the Company, under circumstances when clause (a) above shall not be applicable, the holders of the subordinated notes shall not be entitled to payments until sixty (60) days after such event and then only if such payment is permitted under clauses (a) and (b) above. (e) The holder of each subordinated note undertakes and agrees for the benefit of each holder of Superior Indebtedness to execute, verify, deliver and file any proof of claim, consent, assignment or other instrument which any holder of Superior Indebtedness may at any time require in order to prove and realize upon any right or claim pertaining to the subordinated notes and to effectuate the full benefit of the subordination contained herein; and upon failure of the holder of any subordinated note so to do any such holder of Superior Indebtedness shall be deemed to be irrevocably appointed the agent and attorney-in-fact of the holder of such note to execute, verify, deliver and file any such proof of claim, consent, assignment or other instrument. (f) No right of any holder of any Superior Indebtedness to enforce subordination as herein provided shall at any time or in any way be affected or impaired by any failure to act on the part of the Company or any holder of Superior Indebtedness, or by any non-compliance by the Company with any term, provision or covenant of the subordinated notes or the agreement under which they are issued, regardless of any knowledge thereof that any such holder of Superior Indebtedness may have or be otherwise charged with. (g) The Company agrees, for the benefit of the holders of Superior Indebtedness, that in the event that any subordinated note is declared due and payable before its expressed maturity because of the occurrence of a default thereunder or under the agreement under which it was issued, the Company will give prompt notice in writing of such happening to the holders of Superior Indebtedness. (h) "Superior Indebtedness" means (a) all obligations of the Company under or in connection with the Credit Agreement, dated as of August 3, 1999 among the Company, various financial institutions and Chrysler Financial Company L.L.C. ("CFC"), as agent (as amended, restated, amended and restated or otherwise modified from time to time, the "Credit Agreement"), whether for principal, interest (including any interest that would accrue but for the filing of a petition initiating any bankruptcy, insolvency or like proceeding, whether or not such interest is an allowed claim enforceable against the debtor), fees, expenses or otherwise and (b) all other obligations of the Company to CFC, howsoever arising or evidenced. B-I-2 EX-10.1.19.2 3 FIRST ADMENDMENT TO CREDIT AGREEMENT DATED 8/3/99 1 EXHIBIT 10.1.19.2 FIRST AMENDMENT THIS FIRST AMENDMENT dated as of October 8, 1999 (this "Amendment") is to the Credit Agreement (the "Credit Agreement") dated as of August 3, 1999 among UNITED AUTO GROUP, INC., a Delaware corporation (the "Company"), various financial institutions (the "Lenders") and CHRYSLER FINANCIAL COMPANY, L.L.C., as agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as defined in the Credit Agreement. WHEREAS, the parties hereto desire to amend the Credit Agreement and certain other Loan Documents in certain respects; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. AMENDMENTS. Effective on (and subject to the occurrence of) the Amendment Effective Date (as defined below): 1.1 (a) The following definitions in Section 1.1 of the Credit Agreement shall be amended and restated in their entireties to read as follows: Commitment means, as to any Lender, such Lender's commitment to make Loans, and to issue or participate in LC Guaranties, under this Agreement. The initial amount of each Lender's Pro Rata Share of the Revolving Commitment Amount and the Acquisition Commitment Amount is set forth on Schedule 2.1. Foreign Subsidiary means any Subsidiary of the Company which is not incorporated or organized in the United States or in any State thereof. Lender - see the Preamble. Letter of Credit means a letter of credit issued by the Issuer for the account of the Company pursuant to an LC Reimbursement Agreement and in respect of which an LC Guaranty has been issued. Loan Documents means this Agreement, the Notes, the Guaranty, the LC Guaranties, the LC Reimbursement Agreements and the Collateral Documents. (b) The following definitions shall be added to Section 1.1 of the Credit Agreement, each in its appropriate alphabetical position: Issuer means DaimlerChrysler North America Holding Corporation. 2 LC Guaranty - see Section 2.1.3(a). LC Reimbursement Agreement - see Section 2.1.3(a). Reimbursement Obligation - see Section 2.1.3(c). Young JV Agreement - see Section 9.9. (c) The definitions of "Issuing Lender" and "L/C Application" in Section 1.1 of the Credit Agreement shall be deleted. 1.2 The lead in paragraph to Section 2.1 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.1 Commitments. On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make Loans to, and to issue or participate in LC Guaranties for the account of, the Company as follows: 1.3 Section 2.1.3 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.1.3 Letter of Credit Commitment; Reimbursement Obligations. (a) Upon written request from the Company, CFC (on behalf of all the Lenders) will issue to the Issuer, guaranties, in such form as is reasonably satisfactory to CFC, the Issuer and the Company (each herein, together with any extensions or renewals thereof, or guaranties issued by CFC in substitution therefor from time to time, called an "LC Guaranty"), of reimbursement obligations of the Company arising under reimbursement agreements in such form as is reasonably satisfactory to CFC, the Issuer and the Company (herein, collectively called the "LC Reimbursement Agreements" and individually called an "LC Reimbursement Agreement") executed by the Company in connection with Letters of Credit; provided, however, that CFC shall not issue any LC Guaranty if, after giving effect to such issuance, (i) the aggregate Stated Amount of all Letters of Credit shall exceed $10,000,000 or (ii) the Revolving Outstandings exceed the Revolving Commitment Amount. Each such request by the Company for an LC Guaranty shall specify the Stated Amount of the proposed underlying Letter of Credit, the beneficiary thereof, the proposed date of issuance of such Letter of Credit and such other matters as CFC may reasonably require. (b) Upon CFC making any payment under any LC Guaranty, if the Company has not reimbursed CFC in full for such payment or disbursement by 11:00 A.M., Detroit time, on the date of such payment, or if any reimbursement received by CFC from the Company is or must be returned or rescinded upon or during any bankruptcy or reorganization of the Company or otherwise, each other Lender shall be obligated to pay to CFC its Pro Rata Share of such payment (but no such -2- 3 payment shall diminish the obligation of the Company under Section 2.1.3(c)). Each Lender irrevocably and unconditionally agrees to so pay to CFC in immediately available funds the amount of such Lender's Pro Rata Share of such payment. If and to the extent any Lender shall not have made such amount available to CFC by 2:00 P.M., Detroit time, on the Business Day on which such Lender receives notice from CFC of such payment (it being understood that any such notice received after noon, Detroit time, on any Business Day shall be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to CFC forthwith on demand, for each day from the date such amount was to have been delivered to CFC to the date such amount is paid, at a rate per annum equal to (i) for the first three days after demand, the Federal Funds Rate from time to time in effect and (ii) thereafter, the Prime Rate from time to time in effect. Any Lender's failure to make available to CFC its Pro Rata Share of any such payment shall not relieve any other Lender of its obligation hereunder to make available to CFC such other Lender's Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to CFC such other Lender's Pro Rata Share of any such payment. (c) Notwithstanding any provision herein to the contrary, immediately upon the Issuer's presentation of any demand for payment under an LC Guaranty, the Company shall be obligated to reimburse CFC for such demand, on the date on which CFC honors such demand, in immediately available funds equal to the amount of such honored demand (such obligations being referred to herein as "Reimbursement Obligations"). If all or any part of such demand is not paid by the Company when due, such unpaid amount shall bear interest for each day during the period from the day of such demand until it shall be paid in full at a rate equal to the Prime Rate from time to time in effect (but not less than the Prime Rate in effect on the date on which CFC shall have honored such demand) plus two percent (2%) per annum; such interest shall be payable on demand. (d) The obligation of the Company to reimburse CFC for demands made under the LC Guaranties shall be unconditional and irrevocable and shall be enforced strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following: (A) lack of validity or enforceability of the appropriate LC Guaranty or Letter of Credit; (B) the existence of any claim, set-off, defense or other right which the Company may have at any time against CFC or the Issuer, Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Company and the beneficiary under a Letter of Credit); (D) any draft, demand, certificate or any other document presented under an LC Guaranty or a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; -3- 4 (E) payment by CFC under an LC Guaranty against a demand which does not comply with the terms of such LC Guaranty, provided that such payment does not constitute gross negligence or willful misconduct of CFC; (F) any adverse change in the condition (financial or otherwise) of the Company; (G) any breach of this Agreement by the Company, the Agent, CFC or any other Lender; (H) any other circumstance or happening whatsoever; or (I) the fact that an Event of Default or an Unmatured Event of Default shall have occurred and be continuing. (d) As between the Company, the Agent and the Lenders, the Company assumes all risks of the acts and omissions of, or misuse of any LC Guaranty by, the Issuer or any beneficiary of a Letter of Credit. Without limiting the foregoing, neither the Agent, CFC nor any other Lender shall be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of a LC Guaranty or Letter of Credit, even if such document is proven to be in any respect invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a LC Guaranty or Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw thereupon, or the failure of the Issuer to comply fully with conditions required in order to demand under a LC Guaranty; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or a demand under a LC Guaranty or of the proceeds of either thereof; (vii) the misapplication by the Issuer of the proceeds of any demand under a LC Guaranty; and (viii) any consequence arising from causes beyond the control of the Agent, CFC or any other Lender. None of the above shall affect, impair or prevent the vesting of any of the rights or powers hereunder of the Agent, CFC or any other Lender. 1.4 Section 2.3 of the Credit Agreement shall be amended and restated to read in its entirety as follows: "[Intentionally left blank]." 1.5 Section 2.5 of the Credit Agreement shall be amended and restated to read in its entirety as follows: -4- 5 2.5 Certain Conditions. Notwithstanding any other provision of this Agreement, no Lender shall have an obligation to make any Loan and CFC shall not have any obligation to issue any LC Guaranty, if an Event of Default or Unmatured Event of Default exists. 1.6 Section 6.1(a) of the Credit Agreement shall be amended by deleting the words "Letters of Credit" where they appear and inserting in lieu thereof the words "LC Guaranties." 1.7 Section 7.5 of the Credit Agreement shall be amended by (i) deleting the words "Letter of Credit" where they appear and inserting in lieu thereof the words "LC Guaranty" and (ii) deleting the words "Letters of Credit" where they appear and inserting in lieu thereof the words "LC Guaranties." 1.8 Section 9.1.9 shall be redesignated as Section 9.1.10 and the following Section 9.1.9 shall be added to the Credit Agreement: 9.1.9 Subordinated Notes. (a) Within 45 days of the end of each Fiscal Quarter, the Company shall obtain from its independent certified public accountants and furnish to the Agent a letter, in form and substance satisfactory to the Agent, stating that such accountants have read Section 4.04 of the Series A Subordinated Notes Indenture and Section 4.4 of the Series B Subordinated Notes Indenture (and any similar provision in any Refinancing Agreement), that such accountants have tested the compliance by the Company with such provisions during such Fiscal Quarter and concluding that the Company was in compliance with such provisions during such Fiscal Quarter or, if the Company was not in compliance with any such provision, describing such non-compliance in reasonable detail. (b) If in any Fiscal Quarter the sum of the aggregate principal amount of all outstanding Loans plus the Stated Amount of all Letters of Credit increases by more than $5,000,000, following such Fiscal Quarter each borrowing and issuance of a Letter of Credit shall (in addition to the conditions imposed by Section 10) be conditioned on the receipt by the Agent of a letter, in form and substance satisfactory to the Agent, from the independent certified public accountants of the Company stating that such accountants have read Section 4.04 of the Series A Subordinated Notes Indenture and Section 4.4 of the Series B Subordinated Notes Indenture (and any similar provision in any Refinancing Agreement), that such accountants have tested the compliance by the Company with such provisions after giving pro forma effect to such borrowing or issuance and concluding that the Company is in compliance with such provisions after giving pro forma effect to such borrowing or issuance. 1.9 Section 9.7(j) of the Credit Agreement shall be amended and restated to read in its entirety as follows: (j) Debt with respect to any Floor Plan Financing provided to the Company or any Subsidiary by General Motors Acceptance Corporation, BMW Financial Services NA, Inc., Ford -5- 6 Motor Credit Corporation, PRIMUS Automotive Financial Services, Inc., World Omni Financial Corporation (with respect to Toyota make vehicles only) or Toyota Motor Credit Corporation or any other Person to whom CFC, in its sole discretion, consents; 1.10 Section 9.8(h) of the Credit Agreement shall be amended and restated to read in its entirety as follows: (h) Liens on any asset of an Automobile Dealership securing Debt permitted by Sections 9.7(j), (k) and (l) (in the case of Debt under Sections 9.7(j) and (l), (x) such Liens under agreements entered into after the date hereof may attach only to the inventory floorplanned by such Debt and proceeds thereof, accounts receivable and payment intangibles owing by the relevant Dealer to the manufacturer with whom the provider of the financing is affiliated (and, with respect to World Omni Financial Corp., owing to Southeast Toyota Distributors, Inc.) (and all other rights to payment in which any such financing provider could exercise a right of setoff or recoupment) and service loaner vehicles manufactured by a manufacturer and financed by a financing provider permitted under Section 9.7(j) or (l) (collectively, "Permitted Floorplan Collateral") and (y) to the extent that such Liens under agreements in existence on the date hereof attach to assets in addition to Permitted Floorplan Collateral, such Liens on such assets other than Permitted Floorplan Collateral must be subordinated to the security interest of the Agent in form and substance satisfactory to the Agent (it being understood that no such Lien may attach to any Excluded Property)). 1.11 Clause (i) of the second sentence of Section 9.9 of the Credit Agreement shall be amended and restated to read in its entirety as follows " (i) any Subsidiary may pay dividends or make other distributions to the Company or another Subsidiary." 1.12 Section 9.13 of the Credit Agreement shall be amended by (i) deleting the parenthetical phrase in clause (a)(i) thereof and inserting in lieu thereof the following "(other than Excluded Property and property in which the Company is prohibited from granting a security interest, pledge or assignment pursuant to a Permitted Restriction)" and (ii) deleting the first parenthetical phrase in clause (bi) thereof and inserting in lieu thereof the following "(other than Excluded Property and property in which such Subsidiary is prohibited from granting a security interest, pledge or assignment pursuant to a Permitted Restriction)." 1.13 Clause (b) of Section 9.17 of the Credit Agreement shall be amended and restated to read in its entirety as follows "(b) except for Permitted Restrictions, prohibit the Company or any Subsidiary from granting to the Agent, for the benefit of the Lenders, a Lien on any of its assets or". 1.14 Clause (b) of Section 9.19 of the Credit Agreement shall be amended and restated to read in its entirety as follows: -6- 7 (b) Investments by the Company in any Subsidiary or by any Subsidiary in the Company, or by any Subsidiary in any Subsidiary, by way of intercompany loans, advances or guaranties, all to the extent permitted by Section 9.7; 1.15 The following Section 9.22 shall be added to the Credit Agreement: 9.22 Amendments to Subordinated Note Indentures. Not solicit the consent of any holder of Subordinated Notes to any amendment, waiver or modification of any Subordinated Note Indenture (or any Refinancing Agreement) unless, concurrently with any other consents being solicited, the consent of such holders is solicited to amend Section 4.04(ii) of the Series A Subordinated Notes Indenture and Section 4.4(ii) of the Series B Subordinated Notes Indenture (and any similar provision in any Refinancing Agreement) to increase the maximum amount of Debt that can be incurred under the "Senior Credit Facility" pursuant to such subsections from $100,000,000 to $250,000,000. 1.16 The lead in paragraph of Section 10 shall be amended and restated to read in its entirety as follows: The obligation of each Lender to make its Loans and of CFC to issue LC Guaranties is subject to the following conditions precedent: 1.17 Section 10.1 of the Credit Agreement shall be amended by deleting the words "the Issuing Lender to issue its initial Letter of Credit" where they appear and inserting in lieu thereof the words "CFC to issue its initial LC Guaranty". 1.18 The lead in paragraph to Section 10.2 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 10.2 Conditions. The obligation (a) of each Lender to make each Loan and (b) of CFC to issue each LC Guaranty is subject to the following further conditions precedent that: 1.19 Section 11.1.12 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 11.1.12 Change of Control. A majority of the members of the Board of Directors of the Company shall cease to be constituted of (i) nominees and designees of Penske Capital Partners, (ii) officers and directors of any entity which, directly or indirectly, controls or is controlled by or is under common control with Penske Capital Partners or (iii) any Person approved by the vote of a majority of the members of the Board of Directors of the Company then in office who were at the time Persons described in clauses (i) and (ii) above. -7- 8 1.20 The following Section 11.1.13 shall be added to the Credit Agreement: 11.1.13 Securities Purchase Agreement; Put of Stock. Penske Capital Partners shall exercise its right to require the Company to repurchase the stock of the Company held by Penske Capital Partners pursuant to Section 7.2 of the Securities Purchase Agreement. 1.21 The last two sentences of Section 11.2 of the Credit Agreement shall be deleted and the following inserted in lieu thereof: Any cash collateral delivered hereunder shall be held by the Agent (without liability for interest thereon) and applied to Reimbursement Obligations. After the expiration or termination of all LC Guaranties, such cash collateral shall be applied by the Agent to any remaining obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may elect. 1.22 Section 12.1(b) of the Credit Agreement shall be amended and restated in its entirety to read as follows: "[Intentionally left blank]." 1.23 The last sentence of Section 13.1 of the Credit Agreement shall be deleted and the following inserted in lieu thereof: No provision of this Agreement relating to the rights or duties of CFC in its capacity as issuer of LC Guaranties shall be amended, modified or waived without the consent of CFC. 1.24 Section 13.9.1 of the Credit Agreement shall be amended by deleting the words "the Issuing Lender" where they appear and inserting in lieu thereof the word "CFC." 1.25 The Security Agreement shall be amended by (i) adding to Section 1 thereof the following definition in its appropriate alphabetical position Excluded Contracts means (1) the Young JV Agreement, (2) the Securities Purchase Agreement and (3) to the extent the grant of a security interest or assignment as collateral security to the Agent therein is prohibited by a valid and enforceable restriction on the grant of a security interest or an assignment as collateral security, any franchise, dealer, framework, floor plan financing or similar agreement between the Company or any of its Subsidiaries or Affiliates, on the one hand, and any automobile manufacturer or any of such automobile manufacturer's subsidiaries or affiliates, on the other hand. and (ii) amending and restating clause (y) of the proviso to Section 2 of the Security Agreement to read in its entirety as follows " (y) all Excluded Property and Excluded Contracts (but not any proceeds thereof) are excluded from the foregoing grant." -8- 9 1.26 The Guaranty shall be amended by (i) amending the sixth paragraph following the paragraph beginning "NOW, THEREFORE" by amending and restating clause (a) thereof to read in its entirety as follows "(a) retain or obtain a security interest in any property to secure any of the Liabilities or any obligation hereunder (subject only to the agreement of the party providing such security interest)" and (ii) amending the eleventh paragraph following the paragraph beginning "NOW, THEREFORE" by inserting the phrase ", but subject to Section 13.9 of the Credit Agreement," immediately preceding the words "assign or transfer any or all of the Liabilities or any interest therein" where they appear in such paragraph. SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Agent and the Lenders that (a) the representations and warranties made in Section 8 of the Credit Agreement are true and correct on and as of the Amendment Effective Date with the same effect as if made on and as of the Amendment Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default exists or will result from the execution of this Amendment; (c) the execution and delivery by the Company of this Amendment and the performance by the Company of its obligations under the Credit Agreement as amended hereby (as so amended, the "Amended Credit Agreement") (i) are within the corporate powers of the Company, (ii) have been duly authorized by all necessary corporate action, (iii) have received all necessary approval from any governmental authority and (iv) do not and will not contravene or conflict with any provision of any law, rule or regulation or any order, decree, judgment or award which is binding on the Company or any of its Subsidiaries or of any provision of the certificate of incorporation or bylaws of the Company or of any agreement, indenture, instrument or other document which is binding on the Company or any of its Subsidiaries; and (d) the Amended Credit Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above shall become effective on such date (the "Amendment Effective Date") when the Agent shall have received (a) a counterpart of this Amendment executed by the Company and the Required Lenders and (b) each of the following documents, each in form and substance satisfactory to the Agent: 3.1 Resolutions. Certified copies of resolutions of the Board of Directors of the Company authorizing or ratifying the execution, delivery and performance by the Company of this Amendment, the Amended Credit Agreement and each other Loan Document contemplated by this Amendment to which the Company is a party. 3.2 Incumbency and Signature Certificates. A certificate of the Secretary or an Assistant Secretary of the Company, certifying the names of the officer or officers of the Company authorized to sign -9- 10 this Amendment and the other Loan Documents contemplated hereby to which the Company is a party, together with a sample of the true signature of each such officer. 3.3 Reaffirmation. A Reaffirmation of Loan Documents in the form attached hereto executed by each Loan Party other than the Company. 3.4 Other Documents. Such other documents as the Agent or any Lender may reasonably request. SECTION 4 MISCELLANEOUS. 4.1 Continuing Effectiveness, etc. As herein amended and as waived by Section 4.6, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the Amendment Effective Date, all references in the Credit Agreement, the Notes, each other Loan Document and any similar document to the "Credit Agreement" or similar terms shall refer to the Amended Credit Agreement. 4.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 4.3 Expenses. The Company agrees to pay the reasonable costs and expenses of the Agent (including reasonable fees and disbursements of counsel, including, without duplication, the allocable costs of internal legal services and all disbursements of internal legal counsel) in connection with the preparation, execution and delivery of this Amendment. 4.4 Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. 4.5 Successors and Assigns. This Amendment shall be binding upon the Company, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders and the Agent and the successors and assigns of the Lenders and the Agent. 4.6 Waiver. The Required Lenders hereby waive, for a period commencing on the date hereof and ending on November 8, 1999, any Event of Default arising solely out of the Company's failure to comply with Section 4.18 of each Subordinated Notes Indenture. 4.7. Guaranty of Existing Letters of Credit. The parties hereto agree that the Letter of Credit Guaranty dated as of October 1, 1999 issued by CFC to The Bank of Nova Scotia ("BNS") in respect of two standby letters of credit issued by BNS for the account of the Company in the aggregate stated amount of $2,121,134 shall for the purposes of the Credit Agreement (as hereby amended) be an "LC Guaranty" thereunder. Delivered as of the day and year first above written. -10- 11 UNITED AUTO GROUP, INC. By -------------------------------- Title ----------------------------- CHRYSLER FINANCIAL COMPANY, L.L.C., as Agent and as a Lender By -------------------------------- Title ----------------------------- -11- 12 REAFFIRMATION OF LOAN DOCUMENTS October 8, 1999 Chrysler Financial Company, L.L.C., as Agent and the other parties to the Credit Agreement referred to below RE: REAFFIRMATION OF LOAN DOCUMENTS Ladies and Gentlemen: Please refer to: 1. The Pledge Agreement dated as of October 8, 1999 (the "Pledge Agreement") among United Auto Group, Inc. ("UAG"), various of its subsidiaries and Chrysler Financial Company, L.L.C., in its capacity as Agent (in such capacity, the "Agent"); 2. The Guaranty dated as of October 8, 1999 (the "Guaranty") executed in favor of the Agent and various other parties by all subsidiaries of UAG; and 3. The Security Agreement dated as of October 8, 1999 (the "Security Agreement") among UAG, its subsidiaries and the Agent. The Guaranty, the Pledge Agreement, the Security Agreement and the Credit Agreement referred to below are collectively referred to herein as the "Loan Documents". Capitalized terms not otherwise defined herein will have the meanings given in the Credit Agreement referred to below. Each of the undersigned acknowledges that the Company, the Lenders and the Agent have executed the First Amendment (the "Amendment") to the Credit Agreement dated as of August 3, 1999 (as so amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Each of the undersigned hereby (i) consents and agrees to the amendments to the Loan Documents to which such undersigned is a party contained in the Amendment and (ii) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and that, upon such effectiveness, all references in such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended by the Amendment. 13 The letter agreement may be signed in counterparts and by the various parties as herein on separate counterparts. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. UAG NORTHEAST, INC. DIFEO PARTNERSHIP, INC. DIFEO PARTNERSHIP HCT, INC. DIFEO PARTNERSHIP SCT, INC. DIFEO PARTNERSHIP RCT, INC. DIFEO PARTNERSHIP RCM, INC. DIFEO PARTNERSHIP VIII, INC. DIFEO PARTNERSHIP IX, INC. DIFEO PARTNERSHIP X, INC. UAG HUDSON, INC. SOMERSET MOTORS INC. UAG NORTHEAST BODY SHOP, INC. UAG NORTHEAST (NY), INC. UNITED LANDERS, INC. LANDERS AUTO SALES, INC. LANDERS UNITED AUTO GROUP NO. 2, INC. LANDERS UNITED AUTO GROUP, INC. LANDERS UNITED AUTO GROUP NO. 3, INC. LANDERS UNITED AUTO GROUP NO. 4, INC. LANDERS BUICK-PONTIAC, INC. UNITED AUTO GROUP, INC. UAG ATLANTA, INC. UAG DULUTH, INC. UAG ATLANTA II, INC. UNITED NISSAN, INC. UAG ATLANTA III, INC. PEACHTREE NISSAN, INC. UAG ATLANTA IV, INC. UAG ATLANTA IV MOTORS, INC. UAG ATLANTA V, INC. CONYERS NISSAN, INC. UAG ATLANTA VI, INC. UNITED JEEP CHRYSLER PLYMOUTH OF STONE MOUNTAIN, INC. UNITED MAZDA, INC. UAG TENNESSEE, INC. UAG WEST, INC. -2- 14 SA AUTOMOTIVE, LTD. SL AUTOMOTIVE, LTD. SPA AUTOMOTIVE, LTD. LRP, LTD. SUN MOTORS, LTD. SCOTTSDALE MANAGEMENT GROUP, LTD. SCOTTSDALE AUDI, LTD. SK MOTORS, LTD. KMT/UAG, INC. RELENTLESS PURSUIT ENTERPRISES, INC. TRI-CITY LEASING, INC. HT AUTOMOTIVE LTD. TEMPE MOTORS, INC. UAG NEVADA, INC. UAG TEXAS, INC. UAG TEXAS II, INC. UAG EAST, INC. WESTBURY SUPERSTORE, LTD. WESTBURY NISSAN LTD. PALM AUTO PLAZA, INC. FLORIDA CHRYSLER PLYMOUTH, INC. WEST PALM NISSAN, INC. WEST PALM INFINITI, INC. NORTHLAKE AUTO FINISH, INC. J & S AUTO REFINISHING, LTD. J&S IMPORTS, INC. WEST PALM AUTO MALL, INC. AUTO MALL PAYROLL SERVICES, INC. AUTO MALL STORAGE, INC. AMITY AUTO PLAZA, LTD. AMITY NISSAN OF MASSAPEQUA, LTD. UAG CAROLINA, INC. REED-LALLIER CHEVROLET, INC. MICHAEL CHEVROLET-OLDSMOBILE, INC. GENE REED CHEVROLET, INC. UNITEDAUTO DODGE OF SHREVEPORT, INC. UAG MEMPHIS, INC. COVINGTON PIKE DODGE, INC. UAG GRACELAND, INC. THE NEW GRACELAND DODGE, INC. -3- 15 UAG GRACELAND II, INC. UAG MEMPHIS II, INC. UAG MEMPHIS III, INC. UAG MEMPHIS IV, INC. UAG MEMPHIS V, INC. UAG KNOXVILLE, INC. UAG KNOXVILLE II, INC. UAG-CARIBBEAN, INC. UAG YOUNG, INC. DAN YOUNG INC. DAN YOUNG CHEVROLET INC. YOUNG MANAGEMENT GROUP, INC. PARKWAY CHEVROLET, INC. UAG YOUNG II, INC. UAG CENTURY MOTORS, INC. UAG PARAMOUNT MOTORS, INC. UAG KISSIMMEE MOTORS, INC. UAG CITRUS, INC. UAG CLASSIC, INC. CLASSIC AUTO GROUP, INC. CHERRY HILL CLASSIC CARS, INC. CLASSIC OF CHERRY HILL, INC. CLASSIC MANAGEMENT COMPANY, INC. CLASSIC CHEVROLET, INC. CLASSIC ENTERPRISE, INC. CLASSIC AUTO GROUP HOLDINGS, INC. CLASSIC IMPORTS, INC. UNITEDAUTO ENTERPRISE, INC. UNITED AUTOCARE, INC. UNITED AUTOCARE PRODUCTS, INC. UNITEDAUTO FOURTH FUNDING INC. UNITEDAUTO FIFTH FUNDING INC. AUTO LEASING CORPORATION UAG CAPITAL MANAGEMENT, INC. UAG FINANCE COMPANY, INC. KMT/UAG, INC. 6725 DEALERSHIP LTD. CHERRY HILL CLASSIC CARS CLASSIC MOTOR SALES LLC D. YOUNG CHEVROLET LLC DAN YOUNG MOTORS LLC DAN YOUNG TIPTON LLC UAG YOUNG AUTOMOTIVE GROUP LLC -4- 16 UAG LANDERS, INC. YOUNG AUTOMOTIVE HOLDINGS LLC By: ---------------------------------- Title: ------------------------------- DIFEO HYUNDAI PARTNERSHIP DIFEO NISSAN PARTNERSHIP DIFEO CHRYSLER PLYMOUTH JEEPEAGLE PARTNERSHIP DIFEO LEASING PARTNERSHIP DIFEO CHEVROLET-GEO PARTNERSHIP J&F OLDSMOBILE PARTNERSHIP DANBURY AUTO PARTNERSHIP FAIR HYUNDAI PARTNERSHIP FAIR CHEVROLET-GEO PARTNERSHIP DANBURY CHRYSLER PLYMOUTH PARTNERSHIP DIFEO TENAFLY PARTNERSHIP By: DIFEO PARTNERSHIP, INC. a general partner By: ---------------------------------- Title: ------------------------------- OCT PARTNERSHIP By: DIFEO PARTNERSHIP VIII, INC. a general partner By: ---------------------------------- Title: ------------------------------- -5- 17 OCM PARTNERSHIP By: DIFEO PARTNERSHIP IX, INC. a general partner By: ---------------------------------- Title: ------------------------------- HUDSON MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP HCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- COUNTY AUTO GROUP PARTNERSHIP By: DIFEO PARTNERSHIP RCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- SOMERSET MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP SCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- -6- 18 ROCKLAND MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP RCM, INC. a general partner By: ---------------------------------- Title: ------------------------------- 6725 AGENT PARTNERSHIP By: SCOTTSDALE AUDI, LTD. a general partner By: ---------------------------------- Title: ------------------------------- SHANNON AUTOMOTIVE, LTD. By: UAG TEXAS, INC. a general partner By: ---------------------------------- Title: ------------------------------- DAN YOUNG TIPTON, LLC By: DAN YOUNG, INC. Member By: ---------------------------------- Title: ------------------------------- -7- 19 YOUNG AUTOMOTIVE HOLDINGS, LLC UAG YOUNG AUTOMOTIVE GROUP, LLC D. YOUNG CHEVROLET, LLC By: UAG YOUNG, INC. Member By: ---------------------------------- Title: ------------------------------- DAN YOUNG MOTORS LLC By: DAN YOUNG CHEVROLET, INC. Member By: ---------------------------------- Title: ------------------------------- UAG CITRUS MOTORS, LLC By: UAG CITRUS, INC. Member By: ---------------------------------- Title: ------------------------------- CLASSIC MOTOR SALES, LLC CLASSIC ENTERPRISES, LLC By: UAG CITRUS, INC. Member By: ---------------------------------- Title: ------------------------------- -8- 20 CLASSIC NISSAN OF TURNERSVILLE, LLC By: Thomas J. Hessert Member ---------------------------------- -9- 21 SCOTTSDALE JAGUAR, LTD. By: ---------------------------------- Title: ------------------------------- -10- 22 LANDERS UNITED AUTO GROUP NO. 5, INC. BPT HOLDINGS, INC. LANDERS FORD, INC NATIONAL CITY FORD, INC. CENTRAL FORD CENTER, INC. PIONEER FORD SALES, INC. By: ---------------------------------- Title: ------------------------------- ACKNOWLEDGED AND AGREED as of the date first written above CHRYSLER FINANCIAL COMPANY, L.L.C., as Agent By: ---------------------------------- Title: ------------------------------- -11- EX-10.1.19.3 4 SECOND ADMENDMENT TO CREDIT AGREEMENT DATED 8/3/99 1 EXHIBIT 10.1.19.3 SECOND AMENDMENT THIS SECOND AMENDMENT dated as of December 23, 1999 (this "Amendment") is to the Credit Agreement (as heretofore amended, the "Credit Agreement") dated as of August 3, 1999 among UNITED AUTO GROUP, INC., a Delaware corporation (the "Company"), various financial institutions (the "Lenders") and CHRYSLER FINANCIAL COMPANY, L.L.C., as agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as defined in the Credit Agreement. WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1 AMENDMENTS. Effective on (and subject to the occurrence of) the Amendment Effective Date (as defined below): 1.1 (a) The following definitions in Section 1.1 of the Credit Agreement shall be amended and restated in their entireties to read as follows: Commitment means, as to any Lender, such Lender's commitment to make Loans, and to issue or participate in Letters of Credit, under this Agreement. The initial amount of each Lender's Pro Rata Share of the Revolving Commitment Amount, the Acquisition Commitment Amount and the Term Commitment Amount is set forth on Schedule 2.1. Funded Debt means all Debt of the Company and its Subsidiaries, determined on a consolidated basis, excluding (i) contingent obligations in respect of Suretyship Liabilities (except to the extent constituting Suretyship Liabilities in respect of Debt of a Person other than the Company or any Subsidiary), (ii) Hedging Obligations, (iii) Debt of the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries and (iv) an amount equal to 25% of the Loans outstanding at the time of calculation the proceeds of which were used to repurchase, redeem, repay or defease the Subordinated Notes. Issuing Lender means CFC in its capacity as the issuer of Letters of Credit hereunder and its successors and assigns in such capacity. L/C Application means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by the Issuing Lender at the time of such request for the type of letter of credit requested. 2 Lender - see the Preamble. References to the "Lenders" shall include the Issuing Lender; for purposes of clarification only, to the extent that CFC (or any successor Issuing Lender) may have any rights or obligations in addition to those of the other Lenders due to its status as Issuing Lender, its status as such will be specifically referenced. Letter of Credit - see Section 2.1.3. Loans means Acquisition Loans, Revolving Loans and Term Loans. Loan Documents means this Agreement, the Notes, the Guaranty, the Letters of Credit and the Collateral Documents. Revolving Commitment Amount means $125,000,000, as reduced from time to time pursuant to Section 6.1; provided that if the Company elects pursuant to Section 2.1.4 to convert Revolving Loans to Term Loans, the Revolving Commitment Amount shall automatically be reduced by the principal amount of the Revolving Loans so converted; provided, further, however, that if, following repayment in full of $110,000,000 of Term Loans and reduction of the Term Commitment Amount to zero and prior to the Revolving Termination Date, the Company shall pay any Term Loan, the Revolving Loan Commitment shall be increased by the amount of such payment. (b) The following definitions shall be added to Section 1.1 of the Credit Agreement, each in its appropriate alphabetical position: Net Cash Proceeds means, with respect to any issuance of Debt, the aggregate cash proceeds received by the Company or any Subsidiary pursuant to such issuance, net of the direct costs of such issuance. Revolving Termination Date means the earlier to occur of (a) August 3, 2005 or (b) such other date on which the Commitments terminate pursuant to Section 6 or 11. Term Commitment Amount means $110,000,000, as reduced from time to time pursuant to Section 6.1 or 6.3; provided that the Term Commitment Amount shall be automatically and permanently reduced by the amount of any Term Loan made hereunder (other than Term Loans arising out of the conversion of Revolving Loans pursuant to the proviso to the definition of "Revolving Commitment Amount"). Term Commitment Termination Date means the earlier to occur of (a) December 23, 2007 and (b) such other date on which the Commitments terminate pursuant to Section 6 or 11. Term Loan Termination Date means December 23, 2007. Term Loans - see Section 2.1.4 -2- 3 (c) The following definitions shall be deleted from Section 1.1 of the Credit Agreement: Excluded Property, Issuer, LC Guaranty, LC Reimbursement Agreement, Reimbursement Obligation and Termination Date. (d) The definition of "Interest Rate" in Section 1.1 of the Credit Agreement shall be amended by deleting clause (b)(x) of the first sentence of such definition and inserting the following in lieu thereof: "(b)(x) three percent (3.00%) per annum on all Term Loans and, if the Company uses the proceeds of any Revolving Loans to repurchase, redeem, repay or defease the Subordinated Notes but has not converted such Revolving Loans to Term Loans pursuant to Section 2.1.4, then, with respect to such Revolving Loans, three percent (3.00%) per annum". 1.2 The lead in paragraph to Section 2.1 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.1 Commitments. On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make Loans to, and to issue or participate in Letters of Credit for the account of, the Company as follows: 1.3 Sections 2.1.1, 2.1.2, 3.1 and 5.1 shall be amended by inserting the word "Revolving" in front of the words "Termination Date" each place where such words appear in such Sections. 1.4 Section 2.1.3 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.1.3 L/C Commitment. (a) The Issuing Lender will issue letters of credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to the Issuing Lender (each a "Letter of Credit"), at the request of and for the account of the Company from time to time before the date which is 30 days prior to the Revolving Termination Date and (b) as more fully set forth in Section 2.3.2, each Lender agrees to purchase a participation in each such Letter of Credit; provided that (i) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed $10,000,000 and (ii) the Revolving Outstandings will not at any time exceed the Revolving Commitment Amount. 1.5 The following Section 2.1.4 shall be added to the Credit Agreement: 2.1.4 Term Loan Commitment. Each Lender agrees to make loans to the Company (each such loan, a "Term Loan") on a Business Day before the Term Commitment Termination Date in such Lender's Pro Rata Share of such amount as the Company shall request from all Lenders; provided that the aggregate amount of Term Loans requested by the Company pursuant to this sentence shall not exceed the Term Commitment Amount. In addition, at any time when the Term Commitment Amount is zero, if the Company elects by delivering written notice of such election to the Agent, it -3- 4 may convert up to $78,000,000 of Revolving Loans to Term Loans notwithstanding that such election may cause the aggregate amount of Term Loans to exceed the Term Commitment Amount; provided that the aggregate amount of Revolving Loans converted into Term Loans shall not exceed the aggregate amount of Revolving Loans borrowed at any time the proceeds of which were used to repurchase, redeem, repay or defease the Subordinated Notes. No amount paid or prepaid with respect to any Term Loan may be reborrowed. 1.6 Section 2.3 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.3 Letter of Credit Procedures. 2.3.1 L/C Applications. The Company shall give notice to the Agent and the Issuing Lender of the proposed issuance of each Letter of Credit on a Business Day which is at least three Business Days (or such lesser number of days as the Agent and the Issuing Lender shall agree in any particular instance in their sole discretion) prior to the proposed date of issuance of such Letter of Credit. Each such notice shall be accompanied by an L/C Application, duly executed by the Company and in all respects reasonably satisfactory to the Agent and the Issuing Lender, together with such other documentation as the Agent or the Issuing Lender may reasonably request in support thereof, it being understood that each L/C Application shall specify, among other things, the date on which the proposed Letter of Credit is to be issued, the expiration date of such Letter of Credit (which shall not be later than the earlier to occur of (x) one year after the date of issuance thereof and (y) thirty days prior to the scheduled Revolving Termination Date) and whether such Letter of Credit is to be transferable in whole or in part. So long as the Issuing Lender has not received written notice that the conditions precedent set forth in Section 10 with respect to the issuance of such Letter of Credit have not been satisfied, the Issuing Lender shall issue such Letter of Credit on the requested issuance date. The Issuing Lender shall promptly advise the Agent of the issuance of each Letter of Credit and of any amendment thereto, extension thereof or event or circumstance changing the amount available for drawing thereunder. In the event of any inconsistency between the terms of any L/C Application and the terms of this Agreement, the terms of this Agreement shall control. 2.3.2 Participations in Letters of Credit. Concurrently with the issuance of each Letter of Credit, the Issuing Lender shall be deemed to have sold and transferred to each other Lender, and each other Lender shall be deemed irrevocably and unconditionally to have purchased and received from the Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such other Lender's Pro Rata Share, in such Letter of Credit and the Company's reimbursement obligations with respect thereto. For the purposes of this Agreement, the unparticipated portion of each Letter of Credit shall be deemed to be the Issuing Lender's "participation" therein. The Issuing Lender hereby agrees, upon request of the Agent or any Lender, to deliver to the Agent or such Lender a list of all outstanding Letters of Credit issued by the Issuing -4- 5 Lender, together with such information related thereto as the Agent or such Lender may reasonably request. 2.3.3 Reimbursement Obligations. The Company hereby unconditionally and irrevocably agrees to reimburse the Issuing Lender for each payment or disbursement made by the Issuing Lender under any Letter of Credit honoring any demand for payment made by the beneficiary thereunder, in each case on the date that such payment or disbursement is made. Any amount not reimbursed on the date of such payment or disbursement shall bear interest from the date of such payment or disbursement to the date that the Issuing Lender is reimbursed by the Company therefor, payable on demand, at a rate per annum equal to the Interest Rate from time to time in effect plus, beginning on the third Business Day after receipt of notice from the Issuing Lender of such payment or disbursement, 2%. The Issuing Lender shall notify the Company and the Agent whenever any demand for payment is made under any Letter of Credit by the beneficiary thereunder; provided that the failure of the Issuing Lender to so notify the Company shall not affect the rights of the Issuing Lender or the Lenders in any manner whatsoever. 2.3.4 Limitation on Obligations of Issuing Lender. In determining whether to pay under any Letter of Credit, the Issuing Lender shall not have any obligation to the Company or any Lender other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Issuing Lender under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence and willful misconduct, shall not impose upon the Issuing Lender any liability to the Company or any Lender and shall not reduce or impair the Company's reimbursement obligations set forth in Section 2.3.3 or the obligations of the Lenders pursuant to Section 2.3.5. 2.3.5 Funding by Lenders to Issuing Lender. If the Issuing Lender makes any payment or disbursement under any Letter of Credit and the Company has not reimbursed the Issuing Lender in full for such payment or disbursement by 10:00 A.M., Detroit time, on the date of such payment or disbursement, or if any reimbursement received by the Issuing Lender from the Company is or must be returned or rescinded upon or during any bankruptcy or reorganization of the Company or otherwise, each other Lender shall be obligated to pay to the Agent for the account of the Issuing Lender, in full or partial payment of the purchase price of its participation in such Letter of Credit, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the obligations of the Company under Section 2.3.3), and, upon notice from the Issuing Lender, the Agent shall promptly notify each other Lender thereof. Each other Lender irrevocably and unconditionally agrees to so pay to the Agent in immediately available funds for the Issuing Lender's account the amount of such other Lender's Pro Rata Share of such payment or disbursement. If and to the extent any Lender shall not have made such amount available to the Agent by 2:00 P.M., Detroit time, on the Business Day on which such Lender receives notice from the Agent of such payment or disbursement (it being understood that any such notice received after noon, Detroit time, on any Business Day shall -5- 6 be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to the Agent for the Issuing Lender's account forthwith on demand, for each day from the date such amount was to have been delivered to the Agent to the date such amount is paid, at a rate per annum equal to (a) for the first three days after demand, the Federal Funds Rate from time to time in effect and (b) thereafter, the Interest Rate from time to time in effect. Any Lender's failure to make available to the Agent its Pro Rata Share of any such payment or disbursement shall not relieve any other Lender of its obligation hereunder to make available to the Agent such other Lender's Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to the Agent such other Lender's Pro Rata Share of any such payment or disbursement. 1.7 Section 2.5 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 2.5 Certain Conditions. Notwithstanding any other provision of this Agreement, no Lender shall have an obligation to make any Loan and the Issuing Lender shall not have any obligation to issue any Letter of Credit, if an Event of Default or Unmatured Event of Default has occurred and is continuing. 1.8 Section 3.1 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 3.1 Notes. The Loans of each Lender shall be evidenced by a promissory note (each a "Note") substantially in the form set forth in Exhibit A, with appropriate insertions, payable to the order of such Lender as follows: (a) each Revolving Loan and Acquisition Loan of such Lender shall be paid in full on the Revolving Termination Date; and (b) each Term Loan of such Lender shall be paid in installments equal to such Lender's Pro Rata Share of the aggregate principal amount of the installments of the Term Loans to be paid on the following dates: Payment Date Payment Amount ------------ -------------- December 23, 2001 $20,000,000 (or, if less, the aggregate amount of all Term Loans then outstanding) December 23, 2003 $20,000,000 (or, if less, the aggregate amount of all Term Loans then outstanding) December 23, 2005 $20,000,000 (or, if less, the aggregate amount of all Term Loans then outstanding) Term Loan Termination Date The aggregate amount of all Term Loans then outstanding. -6- 7 1.9 Section 6.1 of the Credit Agreement shall be amended by (i) deleting the words "LC Guaranties" where they appear in clause (a) and inserting in lieu thereof the words "Letters of Credit", (ii) deleting clause (c) of such Section in its entirety and (iii) adding the following clauses (c) and (d): (c) The Company may from time to time by written notice to the Agent (which shall promptly advise each Lender thereof) permanently reduce the Term Commitment Amount to an amount not less than the aggregate principal amount of all Term Loans then outstanding. (d) All reductions of the Revolving Commitment Amount, the Acquisition Commitment Amount and the Term Commitment Amount shall reduce the Commitments pro rata among the Lenders according to their respective Pro Rata Shares. 1.10 Section 6.2 of the Credit Agreement shall be amended by adding the following sentence at the end thereof: All such prepayments of the Term Loans shall be applied to the remaining installments thereof in inverse order of maturity. 1.11 The following Sections 6.3 and 6.4 shall be added to the Credit Agreement: 6.3 Mandatory Reduction of Term Commitment Amount. If the Subordinated Notes shall be refunded or refinanced using the proceeds of any Debt (other than Loans hereunder), the Term Commitment Amount shall automatically and permanently be reduced by an amount equal to the principal amount of Subordinated Notes so refunded or refinanced. 6.4 Mandatory Prepayments. If the Company or any Subsidiary shall receive any Net Cash Proceeds from the issuance of any Subordinated Debt (other than Seller Subordinated Debt and other than Refinancing Debt in respect of any portion of the Subordinated Notes that has not been repurchased, redeemed, defeased or otherwise repaid with the proceeds of Loans) or any other Debt that is not permitted by Section 9.7, the Company shall, concurrently with such receipt, make a prepayment of the Term Loans in an amount equal to 100% of such Net Cash Proceeds. Each such prepayment of the Term Loans shall be applied to the remaining installments thereof in inverse order of maturity. 1.12 Section 7.5 of the Credit Agreement shall be amended by (i) deleting the words "LC Guaranty" where they appear and inserting in lieu thereof the words "Letter of Credit" and (ii) deleting the words "LC Guaranties" where they appear and inserting in lieu thereof the words "Letters of Credit." 1.13 Section 9.8 of the Credit Agreement shall be amended by deleting clause (d) thereof in its entirety and substituting the following therefor: -7- 8 (d) (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), (ii) Liens existing on property at the time of the acquisition thereof by the Company or any Subsidiary (and not created in contemplation of such acquisition) and (iii) Liens that constitute purchase money security interests on any property securing Debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within 60 days of the acquisition thereof and attaches solely to the property so acquired; 1.14 Section 9.9 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 9.9 Restricted Payments. Not, and not permit any Subsidiary to, (a) make any distribution to any of its shareholders, (b) purchase or redeem any of its capital stock or other equity interests or any warrants, options or other rights in respect thereof, (c) pay any management fees or similar fees to any of its shareholders or any Affiliate thereof, (d) make any redemption, prepayment, defeasance or repurchase of any Subordinated Debt or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing, (i)(i) any Subsidiary may pay dividends or make other distributions to the Company or another Subsidiary and (ii) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, the Company and its Subsidiaries may (w) pay dividends to its stockholders and purchase or redeem its capital stock, (x) pay management fees to Young Automotive Group, LLC, an Indiana limited liability company ("YAG"), and its Affiliates (collectively, "Young") in connection with joint ventures formed by the Company and its Subsidiaries pursuant to that certain Joint Venture Formation Agreement, dated as of January 31, 1998, among the Company, YAG and certain other parties (the "Young JV Agreement"), in an amount not to exceed 30% of the annual pre-tax income of all Persons in which Investments are made pursuant to the Young JV Agreement, (y) repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes using the proceeds of the Term Loans and/or the proceeds of up to $78,000,000 of Revolving Loans and (z) repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes using the proceeds of an offering of equity securities, which equity securities are issued by the Company. 1.15 Section 9.12 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 9.12 Use of Proceeds. Use the proceeds of the Revolving Loans and Acquisition Loans, and the Letters of Credit, solely for working capital, for Acquisitions permitted by Section 9.10, for capital expenditures, to repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes (to the extent permitted by Section 9.9) to make Investments permitted hereunder, to repurchase capital stock and for other general corporate purposes (including, in the case of Revolving Loans, to pay Term Loans); use the proceeds of the Term Loans solely to repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes; and not use -8- 9 or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock. 1.16 Section 9.13 of the Credit Agreement shall be amended by (i) deleting the parenthetical phrase in clause (a)(i) thereof and inserting in lieu thereof the following "(other than property in which the Company is prohibited from granting a security interest, pledge or assignment pursuant to a Permitted Restriction)" and (ii) deleting the first parenthetical phrase in clause (b) thereof and inserting in lieu thereof the following "(other than property in which such Subsidiary is prohibited from granting a security interest, pledge or assignment pursuant to a Permitted Restriction)." 1.17 The lead in paragraph of Section 10 shall be amended and restated to read in its entirety as follows: The obligation of each Lender to make its Loans and of the Issuing Lender to issue Letters of Credit is subject to the following conditions precedent: 1.18 Section 10.1 of the Credit Agreement shall be amended by deleting the words "CFC to issue its initial LC Guaranty" where they appear and inserting in lieu thereof the words "the Issuing Lender to issue its initial Letter of Credit." 1.19 The lead in paragraph to Section 10.2 of the Credit Agreement shall be amended and restated to read in its entirety as follows: 10.2 Conditions. The obligation (a) of each Lender to make each Loan and (b) of the Issuing Lender to issue each Letter of Credit is subject to the following further conditions precedent that: 1.20 Section 10.2.1 of the Credit Agreement shall be amended by (i) deleting the word "and" following clause (b) thereof, (ii) amending and restating clause (c) thereof to read in its entirety as follows (c) unless the proceeds of such borrowing are to be used to repurchase, redeem or repay all outstanding Subordinated Notes, for so long as either Subordinated Notes Indenture is in effect (unless the obligations of the Company with respect to all Subordinated Notes thereunder have been, or are concurrently with such borrowing to be, defeased in accordance with the terms of such Subordinated Notes Indenture), if after giving effect to such borrowing or the issuance of such Letter of Credit, the sum of the aggregate principal amount of all outstanding Loans plus the Stated Amount of all Letters of Credit would exceed the maximum amount of Debt permitted under each of Section 4.04(ii) of the Series A Subordinated Notes Indenture or Section 4.4(ii) of the Series B Subordinated Notes Indenture, the Agent shall be satisfied that such borrowing or such issuance of a Letter of Credit will not violate either Subordinated Notes Indenture (or any Refinancing Agreement) and that the Company's obligations to the Agent and the Lenders in respect of such -9- 10 borrowing or Letter of Credit are "Senior Debt" under and as defined in each Subordinated Notes Indenture that is in effect at the time of such borrowing; and and (iii) adding the following clause (d) (d) (i) if the proceeds of any borrowing are to be used to finance a tender offer for Subordinated Notes, (x) all terms and conditions of any such tender offer shall be satisfactory to the Agent (including the maximum tender price and all fees and commissions paid to any information agent, solicitation agent, dealer manager or Person performing any similar role) and each such tender offer shall comply with the offer documents applicable thereto and all applicable laws (including Rule 14e-1 under the Securities Exchange Act of 1934 and other Federal and state securities laws and regulations) and (y) there shall have been delivered to the Agent true and correct copies of all offer documents applicable thereto, all of which shall be in form and substance reasonably satisfactory to the Agent (the Agent agrees to review any such documents received by it reasonably promptly following receipt) and (ii) if the proceeds of any borrowing are to be used in connection with any solicitation of consents to amend any Subordinated Notes Indenture, all terms and conditions of each such consent solicitation shall be reasonably satisfactory to the Agent (the Agent agrees to review any such documents received by it reasonably promptly following receipt). 1.21 The following Section 10.4 shall be added to the Credit Agreement: 10.4 Conditions to Term Loans. The obligation of each Lender to make Term Loans is subject to the following further conditions precedent that: 10.4.1 Filings, Registrations and Recordings. The Agent shall have received each document (including Uniform Commercial Code financing statements) required by the Collateral Documents or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create in favor of the Agent, for the benefit of the Lenders, a perfected Lien in all equipment of the Company and its Subsidiaries (other than Foreign Subsidiaries), prior and superior to any other Person, in proper form for filing, registration or recording. 10.4.2 Subordinated Note Repurchase. The Agent shall be satisfied that the proceeds of such borrowing are to be used to repurchase, redeem, defease or otherwise repay the Subordinated Notes. 1.22 The last two sentences of Section 11.2 of the Credit Agreement shall be deleted and the following inserted in lieu thereof: Any cash collateral delivered hereunder shall be held by the Agent (without liability for interest thereon) and applied to reimbursement obligations under the Letters of Credit. After the expiration or termination of the Letters of Credit, such cash collateral shall be applied by the Agent to any -10- 11 remaining obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may direct. 1.23 Section 12.1(b) of the Credit Agreement shall be amended and restated in its entirety to read as follows: (b) The Issuing Lender shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith. The Issuing Lender shall have all of the benefits and immunities (i) provided to the Agent in this Section 12 with respect to any acts taken or omissions suffered by the Issuing Lender in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term "Agent", as used in this Section 12, included the Issuing Lender with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the Issuing Lender. 1.24 Section 13.1 of the Credit Agreement shall be amended by (i) deleting clause (i) of the penultimate sentence and inserting the following in lieu thereof "(i) increase the Revolving Commitment Amount, the Acquisition Commitment Amount or the Term Commitment Amount" and (ii) deleting the final sentence and inserting the following in lieu thereof: No provision of this Agreement relating to the rights or duties of the Issuing Lender in its capacity as such shall be amended, modified or waived without the consent of the Issuing Lender. 1.25 Section 13.9.1 of the Credit Agreement shall be amended by (i) deleting the word "CFC" where it appears and inserting in lieu thereof the words "the Issuing Lender" and (ii) adding he following to clause (i) of the first sentence thereof "plus the unpaid amount of such Lender's Term Loans." 1.26 Schedule 2.1 to the Credit Agreement is replaced by Schedule 2.1 hereto. SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Agent and the Lenders that (a) the representations and warranties made in Section 8 of the Credit Agreement are true and correct on and as of the Amendment Effective Date with the same effect as if made on and as of the Amendment Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default exists or will result from the execution of this Amendment; (c) the execution and delivery by the Company of this Amendment and the performance by the Company of its obligations under the Credit Agreement as amended hereby (as so amended, the "Amended Credit Agreement") (i) are within the corporate powers of the Company, (ii) have been duly authorized by all necessary corporate action, (iii) have received all necessary approval from any governmental authority and (iv) do not and will not contravene or conflict with any provision of any law, rule or regulation or any order, decree, judgment or award which is binding on the Company or any of its Subsidiaries or of any provision of the certificate of incorporation or -11- 12 bylaws of the Company or of any agreement, indenture, instrument or other document which is binding on the Company or any of its Subsidiaries; and (d) the Amended Credit Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above shall become effective on such date (the "Amendment Effective Date") when the Agent shall have received (a) a counterpart of this Amendment executed by the Company and the Required Lenders and (b) each of the following documents, each in form and substance reasonably satisfactory to the Agent: 3.1 Reaffirmation. A Reaffirmation of Loan Documents in the form attached hereto as Exhibit A executed by each Loan Party other than the Company. 3.2 Security Agreement. A counterpart of the Amended and Restated Security Agreement in substantially the form attached hereto as Exhibit B executed by the Company and each Subsidiary (other than Foreign Subsidiaries). 3.3 Opinion of Counsel. An opinion of counsel or counsels reasonably satisfactory to the Agent. 3.4 Other Documents. Such other documents as the Agent or any Lender may reasonably request. SECTION 4 MISCELLANEOUS. 4.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the Amendment Effective Date, all references in the Credit Agreement, the Notes, each other Loan Document and any similar document to the "Credit Agreement" or similar terms shall refer to the Amended Credit Agreement. 4.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 4.3 Expenses. The Company agrees to pay the reasonable costs and expenses of the Agent (including reasonable fees and disbursements of counsel, including, without duplication, the allocable costs of internal legal services and all disbursements of internal legal counsel) in connection with the preparation, execution and delivery of this Amendment. 4.4 Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. 4.5 Successors and Assigns. This Amendment shall be binding upon the Company, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders and the Agent and the successors and assigns of the Lenders and the Agent. Delivered as of the day and year first above written. -12- 13 UNITED AUTO GROUP, INC. By --------------------------- Title ------------------------ CHRYSLER FINANCIAL COMPANY, L.L.C., as Agent and as a Lender By --------------------------- Title ----------------------- -13- 14 EXHIBIT A REAFFIRMATION OF LOAN DOCUMENTS December 23, 1999 Chrysler Financial Company, L.L.C., as Agent and the other parties to the Credit Agreement referred to below RE: REAFFIRMATION OF LOAN DOCUMENTS Ladies and Gentlemen: Please refer to: 1. The Pledge Agreement dated as of October 8, 1999 (the "Pledge Agreement") among United Auto Group, Inc. ("UAG"), various of its subsidiaries and Chrysler Financial Company, L.L.C., in its capacity as Agent (in such capacity, the "Agent"); 2. The Guaranty dated as of October 8, 1999 (the "Guaranty") executed in favor of the Agent and various other parties by all subsidiaries of UAG; and 3. The Security Agreement dated as of October 8, 1999 (the "Security Agreement") among UAG, its subsidiaries and the Agent. The Guaranty, the Pledge Agreement, the Security Agreement and the Credit Agreement referred to below are collectively referred to herein as the "Loan Documents". Capitalized terms not otherwise defined herein will have the meanings given in the Credit Agreement referred to below. Each of the undersigned acknowledges that the Company, the Lenders and the Agent have executed the Second Amendment (the "Amendment") to the Credit Agreement dated as of August 3, 1999 (as heretofore amended, as so amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Each of the undersigned hereby (i) consents and agrees to the amendments to the Loan Documents to which such undersigned is a party contained in the Amendment and (ii) confirms that each Loan 15 Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and that, upon such effectiveness, all references in such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended by the Amendment. -2- 16 The letter agreement may be signed in counterparts and by the various parties as herein on separate counterparts. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. UAG NORTHEAST, INC. DIFEO PARTNERSHIP, INC. DIFEO PARTNERSHIP HCT, INC. DIFEO PARTNERSHIP SCT, INC. DIFEO PARTNERSHIP RCT, INC. DIFEO PARTNERSHIP RCM, INC. DIFEO PARTNERSHIP VIII, INC. DIFEO PARTNERSHIP IX, INC. DIFEO PARTNERSHIP X, INC. UAG HUDSON, INC. SOMERSET MOTORS INC. UAG NORTHEAST BODY SHOP, INC. UAG NORTHEAST (NY), INC. UNITED LANDERS, INC. LANDERS AUTO SALES, INC. LANDERS UNITED AUTO GROUP NO. 2, INC. LANDERS UNITED AUTO GROUP, INC. LANDERS UNITED AUTO GROUP NO. 3, INC. LANDERS UNITED AUTO GROUP NO. 4, INC. LANDERS BUICK-PONTIAC, INC. UNITED AUTO GROUP, INC. UAG ATLANTA, INC. UAG DULUTH, INC. UAG ATLANTA II, INC. UNITED NISSAN, INC. (GA) UNITED NISSAN, INC. (NY) UNITED NISSAN, INC. (TN) UAG ATLANTA III, INC. PEACHTREE NISSAN, INC. UAG ATLANTA IV, INC. UAG ATLANTA IV MOTORS, INC. UAG ATLANTA V, INC. CONYERS NISSAN, INC. UAG ATLANTA VI, INC. UNITED JEEP CHRYSLER PLYMOUTH OF STONE MOUNTAIN, INC. UNITED MAZDA, INC. -3- 17 UAG TENNESSEE, INC. UAG WEST, INC. SA AUTOMOTIVE, LTD. SL AUTOMOTIVE, LTD. SPA AUTOMOTIVE, LTD. LRP, LTD. SUN MOTORS, LTD. SCOTTSDALE MANAGEMENT GROUP, LTD. SAU AUTOMOTIVE, LTD. SK MOTORS, LTD. KMT/UAG, INC. RELENTLESS PURSUIT ENTERPRISES, INC. TRI-CITY LEASING, INC. HT AUTOMOTIVE LTD. UAG NEVADA, INC. UAG TEXAS, INC. UAG TEXAS II, INC. UAG EAST, INC. WESTBURY SUPERSTORE, LTD. WESTBURY NISSAN LTD. PALM AUTO PLAZA, INC. FLORIDA CHRYSLER PLYMOUTH, INC. WEST PALM NISSAN, INC. WEST PALM INFINITI, INC. NORTHLAKE AUTO FINISH, INC. J & S AUTO REFINISHING, LTD. J&S IMPORTS, INC. WEST PALM AUTO MALL, INC. AUTO MALL PAYROLL SERVICES, INC. AUTO MALL STORAGE, INC. AMITY AUTO PLAZA, LTD. AMITY NISSAN OF MASSAPEQUA, LTD. UAG CAROLINA, INC. REED-LALLIER CHEVROLET, INC. MICHAEL CHEVROLET-OLDSMOBILE, INC. GENE REED CHEVROLET, INC. UNITEDAUTO DODGE OF SHREVEPORT, INC. UAG MEMPHIS, INC. COVINGTON PIKE DODGE, INC. UAG GRACELAND, INC. -4- 18 THE NEW GRACELAND DODGE, INC. UAG GRACELAND II, INC. UAG MEMPHIS II, INC. UAG MEMPHIS III, INC. UAG MEMPHIS IV, INC. UAG MEMPHIS V, INC. UAG KNOXVILLE, INC. UAG KNOXVILLE II, INC. UAG-CARIBBEAN, INC. UAG YOUNG, INC. DAN YOUNG INC. DAN YOUNG CHEVROLET INC. YOUNG MANAGEMENT GROUP, INC. PARKWAY CHEVROLET, INC. UAG YOUNG II, INC. UAG CENTURY MOTORS, INC. UAG PARAMOUNT MOTORS, INC. UAG KISSIMMEE MOTORS, INC. UAG CITRUS, INC. UAG CLASSIC, INC. CLASSIC AUTO GROUP, INC. CHERRY HILL CLASSIC CARS, INC. CLASSIC OF CHERRY HILL, INC. CLASSIC MANAGEMENT COMPANY, INC. CLASSIC CHEVROLET, INC. CLASSIC ENTERPRISE, INC. CLASSIC AUTO GROUP HOLDINGS, INC. CLASSIC IMPORTS, INC. UNITEDAUTO ENTERPRISES, INC. UNITED AUTOCARE, INC. UNITED AUTOCARE PRODUCTS, INC. UNITEDAUTO FOURTH FUNDING INC. UNITEDAUTO FIFTH FUNDING INC. AUTO LEASING CORPORATION UAG FINANCE COMPANY, INC. 6725 DEALERSHIP LTD. CHERRY HILL CLASSIC CARS CLASSIC MOTOR SALES LLC D. YOUNG CHEVROLET LLC DAN YOUNG MOTORS LLC DAN YOUNG TIPTON LLC UAG YOUNG AUTOMOTIVE GROUP LLC -5- 19 UAG LANDERS, INC. YOUNG AUTOMOTIVE HOLDINGS LLC UAG LAKE NORMAN LLC By: ---------------------------------- Title: ------------------------------- DIFEO HYUNDAI PARTNERSHIP DIFEO NISSAN PARTNERSHIP DIFEO CHRYSLER PLYMOUTH JEEP EAGLE PARTNERSHIP DIFEO LEASING PARTNERSHIP DIFEO CHEVROLET-GEO PARTNERSHIP J&F OLDSMOBILE PARTNERSHIP DANBURY AUTO PARTNERSHIP FAIR HYUNDAI PARTNERSHIP FAIR CHEVROLET-GEO PARTNERSHIP DANBURY CHRYSLER PLYMOUTH PARTNERSHIP DIFEO TENAFLY PARTNERSHIP By: DIFEO PARTNERSHIP, INC. a general partner By: ---------------------------------- Title: ------------------------------- OCT PARTNERSHIP By: DIFEO PARTNERSHIP VIII, INC. a general partner By: ---------------------------------- Title: ------------------------------- -6- 20 OCM PARTNERSHIP By: DIFEO PARTNERSHIP IX, INC. a general partner By: ---------------------------------- Title: ------------------------------- HUDSON MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP HCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- COUNTY AUTO GROUP PARTNERSHIP By: DIFEO PARTNERSHIP RCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- SOMERSET MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP SCT, INC. a general partner By: ---------------------------------- Title: ------------------------------- -7- 21 ROCKLAND MOTORS PARTNERSHIP By: DIFEO PARTNERSHIP RCM, INC. a general partner By: ---------------------------------- Title: ------------------------------- 6725 AGENT PARTNERSHIP By: SAU AUTOMOTIVE, LTD. a general partner By: ---------------------------------- Title: ------------------------------- SHANNON AUTOMOTIVE, LTD. By: UAG TEXAS, INC. a general partner By: ---------------------------------- Title: ------------------------------- DAN YOUNG TIPTON, LLC By: DAN YOUNG, INC. Member By: ---------------------------------- Title: ------------------------------- -8- 22 YOUNG AUTOMOTIVE HOLDINGS, LLC UAG YOUNG AUTOMOTIVE GROUP, LLC D. YOUNG CHEVROLET, LLC By: UAG YOUNG, INC. Member By: ---------------------------------- Title: ------------------------------- DAN YOUNG MOTORS LLC By: DAN YOUNG CHEVROLET, INC. Member By: ---------------------------------- Title: ------------------------------- UAG CITRUS MOTORS, LLC By: UAG CITRUS, INC. Member By: ---------------------------------- Title: ------------------------------- CLASSIC MOTOR SALES, LLC CLASSIC ENTERPRISES, LLC By: UAG CITRUS, INC. Member By: ---------------------------------- Title: ------------------------------- -9- 23 CLASSIC NISSAN OF TURNERSVILLE, LLC By: Thomas J. Hessert Member ---------------------------------- -10- 24 SCOTTSDALE JAGUAR, LTD. By: ---------------------------------- Title: ------------------------------- -11- 25 LANDERS UNITED AUTO GROUP NO. 5, INC. BPT HOLDINGS, INC. LANDERS FORD, INC NATIONAL CITY FORD, INC. CENTRAL FORD CENTER, INC. PIONEER FORD SALES, INC. By: ---------------------------------- Title: ------------------------------- ACKNOWLEDGED AND AGREED as of the date first written above CHRYSLER FINANCIAL COMPANY, L.L.C., as Agent By: ---------------------------------- Title: ------------------------------- -12- EX-10.21 5 SEVERENCE AGREEMENT 1 EXHIBIT 10.21 SEVERANCE AGREEMENT This Severance Agreement is dated as of May 3, 1999, and is entered into between United Auto Group, Inc., a Delaware corporation (the "Company"), and Robert Nelson ("Executive"). WHEREAS, Executive is currently employed by the Company as an executive officer of the Company; and WHEREAS, Executive and the Company desire to embody in this Agreement the terms, conditions and benefits to be provided to Executive in the event of Executive's termination of employment with the Company following a Change in Control (as defined below); and WHEREAS, This Agreement shall supersede all prior oral and written agreements, arrangements and understandings relating to the terms and conditions of Executive's employment termination. NOW, THEREFORE, the parties hereby agree: ARTICLE I DEFINITIONS 1.1. "BOARD" shall mean the Board of Directors of the Company. 1.2. "CAUSE" shall mean (with regard to Executive's termination of employment with the Company): (a) Executive's conviction of a felony (other than a traffic violation), (b) Executive's embezzlement, willful breach of fiduciary duty or fraud with regard to the Company or any of its assets or businesses, or (c) Executive's substantial and continuing failure to perform the material duties of his position. 1.3. "CHANGE IN CONTROL" shall mean the consummation of the transactions contemplated by the "Second Purchase" as such term is defined in the Securities Purchase Agreement, dated as of April 12, 1999, by and among the Company, International Motor Cars Group I, L.L.C., a Delaware limited liability company, and International Motor Cars Group II, L.L.C., a Delaware limited liability company. 1.4. "COMPANY" shall mean United Auto Group, Inc., a Delaware corporation, and any successor as provided in Section 4.5 hereof. 1.5. "GOOD REASON" shall mean (with respect to Executive's termination of employment with the Company) Executive's voluntary termination of employment with the Company due to: (i) a material diminution in Executive's responsibilities or a reduction in Executive's basic annual salary from the 1999 budgeted annual salary for Executive, (ii) the elimination of Executive's position responsibilities, or (iii) the company's requiring Executive to be based at any office or location that is more than fifty (50) miles further from Executive's present job location on the date hereof. No termination of employment shall be treated as for Good Reason unless, before the termination of his employment, Executive has given the Company thirty (30) days' notice and opportunity to cure the action which is the basis for the assertion of Good Reason and such notice is given not more than ninety (90) days after the action alleged to constitute Good Reason. 1.6. "SALARY" shall mean Executive's 1999 budgeted annual salary. 1.7. "SEVERANCE BENEFIT" shall mean the benefit paid or provided to Executive by the Company in accordance with Section 2.1 hereof. 1.8. "TERMINATION DATE" shall mean May 3, 1999 and specifically excludes any period for which a Severance Benefit is made. 2 ARTICLE II BENEFITS 2.1. Change in Control Benefits. In the event that a Change in Control occurs and Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason on and after May 3, 1999 and prior to August 2, 2000, (i) the Company shall pay to Executive all amounts and benefits that have accrued or were earned but remain unpaid through the Termination Date in respect of salary, bonus and unreimbursed expenses, including accrued and unused vacation, within thirty (30) days following the Termination Date, (ii) Executive shall continue to receive the Salary (less any applicable withholding or similar taxes) in accordance with the Company's prevailing payroll practices for a period of 12 months following the Termination Date (the "Severance Term"), and (iii) all outstanding stock options in respect of Company common stock previously granted to the Executive shall vest, to the extent unvested, and be immediately exercisable until the scheduled date of expiration, but without regard to the Executive's termination of employment. Anything in this Section 2.1 to contrary, the payments and benefits to be provided to the Executive as set forth in this Section 2.1 shall be lieu of any and all benefits otherwise provided under any severance pay policy, plan or program maintained from time to time by the Company for its employees. 2.2. Continuation of Benefits in the Event of Death. In the event Executive dies prior to receipt of his entire Severance Benefit, the remaining portion of such Severance Benefit shall continue to be paid, in the same form as described in Section 2.1 above to Executive's spouse, or, if Executive is not married on the date of death, to Executive's estate. 2.3. Mitigation/Set Off. (a) Executive shall not be required to seek other employment or to attempt in any way to reduce amounts payable to him pursuant to this Agreement. Further, except as otherwise provided in this Section 2.3, the amount of the Severance Benefit payable under this Agreement shall not be reduced by any compensation earned by or other benefits provided to Executive as a result of employment by another employer or otherwise. (b) Notwithstanding the foregoing provisions of this Section 2.3, the Company's obligation to make payment of Severance Benefits and otherwise to perform its obligations hereunder shall be reduced to the extent of any amounts owed by Executive to the Company which relate to or arise out of Executive's employment prior to the Termination Date. ARTICLE III RESTRICTIVE COVENANTS 3.1. Confidentiality. All material and information which is confidential to the Company or to any of its subsidiaries or affiliates, whether tangible or intangible, made available, disclosed or otherwise known to Executive as a result of his employment with the Company, shall be considered the sole property of the Company. Executive shall not disclose such material or information to others except with the Company's prior written approval or as may otherwise be required by law or legal process. If disclosure of material and information which is confidential to the Company is sought by a court or administrative agency of competent jurisdiction or an officer of the court or administrative agency, either by subpoena or other method, Executive shall, prior to making disclosure, immediately notify by telephone and confirm in writing to Company's General Counsel, the circumstances requiring disclosure. The Company shall have the opportunity, at its own expense, to respond and object (on behalf of itself or the Executive) to the disclosure, including, but not limited to, an opportunity to object to the court or administrative agency order, to move to quash any subpoena, and to take such further action as may be necessary to protect the terms of this Agreement and to limit or cause to be limited the extent to which such disclosure shall be made. 3.2. Nonsolicitation. During the Severance Term, Executive shall not attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any employee of the Company to give up, or to not commence, employment or a business relationship with the Company. 2 3 3.3. Non-Compete. Executive agrees that, during the Severance Term, except with the prior written consent of either the Chairman of the Board or the President of the Company, which will not be unreasonably withheld, he or she shall not, directly or indirectly, for himself or herself or on behalf of or in conjunction with any person, partnership, corporation or other entity, compete, own, operate, control, or participate or engage in the ownership, management, operation or control of, or be connected with as an officer, employee, partner, director, shareholder, representative, consultant, independent contractor, guarantor, advisor or in any other similar capacity or otherwise have a financial interest in, a business organization or enterprises that competes with the business of the Company or any of its subsidiaries and whose outstanding capital stock or other equity interests are traded on any national stock exchange or in the national over-the-counter market ("Public Companies"). For purposes hereof, the Company shall be deemed to be in the business of operating dealerships located in the United States of America or the Commonwealth of Puerto Rico that engage in the retail sale of new or used automobiles or light-duty trucks and businesses ancillary thereto, provided, however, that for any business of Executive to be deemed competitive for purposes hereof, it must be located within a fifty (50) mile radius of any automobile or truck dealership or ancillary business in which the Company (or any subsidiary thereof), directly or indirectly has an ownership interest of 20% or more at the time the competing activities commence. During the Severance Period, Executive shall not interfere with or disrupt, or attempt to interfere with or disrupt, the relationship, contractual or otherwise, between the Company or any of its subsidiaries or their affiliates and any customer, client, supplier, manufacturer, distributor, consultant, independent contractor, employee or landlord of the Company or any of its subsidiaries or their affiliates. Unless otherwise agreed, any request for consent under this provision that is not acted on by the Chairman of the Board or President of the Company within ten (10) calendar days of receipt of the request shall be deemed granted. Notwithstanding anything in this Subsection 3.3 to the contrary, Executive may own, directly or indirectly, up to 1% of the outstanding capital stock or other equity interests of any competitive business having a class of capital stock which is traded on any national stock exchange or in the national over-the-counter market. 3 4 ARTICLE IV MISCELLANEOUS 4.2. Amendment. This Agreement may not be amended without the written consent of both parties. 4.2. Withholding. The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it reasonably believes it may have to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to this Agreement. In lieu thereof, the Company shall have the right to withhold the amount of such taxes from any other sums due or to become due from the Company to Executive upon such terms and conditions as the Company may decide. 4.3. Severability. Should any provisions of this Agreement be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of this Agreement. Notwithstanding the above, if any covenant set forth in Sections 3.1, 3.2 or 3.3 hereof is deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant will be modified so that scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 4.4. Controlling Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of Delaware, without regard to conflicts of law principles. 4.5. Binding on Successors. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company's obligations under this Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. 4.6. Effect of Agreement. This Agreement shall not be construed as creating any contract of employment between the Company and Executive. Executive shall not have any right to be retained in the employ or service of the Company for any length of time by reason of this Agreement, and this Agreement shall not affect the right of the Company to deal with Executive in all respects relating to Executive's employment, including Executive's discharge, compensation, and conditions of employment. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. /s/ ROBERT NELSON -------------------------------------- Robert Nelson, Executive UNITED AUTO GROUP, INC., a Delaware corporation By: /s/ PAUL F. WALTERS ------------------------------------ Name: Paul F. Walters ------------------------------------ Title: Executive Vice President ------------------------------------ 4 EX-10.22 6 SEVERENCE AGREEMENT 1 EXHIBIT 10.22 SEVERANCE AGREEMENT This Severance Agreement is dated as of August 2, 1999, and is entered into between United Auto Group, Inc., a Delaware corporation (the "Company"), and James Davidson ("Executive"). WHEREAS, Executive is currently employed by the Company as an executive officer of the Company; and WHEREAS, Executive and the Company desire to embody in this Agreement the terms, conditions and benefits to be provided to Executive in the event of Executive's termination of employment with the Company following a Change in Control (as defined below); and WHEREAS, This Agreement shall supersede all prior oral and written agreements, arrangements and understandings relating to the terms and conditions of Executive's employment termination. NOW, THEREFORE, the parties hereby agree: ARTICLE I DEFINITIONS 1.1. "BOARD" shall mean the Board of Directors of the Company. 1.2. "CAUSE" shall mean (with regard to Executive's termination of employment with the Company): (a) Executive's conviction of a felony (other than a traffic violation), (b) Executive's embezzlement, willful breach of fiduciary duty or fraud with regard to the Company or any of its assets or businesses, or (c) Executive's substantial and continuing failure to perform the material duties of his position. 1.3. "CHANGE IN CONTROL" shall mean the consummation of the transactions contemplated by the "Second Purchase" as such term is defined in the Securities Purchase Agreement, dated as of April 12, 1999, by and among the Company, International Motor Cars Group I, L.L.C., a Delaware limited liability company, and International Motor Cars Group II, L.L.C., a Delaware limited liability company. 1.4. "COMPANY" shall mean United Auto Group, Inc., a Delaware corporation, and any successor as provided in Section 4.5 hereof. 1.5. "GOOD REASON" shall mean (with respect to Executive's termination of employment with the Company) Executive's voluntary termination of employment with the Company due to: (i) a material diminution in Executive's responsibilities or a reduction in Executive's basic annual salary from the 1999 budgeted annual salary for Executive, (ii) the elimination of Executive's position responsibilities, or (iii) the company's requiring Executive to be based at any office or location that is more than fifty (50) miles further from Executive's present job location on the date hereof. No termination of employment shall be treated as for Good Reason unless, before the termination of his employment, Executive has given the Company thirty (30) days' notice and opportunity to cure the action which is the basis for the assertion of Good Reason and such notice is given not more than ninety (90) days after the action alleged to constitute Good Reason. 1.6. "SALARY" shall mean Executive's 1999 budgeted annual salary plus $100,000.00 over an annual period. 1.7. "SEVERANCE BENEFIT" shall mean the benefit paid or provided to Executive by the Company in accordance with Section 2.1 hereof. 1.8. "TERMINATION DATE" shall mean the last official work day for which Executive receives pay for service with the Company and specifically excludes any period for which a Severance Benefit is made. 2 ARTICLE II BENEFITS 2.1. Change in Control Benefits. In the event that before expiration of the twelve-month period immediately following a Change in Control, Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason: (i) the Company shall pay to Executive all amounts and benefits that have accrued or were earned but remain unpaid through the Termination Date in respect of salary, bonus and unreimbursed expenses, including accrued and unused vacation, within thirty (30) days following the Termination Date, (ii) Executive shall continue to receive the Salary (less any applicable withholding or similar taxes) in accordance with the Company's prevailing payroll practices for a period of 18 months following the Termination Date (the "Severance Term"), and (iii) all outstanding stock options in respect of Company common stock previously granted to the Executive shall vest, to the extent unvested, and be immediately exercisable until the scheduled date of expiration, but without regard to the Executive's termination of employment. Anything in this Section 2.1 to contrary, the payments and benefits to be provided to the Executive as set forth in this Section 2.1 shall be lieu of any and all benefits otherwise provided under any severance pay policy, plan or program maintained from time to time by the Company for its employees. 2.2. Continuation of Benefits in the Event of Death. In the event Executive dies prior to receipt of his entire Severance Benefit, the remaining portion of such Severance Benefit shall continue to be paid, in the same form as described in Section 2.1 above to Executive's spouse, or, if Executive is not married on the date of death, to Executive's estate. 2.3. Mitigation/Set Off. (a) Executive shall not be required to seek other employment or to attempt in any way to reduce amounts payable to him pursuant to this Agreement. Further, except as otherwise provided in this Section 2.3, the amount of the Severance Benefit payable under this Agreement shall not be reduced by any compensation earned by or other benefits provided to Executive as a result of employment by another employer or otherwise. (b) Notwithstanding the foregoing provisions of this Section 2.3, the Company's obligation to make payment of Severance Benefits and otherwise to perform its obligations hereunder shall be reduced to the extent of any amounts owed by Executive to the Company which relate to or arise out of Executive's employment prior to the Termination Date. ARTICLE III RESTRICTIVE COVENANTS 3.1. Confidentiality. All material and information which is confidential to the Company or to any of its subsidiaries or affiliates, whether tangible or intangible, made available, disclosed or otherwise known to Executive as a result of his employment with the Company, shall be considered the sole property of the Company. Executive shall not disclose such material or information to others except with the Company's prior written approval or as may otherwise be required by law or legal process. If disclosure of material and information which is confidential to the Company is sought by a court or administrative agency of competent jurisdiction or an officer of the court or administrative agency, either by subpoena or other method, Executive shall, prior to making disclosure, immediately notify by telephone and confirm in writing to Company's General Counsel, the circumstances requiring disclosure. The Company shall have the opportunity, at its own expense, to respond and object (on behalf of itself or the Executive) to the disclosure, including, but not limited to, an opportunity to object to the court or administrative agency order, to move to quash any subpoena, and to take such further action as may be necessary to protect the terms of this Agreement and to limit or cause to be limited the extent to which such disclosure shall be made. 3.2. Nonsolicitation. During the Severance Term, Executive shall not attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any employee of the Company to give up, or to not commence, employment or a business relationship with the Company. 2 3 3.3. Non-Compete. Executive agrees that, during the Severance Term, except with the prior written consent of either the Chairman of the Board or the President of the Company, which will not be unreasonably withheld, he or she shall not, directly or indirectly, for himself or herself or on behalf of or in conjunction with any person, partnership, corporation or other entity, compete, own, operate, control, or participate or engage in the ownership, management, operation or control of, or be connected with as an officer, employee, partner, director, shareholder, representative, consultant, independent contractor, guarantor, advisor or in any other similar capacity or otherwise have a financial interest in, a business organization or enterprises that competes with the business of the Company or any of its subsidiaries. For purposes hereof, the Company shall be deemed to be in the business of operating dealerships located in the United States of America or the Commonwealth of Puerto Rico that engage in the retail sale of new or used automobiles or light-duty trucks and businesses ancillary thereto, provided, however, that for any business of Executive to be deemed competitive for purposes hereof, it must be located within a fifty (50) mile radius of any automobile or truck dealership or ancillary business in which the Company (or any subsidiary thereof), directly or indirectly has an ownership interest of 20% or more at the time the competing activities commence, provided, further, however, that where Executive is employed by or becomes a shareholder or partner or member of any business organization that consults for or advises retail automobile dealerships, the employment or the holding of the shareholder, partnership or membership interest shall not be deemed competition unless Executive is or will be personally engaged, or responsible for, providing advisory or consulting service to entities that compete with the Company or any of its subsidiaries. During the Severance Period, Executive shall not interfere with or disrupt, or attempt to interfere with or disrupt, the relationship, contractual or otherwise, between the Company or any of its subsidiaries or their affiliates and any customer, client, supplier, manufacturer, distributor, consultant, independent contractor, employee or landlord of the Company or any of its subsidiaries or their affiliates. Unless otherwise agreed, any request for consent under this provision that is not acted on by the Chairman of the Board or President of the Company within ten (10) calendar days of receipt of the request shall be deemed granted. Notwithstanding anything in this Subsection 3.3 to the contrary, Executive may own, directly or indirectly, up to 1% of the outstanding capital stock of any competitive business having a class of capital stock which is traded on any national stock exchange or in the over-the-counter market. ARTICLE IV MISCELLANEOUS 4.1. Amendment. This Agreement may not be amended without the written consent of both parties. 4.2. Withholding. The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it reasonably believes it may have to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to this Agreement. In lieu thereof, the Company shall have the right to withhold the amount of such taxes from any other sums due or to become due from the Company to Executive upon such terms and conditions as the Company may decide. 4.3. Severability. Should any provisions of this Agreement be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of this Agreement. Notwithstanding the above, if any covenant set forth in Sections 3.1, 3.2 or 3.3 hereof is deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant will be modified so that scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 4.4. Controlling Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of Delaware, without regard to conflicts of law principles. 4.5. Binding on Successors. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company's obligations under this 3 4 Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. 4.6. Effect of Agreement. This Agreement shall not be construed as creating any contract of employment between the Company and Executive. Executive shall not have any right to be retained in the employ or service of the Company for any length of time by reason of this Agreement, and this Agreement shall not affect the right of the Company to deal with Executive in all respects relating to Executive's employment, including Executive's discharge, compensation, and conditions of employment. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. /s/ JAMES R. DAVIDSON -------------------------------------- James Davidson, Executive UNITED AUTO GROUP, INC., a Delaware corporation By: /s/ PAUL F. WALTERS ------------------------------------ Name: Paul F. Walters ------------------------------------ Title: Executive Vice President ------------------------------------ 4 EX-10.23 7 SEVERENCE AGREEMENT 1 EXHIBIT 10.23 UNITED AUTO GROUP, INC. 375 FIFTH AVENUE NEW YORK, NEW YORK 10152 As of August 3, 1999 Samuel X. DiFeo 141 Lorraine Avenue Spring Lake, N.J. 10152 Dear Sam: This letter sets forth our mutual agreement regarding (i) the terms and conditions on which Samuel X. DiFeo (hereinafter sometimes the "Executive") will continue to serve as President and Chief Operating officer of United Auto Group, Inc. (the "Company") and (ii) the rights, entitlements and obligations of the Executive and the Company, respectively, upon the termination of the Executive's current employment as President and Chief Operating Officer of the Company ("President"), as set forth in Section 2 hereafter. 1. TERM, PAYMENTS AND BENEFITS. In consideration for services to be rendered by the Executive as President for the Term (defined below), the Company hereby agrees to compensate the Executive, in consideration for such service and without regard to such other compensation and benefits to which the Executive has been entitled pursuant to the Executive's existing agreements and understandings with the Company, and to otherwise provide benefits to the Executive as follows: (a) Term. The Executive shall continue to serve as President of the Company, through December 31, 1999, subject to the Company's right to extend the Executive's service as President of the Company through May 31, 2000 upon written notice of the Company's election to so extend the Executive's employment as President hereunder, such notice to be delivered by the Company to the Executive on or before December 1, 1999. (b) Compensation. As President of the Company, the Executive shall be compensated at the rate of $360,000 per annum, together with such bonus as the Company shall determine to be appropriate for services rendered by the Executive as President of the Company during any applicable period in light of the Executive's contribution to the Company during such period and additional factors deemed relevant by the Company. 2 Samuel X. DiFeo August 3, 1999 Page 2 (c) Stock Options. The Company shall confirm the immediate vesting (i.e., August 3, 1999) of all options held by the Executive to purchase shares of voting common stock, par value $0.0001 per share (the "Common Stock") of the Company, which options shall thereafter be exercisable at any time after August 3, 1999, through and including the termination of the exercise period attributable to each option as set forth below, notwithstanding any agreements to the contrary. Such immediate vesting and exercise rights shall apply to all options previously granted to the Executive, including without limitation, as follows: (i) 20,000 shares at the exercise price of $10.00 per share pursuant to Stock Option Agreement dated as of April 23, 1996, with an exercise termination date of April 23, 2006; (ii) 21,267 shares at the exercise price of $30.00 per share pursuant to Option Certificate dated as of October 28, 1996, with an exercise termination date of October 28, 2061;' (iii) 20,000 shares at the exercise price of $17.00 per share pursuant to Stock Option Agreement dated as of May 14, 1997, with an exercise termination date of May 14, 2007; (iv) 100,000 shares at the exercise price of $17.50 per share pursuant to Stock Option Agreement dated as of April 13, 1998, with an exercise termination date of April 13, 2008; and (v) 120,000 shares at the exercise price of $7.0625 per share pursuant to Stock Option Agreement dated as of March 3, 1999, with an exercise termination date of March 3, 2009. 2. TERMINATION OF EMPLOYMENT. (a) Termination of Employment. The Executive's employment as President of the Company shall be deemed terminated upon the occurrences of any of the following (each a "Termination Event"): (i) Immediately upon the death of the Executive. 3 Samuel X. DiFeo August 3, 1999 Page 3 (ii) By the Company at any time after the Permanent Disability of the Executive, subject to compliance by the Company with the Americans With Disabilities Act, and by the Executive at any time after his Permanent Disability. (iii) By the Company at any time for Cause. (iv) By the Company at any time without Cause. (v) By the Executive's voluntary resignation. (b) Cause. For purposes hereof, Cause shall mean: (i) active participation by the Executive in fraudulent conduct, (ii) conviction of, or a guilty plea to, a felony (iii) a deliberate act or series of deliberate acts which results in material injury to the business, operations or business reputation of the Company, (iv) an act or series of acts of dishonesty, recklessness or gross-negligence which results in material injury to the business operations or business reputation of the Company or (v) the Executive's willful and continued failure to perform any of his material duties as President which results in material injury to the business operations or business reputation of the Company; provided, however there shall not be Cause in the case of (x) clause (iii) or (iv) if the Executive promptly and diligently, after receipt of written notice form the Company, takes such action which causes the Company, in its reasonable judgment, to believe that such act or series of acts would not likely result in material injury to the business, operations or business reputation of the Company, or that any such injury, if already incurred, has been rectified, or (y) clause (v), if the Executive promptly and diligently, after receipt of written notice form the Company, discontinues his failure to perform and rectifies any injury which resulted form his failure to perform. Any repetition of any such deliberate, or substantially similar, act, or such willful, or substantially similar, failure to perform, shall be Cause without any further opportunity to cure. (c) Permanent Disability. For the purposes hereof, Permanent Disability shall be determined as follows: (i) Determination. The Executive's "Permanent Disability" shall be deemed to have occurred one (1) day after (x) one hundred fifty (150) days in the aggregate during any consecutive twelve (12) month period, or (y) one hundred fifty (150) consecutive days that, in either case, the Executive, by reason of his physical or mental disability or illness, shall have been unable to discharge fully his duties as President. 4 Samuel X. DiFeo August 3, 1999 Page 4 (ii) Resolution of Disagreement. If either the Company or the Executive, after receipt of notice of the executive's Permanent Disability from the other, disagrees that the Executive's Permanent Disability shall have occurred, the Executive shall promptly submit to a physical examination by, or at the direction of, the chief of medicine of any major accredited hospital in the New York, New York metropolitan area and, unless such physician shall issue a written statement to the effect that, in such physician's opinion, based on such physician's diagnosis, the Executive is capable of resuming his employment and devoting his full time and energy to discharging fully his duties hereunder within thirty (30) days after the date of such statement, such Permanent Disability shall be deemed to have occurred on a date determined in accordance with Section 2(c)(i) above. 3. SEVERANCE COMPENSATION. (a) Termination By Death. If the Executive's employment is terminated by death, the Executive's estate shall be entitled to receive (v) any unpaid salary and other compensation and benefits accrued and earned by the Executive through the date of the Executive's death, including a pro rata share of any bonus applicable to the calendar year in which death occurs, (w) severance compensation, within ninety (90) days after the date of death, in a lump sum payment equal to Eight Hundred Thousand ($800,000) Dollars, (x) any amounts owing in accordance with the terms of any profit sharing, retirement and other benefit plans in which the Executive is a participant, (y) any other benefits to which the Executive is then entitled, payable within ninety (90) days after the date of death, accrued up to and including the date of the Executive's death and (z) benefits, if any, provided by any insurance policies to Executive or Executive's estate in accordance with their terms. (b) Termination for Cause. If the Executive's employment is terminated by the Company for Cause, the Company shall not have any other or further obligations to the Executive under this Agreement, except (w) as may be provided in accordance with the terms of any profit sharing, retirement and other benefit plans to which the Executive is a participant (x) as to that portion of any unpaid salary and other compensation and benefits accrued and earned by the Executive through the date of such termination, (y) any other benefits to which the Executive is then entitled, payable within ninety (90) days after the date of such termination, accrued up to and including the date of such termination and (z) as to the benefits, if any, provided by any insurance policies in accordance with their terms. 5 Samuel X. DiFeo August 3, 1999 Page 5 (c). Termination without Cause or For Permanent Disability. (i) If the Executive's employment is terminated by the Company without Cause, the Executive shall be entitled to receive (v) salary and other compensation and benefits payable to the Executive hereunder through December 31, 1999 or such later date to which the term of employment hereunder shall have been extended (the "Contract Term Expiration Date"), together with any bonus applicable to the calendar year in which such termination occurs that would have been payable to the Executive had such termination not occurred (w) the benefit of the Consulting Agreement (the "Consulting Agreement") a copy of which is attached hereto as Exhibit A (x) any amounts owing in accordance with the terms of any profit sharing, retirement and other benefit plans in which the Executive is a participant (y) any other benefits to which the Executive is entitled, payable within ninety (90) days after the Contract Term Expiration Date, accrued up to and including the Contract Term Expiration Date and (z) benefits, if any, provided by any insurance policies in accordance with their terms. (ii) If the Executive's employment is terminated because of his Permanent Disability, the Executive shall be entitled to receive (v) salary and other compensation and benefits payable to the Executive hereunder through December 31, 1999 or such later date to which the term of employment hereunder shall have been extended (the "Contract Term Expiration Date"), together with any bonus applicable to the calendar year in which such termination occurs that would have been payable to the Executive had such termination not occurred, (w) the benefit of the Consulting Agreement, (x) any amounts owing in accordance with the terms of any profit sharing, retirement and other benefit plans in which the Executive is a participant, (y) any other benefits to which the Executive is entitled, payable within ninety (90) days after the Contract Term Expiration Date, accrued up to and including the Contract Term Expiration Date and (z) benefits, if any, provided by any insurance policies to Executive or Executive's estate in accordance with their terms. (d) Involuntary Resignation. If the Executive resigns from all offices and directorships of the Company and all entity affiliates of the Company for any of the reasons set forth in clauses (i) through (viii) of this Section 3(d), such resignation shall be deemed to be an "Involuntary Resignation," and the Executive shall be entitled to receive the same severance compensation and other benefits as are provided for in Section 3(c) above. (i) The Company materially changes the Executive's duties and responsibilities as President without his prior written consent, which consent may be granted or withheld by the Executive in his absolute and sole discretion. The Executive 6 Samuel X. DiFeo August 3, 1999 Page 6 shall be deemed to have consented to any proposal of the Board of Directors of the Company calling for a material change in his duties and responsibilities only if he shall give written notice of his consent thereto to the Board of Directors of the Company within thirty (30) days after receipt of such written proposal. If the Executive shall have failed to give such consent, the Company shall have the opportunity to withdraw such proposed material change by written notice to the Executive given within ten (10) days after the end of such thirty (30) day period. (ii) The Executive's place of employment is located or relocated more than fifty (50) road miles from either 375 Park Avenue, New York, New York or Jersey City, New Jersey (iii) The Company, without the Executive's prior written consent, reduces the Executive's current base salary of $360,000. (iv) The Company imposes requirements on the Executive, or gives instructions or directions to the Executive, which are: (x) contrary to or in violation of (a) rules, principles, or codes of professional responsibility or (b) law (as set forth in written statutes or regulations thereunder), which the Executive is obligated to follow; (y) such that compliance by the Executive with such requirements, instructions or directions would likely (a) have a material adverse effect on the Executive or (b) cause the Executive to suffer substantial liability, and (z) not withdrawn by the Company after written request by the Executive, which written request sets forth the Executive's complete explanation as to why he believes the requirements, instructions or directions should be withdrawn. (v) There occurs a material breach by the Company of any of its obligations under this Agreement or any other agreement between the Executive and the Company regarding the Executive's compensation, benefits or otherwise, which breach has not been cured in all material respects within thirty (30) days after the Executive gives written notice thereof to the Company, which notice sets forth in reasonable detail the nature and circumstances of such breach. (vi) The Company or any majority owned subsidiary of the Company violates a federal for state criminal law involving moral turpitude which would likely (a) have a material adverse effect on the Executive or (b) cause the Executive to suffer substantial liability, and the Executive was unaware of such unlawful activity at the time of its occurrence. 7 Samuel X. DiFeo August 3, 1999 Page 7 (vii) The Executive resigns upon the occurrence of a "change in control," such change occurring after August 3, 1999. (viii) In the event of termination of the Executive by the Company within six (6) months following a "change in control," other than a termination by the Company for Cause. The term "change in control" means the first to occur of the following events: A. The acquisition by any person, entity or "group" within the meaning of ss.13(d) or 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five (25%) percent or more of either the then outstanding equity interests in the Company or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the Board of Directors; or B. The Company's stockholders approve an agreement to merge or consolidate with another corporation or other entity resulting (whether separately or in connection with a series of related transactions) in a change in ownership of twenty percent (20%) or more of the voting control of, or beneficial rights to, the voting capital stock of the Company, or an agreement to sell or otherwise dispose of all or substantially all of the Company's assets (including, without limitation a plan of liquidation or dissolution), or otherwise approve of a fundamental alteration in the nature of the Company's business; provided, however, that the term "change of control" shall specifically not include the announced transaction whereby Penske Capital Partners and its affiliates are acquiring interests in the Company. (e) Voluntary Resignation. If the Executive voluntarily resigns, the Executive's employment shall be terminated. In the event of such voluntary resignation, the Executive shall be entitled to (w) any unpaid salary and other compensation and benefits accrued and earned by the Executive through the date of such termination, including a pro rata portion of any bonus applicable to the calendar year in which such termination occurs, (x) any amounts owing in accordance with the terms of any profit sharing, retirement and other benefit plans in which the Executive is a participant, (y) other benefits to which the Executive is entitled, payable within ninety (90) days after the date of such termination, accrued to and including the date of such termination, and (z) benefits, if any, provided by any insurance policies in accordance with their terms. 8 Samuel X. DiFeo August 3, 1999 Page 8 4. SEVERANCE AGREEMENTS. (a) Resignation from Office. Upon the occurrence of any Termination Event, the Executive shall be deemed to have thereupon resigned immediately from all offices and directorships held by the Executive in the Company and all affiliates of the Company, and the Executive shall sign and deliver to the Company and all entity affiliates of the Company, as the case may be, written resignations from all such offices and directorships. (b) Consulting Agreement. Upon the occurrence of a Termination Event as set forth in Sections 3(c)(i) or (ii) or 3(d), or if a Termination Event as set forth in Sections 3(c)(i) or (ii) or 3(d) has not occurred prior to the Contract Term Expiration Date, upon the Contract Term Expiration Date (unless the Executive's employment has been terminated by the Company for Cause or the Executive has voluntarily resigned from the Company prior to the Contract Term Expiration Date), the Executive shall continue to be employed as a consultant by the Company in accordance with the terms and conditions of that certain Consulting Agreement. (c) Press Release. Upon the occurrence of a Termination Event, the form of press release confirming the termination of the Executive as President shall be subject to the mutual agreement of the Executive and the Company. Any statements by the Company or the Executive to third parties or to employees of the Company regarding the termination of the Executive's employment as President shall be consistent with such press release or subject to the mutual agreement of the Executive and the Company. (d) Non-Compete. Upon the termination of the Executive as contemplated hereunder, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive hereunder, under the Consulting Agreement or under any other agreement between the Executive and the Company, on account of any remuneration attributable to any subsequent or additional employment the Executive may obtain; provided, however, the Executive shall not seek or accept employment in the automotive industry for so long as the Consulting Agreement is in effect without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed, and, provided further, that any such permitted subsequent employment shall have no effect on the Executive's rights and entitlements under this Agreement, the Consulting Agreement or any other agreement between the Executive and the Company or the Company's rights with respect to the Executive's responsibility to maintain the confidentiality of this letter agreement and confidential data of the Company, its affiliates, and its suppliers and manufacturers. 9 Samuel X. DiFeo August 3, 1999 Page 9 (e) Confidentiality. The Executive and the Company hereby agree that for so long as this letter agreement is otherwise confidential, neither the Executive nor the Company will disclose the fact of this letter or any of its terms or provisions to any person without the prior written consent of the other party hereto; provided, however, that nothing herein shall prohibit disclosure of such information to the extent required by law, nor prohibit disclosure by the Executive to any legal or financial consultant, member of the Executive's immediate family or prospective employer, if such person first agrees to be bound by the confidentiality provisions of this Section 4(e). Notwithstanding the foregoing, it is acknowledged by the parties hereto that this letter may be filed by the Company with the Securities and Exchange Commission pursuant to applicable law. 5. GENERAL PROVISIONS. (a) This letter may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original and which all together shall constitute one agreement, with such counterparts being deliverable by facsimile with the original being transmitted by overnight courier. (b) This letter shall bind and inure to the benefit of the Executive's and the Company's respective successors and permitted assigns. (c) This letter may not be amended, waived or modified, in whole or in part, except by a writing signed by each of the Executive and the Company. (d) This letter shall be construed and enforced in accordance with, and shall be governed by, the laws of the State of New York without giving effect to that State's choice of law principles. (e) Any disputes arising under or in connection with this letter shall, at the election of either the Executive or the Company, be resolved by binding arbitration, to be held in New York City in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Company shall pay all costs and expenses (including reasonable attorneys fees) as incurred by the Executive with any such arbitration or litigation, unless the Executive is the unsuccessful party. Pending the resolution of any arbitration or court proceeding, the Company shall continue payment of all amounts due the Executive under this letter and all benefits to which the Executive is entitled at the time the dispute arises. (f) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and shall supercede all prior agreements 10 Samuel X. DiFeo August 3, 1999 Page 10 entered into between the parties with respect to the subject matter hereof, including, without limitation, any terms or conditions of the Option Agreements that conflict with any of the terms and conditions set forth in this Agreement. If the forgoing is acceptable to you, please sign, date and return the attached copy of this letter to the undersigned by hand or by express mail. Sincerely, UNITED AUTO GROUP, INC. By: [SIG] ------------------------ AGREED: /s/ Samuel X. DiFeo - ----------------------- Samuel X. DiFeo Date: 8-6-99 ------------------ EX-21.1 8 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANY Amity Auto Plaza, Ltd. Amity Nissan of Massapequa, Ltd. Atlantic Auto Funding Corporation Atlantic Auto Second Funding Corporation Atlantic Auto Third Funding Corporation Auto Leasing Corporation Auto Mall Payroll Services, Inc. Auto Mall Storage, Inc. BPT Holdings, Inc. Central Ford Center, Inc. Cherry Hill Classic Cars, Inc. Classic Auto Group, Inc. Classic Auto Group Holdings, Inc. Classic of Cherry Hill, Inc. Classic Chevrolet, Inc. Classic Enterprise, Inc. Classic Enterprises, LLC Classic Imports, Inc. Classic Management Company, Inc. Classic Motor Sales, LLC Classic Nissan of Turnersville, LLC Conyers Nissan, Inc. Covington Pike Dodge, Inc. D. Young Chevrolet, LLC Dan Young Chevrolet, Inc. Dan Young Motors, LLC Dan Young Tipton, LLC Dan Young, Inc. DiFeo Partnership HCT, Inc. DiFeo Partnership HCT, Inc. on behalf of Hudson Motors Partnership DiFeo Partnership IX, Inc. DiFeo Partnership IX, Inc. on behalf of OCM Partnership DiFeo Partnership RCM, Inc. DiFeo Partnership RCM, Inc. on behalf of Rockland Motors Partnership DiFeo Partnership RCT, Inc. DiFeo Partnership RCT, Inc. on behalf of County Auto Group Partnership DiFeo Partnership SCT, Inc. DiFeo Partnership SCT, Inc. on behalf of Somerset Motors Partnership 1 2 EXHIBIT 21.1 DiFeo Partnership VIII, Inc. DiFeo Partnership VIII, Inc. on behalf of OCT Partnership DiFeo Partnership X, Inc. DiFeo Partnership, Inc. DiFeo Partnership, Inc. on behalf of Danbury Auto Partnership Danbury Chrysler-Plymouth Partnership DiFeo Chevrolet-Geo Partnership DiFeo Chrysler Plymouth Jeep Eagle Partnership DiFeo Hyundai Partnership DiFeo Leasing Partnership DiFeo Nissan Partnership DiFeo Tenafly Partnership Fair Chevrolet-Geo Partnership Fair Hyundai Partnership J&F Oldsmobile Partnership Europa Motors, Inc. Florida Chrysler Plymouth, Inc. Gene Reed Chevrolet, Inc. HT Automotive, Ltd. HVP Motor Corporation J&S Auto Refinishing, Ltd. JS Imports, Inc. KMT/UAG, Inc. Landers Auto Sales, Inc. Landers Buick-Pontiac, Inc. Landers Ford, Inc. Landers United Auto Group No.2, Inc. Landers United Auto Group No.3, Inc. Landers United Auto Group No.4, Inc. Landers United Auto Group No.5, Inc. Landers United Auto Group No.6, Inc. Landers United Auto Group, Inc. Landers Ford North, Inc. LRP, Ltd. Michael Chevrolet-Oldsmobile, Inc. Motorcars Acquisiton, LLC Motorcars Acquisition II, LLC Motorcars Acquisition III, LLC National City Ford, Inc. Northlake Auto Finish, Inc. Palm Auto Plaza, Inc. Parkway Chevrolet, Inc. Peachtree Nissan, Inc. Pioneer Ford Sales, Inc. 2 3 EXHIBIT 21.1 PVH Motor Corporation Reed-Lallier Chevrolet, Inc. Relentless Pursuit Enterprises, Inc. S.H.V.P. Motor Corp. SA Automotive, Ltd. SAU Automotive, Ltd. Scottsdale Management Group, Ltd. Scottsdale Ferrari, LLC SK Motors, Ltd. SL Automotive, Ltd. Somerset Motors, Inc. SPA Automotive, Ltd. Sun Motors, Ltd. The New Graceland Dodge, Inc. TriCity Leasing, Inc. UAG Atlanta II, Inc. UAG Atlanta III, Inc. UAG Atlanta IV Motors, Inc. UAG Atlanta IV, Inc. UAG Atlanta V, Inc. UAG Atlanta VI, Inc. UAG Atlanta, Inc. UAG Carolina, Inc. UAG Century Motors, Inc. UAG Citrus Motors, LLC UAG Citrus, Inc. UAG Classic, Inc. UAG Duluth, Inc. UAG East, Inc. UAG Finance Company, Inc. UAG Graceland II, Inc. UAG Graceland, Inc. UAG Hudson, Inc. UAG Kissimmee Motors, Inc. UAG Knoxville II, Inc. UAG Knoxville, Inc. UAG Lake Norman, LLC UAG Memphis II, Inc. UAG Memphis III, Inc. UAG Memphis IV, Inc. UAG Memphis V, Inc. UAG Memphis, Inc. UAG Nevada, Inc. UAG Northeast (NY), Inc. 3 4 EXHIBIT 21.1 UAG Northeast Body Shop, Inc. UAG Northeast, Inc. UAG Oldsmobile of Indiana, LLC UAG Paramount Motors, Inc. UAG Tennessee, Inc. UAG Texas II, Inc. UAG Texas, Inc. UAG Texas, Inc. on behalf of Shannon Automotive, Ltd. UAG West, Inc. UAG West Texas, Inc. UAG Young Automotive Group, LLC UAG Young II, Inc. UAG Young, Inc. UAG-Caribbean, Inc. United Auto Dodge of Shreveport, Inc. United Auto Enterprises, Inc. United AutoCare Products, Inc. United AutoCare, Inc. United Jeep Chrysler Plymouth of Stone Mountain, Inc. United Landers, Inc. United Mazda, Inc. United Nissan, Inc. (NV) United Nissan, Inc. (TN) United Nissan, Inc. (GA) United Auto Fourth Funding, Inc. United Auto Fifth Funding, Inc. UnitedAuto Finance, Inc. VPH Motor Corporation West Palm Auto Mall, Inc. West Palm Infiniti, Inc. West Palm Nissan, Inc. Westbury Nissan, Ltd. Westbury Superstore, Ltd. Young Automotive Holdings, LLC Young Management Group, Inc. 4 EX-23.1 9 CONSENT OF PRICEWATERHOUSECOOPERS, LLP 1 Exhibit 23.1 Consent Of Independent Accountants We consent to the incorporation by reference in the registration statements of United Auto Group, Inc. on Form S-3 (Registration No. 333-39997) and Form S-8 (Registration Nos. 333-14971 and 333-26219) of our report dated March 29, 1999 on our audits of the consolidated financial statements as of December 31, 1998 and for the years ended December 31, 1998 and 1997, which report is included in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Princeton, New Jersey March 29, 1999 EX-23.2 10 CONSENT OF DELOITTE & TOUCHE, LLP 1 Exhibit 23.2 Consent Of Independent Accountants We consent to the incorporation by reference in Registration Statement No. 333-39997 of United Auto Group, Inc. ("UAG") on Form S-3 and Registration Nos. 333-14971 and 333-26219 of UAG on Form S-8 of our report dated February 1, 2000, appearing in this Annual Report of UAG for the year ended December 31, 1999. /s/ Deloitte & Touche LLP New York, New York February 1, 2000 EX-27.1 11 DECEMBER 31, 1999 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> DEC-31-1999 <CASH> 19,847 <SECURITIES> 0 <RECEIVABLES> 142,372 <ALLOWANCES> (1,899) <INVENTORY> 508,289 <CURRENT-ASSETS> 679,332 <PP&E> 84,473 <DEPRECIATION> (16,241) <TOTAL-ASSETS> 1,279,337 <CURRENT-LIABILITIES> 582,290 <BONDS> 218,535 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 430,863 <TOTAL-LIABILITY-AND-EQUITY> 1,279,337 <SALES> 4,022,517 <TOTAL-REVENUES> 4,022,517 <CGS> 3,473,080 <TOTAL-COSTS> 3,918,222 <OTHER-EXPENSES> 2,571 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 58,020 <INCOME-PRETAX> 48,846 <INCOME-TAX> (21,414) <INCOME-CONTINUING> 26,710 <DISCONTINUED> 46 <EXTRAORDINARY> 732 <CHANGES> 0 <NET-INCOME> 27,488 <EPS-BASIC> 1.14 <EPS-DILUTED> 1.04

EX-27.2 12 SEPTEMBER 30, 1999 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> 9-MOS <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> SEP-30-1999 <CASH> 44,127 <SECURITIES> 0 <RECEIVABLES> 139,244 <ALLOWANCES> (1,134) <INVENTORY> 420,759 <CURRENT-ASSETS> 618,066 <PP&E> 73,418 <DEPRECIATION> (15,078) <TOTAL-ASSETS> 1,218,109 <CURRENT-LIABILITIES> 525,107 <BONDS> 214,340 <PREFERRED-MANDATORY> 0 <PREFERRED> 77,000 <COMMON> 2 <OTHER-SE> 349,293 <TOTAL-LIABILITY-AND-EQUITY> 1,218,109 <SALES> 3,033,696 <TOTAL-REVENUES> 3,033,696 <CGS> 2,620,622 <TOTAL-COSTS> 2,952,981 <OTHER-EXPENSES> 2,270 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 44,233 <INCOME-PRETAX> 38,752 <INCOME-TAX> (16,923) <INCOME-CONTINUING> 21,287 <DISCONTINUED> 28 <EXTRAORDINARY> 320 <CHANGES> 0 <NET-INCOME> 21,635 <EPS-BASIC> 0.99 <EPS-DILUTED> 0.86

EX-27.3 13 JUNE 30, 1999 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> 6-MOS <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> JUN-30-1999 <CASH> 43,670 <SECURITIES> 0 <RECEIVABLES> 142,363 <ALLOWANCES> (860) <INVENTORY> 490,628 <CURRENT-ASSETS> 656,346 <PP&E> 70,977 <DEPRECIATION> (13,999) <TOTAL-ASSETS> 1,251,321 <CURRENT-LIABILITIES> 586,496 <BONDS> 238,933 <PREFERRED-MANDATORY> 33,551 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 339,267 <TOTAL-LIABILITY-AND-EQUITY> 1,251,321 <SALES> 1,948,330 <TOTAL-REVENUES> 1,948,330 <CGS> 1,681,740 <TOTAL-COSTS> 1,896,776 <OTHER-EXPENSES> 1,396 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 29,979 <INCOME-PRETAX> 22,971 <INCOME-TAX> (10,292) <INCOME-CONTINUING> 12,318 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 12,318 <EPS-BASIC> 0.56 <EPS-DILUTED> 0.53

EX-27.4 14 MARCH 31, 1999 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> MAR-31-1999 <CASH> 23,132 <SECURITIES> 0 <RECEIVABLES> 129,031 <ALLOWANCES> (842) <INVENTORY> 436,520 <CURRENT-ASSETS> 606,646 <PP&E> 67,561 <DEPRECIATION> (12,434) <TOTAL-ASSETS> 1,200,232 <CURRENT-LIABILITIES> 526,259 <BONDS> 279,204 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 342,468 <TOTAL-LIABILITY-AND-EQUITY> 1,200,232 <SALES> 904,732 <TOTAL-REVENUES> 904,732 <CGS> 779,974 <TOTAL-COSTS> 883,526 <OTHER-EXPENSES> 794 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 14,945 <INCOME-PRETAX> 7,055 <INCOME-TAX> (3,209) <INCOME-CONTINUING> 3,698 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 3,698 <EPS-BASIC> 0.17 <EPS-DILUTED> 0.16

EX-27.5 15 DECEMBER 31, 1998 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1998 <PERIOD-START> JAN-01-1998 <PERIOD-END> DEC-31-1998 <CASH> 38,538 <SECURITIES> 0 <RECEIVABLES> 126,320 <ALLOWANCES> (860) <INVENTORY> 410,295 <CURRENT-ASSETS> 590,713 <PP&E> 65,897 <DEPRECIATION> (14,414) <TOTAL-ASSETS> 1,184,194 <CURRENT-LIABILITIES> 505,529 <BONDS> 288,265 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 341,648 <TOTAL-LIABILITY-AND-EQUITY> 1,184,194 <SALES> 3,343,147 <TOTAL-REVENUES> 3,343,147 <CGS> 2,887,530 <TOTAL-COSTS> 3,262,573 <OTHER-EXPENSES> 4,800 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 60,180 <INCOME-PRETAX> 25,194 <INCOME-TAX> (11,554) <INCOME-CONTINUING> 13,378 <DISCONTINUED> (12,940) <EXTRAORDINARY> (1,235) <CHANGES> 0 <NET-INCOME> (797) <EPS-BASIC> (0.04) <EPS-DILUTED> (0.04)

EX-27.6 16 SEPTEMBER 30, 1998 FINANCIAL DATA SCHEUDLE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> 9-MOS <FISCAL-YEAR-END> DEC-31-1998 <PERIOD-START> JAN-01-1998 <PERIOD-END> SEP-30-1998 <CASH> 25,332 <SECURITIES> 0 <RECEIVABLES> 124,971 <ALLOWANCES> (594) <INVENTORY> 359,558 <CURRENT-ASSETS> 534,098 <PP&E> 62,067 <DEPRECIATION> (9,868) <TOTAL-ASSETS> 1,141,575 <CURRENT-LIABILITIES> 455,559 <BONDS> 303,394 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 352,027 <TOTAL-LIABILITY-AND-EQUITY> 1,141,575 <SALES> 2,505,134 <TOTAL-REVENUES> 2,505,134 <CGS> 2,158,936 <TOTAL-COSTS> 2,431,619 <OTHER-EXPENSES> 3,627 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 45,735 <INCOME-PRETAX> 31,407 <INCOME-TAX> (12,903) <INCOME-CONTINUING> 18,378 <DISCONTINUED> 341 <EXTRAORDINARY> (1,235) <CHANGES> 0 <NET-INCOME> 17,484 <EPS-BASIC> 0.86 <EPS-DILUTED> 0.86

EX-27.7 17 JUNE 30, 1998 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> 6-MOS <FISCAL-YEAR-END> DEC-31-1998 <PERIOD-START> JAN-01-1998 <PERIOD-END> JUN-30-1998 <CASH> 36,428 <SECURITIES> 0 <RECEIVABLES> 123,949 <ALLOWANCES> (553) <INVENTORY> 399,443 <CURRENT-ASSETS> 1,117,354 <PP&E> 55,481 <DEPRECIATION> (10,638) <TOTAL-ASSETS> 1,166,997 <CURRENT-LIABILITIES> 482,798 <BONDS> 301,403 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 342,217 <TOTAL-LIABILITY-AND-EQUITY> 1,166,997 <SALES> 1,608,128 <TOTAL-REVENUES> 1,608,128 <CGS> 1,390,521 <TOTAL-COSTS> 1,561,528 <OTHER-EXPENSES> 1,848 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 30,795 <INCOME-PRETAX> 17,653 <INCOME-TAX> (7,251) <INCOME-CONTINUING> 10,318 <DISCONTINUED> 174 <EXTRAORDINARY> (1,235) <CHANGES> 0 <NET-INCOME> 9,257 <EPS-BASIC> 0.46 <EPS-DILUTED> 0.46

EX-27.8 18 MARCH 31, 1998 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1998 <PERIOD-END> MAR-31-1998 <CASH> 20,524 <SECURITIES> 0 <RECEIVABLES> 117,035 <ALLOWANCES> (1,506) <INVENTORY> 453,264 <CURRENT-ASSETS> 610,822 <PP&E> 50,698 <DEPRECIATION> (7,257) <TOTAL-ASSETS> 1,167,635 <CURRENT-LIABILITIES> 538,430 <BONDS> 273,797 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 333,262 <TOTAL-LIABILITY-AND-EQUITY> 1,167,635 <SALES> 711,709 <TOTAL-REVENUES> 711,709 <CGS> 615,194 <TOTAL-COSTS> 693,735 <OTHER-EXPENSES> 353 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 14,385 <INCOME-PRETAX> 3,942 <INCOME-TAX> (1,617) <INCOME-CONTINUING> 2,291 <DISCONTINUED> 8 <EXTRAORDINARY> (1,235) <CHANGES> 0 <NET-INCOME> 1,064 <EPS-BASIC> 0.05 <EPS-DILUTED> 0.05

EX-27.9 19 DECEMBER 31, 1997 FINANCIAL DATA SCHEDULE

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1997 <PERIOD-START> JAN-01-1997 <PERIOD-END> DEC-31-1997 <CASH> 94,435 <SECURITIES> 0 <RECEIVABLES> 93,488 <ALLOWANCES> (887) <INVENTORY> 324,330 <CURRENT-ASSETS> 531,779 <PP&E> 44,028 <DEPRECIATION> (6,440) <TOTAL-ASSETS> 971,064 <CURRENT-LIABILITIES> 414,588 <BONDS> 238,550 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 2 <OTHER-SE> 300,555 <TOTAL-LIABILITY-AND-EQUITY> 971,064 <SALES> 2,092,593 <TOTAL-REVENUES> 2,092,593 <CGS> 1,816,234 <TOTAL-COSTS> 2,071,300 <OTHER-EXPENSES> 297 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 33,368 <INCOME-PRETAX> (11,778) <INCOME-TAX> 3,980 <INCOME-CONTINUING> (7,936) <DISCONTINUED> (2,204) <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> (10,140) <EPS-BASIC> (0.56) <EPS-DILUTED> (0.56)

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1.19.1

   1


                                                            EXHIBIT 10.1.19.1








================================================================================



                                CREDIT AGREEMENT

                           DATED AS OF AUGUST 3, 1999

                                      AMONG

                            UNITED AUTO GROUP, INC.,

                         VARIOUS FINANCIAL INSTITUTIONS

                                       AND

                       CHRYSLER FINANCIAL COMPANY L.L.C.,
                                    AS AGENT




================================================================================






   2


                                TABLE OF CONTENTS
                                                                          
SECTION 1   DEFINITIONS .......................................................1
    1.1 Definitions ...........................................................1
    1.2 Other Interpretive Provisions ........................................11

SECTION 2   COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF
            CREDIT PROCEDURES ................................................12
    2.1  Commitments .........................................................12
            2.1.1 Revolving Loan Commitment ..................................12
            2.1.2 Acquisition Loan Commitment ................................12
            2.1.3 L/C Commitment .............................................12
    2.2  Loan Procedures .....................................................12
    2.3  Letter of Credit Procedures .........................................13
            2.3.1 L/C Applications ...........................................13
            2.3.2 Participations in Letters of Credit ........................13
            2.3.3 Reimbursement Obligations ..................................13
            2.3.4 Limitation on Obligations of Issuing Lender ................14
            2.3.5 Funding by Lenders to Issuing Lender .......................14
    2.4  Commitments Several .................................................15
    2.5  Certain Conditions ..................................................15

SECTION 3   NOTES EVIDENCING LOANS ...........................................15
    3.1   Notes ..............................................................15
    3.2   Recordkeeping ......................................................15

SECTION 4   INTEREST .........................................................15
    4.1   Interest Rate ......................................................15
    4.2   Interest Payment Dates .............................................15
    4.3   Computation of Interest ............................................15

SECTION 5   FEES .............................................................16
    5.1   Letter of Credit Fees ..............................................16

SECTION 6   REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT
            AMOUNT AND THE ACQUISITION COMMITMENT AMOUNT;
            PREPAYMENTS ......................................................16
    6.1.  Voluntary Reduction or Termination of Commitment Amounts ...........16
    6.2   Voluntary Prepayments ..............................................16

SECTION 7   MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES ..................16



                                      -i-
   3

                                                                          

         7.1   Making of Payments ............................................16
         7.2   Application of Certain Payments ...............................17
         7.3   Due Date Extension ............................................17
         7.4   Setoff ........................................................17
         7.5   Proration of Payments .........................................17
         7.6   Taxes .........................................................17

    SECTION 8     WARRANTIES .................................................18
         8.1   Organization ..................................................18
         8.2   Authorization; No Conflict ....................................19
         8.3   Validity and Binding Nature ...................................19
         8.4   Financial Condition ...........................................19
         8.5   No Material Adverse Change ....................................19
         8.6   Litigation and Contingent Liabilities .........................19
         8.7   Ownership of Properties; Liens ................................20
         8.8   Subsidiaries ..................................................20
         8.9   Pension Plans .................................................20
         8.10  Investment Company Act ........................................20
         8.11  Public Utility Holding Company Act ............................20
         8.12  Regulation U ..................................................20
         8.13  Taxes .........................................................21
         8.14  Solvency, etc. ................................................21
         8.15  Environmental Matters .........................................21
         8.16  Year 2000 Problem .............................................22
         8.17  Insurance .....................................................22
         8.18  Information ...................................................22
         8.19  Intellectual Property .........................................23
         8.20  Burdensome Obligations ........................................23
         8.21  Labor Matters .................................................23
         8.22  No Default ....................................................23
         8.23  Securities Purchase Agreement. ................................23
         8.24  Senior Debt ...................................................24

    SECTION 9     COVENANTS ..................................................24
         9.1   Reports,  Certificates and Other Information ..................24
                  9.1.1  Annual Report .......................................24
                  9.1.2  Interim Reports .....................................25
                  9.1.3  Compliance Certificates .............................25
                  9.1.4  Reports to the SEC and to Shareholders ..............25
                  9.1.5  Notice of Default, Litigation and ERISA Matters .....25
                  9.1.6  Management Reports ..................................26



                                      -ii-

   4
                                                                          
                  9.1.7  Subordinated Debt Notices ...........................26
                  9.1.8  Year 2000 Problem ...................................26
                  9.1.9  Other Information ...................................26
         9.2   Books, Records and Inspections ................................26
         9.3   Maintenance of Property; Insurance ............................27
         9.4   Compliance with Laws; Payment of Taxes and Liabilities ........27
         9.5   Maintenance of Existence, etc. ................................28
         9.6   Financial Covenants ...........................................28
                  9.6.1  Ratio of Funded Debt to Stockholders' Equity ........28
                  9.6.2  Ratio of Non-Floorplan Debt to Stockholders'Equity...28
                  9.6.3  Funded Debt to EBITDA Ratio .........................28
                  9.6.4  Working Capital .....................................28
         9.7   Limitations on Debt ...........................................28
         9.8   Liens .........................................................29
         9.9   Restricted Payments ...........................................30
         9.10  Mergers, Consolidations, Sales ................................30
         9.11  Modification of Organizational Documents ......................31
         9.12  Use of Proceeds ...............................................31
         9.13  Further Assurances ............................................31
         9.14  Transactions with Affiliates ..................................32
         9.15  Employee Benefit Plans ........................................32
         9.16  Environmental Matters .........................................32
         9.17  Inconsistent Agreements .......................................33
         9.18  Business Activities ...........................................33
         9.19  Investments ...................................................33
         9.20  Restriction of Amendments to Certain Documents ................34
         9.21  Limitation on Floor Plan Amendments ...........................34

    SECTION 10    EFFECTIVENESS; CONDITIONS OF LENDING, ETC...................34
         10.1  Initial Credit Extension ......................................34
                  10.1.1   Notes .............................................34
                  10.1.2   Resolutions .......................................34
                  10.1.3   Consents, etc. ....................................35
                  10.1.4   Incumbency and Signature Certificates .............35
                  10.1.5   Guaranty ..........................................35
                  10.1.6   Security Agreement ................................35
                  10.1.7   Pledge Agreements .................................35
                  10.1.8   Subordinated Indenture ............................35
                  10.1.9   Opinion of Counsel ................................35
                  10.1.10  Insurance .........................................35
                  10.1.11  Copies of Documents ...............................35




                                     -iii-

   5

                                                                          
                  10.1.12  Payment of Fees ...................................36
                  10.1.13  Solvency Certificate ..............................36
                  10.1.14  Search Results; Lien Terminations .................36
                  10.1.15  Filings, Registrations and Recordings .............36
                  10.1.16  Closing Certificate ...............................36
                  10.1.17  Other .............................................36
         10.2   Conditions ...................................................36
                  10.2.1  Compliance with Warranties, No Default, etc. .......36
                  10.2.2  Confirmatory Certificate ...........................37
         10.3   Further Conditions to Acquisition Loans ......................37

    SECTION 11    EVENTS OF DEFAULT AND THEIR EFFECT .........................38
         11.1   Events of Default ............................................38
                  11.1.1   Non-Payment of the Loans, etc. ....................38
                  11.1.2   Non-Payment of Other Debt .........................38
                  11.1.3   Other Material Obligations ........................38
                  11.1.4   Bankruptcy, Insolvency, etc. ......................38
                  11.1.5   Non-Compliance with Loan Documents ................39
                  11.1.6   Warranties ........................................39
                  11.1.7   Pension Plans .....................................39
                  11.1.8   Judgments .........................................39
                  11.1.9   Invalidity of Guaranty, etc. ......................39
                  11.1.10  Invalidity of Collateral Documents, etc. ..........39
                  11.1.11  Invalidity of Subordination Provisions, etc. ......40
                  11.1.12  Change of Control .................................40
         11.2   Effect of Event of Default ...................................40

    SECTION 12    THE AGENT ..................................................40
         12.1   Appointment and Authorization ................................40
         12.2   Delegation of Duties .........................................41
         12.3   Liability of Agent ...........................................41
         12.4   Reliance by Agent ............................................41
         12.5   Notice of Default ............................................42
         12.6   Credit Decision ..............................................42
         12.7   Indemnification ..............................................42
         12.8   Agent in Individual Capacity .................................43
         12.9   Successor Agent ..............................................43
         12.10  Collateral Matters ...........................................43
         12.11  Funding Reliance .............................................44

    SECTION 13    GENERAL ....................................................44




                                      -iv-

   6
                                                                          
         13.1  Waiver; Amendments ............................................44
         13.2  Confirmations .................................................45
         13.3  Notices .......................................................45
         13.4  Computations ..................................................45
         13.5  Regulation U ..................................................45
         13.6  Costs, Expenses and Taxes .....................................46
         13.7  Subsidiary References .........................................46
         13.8  Captions ......................................................46
         13.9  Assignments; Participations ...................................46
                  13.9.1  Assignments ........................................46
                  13.9.2  Participations .....................................47
         13.10  Governing Law ................................................48
         13.11  Counterparts .................................................48
         13.12  Successors and Assigns .......................................48
         13.13  Indemnification by the Company ...............................48
         13.14  Nonliability of Lenders ......................................49
         13.15  Forum Selection and Consent to Jurisdiction ..................49
         13.16  Waiver of Jury Trial .........................................50
         13.17  CFC Right of First Refusal on Floor Plan Financing ...........50
         13.18  Confidentiality ..............................................50




                                      -v-

   7


                                    SCHEDULES


Pricing Schedule
                                
SCHEDULE 2.1                        Lenders and Pro Rata Shares
SCHEDULE 8.6                        Litigation and Contingent Liabilities
SCHEDULE 8.8                        Subsidiaries
SCHEDULE 8.15                       Environmental Matters
SCHEDULE 8.17                       Insurance
SCHEDULE 8.20                       Burdensome Obligations
SCHEDULE 8.21                       Labor Matters
SCHEDULE 9.7                        Permitted Existing Debt
SCHEDULE 9.8                        Permitted Existing Liens
SCHEDULE 9.17                       Permitted Restrictions
SCHEDULE 9.19                       Investments
SCHEDULE 10.1                       Debt to be Repaid
SCHEDULE 13.3                       Addresses for Notices






                                      -vi-

   8


                                    EXHIBITS

                                
EXHIBIT A                           Form of Note (Section 3.1)
EXHIBIT B                           Form of Compliance Certificate (Section 9.1.3)
EXHIBIT C                           Form of Guaranty (Section 1.1)
EXHIBIT D                           Form of Security Agreement (Section 1.1)
EXHIBIT E                           Form of Pledge Agreement (Section 1.1)
EXHIBIT F                           Form of Solvency Certificate (Section 10.1.13)
EXHIBIT G                           Form of Assignment Agreement (Section 13.9.1)
EXHIBIT H                           [Reserved]
EXHIBIT I                           Subordination Terms (Section 1.1)



                                     -vii-


   9


                                CREDIT AGREEMENT


         THIS CREDIT AGREEMENT dated as of August 3, 1999 (this "Agreement") is
entered into among UNITED AUTO GROUP, INC. (the "Company"), the financial
institutions that are or may from time to time become parties hereto (together
with their respective successors and assigns, the "Lenders") and CHRYSLER
FINANCIAL COMPANY L.L.C. (in its individual capacity, "CFC"), as agent for the
Lenders.

         WHEREAS, the Lenders have agreed to make available to the Company a
revolving credit facility (which includes letters of credit) and an acquisition
loan facility upon the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

         SECTION 1  DEFINITIONS.

         1.1 Definitions. When used herein the following terms shall have the
         following meanings:

         Acquisition means an acquisition by the Company or any Subsidiary of
all or substantially all the assets of a business unit or a controlling interest
in the capital stock or other ownership interests of an Automobile Dealership,
whether through a purchase, merger, consolidation or otherwise.

         Acquisition Commitment Amount means, on any date, (x) $250,000,000, as
reduced from time to time pursuant to Section 6.1 minus (y) the Revolving
Outstandings on such date.

         Acquisition Loan - see Section 2.1.2.

         Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

         Agent means CFC in its capacity as agent for the Lenders hereunder and
any successor thereto in such capacity.

         Agreement - see the Preamble.

   10


         Assignment Agreement - see Section 13.9.1.

         Attorney Costs means, with respect to any Person, all reasonable fees
and charges of any counsel to such Person, the reasonable allocable cost of
internal legal services of such Person, all reasonable disbursements of such
internal counsel and all court costs and similar legal expenses.

         Automobile Dealership means a business that operates a dealership or
dealerships for the retail sales of new and/or used automobiles or trucks and
businesses ancillary to the operation of such dealerships owned or operated by
the Company or its Subsidiaries, including service and parts operations, body
shops, the sale of finance, extended warranty and insurance products (including
after-market items), the financing of the purchase of new and/or used vehicles,
the purchase, sale and servicing of finance contracts for new and/or used
vehicles and other related businesses.

         Business Day means any day of the year (other than any Saturday or
Sunday) which is not a day on which commercial banks are authorized or required
by law to close in Detroit, Michigan.

         Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.

         Cash Collateralize means to deliver cash collateral to the Agent, to be
held as cash collateral for outstanding Letters of Credit, pursuant to
documentation reasonably satisfactory to the Agent and the Company.
Derivatives of such term have corresponding meanings.

         Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case rated at least A-l by Standard & Poor's Ratings Group or P-l
by Moody's Investors Service, Inc., (c) any certificate of deposit (or time
deposits represented by such certificates of deposit) or banker's acceptance,
maturing not more than one year after such time, or overnight Federal Funds
transactions that are issued or sold by any Lender or its holding company or by
a commercial banking institution that is a member of the Federal Reserve System
and has a combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with CFC (or with a
commercial banking institution of the stature referred to in clause (c)) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of CFC (or commercial banking institution) thereunder, (e)
shares of money market mutual funds within the definition of Rule 2a-7
promulgated by the SEC under the Investment Company Act of 1940 and (f) other
cash equivalent investments approved by the Agent.


                                       2

   11

         CERCLA - see Section 8.15.

         CFC - see the Preamble.

         Closing Date - see Section 10.1.

         Code means the Internal Revenue Code of 1986.

         Collateral Documents means the Security Agreement, each Pledge
Agreement and any other agreement or instrument pursuant to which the Company,
any Subsidiary or any other Person grants collateral to the Agent for the
benefit of the Lenders to secure the obligations hereunder and under the other
Loan Documents and any obligations owing by the Company or any Subsidiary to CFC
in respect of any Floor Plan Financing.

         Commitment means, as to any Lender, such Lender's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
The initial amount of each Lender's Pro Rata Share of the Revolving Commitment
Amount and the Acquisition Commitment Amount is set forth on Schedule 2.1.

         Company - see the Preamble.

         Computation Period means each period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.

         Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any gains (or losses) from asset sales,
any extraordinary or unusual non-recurring gains (or losses) and any gains (or
losses) from discontinued operations.

         Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.

         Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person in accordance with GAAP, (c) all obligations of such Person to pay
the deferred purchase price of property or services (excluding trade accounts
payable and accrued expenses in the ordinary course of business), (d) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person, (e) all

                                       3

   12


obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances issued for the
account of such Person (including the Letters of Credit), (f) all Hedging
Obligations of such Person, (g) all Suretyship Liabilities of such Person and
(h) except to the extent the terms of such Debt provide that such Person is not
liable thereunder, all Debt of any partnership of which such Person is a general
partner.

         Debt to be Repaid means Debt listed on Schedule 10.1.

         Disposal - see the definition of "Release".

         Dollar and the sign "$" mean lawful money of the United States of
America.

         EBITDA means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income,
Interest Expense, income tax expense, depreciation and amortization, franchise
taxes and minority interest for such period.

         Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.

         Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.

         Environmental Matters means any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.

         ERISA means the Employee Retirement Income Security Act of 1974.

         Event of Default means any of the events described in Section 11.1.

         Excluded Property means all furniture, fixtures, equipment and real
property (whether fee or leasehold) of the Company and its Subsidiaries.

         Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so


                                       4

   13


published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.

         Fiscal Quarter means a fiscal quarter of a Fiscal Year.

         Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1999") refer to the Fiscal Year ending on December 31 of
such calendar year.

         Floor Plan Financing means a financing undertaken by the Company or any
Subsidiary all of the proceeds of which are used to purchase vehicles and/or
vehicle parts and supplies to be sold in the ordinary course of business of the
Company and the Subsidiaries.

         Floor Plan Financing Provider means each provider of Floor Plan
Financing to the Company and its Subsidiaries.

         Foreign Investment means any Investment in a Subsidiary or any other
Person that is not organized under the laws of the United States (including
Puerto Rico) or Canada.

         Foreign Subsidiary means any Subsidiary of the Company which is not
incorporated or organized in the United States or in any State, territory or
commonwealth thereof.

         FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.

         Funded Debt means all Debt of the Company and its Subsidiaries,
determined on a consolidated basis, excluding (i) contingent obligations in
respect of Suretyship Liabilities (except to the extent constituting Suretyship
Liabilities in respect of Debt of a Person other than the Company or any
Subsidiary), (ii) Hedging Obligations and (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries.

         Funded Debt to EBITDA Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (i) Funded Debt as of such day (minus Debt under Floor
Plan Financings and Subordinated Debt and excluding the lesser of (x) all Debt
outstanding under Capital Leases and (y) $50,000,000) to (ii) EBITDA for the
Computation Period ending on such day. If the Company or any Subsidiary makes
any Acquisition during any Computation Period, EBITDA for such Computation
Period will be determined on a pro forma basis as if such Acquisition were made,
and all Debt incurred in connection therewith was incurred, on the first day
thereof. In determining the pro forma adjustments to EBITDA to be made with
respect to any Acquisition for periods prior to the acquisition date thereof,
actions

                                       5

   14


taken by the Company and its Subsidiaries prior to the first anniversary of such
acquisition date that results in cost savings with respect to such Acquisition
will be deemed to have been taken on the first day of the Computation Period
(with the intent that such cost savings be effectively annualized by
extrapolation from the demonstrated cost savings since the related acquisition
date).

         GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or organizations
with similar functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as of the date
of determination.

         Guaranty means a guaranty substantially in the form of Exhibit C.

         Hazardous Substances - see Section 8.15.

         Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

         Hedging Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement.

         Indemnified Liabilities - see Section 13.13.

         Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases but excluding all interest on Floor Plan Financings).

         Interest Rate means, for each day, a rate per annum equal to the sum of
(a) that rate of interest per annum initially equal to 5.21% and adjusting on
the first day of each month during the term of this Agreement (a "Calculation
Date"), and for each succeeding day until the date of the next monthly
recalculation, the average of (x) the LIBO Rate for such Calculation Date (or,
if such date is not a Business Day, for the immediately preceding Business Day)
and (y) the LIBO Rate for the 16th day of the immediately preceding month (or,
if such date is not a Business Day, for the immediately preceding Business Day)
plus (b) (x) if the Company uses the proceeds of any Loans to repurchase any
Subordinated Notes, two and one quarter percent (2.25%) per annum on that
principal amount of the Revolving Loans up to the principal amount of
Subordinated Notes purchased, plus premium if any on such principal amount and
(y) otherwise two percent (2.00%) per annum. For purposes of this definition,
"LIBO Rate" means, for each date of calculation, (1) the rate of interest
(rounded upwards, if necessary, to the next 1/16th of 1%) published in the Wall
Street Journal on such day (or the immediately preceding Business Day, if such
date is not a Business Day) in its "Money Rates" column


                                       6

   15


as the one month London Interbank Offered Rate for United States dollar
denominated deposits (if the Wall Street Journal ceases to publish such a rate
or substantially changes the methodology used to determine such rate, then the
rate shall be the rate of interest (rounded upwards, if necessary, to the next
1/16th of 1%) published by Reuters Monitor Rates Service on such day (or the
immediately preceding Business Day, if such date is not a Business Day) as the
one month London Interbank Offered Rate for United States dollar denominated
deposits or (2) if such rate is not published or available, such rate as shall
be otherwise independently determined by the Agent on a basis substantially
similar to the methodology used by the Wall Street Journal on the date of this
Agreement.

         Investment means, relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance or by becoming obligated with respect to a Suretyship Liability
in respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).

         Issuing Lender means CFC in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.

         L/C Application means, with respect to any request for the issuance of
a Letter of Credit, a letter of credit application in the form being used by the
Issuing Lender at the time of such request for the type of letter of credit
requested.

         Lender - see the Preamble. References to the "Lenders" shall include
the Issuing Lender; for purposes of clarification only, to the extent that CFC
(or any successor Issuing Lender) may have any rights or obligations in addition
to those of the other Lenders due to its status as Issuing Lender, its status as
such will be specifically referenced.

         Letter of Credit - see Section 2.1.3.

         Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.

         Loan Documents means this Agreement, the Notes, the Guaranty, the
Letters of Credit and the Collateral Documents.

         Loan Party means the Company and each Subsidiary party to any Loan
Document.

         Loans means Acquisition Loans and Revolving Loans.


                                        7


   16

         Margin Stock means any "margin stock" as defined in Regulation U.

         Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Company or any Subsidiary
to perform any of its obligations under any Loan Document or (c) a material
adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan Document.

         Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.

         Note - see Section 3.1.

         PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

         Penske Capital Partners means, collectively, Penske Capital Partners,
L.L.C., International Motor Cars Group I, L.L.C. and International Motor Cars
Group II, L.L.C., each a Delaware limited liability company.

         Permitted Restrictions means restrictions on the ability of any
Subsidiary to declare or pay any dividend or make other distributions, or to
advance or loan funds, to the Company: (i) as set forth on Schedule 9.17 on the
Closing Date, including restrictions imposed by existing Floor Plan Financing
arrangements; (ii) pursuant to modifications to any Floor Plan Financing
arrangement, provided that such modifications are not materially more
restrictive; (iii) applicable to a Person at the time such Person becomes a
Subsidiary and not created in contemplation of such an event; (iv) resulting
from manufacturer-imposed modifications to any franchise agreement; or (v)
imposed by applicable law.

         Person means any natural person, corporation, partnership, joint
venture, trust, limited liability company, association, governmental authority
or unit, or any other entity, whether acting in an individual, fiduciary or
other capacity.

         Pledge Agreement means a pledge agreement in substantially the form of
Exhibit E.

                                       8


   17

         Prime Rate means, on any day, the rate of interest per annum published
in the Wall Street Journal in its "Money Rates" column as the Prime Rate for
such day.

         Pro Rata Share means, with respect to any Lender, the percentage
specified opposite such Lender's name on Schedule 2.1 hereto, as adjusted from
time to time in accordance with the terms hereof.

         RCRA - see Section 8.15.

         Refinancing Debt means Debt that refunds or refinances any Debt,
including Debt that refinances other Refinancing Debt; provided that (i) the
Refinancing Debt has a maturity no earlier than the maturity of the Debt being
refinanced, (ii) the Refinancing Debt has a weighted average life to maturity no
earlier than the weighted average life to maturity of the Debt being refinanced,
(iii) the Refinancing Debt is incurred in an aggregate principal amount (or, if
issued with original issue discount, an aggregate issue price) that is equal to
or less than the aggregate principal amount (or, if issued with original issue
discount, the aggregate accreted value) then outstanding of the Debt being
refinanced and (iv) if the Debt being refinanced is Subordinated Debt, the
subordination terms of the Refinancing Debt are at least as favorable to the
Lenders as the subordination terms of the Debt being refinanced.

         Regulation U means Regulation U of the FRB.

         Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.

         Required Lenders means Lenders having Pro Rata Shares aggregating more
than 50%.

         Revolving Commitment Amount means $125,000,000, as reduced from time to
time pursuant to Section 6.1.

         Revolving Loan - see Section 2.1.1.

         Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.

         SEC means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions thereof.


                                       9


   18

         Securities Purchase Agreement means the Securities Purchase Agreement
dated as of April 12, 1999 among the Company, International Motor Cars Group I,
L.L.C. and International Motor Cars Group II, L.L.C.

         Security Agreement means a security agreement substantially in the form
of Exhibit D.

         Seller Subordinated Debt means unsecured indebtedness of the Company
that:

                  (a) is subordinated, substantially upon the terms set forth in
         Exhibit I or other terms that are more favorable to the Agent and the
         Lenders, in right of payment to the payment in full in cash of the
         Loans and all other amounts owed under the Loan Documents (whether or
         not matured or due and payable), including amounts required to provide
         cash collateral for the Letters of Credit; and

                  (b) represents all or part of the purchase price payable by
         the Company in connection with an Acquisition permitted under this
         Agreement.

         Series A Subordinated Notes means the Senior Subordinated Notes due
2007, in an initial aggregate principal amount of $150,000,000 issued pursuant
to the Series A Subordinated Notes Indenture.

         Series A Subordinated Notes Indenture means the Indenture dated as of
 July 23, 1997 between the Company and the Trustee.

         Series B Subordinated Notes means the Senior Subordinated Notes due
2007, in an initial aggregate principal amount of $50,000,000 issued pursuant to
the Series B Subordinated Notes Indenture.

         Series B Subordinated Notes Indenture means the Indenture dated as of
September 16, 1997 between the Company and the Trustee.

         Stated Amount means, with respect to any Letter of Credit at any date
of determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.

         Stockholders' Equity, of any Person, means the excess of total assets
over total liabilities of such Person and its Subsidiaries, as reported on the
Company's consolidated financial statements.

         Subordinated Debt means (i) the Subordinated Notes, (ii) Seller
Subordinated Debt and (iii) any other unsecured Debt of the Company which has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Required Lenders.

                                       10


   19

         Subordinated Notes means the Series A Subordinated Notes and the Series
B Subordinated Notes.

         Subordinated Notes Indentures means the Series A Subordinated Notes
Indenture and the Series B Subordinated Notes Indenture.

         Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have more than 50% of the
ordinary voting power for the election of directors or other managers of such
corporation, partnership, limited liability company or other entity. Unless the
context otherwise requires, each reference to Subsidiaries herein shall be a
reference to Subsidiaries of the Company.

         Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.

         Taxes - see Section 7.6.

         Termination Date means the earlier to occur of (a) August 3, 2005 or
(b) such other date on which the Commitments terminate pursuant to Section 6 or
11.

         Trustee means The Bank of New York, as trustee under the Subordinated
Notes Indentures.

         Unmatured Event of Default means any event that, if it continues
uncured, will, with lapse of time or notice or both, constitute an Event of
Default.

         Wholly-Owned Subsidiary means, as to any Person, another Person all of
the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
such Person and/or another Wholly-Owned Subsidiary of such Person.

         Year 2000 Problem means the risk that computer applications and
embedded microchips in non-computing devices may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999.


                                       11


   20

         1.2 Other Interpretive Provisions. (a) The meanings of defined terms
 are equally applicable to the singular and plural forms of the defined terms.

         (b)    Section, Schedule and Exhibit references are to this Agreement
 unless otherwise specified.

         (c)    The term "including" is not limiting and means "including
 without limitation."

         (d)    In the computation of periods of time from a specified date to
 a later specified date, the word "from" means "from and including"; the words
 "to" "until" each mean "to but excluding", and the word "through" means "to and
 including."

         (e)    Unless otherwise expressly provided herein, (i) references to
 agreements (including this Agreement) and other contractual instruments shall
 be deemed to include all subsequent amendments and other modifications thereto,
 but only to the extent such amendments and other modifications are not
 prohibited by the terms of any Loan Document, and (ii) references to any
 statute or regulation shall be construed as including all statutory and
 regulatory provisions amending, replacing, supplementing or interpreting such
 statute or regulation.

         (f)    This Agreement and the other Loan Documents may use several
 different limitations, tests or measurements to regulate the same or similar
 matters. All such limitations, tests and measurements are cumulative and each
 shall be performed in accordance with its terms.

         (g)    This Agreement and the other Loan Documents are the result of
 negotiations among and have been reviewed by counsel to the Agent, the Company,
 the Lenders and the other parties thereto and are the products of all parties.
 Accordingly, they shall not be construed against the Agent or the Lenders
 merely because of the Agent's or Lenders' involvement in their preparation.

         (h)    References herein to the "knowledge" of the Company or any
 Subsidiary shall mean the actual knowledge of the officers of the Company or
 such Subsidiary.

         SECTION 2  COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF
                     CREDIT PROCEDURES.

         2.1 Commitments. On and subject to the terms and conditions of this
 Agreement, each of the Lenders, severally and for itself alone, agrees to make
 Loans to, and to issue or participate in Letters of Credit for the account of,
 the Company as follows:

         2.1.1 Revolving Loan Commitment. Each Lender will make loans on a
 revolving basis ("Revolving Loans") from time to time until the Termination
 Date in such Lender's Pro Rata Share of


                                       12
   21
such aggregate amounts as the Company may request from all Lenders; provided
that the Revolving Outstandings will not at any time exceed the Revolving
Commitment Amount.

         2.1.2 Acquisition Loan Commitment. Each Lender will make loans on a
revolving basis ("Acquisition Loans") from time to time until the Termination
Date in such Lender's Pro Rata Share of such aggregate amounts as the Company
may request from all Lenders; provided that the aggregate principal amount of
all outstanding Acquisition Loans will not at any time exceed the Acquisition
Commitment Amount.

         2.1.3 L/C Commitment. (a) The Issuing Lender will issue letters of
credit, in each case containing such terms and conditions as are permitted by
this Agreement and are reasonably satisfactory to the Issuing Lender (each a
"Letter of Credit"), at the request of and for the account of the Company from
time to time before the date which is 30 days prior to the Termination Date and
(b) as more fully set forth in Section 2.3.2, each Lender agrees to purchase a
participation in each such Letter of Credit; provided that (i) the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed $10,000,000
and (ii) the Revolving Outstandings will not at any time exceed the Revolving
Commitment Amount.

         2.2 Loan Procedures. The Company shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to the
Agent of each proposed borrowing not later than 10:00 A.M., Detroit time, on the
proposed date of such borrowing. Each such notice shall be effective upon
receipt by the Agent, shall be irrevocable, and shall specify the date and
amount of borrowing. Promptly upon receipt of such notice, the Agent shall
advise each Lender thereof. Not later than 1:00 P.M., Detroit time, on the date
of a proposed borrowing, each Lender shall provide the Agent at the office
specified by the Agent with immediately available funds covering such Lender's
Pro Rata Share of such borrowing and, so long as the Agent has not received
written notice that the conditions precedent set forth in Section 10 with
respect to such borrowing have not been satisfied, the Agent shall pay over the
funds received by the Agent to the Company on the requested borrowing date. Each
borrowing shall be on a Business Day.

         2.3 Letter of Credit Procedures.

         2.3.1 L/C Applications. The Company shall give notice to the Agent and
the Issuing Lender of the proposed issuance of each Letter of Credit on a
Business Day which is at least three Business Days (or such lesser number of
days as the Agent and the Issuing Lender shall agree in any particular instance
in their sole discretion) prior to the proposed date of issuance of such Letter
of Credit. Each such notice shall be accompanied by an L/C Application, duly
executed by the Company and in all respects reasonably satisfactory to the Agent
and the Issuing Lender, together with such other documentation as the Agent or
the Issuing Lender may reasonably request in support thereof, it being
understood that each L/C Application shall specify, among other things, the date
on which the proposed Letter of Credit is to be issued, the expiration date of
such Letter of Credit (which shall not be later than the




                                       13

   22


earlier to occur of (x) one year after the date of issuance thereof and (y)
thirty days prior to the scheduled Termination Date) and whether such Letter of
Credit is to be transferable in whole or in part. So long as the Issuing Lender
has not received written notice that the conditions precedent set forth in
Section 10 with respect to the issuance of such Letter of Credit have not been
satisfied, the Issuing Lender shall issue such Letter of Credit on the requested
issuance date. The Issuing Lender shall promptly advise the Agent of the
issuance of each Letter of Credit and of any amendment thereto, extension
thereof or event or circumstance changing the amount available for drawing
thereunder. In the event of any inconsistency between the terms of any L/C
Application and the terms of this Agreement, the terms of this Agreement shall
control.

         2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Lender shall be deemed to have
sold and transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty, an undivided interest and participation,
to the extent of such other Lender's Pro Rata Share, in such Letter of Credit
and the Company's reimbursement obligations with respect thereto. For the
purposes of this Agreement, the unparticipated portion of each Letter of Credit
shall be deemed to be the Issuing Lender's "participation" therein. The Issuing
Lender hereby agrees, upon request of the Agent or any Lender, to deliver to the
Agent or such Lender a list of all outstanding Letters of Credit issued by the
Issuing Lender, together with such information related thereto as the Agent or
such Lender may reasonably request.

         2.3.3 Reimbursement Obligations. The Company hereby unconditionally and
irrevocably agrees to reimburse the Issuing Lender for each payment or
disbursement made by the Issuing Lender under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Lender is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the Interest
Rate from time to time in effect plus, beginning on the third Business Day after
receipt of notice from the Issuing Lender of such payment or disbursement, 2%.
The Issuing Lender shall notify the Company and the Agent whenever any demand
for payment is made under any Letter of Credit by the beneficiary thereunder;
provided that the failure of the Issuing Lender to so notify the Company shall
not affect the rights of the Issuing Lender or the Lenders in any manner
whatsoever.

         2.3.4 Limitation on Obligations of Issuing Lender. In determining
whether to pay under any Letter of Credit, the Issuing Lender shall not have any
obligation to the Company or any Lender other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and appear to comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Issuing Lender
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence and willful misconduct, shall not impose upon the
Issuing Lender any liability to the Company or any Lender and shall not reduce
or impair the




                                       14

   23


Company's reimbursement obligations set forth in Section 2.3.3 or the
obligations of the Lenders pursuant to Section 2.3.5.

         2.3.5 Funding by Lenders to Issuing Lender. If the Issuing Lender makes
any payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Lender in full for such payment or disbursement by 10:00
A.M., Detroit time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuing Lender from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Lender shall be obligated to pay to the Agent
for the account of the Issuing Lender, in full or partial payment of the
purchase price of its participation in such Letter of Credit, its Pro Rata Share
of such payment or disbursement (but no such payment shall diminish the
obligations of the Company under Section 2.3.3), and, upon notice from the
Issuing Lender, the Agent shall promptly notify each other Lender thereof. Each
other Lender irrevocably and unconditionally agrees to so pay to the Agent in
immediately available funds for the Issuing Lender's account the amount of such
other Lender's Pro Rata Share of such payment or disbursement. If and to the
extent any Lender shall not have made such amount available to the Agent by 2:00
P.M., Detroit time, on the Business Day on which such Lender receives notice
from the Agent of such payment or disbursement (it being understood that any
such notice received after noon, Detroit time, on any Business Day shall be
deemed to have been received on the next following Business Day), such Lender
agrees to pay interest on such amount to the Agent for the Issuing Lender's
account forthwith on demand, for each day from the date such amount was to have
been delivered to the Agent to the date such amount is paid, at a rate per annum
equal to (a) for the first three days after demand, the Federal Funds Rate from
time to time in effect and (b) thereafter, the Interest Rate from time to time
in effect. Any Lender's failure to make available to the Agent its Pro Rata
Share of any such payment or disbursement shall not relieve any other Lender of
its obligation hereunder to make available to the Agent such other Lender's Pro
Rata Share of such payment, but no Lender shall be responsible for the failure
of any other Lender to make available to the Agent such other Lender's Pro Rata
Share of any such payment or disbursement.

         2.4 Commitments Several. The failure of any Lender to make a requested
Loan on any date shall not relieve any other Lender of its obligation (if any)
to make a Loan on such date, but no Lender shall be responsible for the failure
of any other Lender to make any Loan to be made by such other Lender.

         2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Lender shall have an obligation to make any Loan and the Issuing
Lender shall not have any obligation to issue any Letter of Credit, if an Event
of Default or Unmatured Event of Default has occurred and is continuing.





                                       15
   24


         SECTION 3 NOTES EVIDENCING LOANS.

         3.1 Notes. The Loans of each Lender shall be evidenced by a promissory
note (each a "Note") substantially in the form set forth in Exhibit A, with
appropriate insertions, payable to the order of such Lender in a face principal
amount equal to the sum of such Lender's Pro Rata Share of the Revolving
Commitment Amount and the Acquisition Commitment Amount, in full on the
Termination Date.

         3.2 Recordkeeping. Each Lender shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Lender and each repayment thereof. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on such Note. The failure to so record any such amount
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Company hereunder or under any Note to
repay the principal amount of the Loans evidenced by such Note together with all
interest accruing thereon.

         SECTION 4 INTEREST.

         4.1 Interest Rate. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full at the Interest Rate.

         4.2 Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on the last day of each month and at maturity. After
maturity, accrued interest on all Loans shall be payable on demand.

         4.3 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The Interest Rate
shall change simultaneously with each change in the LIBO Rate average referred
to in the definition of "Interest Rate."

         SECTION 5 FEES.

         5.1 Letter of Credit Fees. The Company agrees to pay to the Agent for
the account of each Lender a fee for each Letter of Credit equal to 0.50% per
annum of such Lender's Pro Rata Share (as adjusted from time to time) of the
undrawn amount of such Letter of Credit (computed for the actual number of days
elapsed on the basis of a year of 360 days). Such letter of credit fee shall be
payable in arrears on the last day of each month and on the Termination Date (or
such later date on which such Letter of Credit expires or is terminated) for the
period from the date of the issuance of each Letter of Credit (or the last day
on which the letter of credit fee was paid with respect thereto) to the date
such payment is due or, if earlier, the date on which the Letter of Credit
expired or was terminated.





                                       16

   25


         SECTION 6  REDUCTION OR TERMINATION OF THE REVOLVING
                    COMMITMENT AMOUNT AND THE ACQUISITION COMMITMENT
                    AMOUNT; PREPAYMENTS.

         6.1. Voluntary Reduction or Termination of Commitment Amounts. (a) The
Company may from time to time by written notice to the Agent (which shall
promptly advise each Lender thereof) permanently reduce the Revolving Commitment
Amount to an amount not less than the Revolving Outstandings. Concurrently with
any reduction of the Revolving Commitment Amount to zero, the Company shall pay
all interest on the Revolving Loans and all letter of credit fees and shall Cash
Collateralize in full all obligations arising with respect to the Letters of
Credit.

         (b) The Company may from time to time by written notice to the Agent
(which shall promptly advise each Lender thereof) permanently reduce the
Acquisition Commitment Amount to an amount not less than the aggregate
outstanding principal amount of all Acquisition Loans.

         (c) All reductions of the Revolving Commitment Amount and the
Acquisition Commitment Amount shall reduce the Commitments pro rata among the
Lenders according to their respective Pro Rata Shares.

         6.2 Voluntary Prepayments. The Company may from time to time prepay the
Loans in whole or in part, without premium or penalty.

         SECTION 7  MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

         7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Agent in immediately
available funds at the office specified by the Agent not later than noon,
Detroit time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the following Business Day. The
Agent shall promptly remit to each Lender its share of all such payments
received in collected funds by the Agent for the account of such Lender.

         7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, first to Revolving Loans used to repurchase Subordinated Notes, next to
other Revolving Loans and next to Acquisition Loans. Concurrently with each
remittance to any Lender of its share of any such payment, the Agent shall
advise such Lender as to the application of such payment.

         7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be





                                       17

   26

extended to the immediately following Business Day and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.

         7.4 Setoff. The Company agrees that the Agent and each Lender have all
rights of set-off provided by applicable law, and in addition thereto, the
Company agrees that at any time any Event of Default exists, the Agent and each
Lender may apply to the payment of any obligations of the Company hereunder,
whether or not then due, any and all balances, credits, deposits, accounts or
moneys of the Company then or thereafter with the Agent or such Lender. The
Agent or the Lender exercising the set-off shall promptly notify the Company
thereof after making such exercise; provided that failure to give such notice
shall not affect the validity of the set-off.

         7.5 Proration of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise, but excluding any payment pursuant to Section 13.9) on account of
principal of or interest on any Loan (or on account of its exposure under any
Letter of Credit) in excess of its pro rata share of payments and other
recoveries obtained by all Lenders on account of principal of and interest on
the Loans (or such exposure) then held by them, such Lender shall purchase from
the other Lenders such participations in the Loans and Letters of Credit held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.

         7.6 Taxes. All payments of principal of, and interest on, the Loans and
all other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Lender's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:

                   (a)   pay directly to the relevant authority the full amount
         required to be so withheld or deducted;

                   (b) promptly forward to the Agent an official receipt or
         other documentation satisfactory to the Agent evidencing such payment
         to such authority; and

                   (c) pay to the Agent for the account of the Lenders such
         additional amount as is necessary to ensure that the net amount
         actually received by each Lender will equal the full amount such Lender
         would have received had no such withholding or deduction been required.




                                       18

   27


Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Company will promptly pay such
additional amounts (including any penalty, interest or expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.

         If the Company fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Company shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 7.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Company.

         Each Lender that (a) is organized under the laws of a jurisdiction
other than the United States of America or a state thereof and (b)(i) is a party
hereto on the Closing Date or (ii) becomes an assignee of an interest under this
Agreement under Section 13.9.1 after the Closing Date (unless such Lender was
already a Lender hereunder immediately prior to such assignment) shall execute
and deliver to the Company and the Agent one or more (as the Company or the
Agent may reasonably request) United States Internal Revenue Service Form 4224
or Form 1001 or such other forms or documents, appropriately completed, as may
be applicable to establish that such Lender is exempt from withholding or
deduction of Taxes. The Company shall not be required to pay additional amounts
to any Lender pursuant to this Section 7.6 to the extent that the obligation to
pay such additional amounts would not have arisen but for the failure of such
Lender to comply with this paragraph.

         SECTION 8  WARRANTIES.

         To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Lenders that (provided that
none of the following warranties is made as of any time prior to the Closing
Date):

         8.1 Organization. The Company is a corporation validly existing and in
good standing under the laws of the State of Delaware; each Subsidiary is
validly existing and in good standing under the laws of the jurisdiction of its
organization; and each of the Company and each Subsidiary is duly qualified to
do business in each jurisdiction where, because of the nature of its activities
or properties, such qualification is required, except for such jurisdictions
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect.

         8.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly




                                       19
   28


authorized to borrow monies hereunder and each of the Company and each other
Loan Party is duly authorized to perform its obligations under each Loan
Document to which it is a party. The execution, delivery and performance by the
Company of this Agreement and by each of the Company and each other Loan Party
of each Loan Document to which it is a party, and the borrowings by the Company
hereunder, do not and will not (a) require any consent or approval of any
governmental agency or authority (other than any consent or approval which has
been obtained and is in full force and effect), (b) conflict with (i) any
provision of law, (ii) the charter, by-laws or other organizational documents of
the Company or any other Loan Party or (iii) any agreement, indenture,
instrument or other document, or any judgment, order or decree, which is binding
upon the Company or any other Loan Party or any of their respective properties
or (c) require, or result in, the creation or imposition of any Lien on any
asset of the Company, any Subsidiary or any other Loan Party (other than Liens
in favor of the Agent created pursuant to the Collateral Documents).

         8.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which the Company or any other Loan Party is a party is the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity.

         8.4 Financial Condition. The audited consolidated financial statements
of the Company and its Subsidiaries as at December 31, 1998 and the unaudited
consolidated condensed financial statements of the Company and its Subsidiaries
as at March 31, 1999, copies of each of which have been delivered to the Agent
for distribution to each Lender, were prepared in accordance with GAAP.

         8.5 No Material Adverse Change. Since December 31, 1998 there has been
no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole.

         8.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary which might reasonably be expected to have a Material
Adverse Effect, except as set forth in Schedule 8.6. Other than any liability
incident to such litigation or proceedings, neither the Company nor any
Subsidiary has, to the best of the Company's knowledge, any material contingent
liabilities not listed on Schedule 8.6 or permitted by Section 9.7.

         8.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and, in the case of real property, marketable title to all
of its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like) except as permitted by Section 9.8.




                                       20

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         8.8 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those listed on Schedule 8.8.

         8.9 Pension Plans. (a) During the twelve-consecutive-month period prior
to the date of the execution and delivery of this Agreement or the making of any
Loan or the issuance of any Letter of Credit, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the Company
of any material liability, fine or penalty.

         (b)  All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company or any other member of
the Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Pension Plan, incurred any withdrawal liability with respect to any such plan or
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal from any such
plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent.

         8.10 Investment Company Act. Neither the Company nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.

         8.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.

         8.12 Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.

         8.13 Taxes. Each of the Company and each Subsidiary has filed all
Federal and other material tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.




                                       21

   30


         8.14 Solvency, etc. On the Closing Date, and immediately prior to and
after giving effect to the issuance of each Letter of Credit and each borrowing
hereunder and the use of the proceeds thereof, (a) the assets of the Company and
the other Loan Parties, taken as a whole, will exceed the liabilities of the
Company and the other Loan Parties, taken as a whole, and (b) the Company and
the other Loan Parties, taken as a whole, will be solvent, will be able to pay
their debts as they mature, will own property with fair saleable value greater
than the amount required to pay their debts and will have capital sufficient to
carry on their business as then constituted.

         8.15 Environmental Matters.

                (a)   No Violations. Except as set forth on Schedule 8.15,
neither the Company nor any Subsidiary, nor any operator of the Company's or any
Subsidiary's properties, is in violation, or alleged violation, of any judgment,
decree, order, law, permit, license, rule or regulation pertaining to
environmental matters, including those arising under the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 or any other Environmental Law which individually or
in the aggregate otherwise might reasonably be expected to have a Material
Adverse Effect.

                (b)   Notices. Except as set forth on Schedule 8.15 and for
matters arising after the Closing Date, in each case none of which could singly
or in the aggregate be expected to have a Material Adverse Effect, neither the
Company nor any Subsidiary has received notice from any third party, including
any Federal, state or local governmental authority: (a) that any one of them has
been identified by the U.S. Environmental Protection Agency as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (b) that any hazardous waste, as
defined by 42 U.S.C. ss.6903(5), any hazardous substance as defined by 42 U.S.C.
ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or
any toxic substance, oil or hazardous material or other chemical or substance
regulated by any Environmental Law (all of the foregoing, "Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a Federal, state or local agency or other third
party has conducted a remedial investigation, removal or other response action
pursuant to any Environmental Law; (c) that the Company or any Subsidiary must
conduct a remedial investigation, removal, response action or other activity
pursuant to any Environmental Law; or (d) of any Environmental Claim.

                (c)   Handling of Hazardous Substances. Except as set forth on
Schedule 8.15, (i) no portion of the real property or other assets of the
Company or any Subsidiary has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance in all material respects
with applicable Environmental Laws and no underground tank or other underground
storage receptacle for Hazardous Substances is located on such properties; (ii)
in the course of any activities conducted by the Company, any Subsidiary or the
operators of any real property of the Company or




                                       22

   31


any Subsidiary, no Hazardous Substances have been generated or are being used on
such properties except in accordance in all material respects with applicable
Environmental Laws; (iii) there have been no Releases or threatened Releases of
Hazardous Substances on, upon, into or from any real property or other assets of
the Company or any Subsidiary, which Releases singly or in the aggregate might
reasonably be expected to have a material adverse effect on the value of such
real property or assets; (iv) there have been no Releases on, upon, from or into
any real property in the vicinity of the real property or other assets of the
Company or any Subsidiary which, through soil or groundwater contamination, may
have come to be located on, and which might reasonably be expected to have a
material adverse effect on the value of, the real property or other assets of
the Company or any Subsidiary; and (v) any Hazardous Substances generated by the
Company and its Subsidiaries have been transported offsite only by properly
licensed carriers and delivered only to treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are operating in compliance in all
material respects with such permits and applicable Environmental Laws.

                (d)   Notwithstanding anything to the contrary herein, the
warranties made in Sections 8.15(a), (c)(i), (c)(iii), (c)(iv) and (c)(v) shall
be deemed made to the best of the Company's knowledge for a period of one year
following the consummation of the transactions in the Securities Purchase
Agreement.

         8.16 Year 2000 Problem. The Company has taken the steps to address the
Year 2000 Problem set forth in the Company's report on Form 10Q filed with the
SEC on May 17, 1999.

         8.17 Insurance. Set forth on Schedule 8.17 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention, and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Company or any
Subsidiary).

         8.18 Information. All information heretofore or contemporaneously
herewith furnished in writing by the Company or any Subsidiary to the Agent or
any Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of the Company or any Subsidiary to the Agent or any
Lender pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be materially incomplete by
omitting to state any material fact necessary to make such information not
misleading in light of the circumstances under which made (it being recognized
by the Agent and the Lenders that any projections and forecasts provided by the
Company are based on good faith estimates and assumptions believed by the
Company to be reasonable as of the date of the applicable projections or
forecasts and






                                       23

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that actual results during the period or periods covered by any such projections
and forecasts may differ from projected or forecasted results).

         8.19 Intellectual Property. The Company and each Subsidiary owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as are necessary for the conduct of the
business of the Company and its Subsidiaries, without any infringement upon
rights of others, except to the extent that failure to comply with any of the
foregoing could not reasonably be expected to have a Material Adverse Effect.

         8.20 Burdensome Obligations. Neither the Company nor any Subsidiary is
a party to any agreement or contract or subject to any corporate or partnership
restriction which might reasonably be expected to have a Material Adverse
Effect, excluding those items set forth in Schedule 8.20.

         8.21 Labor Matters. Except as set forth on Schedule 8.21, neither the
Company nor any Subsidiary is subject to any labor or collective bargaining
agreement. There are no existing or threatened strikes, lockouts or other labor
disputes involving the Company or any Subsidiary that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Company and its Subsidiaries are not in
violation of the Fair Labor Standards Act or any other applicable law, rule or
regulation dealing with such matters.

         8.22 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurring by the Company of any Debt hereunder
or under any other Loan Document.

         8.23 Securities Purchase Agreement. Each of the Company and, to the
Company's knowledge, each other party to the Securities Purchase Agreement, has
duly taken all necessary corporate, partnership or other organizational action
to authorize the execution, delivery and performance of the Securities Purchase
Agreement and the consummation of transactions contemplated thereby.

         (b) The consummation of the transactions contemplated by the Securities
Purchase Agreement will comply in all material respects with all applicable
legal requirements, and all necessary governmental, regulatory, creditor,
shareholder, partner and other material consents, approvals and exemptions
required to be obtained by the Company will be, prior to consummation of such
transactions, duly obtained and will be in full force and effect. As of the time
of consummation of such transactions, all applicable waiting periods with
respect to such transactions will have expired without any action being taken by
any competent governmental authority which restrains, prevents or imposes
material adverse conditions upon the consummation of such transactions.

         (c) The execution and delivery of the Securities Purchase Agreement did
not, and the consummation of the transactions contemplated thereby will not,
violate any statute or regulation of the




                                       24

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United States (including any securities law) or of any state or other applicable
jurisdiction, or any order, judgment or decree of any court or governmental body
binding on the Company or any Subsidiary or result in a breach of, or constitute
a default under, any material agreement, indenture, instrument or other
document, or any judgment, order or decree, to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound.

         (d)   No statement or representation made in the Securities Purchase
Agreement by the Company or, to the Company's knowledge, any other Person,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading.

         8.24 Senior Debt. The obligations of the Company and each Loan Party
under the Loan Documents constitute "Senior Debt" of the Company or such Loan
Party, as applicable, under and as defined in each Subordinated Notes Indenture.

         SECTION 9  COVENANTS.

         Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full and all Letters of Credit have been Cash
Collateralized or terminated, the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it will:

         9.1 Reports, Certificates and Other Information. Furnish to the Agent:

         9.1.1 Annual Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year: (a) a copy of the annual report of the
Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries for such Fiscal Year, certified (without any
qualification arising from the scope of the audit) by Deloitte & Touche or other
independent auditors of recognized standing selected by the Company and
reasonably acceptable to the Agent, together with a written statement from such
accountants to the effect that in making the examination necessary for the
signing of such annual audit report by such accountants, nothing came to their
attention that caused them to believe that the Company was not in compliance
with any provision of Section 9.6, 9.7 or 9.9 of this Agreement insofar as such
provision relates to accounting matters or, if something has come to their
attention that caused them to believe that the Company was not in compliance
with any such provision, describing such non-compliance in reasonable detail;
and (b) consolidating balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and a consolidating statement of earnings for the
Company and its Subsidiaries for such Fiscal Year.




                                       25

   34


         9.1.2 Interim Reports. Promptly when available and in any event within
60 days after the end of each Fiscal Quarter (except the last Fiscal Quarter of
each Fiscal Year), consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such Fiscal Quarter, together with
consolidated and consolidating statements of earnings and cash flows for such
Fiscal Quarter and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such Fiscal Quarter, together with a
comparison with the corresponding period of the previous Fiscal Year; provided,
that so long as the Company is a registrant within the meaning of Rule 1-01 of
Regulation S-X of the SEC, the Company may deliver a copy of its report on Form
10Q for such Fiscal Quarter, together with consolidating balance sheets and
consolidating statements of earnings for the relevant period, in lieu of the
foregoing within such 60-day period.


         9.1.3 Compliance Certificates. Contemporaneously with the furnishing of
a copy of each annual audit report pursuant to Section 9.1.1 and each set of
quarterly statements pursuant to Section 9.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer or the President of the Company, containing a computation of
each of the financial ratios and restrictions set forth in Section 9.6 and a
statement to the effect that such officer has not become aware of any Event of
Default or Unmatured Event of Default that has occurred and is continuing or, if
there is any such event, describing it and the steps, if any, being taken to
cure it and setting forth all Events of Default that had occurred but were cured
or waived during the period covered by the related financial statements.

         9.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing
or sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC; copies of all registration
statements of the Company or any Subsidiary filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made to
security holders generally.

         9.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
the Company obtaining knowledge of any of the following, written notice
describing the same and the steps being taken by the Company or the Subsidiary
affected thereby with respect thereto:

                (a)   the occurrence of an Event of Default or an Unmatured
Event of Default;

                (b)   any litigation, arbitration or governmental investigation
         or proceeding not previously disclosed by the Company to the Lenders
         which has been instituted or, to the knowledge of the Company, is
         threatened against the Company or any Subsidiary or to which any of
         the properties of any thereof is subject which might reasonably be
         expected to have a Material Adverse Effect;




                                       26

   35


                (c)   the institution of any steps by any member of the
         Controlled Group or any other Person to terminate any Pension Plan, or
         the failure of any member of the Controlled Group to make a required
         contribution to any Pension Plan (if such failure is sufficient to
         give rise to a Lien under Section 302(f) of ERISA) or to any
         Multiemployer Pension Plan, or the taking of any action with respect
         to a Pension Plan which could result in the requirement that the
         Company furnish a bond or other security to the PBGC or such Pension
         Plan, or the occurrence of any event with respect to any Pension Plan
         or Multiemployer Pension Plan which could result in the incurrence by
         any member of the Controlled Group of any material liability, fine or
         penalty (including any claim or demand for withdrawal liability or
         partial withdrawal from any Multiemployer Pension Plan), or any
         material increase in the contingent liability of the Company with
         respect to any post-retirement welfare plan benefit, or any notice
         that any Multiemployer Pension Plan is in reorganization, that
         increased contributions may be required to avoid a reduction in plan
         benefits or the imposition of an excise tax, that any such plan is or
         has been funded at a rate less than that required under Section 412 of
         the Code, that any such plan is or may be terminated, or that any such
         plan is or may become insolvent;

                (d)   any cancellation (unless contemporaneously replaced with
         similar coverage) or material change in any insurance maintained by
         the Company or any Subsidiary;

                (e)   any material violation of law by the Company or any
         Subsidiary or any officer or director of the Company or any Subsidiary
         related to the business of the Company or such Subsidiary; or

                (f)   any other event (including any violation of any
         Environmental Law or the assertion of any Environmental Claim) which
         might reasonably be expected to have a Material Adverse Effect.

         9.1.6 Management Reports. Promptly upon receipt thereof, copies of all
detailed financial and management reports submitted to the Company by
independent auditors in connection with each audit made by such auditors of the
books of the Company, to the extent such reports identify a material deficiency
in the Company's internal controls.

         9.1.7 Subordinated Debt Notices. Promptly from time to time, copies of
any material notices (including notices of default or acceleration) received
from any holder, or any notice from any trustee, of, under or with respect to
any Subordinated Debt.

         9.1.8 Year 2000 Problem. Promptly upon the request of the Agent or any
Lender, such updated information or documentation as may be reasonably requested
from time to time regarding the efforts of the Company and its Subsidiaries to
address the Year 2000 Problem.


                                       27

   36


         9.1.9 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Lender or the
Agent may reasonably request.

         9.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Lender or the Agent or
any representative thereof to inspect the properties and operations of the
Company or such Subsidiary; and permit, and cause each Subsidiary to permit, at
any reasonable time and with reasonable notice (or at any time without notice if
an Event of Default exists), any Lender or the Agent or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors, and to examine (and, at the
expense of the Agent or any Lender, unless an Event of Default has occurred and
is continuing, in which case at the expense of the Company or the applicable
Subsidiary, photocopy extracts from) any of its books or other records; and
permit, and cause each Subsidiary to permit, the Agent and its representatives
to inspect the inventory and other tangible assets of the Company or such
Subsidiary and to inspect, audit, check and make copies of and extracts from the
books, records, computer data, computer programs, journals, orders, receipts,
correspondence and other data relating to inventory, accounts receivable and any
other collateral.

         9.3 Maintenance of Property; Insurance. (a) Keep, and cause each
Subsidiary to keep, all material property necessary in the business of the
Company or such Subsidiary in good working order and condition, ordinary wear
and tear excepted.

         (b)   Maintain, and cause each Subsidiary to maintain, with responsible
insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent (including customary deductibles) and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated; and, upon request of the Agent or any Lender, furnish to the Agent or
such Lender a certificate setting forth in reasonable detail the nature and
extent of all insurance maintained by the Company and its Subsidiaries. The
Company shall cause each issuer of an insurance policy to provide the Agent with
an endorsement (i) showing loss payable to the Agent with respect to each policy
of property or casualty insurance and naming the Agent and each Lender as an
additional insured with respect to each policy of insurance for liability for
personal injury or property damage, (ii) providing that 30 days' notice will be
given to the Agent prior to any cancellation of, material reduction or change in
coverage provided by or other material modification to such policy and (iii)
reasonably acceptable in all other respects to the Agent. The Company shall
execute and deliver, and shall cause each Subsidiary to execute and deliver, to
the Agent a collateral assignment, in form and substance reasonably satisfactory
to the Agent, of each business interruption insurance policy maintained by the
Company or such Subsidiary.

         9.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be



                                       28

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expected to have a Material Adverse Effect; and (b) pay, and cause each
Subsidiary to pay, prior to delinquency, all taxes and other governmental
charges against it or any of its property, as well as claims of any kind which,
if unpaid, might become a Lien on any of its property; provided that the
foregoing shall not require the Company or any Subsidiary to pay any such tax or
charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP.

         9.5 Maintenance of Existence, etc. Maintain and preserve, and (subject
to Section 9.10 and to the ability of the Company to dissolve Subsidiaries the
dissolution of which could not have a Material Adverse Effect) cause each
Subsidiary to maintain and preserve, (a) its existence and good standing in the
jurisdiction of its organization and (b) its qualification to do business and
good standing in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing does not have a Material Adverse Effect).

         9.6 Financial Covenants.

         9.6.1 Ratio of Funded Debt to Stockholders' Equity. Not permit the
ratio of Funded Debt to Stockholders' Equity to be greater than (x) 2.2:1 at any
time during the period from the Closing Date through December 31, 2000 and (y)
2.1:1 at any time thereafter.

         9.6.2 Ratio of Non-Floorplan Debt to Stockholders' Equity. Not permit
the ratio of Funded Debt (less Debt under Floor Plan Financings) to
Stockholders' Equity to be greater than 1.1:1 at any time.

         9.6.3 Funded Debt to EBITDA Ratio. Not permit the Funded Debt to EBITDA
Ratio as of the last day of any Computation Period to exceed 3.75:1.

         9.6.4 Working Capital. Cause each Subsidiary to maintain such level of
working capital as is necessary to satisfy the requirements of such Subsidiary's
franchise agreements.

         9.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:

                (a)   obligations under this Agreement and the other Loan
         Documents;

                (b)   Debt secured by Liens permitted by Section 9.8(d), and
         extensions, renewals and refinancings thereof;

                (c)  Debt of Subsidiaries to the Company or to any Subsidiary;





                                       29

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                (d)  unsecured Debt of the Company to Subsidiaries;

                (e) (i) the Subordinated Notes and guaranties thereof provided
         by the Subsidiaries, each such guaranty thereof subordinated to the
         obligations of the respective Subsidiary under the Loan Documents on
         substantially the same basis as the obligations of the Company under
         the Subordinated Notes are subordinated to the obligations of the
         Company under the Loan Documents, (ii) other Subordinated Debt and
         (iii) Refinancing Debt in respect thereof; provided that the aggregate
         principal amount of all Seller Subordinated Debt at any time
         outstanding shall not exceed $30,000,000;

                (f) Hedging Obligations incurred for bona fide hedging
         purposes and not for speculation;

                (g) Debt described on Schedule 9.7 and any extension, renewal
         or refinancing thereof so long as the principal amount thereof is not
         increased;

                (h) Debt to be Repaid (so long as such Debt is repaid on or
         prior to the Closing Date);

                (i) [Intentionally left blank];

                (j) Debt with respect to any Floor Plan Financing provided to
         the Company or any Subsidiary by GMAC, BMW Finance, Ford Motor Credit
         or Toyota Motor Credit or any other person to whom CFC, in its sole
         discretion, consents;

                (k) Debt to CFC in respect of Floor Plan Financings;

                (l) Debt with respect to wholesale motor vehicle financing
         provided by Persons other than CFC provided CFC has declined to provide
         the same and the financing is provided by such other Person in
         compliance with Section 13.17; and

                (m) other Debt, in addition to the Debt listed above, in an
         aggregate amount not at any time exceeding $20,000,000.

         9.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:

                (a) Liens for taxes or other governmental charges not at the
         time delinquent or thereafter payable without penalty or being
         contested in good faith by appropriate proceedings and, in each case,
         for which it maintains adequate reserves;



                                       30

   39


                (b) Liens arising in the ordinary course of business (such as
         (i) Liens of carriers, warehousemen, mechanics and materialmen and
         other similar Liens imposed by law and (ii) Liens incurred in
         connection with worker's compensation, unemployment compensation and
         other types of social security (excluding Liens arising under ERISA) or
         in connection with surety bonds, bids, performance bonds and similar
         obligations) for sums not overdue or being contested in good faith by
         appropriate proceedings and not involving any deposits or advances or
         borrowed money or the deferred purchase price of property or services
         and, in each case, for which it maintains adequate reserves;

                (c)  Liens described on Schedule 9.8;

                (d) (i) Liens arising in connection with Capital Leases (and
         attaching only to the property being leased), (ii) Liens existing on
         property at the time of the acquisition thereof by the Company or any
         Subsidiary (and not created in contemplation of such acquisition) and
         (iii) Liens that constitute purchase money security interests on any
         property securing Debt incurred for the purpose of financing all or any
         part of the cost of acquiring such property, provided that (x) any such
         Lien attaches to such property within 60 days of the acquisition
         thereof and attaches solely to the property so acquired and (y) no such
         Lien may attach to any Excluded Property;

                (e) attachments, appeal bonds, judgments and other similar
         Liens, for sums not exceeding $10,000,000 arising in connection with
         court proceedings, provided the execution or other enforcement of such
         Liens is effectively stayed and the claims secured thereby are being
         actively contested in good faith and by appropriate proceedings;

                (f) easements, rights of way, restrictions, minor defects or
         irregularities in title and other similar Liens not interfering in any
         material respect with the ordinary conduct of the business of the
         Company or any Subsidiary;

                (g)  Liens arising under the Loan Documents; and

                (h) Liens on any asset of an Automobile Dealership securing
         Debt permitted by Sections 9.7(j), (k) and (l) (in the case of Debt
         under Sections 9.7(j) and (l), such Liens may attach only to the
         inventory floorplanned by such Debt and proceeds thereof).

         9.9 Restricted Payments. Not, and not permit any Subsidiary to, (a)
make any distribution to any of its shareholders, (b) purchase or redeem any of
its capital stock or other equity interests or any warrants, options or other
rights in respect thereof, (c) pay any management fees or similar fees to any of
its shareholders or any Affiliate thereof, (d) make any redemption, prepayment,
defeasance or repurchase of any Subordinated Debt or (e) set aside funds for any
of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may pay
dividends or make other distributions to the Company or to a



                                       31

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Wholly-Owned Subsidiary and (ii) so long as no Event of Default or Unmatured
Event of Default has occurred and is continuing or would result therefrom, the
Company and its Subsidiaries may (w) pay dividends to its stockholders and
purchase or redeem its capital stock, (x) pay management fees to Young
Automotive Group, LLC, an Indiana limited liability company ("YAG"), and its
Affiliates (collectively, "Young") in connection with joint ventures formed by
the Company and its Subsidiaries pursuant to that certain Joint Venture
Formation Agreement, dated as of January 31, 1998, among the Company, YAG and
certain other parties (the "Young JV Agreement"), in an amount not to exceed 30%
of the annual pre-tax income of all Persons in which Investments are made
pursuant to the Young JV Agreement, (y) repurchase or redeem up to $25,000,000
of Subordinated Notes or any Refinancing Debt in respect thereof and (z)
repurchase or redeem Subordinated Notes or any Refinancing Debt in respect
thereof using the proceeds of an offering of equity securities or Refinancing
Debt of the Subordinated Debt being repurchased or redeemed, which equity
securities and Refinancing Debt are issued by the Company.

         9.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary
to, be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except in the
ordinary course of its business, sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
receivables, except for: (a) any such merger, consolidation, sale, transfer,
conveyance, lease or assignment of or by any Subsidiary into the Company or
into, with or to any other Subsidiary; (b) any such purchase or other
acquisition by the Company or any Subsidiary of the assets or stock of any
Subsidiary; (c) any Acquisition by the Company or any Subsidiary if (1)
immediately before and after giving effect to such Acquisition, no Event of
Default or Unmatured Event of Default shall exist, (2) immediately after giving
effect to such Acquisition, the Company is in pro forma compliance with all the
financial ratios and restrictions set forth in Section 9.6, (3) in the case of
the Acquisition of any Person, the Board of Directors of such Person has
approved such Acquisition and all auto manufacturers doing business with such
Person have consented to such Acquisition (provided that the auto manufacturers
doing business with the acquired Person need not have consented to such
Acquisition at the time of consummation thereof if the Company or the Subsidiary
making such Acquisition has an irrevocable option, on terms and conditions
(including cash escrow) satisfactory to the Agent in its sole discretion, to put
the Person acquired in such Acquisition back to the seller thereof for a price
in cash at least equal to the total amount of cash consideration paid by the
Company or such Subsidiary in such Acquisition (including purchase price,
noncompetition payments, earnout payments and other similar consideration)
within 180 days if such auto manufacturers have not consented to such
Acquisition, which option is otherwise unconditional, and which option must be
exercised by the Company or the applicable Subsidiary within such period if such
consents are not obtained) and (4) prior to and after such Acquisition, the
Chief Financial Officer of the Company has delivered a certificate to the Agent
confirming that the conditions set forth in clauses (1) - (3) above will be (in
the case of a certificate delivered prior to such Acquisition) or have been (in
the case of a certificate delivered after such Acquisition) met; and (d) sales
and dispositions ("Dispositions") of assets (including the stock of
Subsidiaries) for at least fair market value (as




                                       32
   41

determined by the Board of Directors of the Company) so
long as the net book value of all assets sold or otherwise disposed of in any
Fiscal Year does not exceed $50,000,000 (exclusive of any Disposition the net
cash proceeds of which are used within 180 days to purchase another asset
performing the same or a similar function as the asset disposed of).

         9.11 Modification of Organizational Documents. Not permit the
Certificate or Articles of Incorporation, By-Laws or other organizational
documents of the Company or any Subsidiary to be amended or modified in any way
which might reasonably be expected to materially adversely affect the interests
of the Lenders.

         9.12 Use of Proceeds. Use the proceeds of the Loans, and the Letters of
Credit, solely for working capital, for Acquisitions permitted by Section 9.10,
for capital expenditures, to make Investments permitted hereunder and for other
general corporate purposes; and not use or permit any proceeds of any Loan to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying" any Margin Stock.

         9.13 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as the Agent or the Required Lenders may reasonably
request from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, the filing or recording of any of the foregoing,
and the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that (a) the obligations
of the Company hereunder and under the other Loan Documents (i) are secured by
substantially all of the assets (other than Excluded Property) of the Company
and (ii) guaranteed by all of its Subsidiaries (including, promptly upon the
acquisition or creation thereof, any Subsidiary acquired or created after the
date hereof but excluding Foreign Subsidiaries (to the extent that such
exclusion is necessary to avoid material adverse tax consequences for the
Company)) by execution of a counterpart of the Guaranty and (b) the obligations
of each Subsidiary under the Guaranty are secured by substantially all of the
assets (other than Excluded Property) of such Subsidiary (other than Foreign
Subsidiaries (to the extent that such exclusion is necessary to avoid material
adverse tax consequences for the Company)), provided that (i) the pledge by the
Company or any Subsidiary (other than a Foreign Subsidiary) of the stock of any
Foreign Subsidiary shall be limited to 65% of the stock of such Foreign
Subsidiary to the extent the pledge of a greater percentage would have material
adverse tax consequences for the Company and (ii) a pledge of the stock of a
Subsidiary shall not be required if and to the extent that such pledge would
violate a Permitted Restriction in favor of an auto manufacturer.

         9.14 Transactions with Affiliates. Not, and not permit any Subsidiary
to, enter into, or cause, suffer or permit to exist any transaction, arrangement
or contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms that are less favorable than are obtainable from
any Person which is not one of its Affiliates.










                                       33

   42



         9.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.

         9.16 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of the Company or any Subsidiary, the Company shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. Without limiting the generality of the
foregoing, the Company shall, and shall cause each Subsidiary to, comply with
any valid Federal or state judicial or administrative order requiring the
performance at any real property of the Company or any Subsidiary of activities
in response to the Release or threatened Release of a Hazardous Substance.

              (b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Company shall, and shall
cause its Subsidiaries to, dispose of such hazardous waste only at licensed
disposal facilities operating in compliance with Environmental Laws.

         9.17 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document, (b) prohibit the Company or any Subsidiary from granting to the
Agent, for the benefit of the Lenders, a Lien on any of its assets or (c) except
for Permitted Restrictions, create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make other distributions to the Company or any other applicable Subsidiary,
or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or
advances to the Company or (iii) transfer any of its assets or properties to the
Company.

         9.18 Business Activities. Not, and not permit any Subsidiary to, engage
in any line of business other than the businesses engaged in on the date hereof
and businesses reasonably related thereto.

         9.19 Investments. Not, and not permit any Subsidiary to, make or permit
to exist any Investment in any other Person, except (without duplication) the
following:

                (a) contributions by the Company to the capital of any of its
         Subsidiaries, or by any such Subsidiary to the capital of any of its
         Subsidiaries;

                (b) in the ordinary course of business, Investments by the
         Company in any Subsidiary or by any Subsidiary in the Company, by way
         of intercompany loans, advances or guaranties, all to the extent
         permitted by Section 9.7;

                (c) Suretyship Liabilities permitted by Section 9.7;





                                       34


   43


                (d) Cash Equivalent Investments;

                (e) bank deposits in the ordinary course of business;

                (f) Investments in securities of account debtors received
         pursuant to any plan of reorganization or similar arrangement upon the
         bankruptcy or insolvency of such account debtors;

                (g) Investments to consummate Acquisitions permitted by Section
         9.10;

                (h) Investments listed on Schedule 9.19;

                (i) Investments in an aggregate amount not exceeding $15,000,000
         at any one time outstanding in Persons engaged in businesses in which
         the Company and its Subsidiaries are permitted to engage hereunder
         (provided that any Investment made with the proceeds of any offering of
         equity securities or Subordinated Debt of the Company shall be
         disregarded when determining compliance with the aggregate dollar limit
         in this clause (i)); and

                (j) such other Investments consented to by the Agent in its sole
         discretion;

provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), (g) or (i) shall be permitted to be made if, immediately before or after
giving effect thereto, any Event of Default or Unmatured Event of Default
exists; and (z) the aggregate amount of Foreign Investments made during the term
of this Agreement shall not exceed $25,000,000 (provided that any Investment
made with the proceeds of any offering of equity securities or Subordinated Debt
of the Company shall be disregarded when determining compliance with the
aggregate dollar limit in this clause (z)).

         9.20 Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under, either Subordinated Notes Indenture
or the Subordinated Notes, in any case, if such amendment, modification or
waiver could reasonably be expected to be adverse to the Lenders in any respect.

         9.21 Limitation on Floor Plan Amendments. Not modify any Floor Plan
Financing arrangement if such modification would have a Material Adverse Effect.








                                       35

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         SECTION 10 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

         The obligation of each Lender to make its Loans and of the Issuing
Lender to issue Letters of Credit is subject to the following conditions
precedent:

         10.1 Initial Credit Extension. The obligation of the Lenders to make
the initial Loans and the obligation of the Issuing Lender to issue its initial
Letter of Credit (whichever first occurs) is, in addition to the conditions
precedent specified in Section 10.2, subject to the conditions precedent that
(1) all Debt to be Repaid has been (or concurrently with the initial borrowing
will be) paid in full, and that all agreements and instruments governing the
Debt to be Repaid and that all Liens securing such Debt to be Repaid have been
(or concurrently with the initial borrowing will be) terminated and (2) the
Agent shall have received (a) evidence, reasonably satisfactory to the Agent,
that the Company has received net cash proceeds of not less than $83,000,000
from Penske Capital Partners in connection with the issuance of convertible
preferred stock under the Securities Purchase Agreement and that Penske Capital
Partners has the ability to elect a majority of the members of the Board of
Directors of the Company; and (b) all of the following, each duly executed and
dated the Closing Date (or such earlier date as shall be satisfactory to the
Agent), in form and substance reasonably satisfactory to the Agent (and the date
on which all such conditions precedent have been satisfied or waived in writing
by the Agent and the Lenders is called the "Closing Date"):

         10.1.1 Notes. The Notes.

         10.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing the execution, delivery and performance by
the Company of this Agreement, the Notes and the other Loan Documents to which
the Company is a party; and certified copies of resolutions of the Board of
Directors of each other Loan Party authorizing the execution, delivery and
performance by such Loan Party of each Loan Document to which such entity is a
party.

         10.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate or partnership action, consents and governmental approvals
(if any) required for the execution, delivery and performance by the Company and
each other Loan Party of the documents referred to in this Section 10.

         10.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate representative) of
each Loan Party certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that the Agent and each Lender may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein).







                                       36

   45

         10.1.5 Guaranty. A counterpart of the Guaranty executed by each
Subsidiary of the Company (other than Foreign Subsidiaries).

         10.1.6 Security Agreement. A counterpart of the Security Agreement
executed by the Company and each Subsidiary (other than Foreign Subsidiaries).

         10.1.7 Pledge Agreements. Pledge Agreements executed by the Company
and Subsidiary which itself owns any Subsidiary, in each case pledging the
equity of all of such Person's Subsidiaries to the extent not prohibited by a
Permitted Restriction in favor of an auto manufacturer, together with all items
required to be delivered in connection therewith.

         10.1.8 Opinion of Counsel. An opinion of counsel reasonably
satisfactory to the Agent.

         10.1.9 Insurance. Evidence satisfactory to the Agent of the existence
of insurance required to be maintained pursuant to Section 9.3(b), together with
evidence that the Agent has been named as a lender's loss payee and an
additional insured on all related insurance policies.

         10.1.10 Copies of Documents. Copies, certified by the Secretary or an
Assistant Secretary of the Company, of each Subordinated Notes Indenture and the
Securities Purchase Agreement.

         10.1.11 Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with all Attorney Costs of the Agent to the extent
invoiced prior to the Closing Date, plus such additional amounts of Attorney
Costs as shall constitute the Agent's reasonable estimate of Attorney Costs
incurred or to be incurred by the Agent through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and the Agent).

         10.1.12 Solvency Certificate. A Solvency Certificate, substantially in
the form of Exhibit F, executed by the Chief Financial Officer of the Company.

         10.1.13 Search Results; Lien Terminations. Certified copies of Uniform
Commercial Code Requests for Information or Copies (Form UCC-11), or a similar
search report certified by a party reasonably acceptable to the Agent, dated a
date reasonably near to the Closing Date, listing all effective financing
statements which name the Company and each other Loan Party (under their present
names and any previous names) as debtors and which are filed in the
jurisdictions in which filings are to be made pursuant to the Collateral
Documents, together with (i) copies of such financing statements, (ii) executed
copies of proper Uniform Commercial Code Form UCC-3 termination statements, if
any, necessary to release all Liens and other rights of any Person in any
collateral described in the Collateral Documents previously granted by any
Person (other than Liens permitted by Section 9.8) and (iii) such other Uniform
Commercial Code Form UCC-3 termination statements as the Agent may reasonably
request.








                                       37


   46



         10.4.14 Filings, Registrations and Recordings. The Agent shall have
received each document (including Uniform Commercial Code financing statements)
required by the Collateral Documents or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create in favor of the
Agent, for the benefit of the Lenders, a perfected Lien on the collateral
described therein, prior and superior to any other Person, in proper form for
filing, registration or recording.

         10.1.15 Closing Certificate. A certificate signed by a Vice President
of the Company dated as of the Closing Date, affirming the matters set forth in
Section 10.2.1 as of the Closing Date.

         10.1.16 Other. Such other documents as the Agent or any Lender may
reasonably request.

         10.2 Conditions. The obligation (a) of each Lender to make each Loan
and (b) of the Issuing Lender to issue each Letter of Credit is subject to the
following further conditions precedent that:

         10.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of Credit,
the following statements shall be true and correct:

                (a) the representations and warranties of the Company and each
         Subsidiary set forth in this Agreement and the other Loan Documents
         shall be true and correct in all material respects with the same effect
         as if then made (except to the extent stated to relate to a specific
         earlier date, in which case such representations and warranties shall
         be true and correct as of such earlier date);

                (b) no Event of Default or Unmatured Event of Default shall have
         then occurred and be continuing; and

                (c) if after giving effect to such borrowing or the issuance of
         such Letter of Credit, the sum of the aggregate principal amount of all
         outstanding Loans plus the Stated Amount of all Letters of Credit would
         exceed the maximum amount of Debt permitted under each of Section
         4.04(ii) of the Series A Subordinated Notes Indenture or Section
         4.4(ii) of the Series B Subordinated Notes Indenture (or any similar
         provision in any instrument, indenture or agreement governing
         Refinancing Debt with respect to the Subordinated Notes (a "Refinancing
         Agreement") that limits the maximum amount of Debt that the Company may
         incur under this Agreement or any other senior credit facility of the
         Company without recourse to any other provision in any such Refinancing
         Agreement, such as (by way of example and not of limitation) provisions
         similar or corresponding to Section 4.04 of the Series A Subordinated
         Notes Indenture (other than clause (ii) thereof) and Section 4.4 of the
         Series B Subordinated Notes Indenture (other than clause (ii)
         thereof)), the Agent shall be satisfied that such borrowing or such
         issuance of a Letter of Credit will not violate either Subordinated
         Notes Indenture (or any Refinancing Agreement) and that the Company's
         obligations to the Agent and the Lenders in




                                       38

   47




         respect of such borrowing or Letter of Credit are "Senior Debt" under
         and as defined in each Subordinated Notes Indenture (and each
         Refinancing Agreement).

         10.2.2 Confirmatory Certificate. If requested by the Agent or any
Lender, the Agent shall have received (in sufficient counterparts to provide one
to each Lender) a certificate dated the date of such requested Loan or Letter of
Credit and signed by a duly authorized representative of the Company as to the
matters set out in Section 10.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a warranty by the Company that the conditions precedent set
forth in Section 10.2.1 will be satisfied at the time of the making of such Loan
or the issuance of such Letter of Credit), together with such other documents as
the Agent or any Lender may reasonably request in support thereof.

         10.3 Further Conditions to Acquisition Loans. In addition to the
conditions set forth in Sections 10.1 and 10.2, the obligation of each Lender to
make each Acquisition Loan is subject to the following further conditions
precedent that:


                (a) all of the proceeds of each such Acquisition Loan shall be
         used to consummate an Acquisition;

                (b) the Agent shall have received evidence of compliance by the
         Person to be acquired in such Acquisition with all auto manufacturers'
         working capital requirements;

                (c) the Agent shall have received a certificate from the Chief
         Financial Officer of the Company to the effect that (i) no Event of
         Default or Unmatured Event of Default shall exist after giving effect
         to the consummation of such Acquisition and (ii) confirming the matters
         set forth in clause (a) above.

         SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT.

         11.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:

         11.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five
Business Days, in the payment when due of any interest, fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable by the
Company hereunder or under any other Loan Document.

         11.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all such Debt so affected) exceeding $20,000,000 and such default
shall (a) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit
the holder







                                       39

   48




or holders thereof, or any trustee or agent for such holder or holders, to cause
such Debt to become due and payable prior to its expressed maturity; or any such
Debt shall be required to be prepaid or redeemed (other than by a regularly
scheduled prepayment or redemption), purchased or defeased or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made, in
each case prior to the stated maturity thereof; or any default shall occur under
any Floor Plan Financing provided by CFC or any Affiliate of CFC to the Company
or any Subsidiary.

         11.1.3 Other Material Obligations. Default in the payment when due, or
in the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services, or any agreement with an auto
manufacturer, where such default, singly or in the aggregate with all other such
defaults, might reasonably be expected to have a Material Adverse Effect or
cause the loss of a material franchise.

         11.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any Subsidiary
(other than a voluntary dissolution, not under any bankruptcy or insolvency law,
of an immaterial Subsidiary), and if such case or proceeding is not commenced by
the Company or such Subsidiary, it is consented to or acquiesced in by the
Company or such Subsidiary, or remains for 30 days undismissed; or the Company
or any Subsidiary takes any action to authorize, or in furtherance of, any of
the foregoing.

         11.1.5 Non-Compliance with Loan Documents. (a) Failure by the Company
to comply with or to perform any covenant set forth in Sections 9.1.5(a), 9.5
through 9.14 (excluding Section 9.6.4), and 9.19 through 9.21; (b) failure by
the Company to comply with the covenant set forth in Section 9.6.4 and
continuance of such failure for 60 days; or (c) failure by the Company to comply
with or to perform any other provision of this Agreement or any other Loan
Document (and not constituting an Event of Default under any other provision of
this Section 11) and continuance of such failure for 30 days.

         11.1.6 Warranties. Any warranty made by the Company or any Subsidiary
herein or any other Loan Document is breached or is false or misleading in any
material respect, or any schedule, certificate, financial statement, report,
notice or other writing furnished by the Company or any Subsidiary to the Agent
or any Lender in connection herewith is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.













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         11.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan, in excess of
$10,000,000; (ii) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that the Company and the Controlled Group have incurred on
the date of such withdrawal) exceeds $10,000,000.

         11.1.8 Judgments. Final judgments which exceed an aggregate of
$10,000,000 shall be rendered against the Company or any Subsidiary and shall
not have been paid, discharged or vacated or had execution thereof stayed
pending appeal within 60 days after entry or filing of such judgments.

         11.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to any Subsidiary, other than by virtue of
the release of such Subsidiary after sale thereof in a transaction permitted
hereunder or the voluntary dissolution of an immaterial Subsidiary; or any
Subsidiary (or any Person by, through or on behalf of such Subsidiary) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty with respect to such Subsidiary.

         11.1.10 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect, other than by virtue of the
release of such Subsidiary after sale thereof in a transaction permitted
hereunder or the voluntary dissolution of an immaterial Subsidiary; or the
Company or any Subsidiary (or any Person by, through or on behalf of the Company
or any Subsidiary) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.

         11.1.11 Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Subsidiary of any Subordinated
Debt, shall cease to be in full force and effect, or the Company or any other
Person (including the holder of any applicable Subordinated Debt) shall contest
in any manner the validity, binding nature or enforceability of any such
provision.

         11.1.12 Change of Control. Penske Capital Partners shall cease to have
the power to elect a majority of the members of the Board of Directors of the
Company.

         11.2 Effect of Event of Default. If any Event of Default described in
Section 11.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing,





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the Agent (upon written request of the Required Lenders) shall declare the
Commitments (if they have not theretofore terminated) to be terminated and/or
declare all Loans and all other obligations hereunder to be due and payable
and/or demand that the Company immediately Cash Collateralize all Letters of
Credit, whereupon the Commitments (if they have not theretofore terminated)
shall immediately terminate and/or all Loans and all other obligations hereunder
shall become immediately due and payable and/or the Company shall immediately
become obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind. The Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. Notwithstanding the foregoing, the effect
as an Event of Default of any event described in Section 11.1.1 or Section
11.1.4 may be waived by the written concurrence of all of the Lenders, and the
effect as an Event of Default of any other event described in this Section 11
may be waived by the written concurrence of the Required Lenders. Any cash
collateral delivered hereunder shall be held by the Agent (without liability for
interest thereon) and applied to reimbursement obligations under the Letters of
Credit. After the expiration or termination of the Letters of Credit, such cash
collateral shall be applied by the Agent to any remaining obligations hereunder
and any excess shall be delivered to the Company or as a court of competent
jurisdiction may elect.

         SECTION 12 THE AGENT.

         12.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 12.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duty or
responsibility except those expressly set forth herein, nor shall the Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Agent.

         (b) The Issuing Lender shall act on behalf of the Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith.
The Issuing Lender shall have all of the benefits and immunities (i) provided to
the Agent in this Section 12 with respect to any acts taken or omissions
suffered by the Issuing Lender in connection with Letters of Credit issued by it
or proposed to be issued by it and the applications and agreements for letters
of credit pertaining to such Letters of Credit as fully as if the term "Agent",
as used in this Section 12, included the Issuing Lender with respect to such
acts or omissions and (ii) as additionally provided in this Agreement with
respect to the Issuing Lender.

         12.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to









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advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

         12.3 Liability of Agent. None of the Agent nor any of its directors,
officers, employees or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Lenders for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company's Subsidiaries or
Affiliates.

         12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts reasonably selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, confirmation from the Lenders of their
obligation to indemnify the Agent against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.

         12.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agent for the account of the Lenders, unless
the Agent shall have received written notice from a Lender or the Company
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
may be requested by the Required Lenders in accordance with Section 11; provided
that unless and until the Agent has received any such request, the Agent may
(but shall not be obligated to) take such action, or








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refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest of
the Lenders.

         12.6 Credit Decision. Each Lender acknowledges that the Agent has not
made any representation or warranty to it, and that no act by the Agent
hereafter taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its Subsidiaries, and
made its own decision to enter into this Agreement and to extend credit to the
Company hereunder. Each Lender also represents that it will, independently and
without reliance upon the Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial or other condition or
creditworthiness of the Company which may come into the possession of the Agent.

         12.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the Agent and
its directors, officers, employees and agents (to the extent not reimbursed by
or on behalf of the Company and without limiting the obligation of the Company
to do so), pro rata, from and against any and all Indemnified Liabilities;
provided that no Lender shall be liable for any payment to any such Person of
any portion of the Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, release or discharge of, any or all of the Collateral Documents,
termination of this Agreement and the resignation or replacement of the Agent.

         12.8 Agent in Individual Capacity. CFC and its Affiliates may make
loans to, issue letters of credit for the account of, acquire equity interests
in and generally engage in any kind of business with the Company and its
Subsidiaries and Affiliates as though CFC were not the Agent hereunder and
without




                                       44





   53

notice to or consent of the Lenders. The Lenders acknowledge that, pursuant
to such activities, CFC or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Affiliate) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to their Loans (if any), CFC and its
Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though CFC were not the Agent, and the
terms "Lender" and "Lenders" include CFC and its Affiliates, to the extent
applicable, in their individual capacities.

         12.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders. If the Agent resigns under this Agreement, the Required
Lenders shall, with (so long as no Event of Default exists) the consent of the
Company (which shall not be unreasonably withheld or delayed), appoint from
among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Company, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent, and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 12 and Sections 13.6 and 13.13 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of the Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.

         12.10 Collateral Matters. The Lenders irrevocably authorize the Agent,
at its option and in its discretion, (a) to release any Lien granted to or held
by the Agent under any Collateral Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of the
Company hereunder and the expiration or termination of all Letters of Credit;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
13.1, if approved, authorized or ratified in writing by the Required Lenders; or
(b) to subordinate its interest in any collateral to any holder of a Lien on
such collateral which is permitted by clause (d)(i), (d)(iii) or (h) of Section
9.8. Upon request by the Agent at any time, the Lenders will confirm in writing
the Agent's authority to release, or subordinate its interest in, particular
types or items of collateral pursuant to this Section 12.10.

         12.11 Funding Reliance. (a) Unless the Agent receives notice from a
Lender by noon, Detroit time, on the day of a proposed borrowing that such
Lender will not make available to the Agent an amount equal to its Pro Rata
Share of such borrowing, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make a
corresponding amount available to the Company. If and to the extent such Lender
has not made such amount available to the Agent, such Lender and the Company
jointly and severally agree to repay such amount to the






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Agent forthwith on demand, together with interest thereon at the interest rate
applicable to Loans comprising such borrowing or, in the case of any Lender
which repays such amount within three Business Days, the Federal Funds Rate.
Nothing set forth in this clause (a) shall relieve any Lender of any obligation
it may have to make any Loan hereunder.

         (b) Unless the Agent receives notice from the Company prior to the due
date for any payment hereunder that the Company does not intend to make such
payment, the Agent may assume that the Company has made such payment and, in
reliance upon such assumption, make available to each Lender its share of such
payment. If and to the extent that the Company has not made any such payment to
the Agent, each Lender which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Prime Rate (or, in the case of any Lender
which repays such amount within three Business Days, the Federal Funds Rate).
Nothing set forth in this clause (b) shall relieve the Company of any obligation
it may have to make any payment hereunder.

         SECTION 13 GENERAL.

         13.1 Waiver; Amendments. No delay on the part of the Agent or any
Lender in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by Lenders having an aggregate Pro Rata Share of not less than the
aggregate Pro Rata Share expressly designated herein with respect thereto or, in
the absence of such designation as to any provision of this Agreement or the
Notes, by the Required Lenders, and then any such amendment, modification,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment, modification, waiver or consent
shall change the Pro Rata Share of any Lender without the consent of such
Lender. No amendment, modification, waiver or consent shall (i) increase the
Revolving Commitment Amount or the Acquisition Commitment Amount, (ii) extend
the date for payment of any principal of or interest on the Loans or any fees
payable hereunder, (iii) reduce the principal amount of any Loan, the rate of
interest thereon or any fees payable hereunder, (iv) release the Guaranty or all
or any substantial part of the collateral granted under the Collateral Documents
or (v) reduce the aggregate Pro Rata Share required to effect an amendment,
modification, waiver or consent without, in each case, the consent of all
Lenders. No provision of Section 12 or other provision of this Agreement
affecting the Agent in its capacity as such shall be amended, modified or waived
without the consent of the Agent. No provision of this Agreement relating to the
rights or duties of the Issuing Lender in its capacity as such shall be amended,
modified or waived without the consent of the Issuing Lender.

         13.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such





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confirmation to the Agent) the aggregate unpaid principal amount of the Loans
then outstanding under such Note.

         13.3 Notices. Except as otherwise provided in Section 2.2, all notices
hereunder shall be in writing (including facsimile transmission) and shall be
sent to the applicable party at its address shown on Schedule 13.3 or at such
other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Section 2.2, the Agent shall be entitled to
rely on telephonic instructions from any person that the Agent in good faith
believes is an authorized officer or employee of the Company, and the Company
shall hold the Agent and each other Lender harmless from any loss, cost or
expense resulting from any such reliance.

         13.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Company
notifies the Agent that the Company wishes to amend any covenant in Section 9 to
eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if the Agent notifies the Company that the
Required Lenders wish to amend Section 9 for such purpose), then the Company's
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Company and the Required Lenders.

         13.5 Regulation U. Each Lender represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.

         13.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent (including Attorney
Costs) in connection with the preparation, execution, syndication, delivery and
administration of this Agreement, the other Loan Documents and all other
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith (including any amendment, supplement or waiver to any Loan
Document), and all out-of-pocket costs and expenses (including Attorney Costs)
incurred by the Agent and each Lender after an Event of Default in connection
with the enforcement of this Agreement, the other Loan Documents or any such
other documents. In addition, the Company agrees to pay, and to save the Agent
and the Lenders harmless from all liability for, (a) any stamp or other taxes
(excluding income taxes and franchise taxes based on net income) which may be
payable in connection with the execution








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and delivery of this Agreement, the borrowings hereunder, the issuance of the
Notes or the execution and delivery of any other Loan Document or any other
document provided for herein or delivered or to be delivered hereunder or in
connection herewith and (b) any fees of the Company's auditors in connection
with any reasonable exercise by the Agent and the Lenders of their rights
pursuant to Section 9.2. All obligations provided for in this Section 10.6 shall
survive repayment of the Loans, cancellation of the Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.

         13.7 Subsidiary References. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Company has one or
more Subsidiaries.

         13.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

         13.9 Assignments; Participations.

         13.9.1 Assignments. Any Lender may, with the prior written consents of
the Issuing Lender and the Agent and (so long as no Event of Default exists) the
Company (which consents shall not be unreasonably delayed or withheld and, in
any event, shall not be required for an assignment by a Lender to one of its
Affiliates), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee") all or any fraction of such Lender's
Loans and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount equal to the lesser of (i) the amount
of the assigning Lender's Pro Rata Share of the Revolving Commitment Amount and
the Acquisition Commitment Amount and (ii) $25,000,000; provided that (a) so
long as no Event of Default has occurred, CFC shall hold more than 50% of the
Loans and Commitments, (b) no assignment and delegation may be made to any
Person if, at the time of such assignment and delegation, the Company would be
obligated to pay any greater amount under Section 7.6 to the Assignee than the
Company is then obligated to pay to the assigning Lender under such Section (and
if any assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (c) the Company and the Agent shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:

                  (x) five Business Days (or such lesser period of time as the
         Agent and the assigning Lender shall agree) shall have passed after
         written notice of such assignment and delegation, together with payment
         instructions, addresses and related information with respect to such
         Assignee, shall have been given to the Company and the Agent by such
         assigning Lender and the Assignee,








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                  (y) the assigning Lender and the Assignee shall have executed
         and delivered to the Company and the Agent an assignment agreement
         substantially in the form of Exhibit G (an "Assignment Agreement"),
         together with any documents required to be delivered thereunder, which
         Assignment Agreement shall have been accepted by the Agent, and

                  (z) except in the case of an assignment by a Lender to one of
         its Affiliates, the assigning Lender or the Assignee shall have paid
         the Agent a processing fee of $3,500.

From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (y) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the Assignee). Each such Note shall be dated the effective date
of such assignment. The assigning Lender shall mark the predecessor Note
"exchanged" and deliver it to the Company. Accrued interest on that part of the
predecessor Note being assigned shall be paid as provided in the Assignment
Agreement. Accrued interest and fees on that part of the predecessor Note not
being assigned shall be paid to the assigning Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Note and in this Agreement. Any attempted assignment and delegation not made in
accordance with this Section 13.9.1 shall be null and void.

         Notwithstanding the foregoing provisions of this Section 13.9.1 or any
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations hereunder).

         13.9.2 Participations. Any Lender may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Lender, the Note held by such Lender, the Commitment of such Lender, the
interest of such Lender in any Letter of Credit or any other interest of such
Lender hereunder (any Person purchasing any such participating interest being
herein called a "Participant"). In the event of a sale by a Lender of a
participating interest to a Participant, (x) such Lender shall remain the holder
of its Note for all purposes of this Agreement, (y) the Company and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations hereunder and (z) all amounts payable by
the Company shall be determined as if such Lender had not sold such
participation and shall be paid directly to such Lender. No Participant shall
have any direct or indirect voting rights hereunder except with respect to any
of the events described in the fourth sentence of Section 13.1. Each Lender
agrees to incorporate the requirements of the preceding sentence into each
participation agreement which such Lender enters into with any Participant. The
Company agrees that if amounts outstanding under this Agreement and the Notes
are due and payable (as a result of acceleration or otherwise), each Participant
shall be deemed to have the right of




                                       49

   58


setoff in respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement or such
Note; provided that such right of setoff shall be subject to the obligation of
each Participant to share with the Lenders, and the Lenders agree to share with
each Participant, as provided in Section 7.5. The Company also agrees that each
Participant shall be entitled to the benefits of Section 7.6 as if it were a
Lender (provided that no Participant shall receive any greater compensation
pursuant to Section 7.6 than would have been paid to the participating Lender if
no participation had been sold).

         13.10 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the laws of the State of New York applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and the
Lenders expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law.

         13.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.

         13.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Lenders and the Agent and the
successors and assigns of the Lenders and the Agent.

         13.13 Indemnification by the Company. In consideration of the execution
and delivery of this Agreement by the Agent and the Lenders and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, each Lender and each of the officers,
directors, employees, Affiliates and agents of the Agent and each Lender (each a
"Lender Party") free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the "Indemnified Liabilities"), incurred by the Lender
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Company or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Company or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Company or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (v) the execution, delivery, performance or

                                       50


   59


enforcement of this Agreement or any other Loan Document by any of the Lender
Parties, except for any such Indemnified Liabilities arising on account of the
applicable Lender Party's gross negligence or willful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. All obligations provided for in this Section 13.13 shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit, any foreclosure under, or any modification, release or
discharge of, any or all of the Collateral Documents and termination of this
Agreement.

         13.14 Nonliability of Lenders. The relationship between the Company on
the one hand and the Lenders and the Agent on the other hand shall be solely
that of borrower and lender. Neither the Agent nor any Lender shall have any
fiduciary responsibility to the Company. Neither the Agent nor any Lender
undertakes any responsibility to the Company to review or inform the Company or
any matter in connection with any phase of the Company's business or operations.
The Company agrees that neither the Agent nor any Lender shall have liability to
the Company (whether sounding in tort, contract or otherwise) for losses
suffered by the Company in connection with, arising out of, or in any way
related to the transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Agent
nor any Lender shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Company in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.

         13.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR






                                       51

   60

HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

         13.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

         13.17 CFC Right of First Refusal on Floor Plan Financing. Each
Subsidiary that is engaged in the retail sale or lease of motor vehicle
inventory shall not obtain any wholesale motor vehicle financing from any Person
other than CFC (and other than Floor Plan Financings permitted under Section
9.7(j)) unless and until it shall have submitted a bona fide written proposal (a
"Proposal") to CFC for such financing and CFC has declined to provide the same.
Each Proposal shall set forth all salient terms of the underlying financing. For
purposes hereof, CFC will be deemed to have declined to provide the financing
described in a Proposal if it shall have failed to respond to the Subsidiary
that submitted the Proposal within ten Business Days of receiving such Proposal.
If CFC declines to provide any financing described in a Proposal, the Subsidiary
that submitted the Proposal may then obtain the financing described in the
Proposal from another Person on terms no more favorable to such Person than
those contained in the Proposal and otherwise on terms substantially identical
to those in the Proposal.

         13.18 Confidentiality. Each Lender agrees to take, and to cause its
Affiliates to take, normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by the
Company or any Subsidiary, or by the Agent on the Company's or any Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither such Lender
nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan Documents
or in connection with other business now or hereafter existing or contemplated
with the Company or any Subsidiary, except to the extent such information was or
becomes generally available to the public other than as a result of disclosure
by such Lender or was or becomes available on a non-confidential basis from a
source other than the Company (provided that such source is not bound by a
confidentiality agreement with the Company or any Subsidiary known to such
Lender); provided, however, that any Lender may disclose such information (A) at
the request or pursuant to any requirement of any governmental authority to
which such Lender is subject or in connection with an examination of such Lender
by any such authority, (B) pursuant to subpoena or other court process, when
required to do so in accordance with the provisions of any applicable
requirement of law, (C) to the extent reasonably required in connection with any
litigation or proceeding to which the




                                       52
   61
Agent or any Lender or any of their respective Affiliates may be party, (D) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document, (E) to such Lender's independent
auditors and other professional advisors, (F) to any participant or assignee,
actual or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Lenders hereunder,
(G) as to any Lender or its Affiliate, as expressly permitted under the terms of
any other document or agreement regarding confidentiality to which the Company
or any Subsidiary is party or is deemed party with such Lender or such
Affiliate, (H) to its Affiliates and (I) any nationally recognized rating agency
that requires access to information about such Lender's investment portfolio in
connection with ratings issued to such Lender.

Delivered at Detroit, Michigan as of the day and year first above written.



                                       53


   62



                                    UNITED AUTO GROUP, INC.


                                    By
                                      ------------------------------------------
                                      Title
                                           -------------------------------------

                                    CHRYSLER FINANCIAL COMPANY L.L.C., as Agent
                                    and as a Lender


                                    By
                                      ------------------------------------------
                                      Title
                                           -------------------------------------



                                       54


   63


                                    EXHIBIT A

                                     FORM OF
                                      NOTE

                                                                -------,-------
                                                               Detroit, Michigan

         The undersigned, for value received, promises to pay to the order of
                   (the "Lender") at the principal office of Chrysler Financial
Company L.L.C. (the "Agent") in Southfield, Michigan the aggregate unpaid amount
of all Loans made to the undersigned by the Lender pursuant to the Credit
Agreement referred to below (as shown on the schedule attached hereto (and any
continuation thereof) or in the records of the Lender), such principal amount to
be payable on the dates set forth in the Credit Agreement.

         The undersigned further promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid
in full, payable at the rate(s) and at the time(s) set forth in the Credit
Agreement. Payments of both principal and interest are to be made in lawful
money of the United States of America.

         This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of August 3, 1999 (as
amended or otherwise modified from time to time, the "Credit Agreement";
capitalized terms not otherwise defined herein are used herein as defined in the
Credit Agreement), among the undersigned, certain financial institutions
(including the Lender) and the Agent, to which Credit Agreement reference is
hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or its due date accelerated.

         This Note is made under and governed by the laws of the State of New
York applicable to contracts made and to be performed entirely within such
State.

                                             UNITED AUTO GROUP, INC.



                                             By:
                                                --------------------------------
                                              Title:
                                                    ----------------------------

   64


Schedule attached to Note dated           ,           of UNITED AUTO GROUP, INC.
payable to the order of             .





Date and                        Date and                                           Unpaid
Amount of                       Amount of                   Maturity               Principal           Notation
Loan                            Repayment                   Date                   Balance             Made by
- ----                            ---------                   ----                   -------             -------
                                                                                          


- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------

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- --------------------------------------------------------------------------------------------------------------






   65




                                    EXHIBIT I

                     SUBORDINATION PROVISIONS APPLICABLE TO
                                SUBORDINATED DEBT


The indebtedness evidenced by the subordinated notes shall at all times be
wholly subordinate and junior in right or payment to any and all Superior
Indebtedness (as defined below) in the manner and with the force and effect
hereafter set forth:

         (a) In the event of any liquidation, dissolution or winding up of the
Company, or of any execution sale, receivership, insolvency, bankruptcy,
reorganization or other similar proceeding relative to the Company or its
property, all principal, interest, fees, reimbursement obligations and other
amounts owing on all Superior Indebtedness shall first be paid in full before
any payment is made upon the indebtedness evidenced by the subordinated notes;
and in any such event any payment or distribution of any kind or character,
whether in cash, property or securities (other than in securities or other
evidences of indebtedness, the payment of which is subordinated to the same
extent as the indebtedness evidenced hereby to the payment of all Superior
Indebtedness which may at the time be outstanding) which shall be made upon or
in respect of the subordinated notes shall be paid over to the holders of such
Superior Indebtedness, pro rata, for application in payment thereof until such
Superior Indebtedness shall have been paid or satisfied in full.

         (b) During the continuance of any default in any agreement pursuant to
which any Superior Indebtedness is issued which arises from the failure to pay
when due (whether by acceleration or otherwise) any principal of, premium, if
any, interest on, fees or other amounts in respect of such Superior Indebtedness
(a "Superior Payment Default"), no payment of principal, premium or interest
shall be made on the subordinated notes if either (i) notice in writing of such
default has been given to the Company by any holder or holders of any Superior
Indebtedness or (ii) judicial proceedings shall be pending in respect of such
default.

         (c) During the continuance of any event of default or unmatured event
of default in any agreement pursuant to which any Superior Indebtedness is
issued other than a Superior Payment Default (a "Superior Non-Payment Default")
as to which the Company has received notice in writing from any holder or
holders of Superior Indebtedness, no payment of principal, premium or interest
shall be made on the subordinated notes for a period (each, a "Payment Blockage
Period") commencing on the date of receipt by the Company of such notice and
terminating on the earliest to occur of the following dates: (i) the date of
acceleration of the Superior Indebtedness, (ii) 180 days after the Company's
receipt of such written notice, (iii) the date such Superior Non-Payment Default
shall have been cured or waived, or shall have ceased to exist, (iv) the date
the Superior Indebtedness shall have been discharged or paid in full in cash or
(v) the date such Payment Blockage Period shall have been terminated by written
notice to the Company from the holder or holders of Superior Indebtedness
initiating such Payment Blockage Period, after which, in the case of clauses
(ii), (iii), (iv) and (v), the Company shall resume making payments in respect
of the subordinated notes, unless clause (a) or (b) above is then applicable.

   66

         (d) If the subordinated notes are declared or become due and payable
because of the occurrence of any default thereunder or under the agreement or
instrument under which they are issued or otherwise than at the option of the
Company, under circumstances when clause (a) above shall not be applicable, the
holders of the subordinated notes shall not be entitled to payments until sixty
(60) days after such event and then only if such payment is permitted under
clauses (a) and (b) above.

         (e) The holder of each subordinated note undertakes and agrees for the
benefit of each holder of Superior Indebtedness to execute, verify, deliver and
file any proof of claim, consent, assignment or other instrument which any
holder of Superior Indebtedness may at any time require in order to prove and
realize upon any right or claim pertaining to the subordinated notes and to
effectuate the full benefit of the subordination contained herein; and upon
failure of the holder of any subordinated note so to do any such holder of
Superior Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the holder of such note to execute, verify, deliver and file
any such proof of claim, consent, assignment or other instrument.

         (f) No right of any holder of any Superior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company or any holder of
Superior Indebtedness, or by any non-compliance by the Company with any term,
provision or covenant of the subordinated notes or the agreement under which
they are issued, regardless of any knowledge thereof that any such holder of
Superior Indebtedness may have or be otherwise charged with.

         (g) The Company agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that any subordinated note is declared due and
payable before its expressed maturity because of the occurrence of a default
thereunder or under the agreement under which it was issued, the Company will
give prompt notice in writing of such happening to the holders of Superior
Indebtedness.

         (h) "Superior Indebtedness" means (a) all obligations of the Company
under or in connection with the Credit Agreement, dated as of August 3, 1999
among the Company, various financial institutions and Chrysler Financial Company
L.L.C. ("CFC"), as agent (as amended, restated, amended and restated or
otherwise modified from time to time, the "Credit Agreement"), whether for
principal, interest (including any interest that would accrue but for the filing
of a petition initiating any bankruptcy, insolvency or like proceeding, whether
or not such interest is an allowed claim enforceable against the debtor), fees,
expenses or otherwise and (b) all other obligations of the Company to CFC,
howsoever arising or evidenced.



                                     B-I-2

EX-10.1.19.2

   1
                                                              EXHIBIT 10.1.19.2


                                 FIRST AMENDMENT

         THIS FIRST AMENDMENT dated as of October 8, 1999 (this "Amendment") is
to the Credit Agreement (the "Credit Agreement") dated as of August 3, 1999
among UNITED AUTO GROUP, INC., a Delaware corporation (the "Company"), various
financial institutions (the "Lenders") and CHRYSLER FINANCIAL COMPANY, L.L.C.,
as agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as defined in the Credit
Agreement.

         WHEREAS, the parties hereto desire to amend the Credit Agreement and
certain other Loan Documents in certain respects;

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

         SECTION 1. AMENDMENTS. Effective on (and subject to the occurrence of)
the Amendment Effective Date (as defined below):

         1.1 (a) The following definitions in Section 1.1 of the Credit
Agreement shall be amended and restated in their entireties to read as follows:

                  Commitment means, as to any Lender, such Lender's commitment
         to make Loans, and to issue or participate in LC Guaranties, under this
         Agreement. The initial amount of each Lender's Pro Rata Share of the
         Revolving Commitment Amount and the Acquisition Commitment Amount is
         set forth on Schedule 2.1.

                  Foreign Subsidiary means any Subsidiary of the Company which
         is not incorporated or organized in the United States or in any State
         thereof.

                  Lender - see the Preamble.

                  Letter of Credit means a letter of credit issued by the Issuer
         for the account of the Company pursuant to an LC Reimbursement
         Agreement and in respect of which an LC Guaranty has been issued.

                  Loan Documents means this Agreement, the Notes, the Guaranty,
         the LC Guaranties, the LC Reimbursement Agreements and the Collateral
         Documents.

         (b) The following definitions shall be added to Section 1.1 of the
Credit Agreement, each in its appropriate alphabetical position:

                  Issuer means DaimlerChrysler North America Holding
         Corporation.


   2

                  LC Guaranty - see Section 2.1.3(a).

                  LC Reimbursement Agreement - see Section 2.1.3(a).

                  Reimbursement Obligation - see Section 2.1.3(c).

                  Young JV Agreement - see Section 9.9.

         (c) The definitions of "Issuing Lender" and "L/C Application" in
Section 1.1 of the Credit Agreement shall be deleted.

         1.2 The lead in paragraph to Section 2.1 of the Credit Agreement shall
be amended and restated to read in its entirety as follows:

                  2.1 Commitments. On and subject to the terms and conditions of
         this Agreement, each of the Lenders, severally and for itself alone,
         agrees to make Loans to, and to issue or participate in LC Guaranties
         for the account of, the Company as follows:

         1.3 Section 2.1.3 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  2.1.3 Letter of Credit Commitment; Reimbursement Obligations.
         (a) Upon written request from the Company, CFC (on behalf of all the
         Lenders) will issue to the Issuer, guaranties, in such form as is
         reasonably satisfactory to CFC, the Issuer and the Company (each
         herein, together with any extensions or renewals thereof, or guaranties
         issued by CFC in substitution therefor from time to time, called an "LC
         Guaranty"), of reimbursement obligations of the Company arising under
         reimbursement agreements in such form as is reasonably satisfactory to
         CFC, the Issuer and the Company (herein, collectively called the "LC
         Reimbursement Agreements" and individually called an "LC Reimbursement
         Agreement") executed by the Company in connection with Letters of
         Credit; provided, however, that CFC shall not issue any LC Guaranty if,
         after giving effect to such issuance, (i) the aggregate Stated Amount
         of all Letters of Credit shall exceed $10,000,000 or (ii) the Revolving
         Outstandings exceed the Revolving Commitment Amount. Each such request
         by the Company for an LC Guaranty shall specify the Stated Amount of
         the proposed underlying Letter of Credit, the beneficiary thereof, the
         proposed date of issuance of such Letter of Credit and such other
         matters as CFC may reasonably require.

                  (b) Upon CFC making any payment under any LC Guaranty, if the
         Company has not reimbursed CFC in full for such payment or disbursement
         by 11:00 A.M., Detroit time, on the date of such payment, or if any
         reimbursement received by CFC from the Company is or must be returned
         or rescinded upon or during any bankruptcy or reorganization of the
         Company or otherwise, each other Lender shall be obligated to pay to
         CFC its Pro Rata Share of such payment (but no such


                                      -2-

   3

         payment shall diminish the obligation of the Company under Section
         2.1.3(c)). Each Lender irrevocably and unconditionally agrees to so pay
         to CFC in immediately available funds the amount of such Lender's Pro
         Rata Share of such payment. If and to the extent any Lender shall not
         have made such amount available to CFC by 2:00 P.M., Detroit time, on
         the Business Day on which such Lender receives notice from CFC of such
         payment (it being understood that any such notice received after noon,
         Detroit time, on any Business Day shall be deemed to have been received
         on the next following Business Day), such Lender agrees to pay interest
         on such amount to CFC forthwith on demand, for each day from the date
         such amount was to have been delivered to CFC to the date such amount
         is paid, at a rate per annum equal to (i) for the first three days
         after demand, the Federal Funds Rate from time to time in effect and
         (ii) thereafter, the Prime Rate from time to time in effect. Any
         Lender's failure to make available to CFC its Pro Rata Share of any
         such payment shall not relieve any other Lender of its obligation
         hereunder to make available to CFC such other Lender's Pro Rata Share
         of such payment, but no Lender shall be responsible for the failure of
         any other Lender to make available to CFC such other Lender's Pro Rata
         Share of any such payment.

                  (c) Notwithstanding any provision herein to the contrary,
         immediately upon the Issuer's presentation of any demand for payment
         under an LC Guaranty, the Company shall be obligated to reimburse CFC
         for such demand, on the date on which CFC honors such demand, in
         immediately available funds equal to the amount of such honored demand
         (such obligations being referred to herein as "Reimbursement
         Obligations"). If all or any part of such demand is not paid by the
         Company when due, such unpaid amount shall bear interest for each day
         during the period from the day of such demand until it shall be paid in
         full at a rate equal to the Prime Rate from time to time in effect (but
         not less than the Prime Rate in effect on the date on which CFC shall
         have honored such demand) plus two percent (2%) per annum; such
         interest shall be payable on demand.

                  (d) The obligation of the Company to reimburse CFC for demands
         made under the LC Guaranties shall be unconditional and irrevocable and
         shall be enforced strictly in accordance with the terms of this
         Agreement under all circumstances, including, without limitation, the
         following:

                  (A) lack of validity or enforceability of the appropriate LC
         Guaranty or Letter of Credit;

                  (B) the existence of any claim, set-off, defense or other
         right which the Company may have at any time against CFC or the Issuer,
         Lender or any other Person, whether in connection with this Agreement,
         the transactions contemplated herein or any unrelated transaction
         (including any underlying transaction between the Company and the
         beneficiary under a Letter of Credit);

                  (D) any draft, demand, certificate or any other document
         presented under an LC Guaranty or a Letter of Credit proving to be
         forged, fraudulent, invalid or insufficient in any respect or any
         statement therein being untrue or inaccurate in any respect;


                                      -3-
   4

                  (E) payment by CFC under an LC Guaranty against a demand which
         does not comply with the terms of such LC Guaranty, provided that such
         payment does not constitute gross negligence or willful misconduct of
         CFC;

                  (F) any adverse change in the condition (financial or
         otherwise) of the Company;

                  (G) any breach of this Agreement by the Company, the Agent,
         CFC or any other Lender;

                  (H)      any other circumstance or happening whatsoever; or

                  (I) the fact that an Event of Default or an Unmatured Event of
         Default shall have occurred and be continuing.

                  (d) As between the Company, the Agent and the Lenders, the
         Company assumes all risks of the acts and omissions of, or misuse of
         any LC Guaranty by, the Issuer or any beneficiary of a Letter of
         Credit. Without limiting the foregoing, neither the Agent, CFC nor any
         other Lender shall be responsible for: (i) the form, validity,
         sufficiency, accuracy, genuineness or legal effect of any document
         submitted by any Person in connection with the application for and
         issuance of a LC Guaranty or Letter of Credit, even if such document is
         proven to be in any respect invalid, insufficient, inaccurate,
         fraudulent or forged; (ii) the validity or sufficiency of any
         instrument transferring or assigning or purporting to transfer or
         assign a LC Guaranty or Letter of Credit or the rights or benefits
         thereunder or proceeds thereof, in whole or in part, which may prove to
         be invalid or ineffective for any reason; (iii) the failure of the
         beneficiary of a Letter of Credit to comply fully with conditions
         required in order to draw thereupon, or the failure of the Issuer to
         comply fully with conditions required in order to demand under a LC
         Guaranty; (iv) errors, omissions, interruptions or delays in
         transmission or delivery of any messages, by mail, cable, telegraph,
         facsimile, telex or otherwise, whether or not they be in cipher; (v)
         errors in interpretation of technical terms; (vi) any loss or delay in
         the transmission or otherwise of any document required in order to make
         a drawing under a Letter of Credit or a demand under a LC Guaranty or
         of the proceeds of either thereof; (vii) the misapplication by the
         Issuer of the proceeds of any demand under a LC Guaranty; and (viii)
         any consequence arising from causes beyond the control of the Agent,
         CFC or any other Lender. None of the above shall affect, impair or
         prevent the vesting of any of the rights or powers hereunder of the
         Agent, CFC or any other Lender.

         1.4 Section 2.3 of the Credit Agreement shall be amended and restated
to read in its entirety as follows: "[Intentionally left blank]."

         1.5 Section 2.5 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:


                                      -4-

   5

                  2.5 Certain Conditions. Notwithstanding any other provision of
         this Agreement, no Lender shall have an obligation to make any Loan and
         CFC shall not have any obligation to issue any LC Guaranty, if an Event
         of Default or Unmatured Event of Default exists.

         1.6 Section 6.1(a) of the Credit Agreement shall be amended by deleting
the words "Letters of Credit" where they appear and inserting in lieu thereof
the words "LC Guaranties."

         1.7 Section 7.5 of the Credit Agreement shall be amended by (i)
deleting the words "Letter of Credit" where they appear and inserting in lieu
thereof the words "LC Guaranty" and (ii) deleting the words "Letters of Credit"
where they appear and inserting in lieu thereof the words "LC Guaranties."

         1.8 Section 9.1.9 shall be redesignated as Section 9.1.10 and the
following Section 9.1.9 shall be added to the Credit Agreement:

                  9.1.9 Subordinated Notes. (a) Within 45 days of the end of
         each Fiscal Quarter, the Company shall obtain from its independent
         certified public accountants and furnish to the Agent a letter, in form
         and substance satisfactory to the Agent, stating that such accountants
         have read Section 4.04 of the Series A Subordinated Notes Indenture and
         Section 4.4 of the Series B Subordinated Notes Indenture (and any
         similar provision in any Refinancing Agreement), that such accountants
         have tested the compliance by the Company with such provisions during
         such Fiscal Quarter and concluding that the Company was in compliance
         with such provisions during such Fiscal Quarter or, if the Company was
         not in compliance with any such provision, describing such
         non-compliance in reasonable detail.

                  (b) If in any Fiscal Quarter the sum of the aggregate
         principal amount of all outstanding Loans plus the Stated Amount of all
         Letters of Credit increases by more than $5,000,000, following such
         Fiscal Quarter each borrowing and issuance of a Letter of Credit shall
         (in addition to the conditions imposed by Section 10) be conditioned on
         the receipt by the Agent of a letter, in form and substance
         satisfactory to the Agent, from the independent certified public
         accountants of the Company stating that such accountants have read
         Section 4.04 of the Series A Subordinated Notes Indenture and Section
         4.4 of the Series B Subordinated Notes Indenture (and any similar
         provision in any Refinancing Agreement), that such accountants have
         tested the compliance by the Company with such provisions after giving
         pro forma effect to such borrowing or issuance and concluding that the
         Company is in compliance with such provisions after giving pro forma
         effect to such borrowing or issuance.

         1.9 Section 9.7(j) of the Credit Agreement shall be amended and
restated to read in its entirety as follows:

                  (j) Debt with respect to any Floor Plan Financing provided to
         the Company or any Subsidiary by General Motors Acceptance Corporation,
         BMW Financial Services NA, Inc., Ford


                                      -5-

   6

         Motor Credit Corporation, PRIMUS Automotive Financial Services, Inc.,
         World Omni Financial Corporation (with respect to Toyota make vehicles
         only) or Toyota Motor Credit Corporation or any other Person to whom
         CFC, in its sole discretion, consents;

         1.10 Section 9.8(h) of the Credit Agreement shall be amended and
restated to read in its entirety as follows:

                  (h) Liens on any asset of an Automobile Dealership securing
         Debt permitted by Sections 9.7(j), (k) and (l) (in the case of Debt
         under Sections 9.7(j) and (l), (x) such Liens under agreements entered
         into after the date hereof may attach only to the inventory
         floorplanned by such Debt and proceeds thereof, accounts receivable and
         payment intangibles owing by the relevant Dealer to the manufacturer
         with whom the provider of the financing is affiliated (and, with
         respect to World Omni Financial Corp., owing to Southeast Toyota
         Distributors, Inc.) (and all other rights to payment in which any such
         financing provider could exercise a right of setoff or recoupment) and
         service loaner vehicles manufactured by a manufacturer and financed by
         a financing provider permitted under Section 9.7(j) or (l)
         (collectively, "Permitted Floorplan Collateral") and (y) to the extent
         that such Liens under agreements in existence on the date hereof attach
         to assets in addition to Permitted Floorplan Collateral, such Liens on
         such assets other than Permitted Floorplan Collateral must be
         subordinated to the security interest of the Agent in form and
         substance satisfactory to the Agent (it being understood that no such
         Lien may attach to any Excluded Property)).

         1.11 Clause (i) of the second sentence of Section 9.9 of the Credit
Agreement shall be amended and restated to read in its entirety as follows " (i)
any Subsidiary may pay dividends or make other distributions to the Company or
another Subsidiary."

         1.12 Section 9.13 of the Credit Agreement shall be amended by (i)
deleting the parenthetical phrase in clause (a)(i) thereof and inserting in lieu
thereof the following "(other than Excluded Property and property in which the
Company is prohibited from granting a security interest, pledge or assignment
pursuant to a Permitted Restriction)" and (ii) deleting the first parenthetical
phrase in clause (bi) thereof and inserting in lieu thereof the following
"(other than Excluded Property and property in which such Subsidiary is
prohibited from granting a security interest, pledge or assignment pursuant to a
Permitted Restriction)."

         1.13 Clause (b) of Section 9.17 of the Credit Agreement shall be
amended and restated to read in its entirety as follows "(b) except for
Permitted Restrictions, prohibit the Company or any Subsidiary from granting to
the Agent, for the benefit of the Lenders, a Lien on any of its assets or".

         1.14 Clause (b) of Section 9.19 of the Credit Agreement shall be
amended and restated to read in its entirety as follows:


                                      -6-

   7

                  (b) Investments by the Company in any Subsidiary or by any
         Subsidiary in the Company, or by any Subsidiary in any Subsidiary, by
         way of intercompany loans, advances or guaranties, all to the extent
         permitted by Section 9.7;

         1.15 The following Section 9.22 shall be added to the Credit Agreement:

                  9.22 Amendments to Subordinated Note Indentures. Not solicit
         the consent of any holder of Subordinated Notes to any amendment,
         waiver or modification of any Subordinated Note Indenture (or any
         Refinancing Agreement) unless, concurrently with any other consents
         being solicited, the consent of such holders is solicited to amend
         Section 4.04(ii) of the Series A Subordinated Notes Indenture and
         Section 4.4(ii) of the Series B Subordinated Notes Indenture (and any
         similar provision in any Refinancing Agreement) to increase the maximum
         amount of Debt that can be incurred under the "Senior Credit Facility"
         pursuant to such subsections from $100,000,000 to $250,000,000.

         1.16 The lead in paragraph of Section 10 shall be amended and restated
to read in its entirety as follows:

                  The obligation of each Lender to make its Loans and of CFC to
         issue LC Guaranties is subject to the following conditions precedent:

         1.17 Section 10.1 of the Credit Agreement shall be amended by deleting
the words "the Issuing Lender to issue its initial Letter of Credit" where they
appear and inserting in lieu thereof the words "CFC to issue its initial LC
Guaranty".

         1.18 The lead in paragraph to Section 10.2 of the Credit Agreement
shall be amended and restated to read in its entirety as follows:

                  10.2 Conditions. The obligation (a) of each Lender to make
         each Loan and (b) of CFC to issue each LC Guaranty is subject to the
         following further conditions precedent that:

         1.19 Section 11.1.12 of the Credit Agreement shall be amended and
restated to read in its entirety as follows:

                  11.1.12 Change of Control. A majority of the members of the
         Board of Directors of the Company shall cease to be constituted of (i)
         nominees and designees of Penske Capital Partners, (ii) officers and
         directors of any entity which, directly or indirectly, controls or is
         controlled by or is under common control with Penske Capital Partners
         or (iii) any Person approved by the vote of a majority of the members
         of the Board of Directors of the Company then in office who were at the
         time Persons described in clauses (i) and (ii) above.


                                      -7-

   8

         1.20 The following Section 11.1.13 shall be added to the Credit
Agreement:

                  11.1.13 Securities Purchase Agreement; Put of Stock. Penske
         Capital Partners shall exercise its right to require the Company to
         repurchase the stock of the Company held by Penske Capital Partners
         pursuant to Section 7.2 of the Securities Purchase Agreement.

         1.21 The last two sentences of Section 11.2 of the Credit Agreement
shall be deleted and the following inserted in lieu thereof:

         Any cash collateral delivered hereunder shall be held by the Agent
         (without liability for interest thereon) and applied to Reimbursement
         Obligations. After the expiration or termination of all LC Guaranties,
         such cash collateral shall be applied by the Agent to any remaining
         obligations hereunder and any excess shall be delivered to the Company
         or as a court of competent jurisdiction may elect.

         1.22 Section 12.1(b) of the Credit Agreement shall be amended and
restated in its entirety to read as follows: "[Intentionally left blank]."

         1.23 The last sentence of Section 13.1 of the Credit Agreement shall be
deleted and the following inserted in lieu thereof:

         No provision of this Agreement relating to the rights or duties of CFC
         in its capacity as issuer of LC Guaranties shall be amended, modified
         or waived without the consent of CFC.

         1.24 Section 13.9.1 of the Credit Agreement shall be amended by
deleting the words "the Issuing Lender" where they appear and inserting in lieu
thereof the word "CFC."

         1.25 The Security Agreement shall be amended by (i) adding to Section 1
thereof the following definition in its appropriate alphabetical position

                  Excluded Contracts means (1) the Young JV Agreement, (2) the
         Securities Purchase Agreement and (3) to the extent the grant of a
         security interest or assignment as collateral security to the Agent
         therein is prohibited by a valid and enforceable restriction on the
         grant of a security interest or an assignment as collateral security,
         any franchise, dealer, framework, floor plan financing or similar
         agreement between the Company or any of its Subsidiaries or Affiliates,
         on the one hand, and any automobile manufacturer or any of such
         automobile manufacturer's subsidiaries or affiliates, on the other
         hand.

and (ii) amending and restating clause (y) of the proviso to Section 2 of the
Security Agreement to read in its entirety as follows " (y) all Excluded
Property and Excluded Contracts (but not any proceeds thereof) are excluded from
the foregoing grant."


                                      -8-

   9

         1.26 The Guaranty shall be amended by (i) amending the sixth paragraph
following the paragraph beginning "NOW, THEREFORE" by amending and restating
clause (a) thereof to read in its entirety as follows "(a) retain or obtain a
security interest in any property to secure any of the Liabilities or any
obligation hereunder (subject only to the agreement of the party providing such
security interest)" and (ii) amending the eleventh paragraph following the
paragraph beginning "NOW, THEREFORE" by inserting the phrase ", but subject to
Section 13.9 of the Credit Agreement," immediately preceding the words "assign
or transfer any or all of the Liabilities or any interest therein" where they
appear in such paragraph.



         SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Lenders that (a) the representations and
warranties made in Section 8 of the Credit Agreement are true and correct on and
as of the Amendment Effective Date with the same effect as if made on and as of
the Amendment Effective Date (except to the extent relating solely to an earlier
date, in which case they were true and correct as of such earlier date); (b) no
Event of Default or Unmatured Event of Default exists or will result from the
execution of this Amendment; (c) the execution and delivery by the Company of
this Amendment and the performance by the Company of its obligations under the
Credit Agreement as amended hereby (as so amended, the "Amended Credit
Agreement") (i) are within the corporate powers of the Company, (ii) have been
duly authorized by all necessary corporate action, (iii) have received all
necessary approval from any governmental authority and (iv) do not and will not
contravene or conflict with any provision of any law, rule or regulation or any
order, decree, judgment or award which is binding on the Company or any of its
Subsidiaries or of any provision of the certificate of incorporation or bylaws
of the Company or of any agreement, indenture, instrument or other document
which is binding on the Company or any of its Subsidiaries; and (d) the Amended
Credit Agreement is the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.

         SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above
shall become effective on such date (the "Amendment Effective Date") when the
Agent shall have received (a) a counterpart of this Amendment executed by the
Company and the Required Lenders and (b) each of the following documents, each
in form and substance satisfactory to the Agent:

         3.1 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Amendment, the Amended Credit Agreement and
each other Loan Document contemplated by this Amendment to which the Company is
a party.

         3.2 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company, certifying the names of the
officer or officers of the Company authorized to sign


                                      -9-

   10

this Amendment and the other Loan Documents contemplated hereby to which the
Company is a party, together with a sample of the true signature of each such
officer.

         3.3 Reaffirmation. A Reaffirmation of Loan Documents in the form
attached hereto executed by each Loan Party other than the Company.

         3.4 Other Documents. Such other documents as the Agent or any Lender
may reasonably request.

         SECTION 4  MISCELLANEOUS.

         4.1 Continuing Effectiveness, etc. As herein amended and as waived by
Section 4.6, the Credit Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects. After the Amendment Effective
Date, all references in the Credit Agreement, the Notes, each other Loan
Document and any similar document to the "Credit Agreement" or similar terms
shall refer to the Amended Credit Agreement.

         4.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.

         4.3 Expenses. The Company agrees to pay the reasonable costs and
expenses of the Agent (including reasonable fees and disbursements of counsel,
including, without duplication, the allocable costs of internal legal services
and all disbursements of internal legal counsel) in connection with the
preparation, execution and delivery of this Amendment.

         4.4 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of New York applicable to contracts made and
to be wholly performed within the State of New York.

         4.5 Successors and Assigns. This Amendment shall be binding upon the
Company, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Lenders and the Agent and the
successors and assigns of the Lenders and the Agent.

         4.6 Waiver. The Required Lenders hereby waive, for a period commencing
on the date hereof and ending on November 8, 1999, any Event of Default arising
solely out of the Company's failure to comply with Section 4.18 of each
Subordinated Notes Indenture.

         4.7. Guaranty of Existing Letters of Credit. The parties hereto agree
that the Letter of Credit Guaranty dated as of October 1, 1999 issued by CFC to
The Bank of Nova Scotia ("BNS") in respect of two standby letters of credit
issued by BNS for the account of the Company in the aggregate stated amount of
$2,121,134 shall for the purposes of the Credit Agreement (as hereby amended) be
an "LC Guaranty" thereunder.

         Delivered as of the day and year first above written.


                                      -10-
   11





                                         UNITED AUTO GROUP, INC.


                                         By
                                           --------------------------------
                                         Title
                                              -----------------------------

                                         CHRYSLER FINANCIAL COMPANY, L.L.C., as
                                         Agent and as a Lender


                                         By
                                           --------------------------------
                                         Title
                                              -----------------------------




                                      -11-
   12


                                REAFFIRMATION OF
                                 LOAN DOCUMENTS


                                 October 8, 1999


Chrysler Financial Company, L.L.C., as Agent
and the other parties
to the Credit Agreement
referred to below

                       RE: REAFFIRMATION OF LOAN DOCUMENTS

Ladies and Gentlemen:

         Please refer to:

                  1. The Pledge Agreement dated as of October 8, 1999 (the
         "Pledge Agreement") among United Auto Group, Inc. ("UAG"), various of
         its subsidiaries and Chrysler Financial Company, L.L.C., in its
         capacity as Agent (in such capacity, the "Agent");

                  2. The Guaranty dated as of October 8, 1999 (the "Guaranty")
         executed in favor of the Agent and various other parties by all
         subsidiaries of UAG; and

                  3. The Security Agreement dated as of October 8, 1999 (the
         "Security Agreement") among UAG, its subsidiaries and the Agent.

         The Guaranty, the Pledge Agreement, the Security Agreement and the
Credit Agreement referred to below are collectively referred to herein as the
"Loan Documents". Capitalized terms not otherwise defined herein will have the
meanings given in the Credit Agreement referred to below.

         Each of the undersigned acknowledges that the Company, the Lenders and
the Agent have executed the First Amendment (the "Amendment") to the Credit
Agreement dated as of August 3, 1999 (as so amended and as the same may be
further amended, supplemented or otherwise modified from time to time, the
"Credit Agreement").

         Each of the undersigned hereby (i) consents and agrees to the
amendments to the Loan Documents to which such undersigned is a party contained
in the Amendment and (ii) confirms that each Loan Document to which such
undersigned is a party remains in full force and effect after giving effect to
the effectiveness of the Amendment and that, upon such effectiveness, all
references in such Loan Document to the "Credit Agreement" shall be references
to the Credit Agreement as amended by the Amendment.


   13

         The letter agreement may be signed in counterparts and by the various
parties as herein on separate counterparts. This letter agreement shall be
governed by the laws of the State of New York applicable to contracts made and
to be performed entirely within such State.

                                      UAG NORTHEAST, INC.
                                      DIFEO PARTNERSHIP, INC.
                                      DIFEO PARTNERSHIP HCT, INC.
                                      DIFEO PARTNERSHIP SCT, INC.
                                      DIFEO PARTNERSHIP RCT, INC.
                                      DIFEO PARTNERSHIP RCM, INC.
                                      DIFEO PARTNERSHIP VIII, INC.
                                      DIFEO PARTNERSHIP IX, INC.
                                      DIFEO PARTNERSHIP X, INC.
                                      UAG HUDSON, INC.
                                      SOMERSET MOTORS INC.
                                      UAG NORTHEAST BODY SHOP, INC.
                                      UAG NORTHEAST (NY), INC.
                                      UNITED LANDERS, INC.
                                      LANDERS AUTO SALES, INC.
                                      LANDERS UNITED AUTO GROUP NO. 2, INC.
                                      LANDERS UNITED AUTO GROUP, INC.
                                      LANDERS UNITED AUTO GROUP NO. 3, INC.
                                      LANDERS UNITED AUTO GROUP NO. 4, INC.
                                      LANDERS BUICK-PONTIAC, INC.
                                      UNITED AUTO GROUP, INC.
                                      UAG ATLANTA, INC.
                                      UAG DULUTH, INC.
                                      UAG ATLANTA II, INC.
                                      UNITED NISSAN, INC.
                                      UAG ATLANTA III, INC.
                                      PEACHTREE NISSAN, INC.
                                      UAG ATLANTA IV, INC.
                                      UAG ATLANTA IV MOTORS, INC.
                                      UAG ATLANTA V, INC.
                                      CONYERS NISSAN, INC.
                                      UAG ATLANTA VI, INC.
                                      UNITED JEEP CHRYSLER PLYMOUTH OF STONE
                                        MOUNTAIN, INC.
                                      UNITED MAZDA, INC.
                                      UAG TENNESSEE, INC.
                                      UAG WEST, INC.


                                      -2-

   14

                                      SA AUTOMOTIVE, LTD.
                                      SL AUTOMOTIVE, LTD.
                                      SPA AUTOMOTIVE, LTD.
                                      LRP, LTD.
                                      SUN MOTORS, LTD.
                                      SCOTTSDALE MANAGEMENT GROUP, LTD.
                                      SCOTTSDALE AUDI, LTD.
                                      SK MOTORS, LTD.
                                      KMT/UAG, INC.
                                      RELENTLESS PURSUIT ENTERPRISES, INC.
                                      TRI-CITY LEASING, INC.
                                      HT AUTOMOTIVE LTD.
                                      TEMPE MOTORS, INC.
                                      UAG NEVADA, INC.
                                      UAG TEXAS, INC.
                                      UAG TEXAS II, INC.
                                      UAG EAST, INC.
                                      WESTBURY SUPERSTORE, LTD.
                                      WESTBURY NISSAN LTD.
                                      PALM AUTO PLAZA, INC.
                                      FLORIDA CHRYSLER PLYMOUTH, INC.
                                      WEST PALM NISSAN, INC.
                                      WEST PALM INFINITI, INC.
                                      NORTHLAKE AUTO FINISH, INC.
                                      J & S AUTO REFINISHING, LTD.
                                      J&S IMPORTS, INC.
                                      WEST PALM AUTO MALL, INC.
                                      AUTO MALL PAYROLL SERVICES, INC.
                                      AUTO MALL STORAGE, INC.
                                      AMITY AUTO PLAZA, LTD.
                                      AMITY NISSAN OF MASSAPEQUA, LTD.
                                      UAG CAROLINA, INC.
                                      REED-LALLIER CHEVROLET, INC.
                                      MICHAEL CHEVROLET-OLDSMOBILE, INC.
                                      GENE REED CHEVROLET, INC.
                                      UNITEDAUTO DODGE OF SHREVEPORT, INC.
                                      UAG MEMPHIS, INC.
                                      COVINGTON PIKE DODGE, INC.
                                      UAG GRACELAND, INC.
                                      THE NEW GRACELAND DODGE, INC.


                                      -3-

   15

                                      UAG GRACELAND II, INC.
                                      UAG MEMPHIS II, INC.
                                      UAG MEMPHIS III, INC.
                                      UAG MEMPHIS IV, INC.
                                      UAG MEMPHIS V, INC.
                                      UAG KNOXVILLE, INC.
                                      UAG KNOXVILLE II, INC.
                                      UAG-CARIBBEAN, INC.
                                      UAG YOUNG, INC.
                                      DAN YOUNG INC.
                                      DAN YOUNG CHEVROLET INC.
                                      YOUNG MANAGEMENT GROUP, INC.
                                      PARKWAY CHEVROLET, INC.
                                      UAG YOUNG II, INC.
                                      UAG CENTURY MOTORS, INC.
                                      UAG PARAMOUNT MOTORS, INC.
                                      UAG KISSIMMEE MOTORS, INC.
                                      UAG CITRUS, INC.
                                      UAG CLASSIC, INC.
                                      CLASSIC AUTO GROUP, INC.
                                      CHERRY HILL CLASSIC CARS, INC.
                                      CLASSIC OF CHERRY HILL, INC.
                                      CLASSIC MANAGEMENT COMPANY, INC.
                                      CLASSIC CHEVROLET, INC.
                                      CLASSIC ENTERPRISE, INC.
                                      CLASSIC AUTO GROUP HOLDINGS, INC.
                                      CLASSIC IMPORTS, INC.
                                      UNITEDAUTO ENTERPRISE, INC.
                                      UNITED AUTOCARE, INC.
                                      UNITED AUTOCARE PRODUCTS, INC.
                                      UNITEDAUTO FOURTH FUNDING INC.
                                      UNITEDAUTO FIFTH FUNDING INC.
                                      AUTO LEASING CORPORATION
                                      UAG CAPITAL MANAGEMENT, INC.
                                      UAG FINANCE COMPANY, INC.
                                      KMT/UAG, INC.
                                      6725 DEALERSHIP LTD.
                                      CHERRY HILL CLASSIC CARS
                                      CLASSIC MOTOR SALES LLC
                                      D. YOUNG CHEVROLET LLC
                                      DAN YOUNG MOTORS LLC
                                      DAN YOUNG TIPTON LLC
                                      UAG YOUNG AUTOMOTIVE GROUP LLC

                                      -4-

   16


                                      UAG LANDERS, INC.
                                      YOUNG AUTOMOTIVE HOLDINGS LLC

                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      DIFEO HYUNDAI PARTNERSHIP
                                      DIFEO NISSAN PARTNERSHIP
                                      DIFEO CHRYSLER PLYMOUTH JEEPEAGLE
                                        PARTNERSHIP
                                      DIFEO LEASING PARTNERSHIP
                                      DIFEO CHEVROLET-GEO PARTNERSHIP
                                      J&F OLDSMOBILE PARTNERSHIP
                                      DANBURY AUTO PARTNERSHIP
                                      FAIR HYUNDAI PARTNERSHIP
                                      FAIR CHEVROLET-GEO PARTNERSHIP
                                      DANBURY CHRYSLER PLYMOUTH PARTNERSHIP
                                      DIFEO TENAFLY PARTNERSHIP
                                      By: DIFEO PARTNERSHIP, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      OCT PARTNERSHIP
                                      By: DIFEO PARTNERSHIP VIII, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------



                                      -5-
   17


                                      OCM PARTNERSHIP
                                      By: DIFEO PARTNERSHIP IX, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      HUDSON MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP HCT, INC.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      COUNTY AUTO GROUP PARTNERSHIP
                                      By: DIFEO PARTNERSHIP RCT, INC.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      SOMERSET MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP SCT, INC.
                                           a general partner

                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------



                                      -6-
   18



                                      ROCKLAND MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP RCM, INC.
                                          a general partner

                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      6725 AGENT PARTNERSHIP
                                      By: SCOTTSDALE AUDI, LTD.
                                           a general partner

                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      SHANNON AUTOMOTIVE, LTD.
                                      By: UAG TEXAS, INC.
                                          a general partner

                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      DAN YOUNG TIPTON, LLC
                                      By: DAN YOUNG, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -7-
   19



                                      YOUNG AUTOMOTIVE HOLDINGS, LLC
                                      UAG YOUNG AUTOMOTIVE GROUP, LLC
                                      D. YOUNG CHEVROLET, LLC
                                      By: UAG YOUNG, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------



                                      DAN YOUNG MOTORS LLC
                                      By: DAN YOUNG CHEVROLET, INC.
                                        Member


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      UAG CITRUS MOTORS, LLC
                                      By: UAG CITRUS, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      CLASSIC MOTOR SALES, LLC
                                      CLASSIC ENTERPRISES, LLC
                                      By: UAG CITRUS, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -8-
   20



                                      CLASSIC NISSAN OF TURNERSVILLE, LLC
                                      By: Thomas J. Hessert
                                          Member



                                      ----------------------------------





                                      -9-
   21


                                      SCOTTSDALE JAGUAR, LTD.



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------




                                      -10-
   22


                                      LANDERS UNITED AUTO GROUP NO. 5, INC.
                                      BPT HOLDINGS, INC.
                                      LANDERS FORD, INC
                                      NATIONAL CITY FORD, INC.
                                      CENTRAL FORD CENTER, INC.
                                      PIONEER FORD SALES, INC.


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

ACKNOWLEDGED AND AGREED
as of the date first written above

CHRYSLER FINANCIAL COMPANY, L.L.C.,
as Agent


By:
   ----------------------------------
Title:
      -------------------------------






                                      -11-

EX-10.1.19.3

   1
                                                              EXHIBIT 10.1.19.3


                                SECOND AMENDMENT

         THIS SECOND AMENDMENT dated as of December 23, 1999 (this "Amendment")
is to the Credit Agreement (as heretofore amended, the "Credit Agreement") dated
as of August 3, 1999 among UNITED AUTO GROUP, INC., a Delaware corporation (the
"Company"), various financial institutions (the "Lenders") and CHRYSLER
FINANCIAL COMPANY, L.L.C., as agent for the Lenders (the "Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
as defined in the Credit Agreement.

         WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects;

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

         SECTION 1 AMENDMENTS. Effective on (and subject to the occurrence of)
the Amendment Effective Date (as defined below):

         1.1      (a) The following definitions in Section 1.1 of the Credit
Agreement shall be amended and restated in their entireties to read as follows:

                  Commitment means, as to any Lender, such Lender's commitment
         to make Loans, and to issue or participate in Letters of Credit, under
         this Agreement. The initial amount of each Lender's Pro Rata Share of
         the Revolving Commitment Amount, the Acquisition Commitment Amount and
         the Term Commitment Amount is set forth on Schedule 2.1.

                  Funded Debt means all Debt of the Company and its
         Subsidiaries, determined on a consolidated basis, excluding (i)
         contingent obligations in respect of Suretyship Liabilities (except to
         the extent constituting Suretyship Liabilities in respect of Debt of a
         Person other than the Company or any Subsidiary), (ii) Hedging
         Obligations, (iii) Debt of the Company to Subsidiaries and Debt of
         Subsidiaries to the Company or to other Subsidiaries and (iv) an amount
         equal to 25% of the Loans outstanding at the time of calculation the
         proceeds of which were used to repurchase, redeem, repay or defease the
         Subordinated Notes.

                  Issuing Lender means CFC in its capacity as the issuer of
         Letters of Credit hereunder and its successors and assigns in such
         capacity.

                  L/C Application means, with respect to any request for the
         issuance of a Letter of Credit, a letter of credit application in the
         form being used by the Issuing Lender at the time of such request for
         the type of letter of credit requested.

   2

                  Lender - see the Preamble. References to the "Lenders" shall
         include the Issuing Lender; for purposes of clarification only, to the
         extent that CFC (or any successor Issuing Lender) may have any rights
         or obligations in addition to those of the other Lenders due to its
         status as Issuing Lender, its status as such will be specifically
         referenced.

                  Letter of Credit - see Section 2.1.3.

                  Loans means Acquisition Loans, Revolving Loans and Term Loans.

                  Loan Documents means this Agreement, the Notes, the Guaranty,
         the Letters of Credit and the Collateral Documents.

                  Revolving Commitment Amount means $125,000,000, as reduced
         from time to time pursuant to Section 6.1; provided that if the Company
         elects pursuant to Section 2.1.4 to convert Revolving Loans to Term
         Loans, the Revolving Commitment Amount shall automatically be reduced
         by the principal amount of the Revolving Loans so converted; provided,
         further, however, that if, following repayment in full of $110,000,000
         of Term Loans and reduction of the Term Commitment Amount to zero and
         prior to the Revolving Termination Date, the Company shall pay any Term
         Loan, the Revolving Loan Commitment shall be increased by the amount of
         such payment.

         (b) The following definitions shall be added to Section 1.1 of the
Credit Agreement, each in its appropriate alphabetical position:

                  Net Cash Proceeds means, with respect to any issuance of Debt,
         the aggregate cash proceeds received by the Company or any Subsidiary
         pursuant to such issuance, net of the direct costs of such issuance.

                  Revolving Termination Date means the earlier to occur of (a)
         August 3, 2005 or (b) such other date on which the Commitments
         terminate pursuant to Section 6 or 11.

                  Term Commitment Amount means $110,000,000, as reduced from
         time to time pursuant to Section 6.1 or 6.3; provided that the Term
         Commitment Amount shall be automatically and permanently reduced by the
         amount of any Term Loan made hereunder (other than Term Loans arising
         out of the conversion of Revolving Loans pursuant to the proviso to the
         definition of "Revolving Commitment Amount").

                  Term Commitment Termination Date means the earlier to occur of
         (a) December 23, 2007 and (b) such other date on which the Commitments
         terminate pursuant to Section 6 or 11.
                  Term Loan Termination Date means December 23, 2007.

                  Term Loans - see Section 2.1.4


                                      -2-

   3

         (c) The following definitions shall be deleted from Section 1.1 of the
Credit Agreement: Excluded Property, Issuer, LC Guaranty, LC Reimbursement
Agreement, Reimbursement Obligation and Termination Date.

         (d) The definition of "Interest Rate" in Section 1.1 of the Credit
Agreement shall be amended by deleting clause (b)(x) of the first sentence of
such definition and inserting the following in lieu thereof: "(b)(x) three
percent (3.00%) per annum on all Term Loans and, if the Company uses the
proceeds of any Revolving Loans to repurchase, redeem, repay or defease the
Subordinated Notes but has not converted such Revolving Loans to Term Loans
pursuant to Section 2.1.4, then, with respect to such Revolving Loans, three
percent (3.00%) per annum".

         1.2 The lead in paragraph to Section 2.1 of the Credit Agreement shall
be amended and restated to read in its entirety as follows:

                  2.1 Commitments. On and subject to the terms and conditions of
         this Agreement, each of the Lenders, severally and for itself alone,
         agrees to make Loans to, and to issue or participate in Letters of
         Credit for the account of, the Company as follows:

         1.3 Sections 2.1.1, 2.1.2, 3.1 and 5.1 shall be amended by inserting
the word "Revolving" in front of the words "Termination Date" each place where
such words appear in such Sections.

         1.4 Section 2.1.3 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  2.1.3 L/C Commitment. (a) The Issuing Lender will issue
         letters of credit, in each case containing such terms and conditions as
         are permitted by this Agreement and are reasonably satisfactory to the
         Issuing Lender (each a "Letter of Credit"), at the request of and for
         the account of the Company from time to time before the date which is
         30 days prior to the Revolving Termination Date and (b) as more fully
         set forth in Section 2.3.2, each Lender agrees to purchase a
         participation in each such Letter of Credit; provided that (i) the
         aggregate Stated Amount of all Letters of Credit shall not at any time
         exceed $10,000,000 and (ii) the Revolving Outstandings will not at any
         time exceed the Revolving Commitment Amount.

         1.5 The following Section 2.1.4 shall be added to the Credit Agreement:

                  2.1.4 Term Loan Commitment. Each Lender agrees to make loans
         to the Company (each such loan, a "Term Loan") on a Business Day before
         the Term Commitment Termination Date in such Lender's Pro Rata Share of
         such amount as the Company shall request from all Lenders; provided
         that the aggregate amount of Term Loans requested by the Company
         pursuant to this sentence shall not exceed the Term Commitment Amount.
         In addition, at any time when the Term Commitment Amount is zero, if
         the Company elects by delivering written notice of such election to the
         Agent, it


                                      -3-
   4


         may convert up to $78,000,000 of Revolving Loans to Term Loans
         notwithstanding that such election may cause the aggregate amount of
         Term Loans to exceed the Term Commitment Amount; provided that the
         aggregate amount of Revolving Loans converted into Term Loans shall not
         exceed the aggregate amount of Revolving Loans borrowed at any time the
         proceeds of which were used to repurchase, redeem, repay or defease the
         Subordinated Notes. No amount paid or prepaid with respect to any Term
         Loan may be reborrowed.

         1.6 Section 2.3 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  2.3  Letter of Credit Procedures.

                  2.3.1 L/C Applications. The Company shall give notice to the
         Agent and the Issuing Lender of the proposed issuance of each Letter of
         Credit on a Business Day which is at least three Business Days (or such
         lesser number of days as the Agent and the Issuing Lender shall agree
         in any particular instance in their sole discretion) prior to the
         proposed date of issuance of such Letter of Credit. Each such notice
         shall be accompanied by an L/C Application, duly executed by the
         Company and in all respects reasonably satisfactory to the Agent and
         the Issuing Lender, together with such other documentation as the Agent
         or the Issuing Lender may reasonably request in support thereof, it
         being understood that each L/C Application shall specify, among other
         things, the date on which the proposed Letter of Credit is to be
         issued, the expiration date of such Letter of Credit (which shall not
         be later than the earlier to occur of (x) one year after the date of
         issuance thereof and (y) thirty days prior to the scheduled Revolving
         Termination Date) and whether such Letter of Credit is to be
         transferable in whole or in part. So long as the Issuing Lender has not
         received written notice that the conditions precedent set forth in
         Section 10 with respect to the issuance of such Letter of Credit have
         not been satisfied, the Issuing Lender shall issue such Letter of
         Credit on the requested issuance date. The Issuing Lender shall
         promptly advise the Agent of the issuance of each Letter of Credit and
         of any amendment thereto, extension thereof or event or circumstance
         changing the amount available for drawing thereunder. In the event of
         any inconsistency between the terms of any L/C Application and the
         terms of this Agreement, the terms of this Agreement shall control.

                  2.3.2 Participations in Letters of Credit. Concurrently with
         the issuance of each Letter of Credit, the Issuing Lender shall be
         deemed to have sold and transferred to each other Lender, and each
         other Lender shall be deemed irrevocably and unconditionally to have
         purchased and received from the Issuing Lender, without recourse or
         warranty, an undivided interest and participation, to the extent of
         such other Lender's Pro Rata Share, in such Letter of Credit and the
         Company's reimbursement obligations with respect thereto. For the
         purposes of this Agreement, the unparticipated portion of each Letter
         of Credit shall be deemed to be the Issuing Lender's "participation"
         therein. The Issuing Lender hereby agrees, upon request of the Agent or
         any Lender, to deliver to the Agent or such Lender a list of all
         outstanding Letters of Credit issued by the Issuing


                                      -4-
   5

         Lender, together with such information related thereto as the Agent or
         such Lender may reasonably request.

                  2.3.3 Reimbursement Obligations. The Company hereby
         unconditionally and irrevocably agrees to reimburse the Issuing Lender
         for each payment or disbursement made by the Issuing Lender under any
         Letter of Credit honoring any demand for payment made by the
         beneficiary thereunder, in each case on the date that such payment or
         disbursement is made. Any amount not reimbursed on the date of such
         payment or disbursement shall bear interest from the date of such
         payment or disbursement to the date that the Issuing Lender is
         reimbursed by the Company therefor, payable on demand, at a rate per
         annum equal to the Interest Rate from time to time in effect plus,
         beginning on the third Business Day after receipt of notice from the
         Issuing Lender of such payment or disbursement, 2%. The Issuing Lender
         shall notify the Company and the Agent whenever any demand for payment
         is made under any Letter of Credit by the beneficiary thereunder;
         provided that the failure of the Issuing Lender to so notify the
         Company shall not affect the rights of the Issuing Lender or the
         Lenders in any manner whatsoever.

                  2.3.4 Limitation on Obligations of Issuing Lender. In
         determining whether to pay under any Letter of Credit, the Issuing
         Lender shall not have any obligation to the Company or any Lender other
         than to confirm that any documents required to be delivered under such
         Letter of Credit appear to have been delivered and appear to comply on
         their face with the requirements of such Letter of Credit. Any action
         taken or omitted to be taken by the Issuing Lender under or in
         connection with any Letter of Credit, if taken or omitted in the
         absence of gross negligence and willful misconduct, shall not impose
         upon the Issuing Lender any liability to the Company or any Lender and
         shall not reduce or impair the Company's reimbursement obligations set
         forth in Section 2.3.3 or the obligations of the Lenders pursuant to
         Section 2.3.5.

                  2.3.5 Funding by Lenders to Issuing Lender. If the Issuing
         Lender makes any payment or disbursement under any Letter of Credit and
         the Company has not reimbursed the Issuing Lender in full for such
         payment or disbursement by 10:00 A.M., Detroit time, on the date of
         such payment or disbursement, or if any reimbursement received by the
         Issuing Lender from the Company is or must be returned or rescinded
         upon or during any bankruptcy or reorganization of the Company or
         otherwise, each other Lender shall be obligated to pay to the Agent for
         the account of the Issuing Lender, in full or partial payment of the
         purchase price of its participation in such Letter of Credit, its Pro
         Rata Share of such payment or disbursement (but no such payment shall
         diminish the obligations of the Company under Section 2.3.3), and, upon
         notice from the Issuing Lender, the Agent shall promptly notify each
         other Lender thereof. Each other Lender irrevocably and unconditionally
         agrees to so pay to the Agent in immediately available funds for the
         Issuing Lender's account the amount of such other Lender's Pro Rata
         Share of such payment or disbursement. If and to the extent any Lender
         shall not have made such amount available to the Agent by 2:00 P.M.,
         Detroit time, on the Business Day on which such Lender receives notice
         from the Agent of such payment or disbursement (it being understood
         that any such notice received after noon, Detroit time, on any Business
         Day shall


                                      -5-
   6

         be deemed to have been received on the next following Business Day),
         such Lender agrees to pay interest on such amount to the Agent for the
         Issuing Lender's account forthwith on demand, for each day from the
         date such amount was to have been delivered to the Agent to the date
         such amount is paid, at a rate per annum equal to (a) for the first
         three days after demand, the Federal Funds Rate from time to time in
         effect and (b) thereafter, the Interest Rate from time to time in
         effect. Any Lender's failure to make available to the Agent its Pro
         Rata Share of any such payment or disbursement shall not relieve any
         other Lender of its obligation hereunder to make available to the Agent
         such other Lender's Pro Rata Share of such payment, but no Lender shall
         be responsible for the failure of any other Lender to make available to
         the Agent such other Lender's Pro Rata Share of any such payment or
         disbursement.

         1.7 Section 2.5 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  2.5 Certain Conditions. Notwithstanding any other provision of
         this Agreement, no Lender shall have an obligation to make any Loan and
         the Issuing Lender shall not have any obligation to issue any Letter of
         Credit, if an Event of Default or Unmatured Event of Default has
         occurred and is continuing.

         1.8 Section 3.1 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  3.1 Notes. The Loans of each Lender shall be evidenced by a
         promissory note (each a "Note") substantially in the form set forth in
         Exhibit A, with appropriate insertions, payable to the order of such
         Lender as follows:

                  (a) each Revolving Loan and Acquisition Loan of such Lender
         shall be paid in full on the Revolving Termination Date; and

                  (b) each Term Loan of such Lender shall be paid in
         installments equal to such Lender's Pro Rata Share of the aggregate
         principal amount of the installments of the Term Loans to be paid on
         the following dates:

    Payment Date           Payment Amount
    ------------           --------------
    December 23, 2001      $20,000,000 (or, if less, the aggregate amount of all
                           Term Loans then outstanding)
    December 23, 2003      $20,000,000 (or, if less, the aggregate amount of all
                           Term Loans then outstanding)
    December 23, 2005      $20,000,000 (or, if less, the aggregate amount of all
                           Term Loans then outstanding)

         Term Loan Termination Date The aggregate amount of all Term Loans then
outstanding.


                                      -6-
   7

         1.9 Section 6.1 of the Credit Agreement shall be amended by (i)
deleting the words "LC Guaranties" where they appear in clause (a) and inserting
in lieu thereof the words "Letters of Credit", (ii) deleting clause (c) of such
Section in its entirety and (iii) adding the following clauses (c) and (d):

                  (c) The Company may from time to time by written notice to the
         Agent (which shall promptly advise each Lender thereof) permanently
         reduce the Term Commitment Amount to an amount not less than the
         aggregate principal amount of all Term Loans then outstanding.

                  (d) All reductions of the Revolving Commitment Amount, the
         Acquisition Commitment Amount and the Term Commitment Amount shall
         reduce the Commitments pro rata among the Lenders according to their
         respective Pro Rata Shares.

         1.10 Section 6.2 of the Credit Agreement shall be amended by adding the
following sentence at the end thereof:

         All such prepayments of the Term Loans shall be applied to the
         remaining installments thereof in inverse order of maturity.

         1.11 The following Sections 6.3 and 6.4 shall be added to the Credit
Agreement:

                  6.3 Mandatory Reduction of Term Commitment Amount. If the
         Subordinated Notes shall be refunded or refinanced using the proceeds
         of any Debt (other than Loans hereunder), the Term Commitment Amount
         shall automatically and permanently be reduced by an amount equal to
         the principal amount of Subordinated Notes so refunded or refinanced.

                  6.4 Mandatory Prepayments. If the Company or any Subsidiary
         shall receive any Net Cash Proceeds from the issuance of any
         Subordinated Debt (other than Seller Subordinated Debt and other than
         Refinancing Debt in respect of any portion of the Subordinated Notes
         that has not been repurchased, redeemed, defeased or otherwise repaid
         with the proceeds of Loans) or any other Debt that is not permitted by
         Section 9.7, the Company shall, concurrently with such receipt, make a
         prepayment of the Term Loans in an amount equal to 100% of such Net
         Cash Proceeds. Each such prepayment of the Term Loans shall be applied
         to the remaining installments thereof in inverse order of maturity.

         1.12 Section 7.5 of the Credit Agreement shall be amended by (i)
deleting the words "LC Guaranty" where they appear and inserting in lieu thereof
the words "Letter of Credit" and (ii) deleting the words "LC Guaranties" where
they appear and inserting in lieu thereof the words "Letters of Credit."

         1.13 Section 9.8 of the Credit Agreement shall be amended by deleting
clause (d) thereof in its entirety and substituting the following therefor:




                                      -7-
   8

                  (d) (i) Liens arising in connection with Capital Leases (and
         attaching only to the property being leased), (ii) Liens existing on
         property at the time of the acquisition thereof by the Company or any
         Subsidiary (and not created in contemplation of such acquisition) and
         (iii) Liens that constitute purchase money security interests on any
         property securing Debt incurred for the purpose of financing all or any
         part of the cost of acquiring such property, provided that any such
         Lien attaches to such property within 60 days of the acquisition
         thereof and attaches solely to the property so acquired;

         1.14 Section 9.9 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  9.9 Restricted Payments. Not, and not permit any Subsidiary
         to, (a) make any distribution to any of its shareholders, (b) purchase
         or redeem any of its capital stock or other equity interests or any
         warrants, options or other rights in respect thereof, (c) pay any
         management fees or similar fees to any of its shareholders or any
         Affiliate thereof, (d) make any redemption, prepayment, defeasance or
         repurchase of any Subordinated Debt or (e) set aside funds for any of
         the foregoing. Notwithstanding the foregoing, (i)(i) any Subsidiary
         may pay dividends or make other distributions to the Company or another
         Subsidiary and (ii) so long as no Event of Default or Unmatured Event
         of Default has occurred and is continuing or would result therefrom,
         the Company and its Subsidiaries may (w) pay dividends to its
         stockholders and purchase or redeem its capital stock, (x) pay
         management fees to Young Automotive Group, LLC, an Indiana limited
         liability company ("YAG"), and its Affiliates (collectively, "Young")
         in connection with joint ventures formed by the Company and its
         Subsidiaries pursuant to that certain Joint Venture Formation
         Agreement, dated as of January 31, 1998, among the Company, YAG and
         certain other parties (the "Young JV Agreement"), in an amount not to
         exceed 30% of the annual pre-tax income of all Persons in which
         Investments are made pursuant to the Young JV Agreement, (y)
         repurchase, redeem, defease or otherwise repay all or any of the
         Subordinated Notes using the proceeds of the Term Loans and/or the
         proceeds of up to $78,000,000 of Revolving Loans and (z) repurchase,
         redeem, defease or otherwise repay all or any of the Subordinated Notes
         using the proceeds of an offering of equity securities, which equity
         securities are issued by the Company.

         1.15 Section 9.12 of the Credit Agreement shall be amended and restated
to read in its entirety as follows:

                  9.12 Use of Proceeds. Use the proceeds of the Revolving Loans
         and Acquisition Loans, and the Letters of Credit, solely for working
         capital, for Acquisitions permitted by Section 9.10, for capital
         expenditures, to repurchase, redeem, defease or otherwise repay all or
         any of the Subordinated Notes (to the extent permitted by Section 9.9)
         to make Investments permitted hereunder, to repurchase capital stock
         and for other general corporate purposes (including, in the case of
         Revolving Loans, to pay Term Loans); use the proceeds of the Term Loans
         solely to repurchase, redeem, defease or otherwise repay all or any of
         the Subordinated Notes; and not use




                                      -8-
   9

         or permit any proceeds of any Loan to be used, either directly or
         indirectly, for the purpose, whether immediate, incidental or ultimate,
         of "purchasing or carrying" any Margin Stock.

         1.16 Section 9.13 of the Credit Agreement shall be amended by (i)
deleting the parenthetical phrase in clause (a)(i) thereof and inserting in lieu
thereof the following "(other than property in which the Company is prohibited
from granting a security interest, pledge or assignment pursuant to a Permitted
Restriction)" and (ii) deleting the first parenthetical phrase in clause (b)
thereof and inserting in lieu thereof the following "(other than property in
which such Subsidiary is prohibited from granting a security interest, pledge or
assignment pursuant to a Permitted Restriction)."

         1.17 The lead in paragraph of Section 10 shall be amended and restated
to read in its entirety as follows:

                  The obligation of each Lender to make its Loans and of the
         Issuing Lender to issue Letters of Credit is subject to the following
         conditions precedent:

         1.18 Section 10.1 of the Credit Agreement shall be amended by deleting
the words "CFC to issue its initial LC Guaranty" where they appear and inserting
in lieu thereof the words "the Issuing Lender to issue its initial Letter of
Credit."

         1.19 The lead in paragraph to Section 10.2 of the Credit Agreement
shall be amended and restated to read in its entirety as follows:

                  10.2 Conditions. The obligation (a) of each Lender to make
         each Loan and (b) of the Issuing Lender to issue each Letter of Credit
         is subject to the following further conditions precedent that:

         1.20 Section 10.2.1 of the Credit Agreement shall be amended by (i)
deleting the word "and" following clause (b) thereof, (ii) amending and
restating clause (c) thereof to read in its entirety as follows

                  (c) unless the proceeds of such borrowing are to be used to
         repurchase, redeem or repay all outstanding Subordinated Notes, for so
         long as either Subordinated Notes Indenture is in effect (unless the
         obligations of the Company with respect to all Subordinated Notes
         thereunder have been, or are concurrently with such borrowing to be,
         defeased in accordance with the terms of such Subordinated Notes
         Indenture), if after giving effect to such borrowing or the issuance of
         such Letter of Credit, the sum of the aggregate principal amount of all
         outstanding Loans plus the Stated Amount of all Letters of Credit would
         exceed the maximum amount of Debt permitted under each of Section
         4.04(ii) of the Series A Subordinated Notes Indenture or Section
         4.4(ii) of the Series B Subordinated Notes Indenture, the Agent shall
         be satisfied that such borrowing or such issuance of a Letter of Credit
         will not violate either Subordinated Notes Indenture (or any
         Refinancing Agreement) and that the Company's obligations to the Agent
         and the Lenders in respect of such





                                      -9-
   10

         borrowing or Letter of Credit are "Senior Debt" under and as defined in
         each Subordinated Notes Indenture that is in effect at the time of such
         borrowing; and

and (iii) adding the following clause (d)

                  (d) (i) if the proceeds of any borrowing are to be used to
         finance a tender offer for Subordinated Notes, (x) all terms and
         conditions of any such tender offer shall be satisfactory to the Agent
         (including the maximum tender price and all fees and commissions paid
         to any information agent, solicitation agent, dealer manager or Person
         performing any similar role) and each such tender offer shall comply
         with the offer documents applicable thereto and all applicable laws
         (including Rule 14e-1 under the Securities Exchange Act of 1934 and
         other Federal and state securities laws and regulations) and (y) there
         shall have been delivered to the Agent true and correct copies of all
         offer documents applicable thereto, all of which shall be in form and
         substance reasonably satisfactory to the Agent (the Agent agrees to
         review any such documents received by it reasonably promptly following
         receipt) and (ii) if the proceeds of any borrowing are to be used in
         connection with any solicitation of consents to amend any Subordinated
         Notes Indenture, all terms and conditions of each such consent
         solicitation shall be reasonably satisfactory to the Agent (the Agent
         agrees to review any such documents received by it reasonably promptly
         following receipt).

         1.21 The following Section 10.4 shall be added to the Credit Agreement:

                  10.4 Conditions to Term Loans. The obligation of each Lender
         to make Term Loans is subject to the following further conditions
         precedent that:

                  10.4.1 Filings, Registrations and Recordings. The Agent shall
         have received each document (including Uniform Commercial Code
         financing statements) required by the Collateral Documents or under law
         or reasonably requested by the Agent to be filed, registered or
         recorded in order to create in favor of the Agent, for the benefit of
         the Lenders, a perfected Lien in all equipment of the Company and its
         Subsidiaries (other than Foreign Subsidiaries), prior and superior to
         any other Person, in proper form for filing, registration or recording.

                  10.4.2 Subordinated Note Repurchase. The Agent shall be
         satisfied that the proceeds of such borrowing are to be used to
         repurchase, redeem, defease or otherwise repay the Subordinated Notes.

         1.22 The last two sentences of Section 11.2 of the Credit Agreement
shall be deleted and the following inserted in lieu thereof:

         Any cash collateral delivered hereunder shall be held by the Agent
         (without liability for interest thereon) and applied to reimbursement
         obligations under the Letters of Credit. After the expiration or
         termination of the Letters of Credit, such cash collateral shall be
         applied by the Agent to any


                                      -10-
   11

         remaining obligations hereunder and any excess shall be delivered to
         the Company or as a court of competent jurisdiction may direct.

         1.23 Section 12.1(b) of the Credit Agreement shall be amended and
restated in its entirety to read as follows:

                  (b) The Issuing Lender shall act on behalf of the Lenders with
         respect to any Letters of Credit issued by it and the documents
         associated therewith. The Issuing Lender shall have all of the benefits
         and immunities (i) provided to the Agent in this Section 12 with
         respect to any acts taken or omissions suffered by the Issuing Lender
         in connection with Letters of Credit issued by it or proposed to be
         issued by it and the applications and agreements for letters of credit
         pertaining to such Letters of Credit as fully as if the term "Agent",
         as used in this Section 12, included the Issuing Lender with respect to
         such acts or omissions and (ii) as additionally provided in this
         Agreement with respect to the Issuing Lender.

         1.24 Section 13.1 of the Credit Agreement shall be amended by (i)
deleting clause (i) of the penultimate sentence and inserting the following in
lieu thereof "(i) increase the Revolving Commitment Amount, the Acquisition
Commitment Amount or the Term Commitment Amount" and (ii) deleting the final
sentence and inserting the following in lieu thereof:

         No provision of this Agreement relating to the rights or duties of the
         Issuing Lender in its capacity as such shall be amended, modified or
         waived without the consent of the Issuing Lender.

         1.25 Section 13.9.1 of the Credit Agreement shall be amended by (i)
deleting the word "CFC" where it appears and inserting in lieu thereof the words
"the Issuing Lender" and (ii) adding he following to clause (i) of the first
sentence thereof "plus the unpaid amount of such Lender's Term Loans."

         1.26 Schedule 2.1 to the Credit Agreement is replaced by Schedule 2.1
hereto.

         SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Lenders that (a) the representations and
warranties made in Section 8 of the Credit Agreement are true and correct on and
as of the Amendment Effective Date with the same effect as if made on and as of
the Amendment Effective Date (except to the extent relating solely to an earlier
date, in which case they were true and correct as of such earlier date); (b) no
Event of Default or Unmatured Event of Default exists or will result from the
execution of this Amendment; (c) the execution and delivery by the Company of
this Amendment and the performance by the Company of its obligations under the
Credit Agreement as amended hereby (as so amended, the "Amended Credit
Agreement") (i) are within the corporate powers of the Company, (ii) have been
duly authorized by all necessary corporate action, (iii) have received all
necessary approval from any governmental authority and (iv) do not and will not
contravene or conflict with any provision of any law, rule or regulation or any
order, decree, judgment or award which is binding on the Company or any of its
Subsidiaries or of any provision of the certificate of incorporation or


                                      -11-
   12

bylaws of the Company or of any agreement, indenture, instrument or other
document which is binding on the Company or any of its Subsidiaries; and (d) the
Amended Credit Agreement is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.

         SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above
shall become effective on such date (the "Amendment Effective Date") when the
Agent shall have received (a) a counterpart of this Amendment executed by the
Company and the Required Lenders and (b) each of the following documents, each
in form and substance reasonably satisfactory to the Agent:

         3.1 Reaffirmation. A Reaffirmation of Loan Documents in the form
attached hereto as Exhibit A executed by each Loan Party other than the Company.

         3.2 Security Agreement. A counterpart of the Amended and Restated
Security Agreement in substantially the form attached hereto as Exhibit B
executed by the Company and each Subsidiary (other than Foreign Subsidiaries).

         3.3 Opinion of Counsel. An opinion of counsel or counsels reasonably
satisfactory to the Agent.

         3.4 Other Documents. Such other documents as the Agent or any Lender
may reasonably request.

         SECTION 4  MISCELLANEOUS.

         4.1 Continuing Effectiveness, etc. As herein amended, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the Amendment Effective Date, all references in
the Credit Agreement, the Notes, each other Loan Document and any similar
document to the "Credit Agreement" or similar terms shall refer to the Amended
Credit Agreement.

         4.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.

         4.3 Expenses. The Company agrees to pay the reasonable costs and
expenses of the Agent (including reasonable fees and disbursements of counsel,
including, without duplication, the allocable costs of internal legal services
and all disbursements of internal legal counsel) in connection with the
preparation, execution and delivery of this Amendment.

         4.4 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of New York applicable to contracts made and
to be wholly performed within the State of New York.

         4.5 Successors and Assigns. This Amendment shall be binding upon the
Company, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Lenders and the Agent and the
successors and assigns of the Lenders and the Agent.

         Delivered as of the day and year first above written.


                                      -12-
   13


                                        UNITED AUTO GROUP, INC.


                                        By
                                          ---------------------------
                                        Title
                                             ------------------------

                                        CHRYSLER FINANCIAL
                                        COMPANY, L.L.C., as
                                        Agent and as a Lender


                                        By
                                          ---------------------------
                                        Title
                                              -----------------------







                                      -13-
   14
                                    EXHIBIT A

                                REAFFIRMATION OF
                                 LOAN DOCUMENTS


                                December 23, 1999


Chrysler Financial Company, L.L.C., as Agent
and the other parties
to the Credit Agreement
referred to below

                       RE: REAFFIRMATION OF LOAN DOCUMENTS

Ladies and Gentlemen:

         Please refer to:

                  1. The Pledge Agreement dated as of October 8, 1999 (the
         "Pledge Agreement") among United Auto Group, Inc. ("UAG"), various of
         its subsidiaries and Chrysler Financial Company, L.L.C., in its
         capacity as Agent (in such capacity, the "Agent");

                  2. The Guaranty dated as of October 8, 1999 (the "Guaranty")
         executed in favor of the Agent and various other parties by all
         subsidiaries of UAG; and

                  3. The Security Agreement dated as of October 8, 1999 (the
         "Security Agreement") among UAG, its subsidiaries and the Agent.

         The Guaranty, the Pledge Agreement, the Security Agreement and the
Credit Agreement referred to below are collectively referred to herein as the
"Loan Documents". Capitalized terms not otherwise defined herein will have the
meanings given in the Credit Agreement referred to below.

         Each of the undersigned acknowledges that the Company, the Lenders and
the Agent have executed the Second Amendment (the "Amendment") to the Credit
Agreement dated as of August 3, 1999 (as heretofore amended, as so amended and
as the same may be further amended, supplemented or otherwise modified from time
to time, the "Credit Agreement").

         Each of the undersigned hereby (i) consents and agrees to the
amendments to the Loan Documents to which such undersigned is a party contained
in the Amendment and (ii) confirms that each Loan


   15

Document to which such undersigned is a party remains in full force and effect
after giving effect to the effectiveness of the Amendment and that, upon such
effectiveness, all references in such Loan Document to the "Credit Agreement"
shall be references to the Credit Agreement as amended by the Amendment.



                                      -2-
   16

         The letter agreement may be signed in counterparts and by the various
parties as herein on separate counterparts. This letter agreement shall be
governed by the laws of the State of New York applicable to contracts made and
to be performed entirely within such State.

                                      UAG NORTHEAST, INC.
                                      DIFEO PARTNERSHIP, INC.
                                      DIFEO PARTNERSHIP HCT, INC.
                                      DIFEO PARTNERSHIP SCT, INC.
                                      DIFEO PARTNERSHIP RCT, INC.
                                      DIFEO PARTNERSHIP RCM, INC.
                                      DIFEO PARTNERSHIP VIII, INC.
                                      DIFEO PARTNERSHIP IX, INC.
                                      DIFEO PARTNERSHIP X, INC.
                                      UAG HUDSON, INC.
                                      SOMERSET MOTORS INC.
                                      UAG NORTHEAST BODY SHOP, INC.
                                      UAG NORTHEAST (NY), INC.
                                      UNITED LANDERS, INC.
                                      LANDERS AUTO SALES, INC.
                                      LANDERS UNITED AUTO GROUP NO. 2, INC.
                                      LANDERS UNITED AUTO GROUP, INC.
                                      LANDERS UNITED AUTO GROUP NO. 3, INC.
                                      LANDERS UNITED AUTO GROUP NO. 4, INC.
                                      LANDERS BUICK-PONTIAC, INC.
                                      UNITED AUTO GROUP, INC.
                                      UAG ATLANTA, INC.
                                      UAG DULUTH, INC.
                                      UAG ATLANTA II, INC.
                                      UNITED NISSAN, INC. (GA)
                                      UNITED NISSAN, INC. (NY)
                                      UNITED NISSAN, INC. (TN)
                                      UAG ATLANTA III, INC.
                                      PEACHTREE NISSAN, INC.
                                      UAG ATLANTA IV, INC.
                                      UAG ATLANTA IV MOTORS, INC.
                                      UAG ATLANTA V, INC.
                                      CONYERS NISSAN, INC.
                                      UAG ATLANTA VI, INC.
                                      UNITED JEEP CHRYSLER PLYMOUTH OF
                                        STONE MOUNTAIN, INC.
                                      UNITED MAZDA, INC.


                                      -3-

   17

                                      UAG TENNESSEE, INC.
                                      UAG WEST, INC.
                                      SA AUTOMOTIVE, LTD.
                                      SL AUTOMOTIVE, LTD.
                                      SPA AUTOMOTIVE, LTD.
                                      LRP, LTD.
                                      SUN MOTORS, LTD.
                                      SCOTTSDALE MANAGEMENT GROUP, LTD.
                                      SAU AUTOMOTIVE, LTD.
                                      SK MOTORS, LTD.
                                      KMT/UAG, INC.
                                      RELENTLESS PURSUIT ENTERPRISES, INC.
                                      TRI-CITY LEASING, INC.
                                      HT AUTOMOTIVE LTD.
                                      UAG NEVADA, INC.
                                      UAG TEXAS, INC.
                                      UAG TEXAS II, INC.
                                      UAG EAST, INC.
                                      WESTBURY SUPERSTORE, LTD.
                                      WESTBURY NISSAN LTD.
                                      PALM AUTO PLAZA, INC.
                                      FLORIDA CHRYSLER PLYMOUTH, INC.
                                      WEST PALM NISSAN, INC.
                                      WEST PALM INFINITI, INC.
                                      NORTHLAKE AUTO FINISH, INC.
                                      J & S AUTO REFINISHING, LTD.
                                      J&S IMPORTS, INC.
                                      WEST PALM AUTO MALL, INC.
                                      AUTO MALL PAYROLL SERVICES, INC.
                                      AUTO MALL STORAGE, INC.
                                      AMITY AUTO PLAZA, LTD.
                                      AMITY NISSAN OF MASSAPEQUA, LTD.
                                      UAG CAROLINA, INC.
                                      REED-LALLIER CHEVROLET, INC.
                                      MICHAEL CHEVROLET-OLDSMOBILE, INC.
                                      GENE REED CHEVROLET, INC.
                                      UNITEDAUTO DODGE OF SHREVEPORT,
                                           INC.
                                      UAG MEMPHIS, INC.
                                      COVINGTON PIKE DODGE, INC.
                                      UAG GRACELAND, INC.

                                      -4-

   18

                                      THE NEW GRACELAND DODGE, INC.
                                      UAG GRACELAND II, INC.
                                      UAG MEMPHIS II, INC.
                                      UAG MEMPHIS III, INC.
                                      UAG MEMPHIS IV, INC.
                                      UAG MEMPHIS V, INC.
                                      UAG KNOXVILLE, INC.
                                      UAG KNOXVILLE II, INC.
                                      UAG-CARIBBEAN, INC.
                                      UAG YOUNG, INC.
                                      DAN YOUNG INC.
                                      DAN YOUNG CHEVROLET INC.
                                      YOUNG MANAGEMENT GROUP, INC.
                                      PARKWAY CHEVROLET, INC.
                                      UAG YOUNG II, INC.
                                      UAG CENTURY MOTORS, INC.
                                      UAG PARAMOUNT MOTORS, INC.
                                      UAG KISSIMMEE MOTORS, INC.
                                      UAG CITRUS, INC.
                                      UAG CLASSIC, INC.
                                      CLASSIC AUTO GROUP, INC.
                                      CHERRY HILL CLASSIC CARS, INC.
                                      CLASSIC OF CHERRY HILL, INC.
                                      CLASSIC MANAGEMENT COMPANY, INC.
                                      CLASSIC CHEVROLET, INC.
                                      CLASSIC ENTERPRISE, INC.
                                      CLASSIC AUTO GROUP HOLDINGS, INC.
                                      CLASSIC IMPORTS, INC.
                                      UNITEDAUTO ENTERPRISES, INC.
                                      UNITED AUTOCARE, INC.
                                      UNITED AUTOCARE PRODUCTS, INC.
                                      UNITEDAUTO FOURTH FUNDING INC.
                                      UNITEDAUTO FIFTH FUNDING INC.
                                      AUTO LEASING CORPORATION
                                      UAG FINANCE COMPANY, INC.
                                      6725 DEALERSHIP LTD.
                                      CHERRY HILL CLASSIC CARS
                                      CLASSIC MOTOR SALES LLC
                                      D. YOUNG CHEVROLET LLC
                                      DAN YOUNG MOTORS LLC
                                      DAN YOUNG TIPTON LLC
                                      UAG YOUNG AUTOMOTIVE GROUP LLC

                                      -5-

   19

                                      UAG LANDERS, INC.
                                      YOUNG AUTOMOTIVE HOLDINGS LLC
                                      UAG LAKE NORMAN LLC


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      DIFEO HYUNDAI PARTNERSHIP
                                      DIFEO NISSAN PARTNERSHIP
                                      DIFEO CHRYSLER PLYMOUTH JEEP
                                      EAGLE PARTNERSHIP
                                      DIFEO LEASING PARTNERSHIP
                                      DIFEO CHEVROLET-GEO PARTNERSHIP
                                      J&F OLDSMOBILE PARTNERSHIP
                                      DANBURY AUTO PARTNERSHIP
                                      FAIR HYUNDAI PARTNERSHIP
                                      FAIR CHEVROLET-GEO PARTNERSHIP
                                      DANBURY CHRYSLER PLYMOUTH PARTNERSHIP
                                      DIFEO TENAFLY PARTNERSHIP
                                      By: DIFEO PARTNERSHIP, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      OCT PARTNERSHIP
                                      By: DIFEO PARTNERSHIP VIII, INC.
                                           a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------



                                      -6-
   20


                                      OCM PARTNERSHIP
                                      By: DIFEO PARTNERSHIP IX, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      HUDSON MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP HCT, INC.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      COUNTY AUTO GROUP PARTNERSHIP
                                      By: DIFEO PARTNERSHIP RCT, INC.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      SOMERSET MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP SCT, INC.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -7-
   21



                                      ROCKLAND MOTORS PARTNERSHIP
                                      By: DIFEO PARTNERSHIP RCM, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      6725 AGENT PARTNERSHIP
                                      By: SAU AUTOMOTIVE, LTD.
                                          a general partner



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      SHANNON AUTOMOTIVE, LTD.
                                      By: UAG TEXAS, INC.
                                          a general partner


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      DAN YOUNG TIPTON, LLC
                                      By: DAN YOUNG, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -8-
   22



                                      YOUNG AUTOMOTIVE HOLDINGS, LLC
                                      UAG YOUNG AUTOMOTIVE GROUP, LLC
                                      D. YOUNG CHEVROLET, LLC
                                      By: UAG YOUNG, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------



                                      DAN YOUNG MOTORS LLC
                                      By: DAN YOUNG CHEVROLET, INC.
                                          Member


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      UAG CITRUS MOTORS, LLC
                                      By: UAG CITRUS, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

                                      CLASSIC MOTOR SALES, LLC
                                      CLASSIC ENTERPRISES, LLC
                                      By: UAG CITRUS, INC.
                                          Member



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -9-
   23



                                      CLASSIC NISSAN OF TURNERSVILLE, LLC
                                      By: Thomas J. Hessert
                                          Member



                                      ----------------------------------





                                      -10-
   24


                                      SCOTTSDALE JAGUAR, LTD.



                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------


                                      -11-
   25


                                      LANDERS UNITED AUTO GROUP NO. 5, INC.
                                      BPT HOLDINGS, INC.
                                      LANDERS FORD, INC
                                      NATIONAL CITY FORD, INC.
                                      CENTRAL FORD CENTER, INC.
                                      PIONEER FORD SALES, INC.


                                      By:
                                         ----------------------------------
                                      Title:
                                            -------------------------------

ACKNOWLEDGED AND AGREED
as of the date first written above

CHRYSLER FINANCIAL COMPANY, L.L.C.,
as Agent


By:
   ----------------------------------
Title:
      -------------------------------






                                      -12-

EX-10.21

   1

                                                                   EXHIBIT 10.21

                              SEVERANCE AGREEMENT

     This Severance Agreement is dated as of May 3, 1999, and is entered into
between United Auto Group, Inc., a Delaware corporation (the "Company"), and
Robert Nelson ("Executive").

     WHEREAS, Executive is currently employed by the Company as an executive
officer of the Company; and

     WHEREAS, Executive and the Company desire to embody in this Agreement the
terms, conditions and benefits to be provided to Executive in the event of
Executive's termination of employment with the Company following a Change in
Control (as defined below); and

     WHEREAS, This Agreement shall supersede all prior oral and written
agreements, arrangements and understandings relating to the terms and conditions
of Executive's employment termination.

     NOW, THEREFORE, the parties hereby agree:

                                   ARTICLE I

                                  DEFINITIONS

     1.1. "BOARD" shall mean the Board of Directors of the Company.

     1.2. "CAUSE" shall mean (with regard to Executive's termination of
employment with the Company): (a) Executive's conviction of a felony (other than
a traffic violation), (b) Executive's embezzlement, willful breach of fiduciary
duty or fraud with regard to the Company or any of its assets or businesses, or
(c) Executive's substantial and continuing failure to perform the material
duties of his position.

     1.3. "CHANGE IN CONTROL" shall mean the consummation of the transactions
contemplated by the "Second Purchase" as such term is defined in the Securities
Purchase Agreement, dated as of April 12, 1999, by and among the Company,
International Motor Cars Group I, L.L.C., a Delaware limited liability company,
and International Motor Cars Group II, L.L.C., a Delaware limited liability
company.

     1.4. "COMPANY" shall mean United Auto Group, Inc., a Delaware corporation,
and any successor as provided in Section 4.5 hereof.

     1.5. "GOOD REASON" shall mean (with respect to Executive's termination of
employment with the Company) Executive's voluntary termination of employment
with the Company due to: (i) a material diminution in Executive's
responsibilities or a reduction in Executive's basic annual salary from the 1999
budgeted annual salary for Executive, (ii) the elimination of Executive's
position responsibilities, or (iii) the company's requiring Executive to be
based at any office or location that is more than fifty (50) miles further from
Executive's present job location on the date hereof. No termination of
employment shall be treated as for Good Reason unless, before the termination of
his employment, Executive has given the Company thirty (30) days' notice and
opportunity to cure the action which is the basis for the assertion of Good
Reason and such notice is given not more than ninety (90) days after the action
alleged to constitute Good Reason.

     1.6. "SALARY" shall mean Executive's 1999 budgeted annual salary.

     1.7. "SEVERANCE BENEFIT" shall mean the benefit paid or provided to
Executive by the Company in accordance with Section 2.1 hereof.

     1.8. "TERMINATION DATE" shall mean May 3, 1999 and specifically excludes
any period for which a Severance Benefit is made.
   2

                                   ARTICLE II

                                    BENEFITS

     2.1. Change in Control Benefits. In the event that a Change in Control
occurs and Executive's employment is terminated by the Company without Cause or
by the Executive for Good Reason on and after May 3, 1999 and prior to August 2,
2000, (i) the Company shall pay to Executive all amounts and benefits that have
accrued or were earned but remain unpaid through the Termination Date in respect
of salary, bonus and unreimbursed expenses, including accrued and unused
vacation, within thirty (30) days following the Termination Date, (ii) Executive
shall continue to receive the Salary (less any applicable withholding or similar
taxes) in accordance with the Company's prevailing payroll practices for a
period of 12 months following the Termination Date (the "Severance Term"), and
(iii) all outstanding stock options in respect of Company common stock
previously granted to the Executive shall vest, to the extent unvested, and be
immediately exercisable until the scheduled date of expiration, but without
regard to the Executive's termination of employment. Anything in this Section
2.1 to contrary, the payments and benefits to be provided to the Executive as
set forth in this Section 2.1 shall be lieu of any and all benefits otherwise
provided under any severance pay policy, plan or program maintained from time to
time by the Company for its employees.

     2.2. Continuation of Benefits in the Event of Death. In the event Executive
dies prior to receipt of his entire Severance Benefit, the remaining portion of
such Severance Benefit shall continue to be paid, in the same form as described
in Section 2.1 above to Executive's spouse, or, if Executive is not married on
the date of death, to Executive's estate.

     2.3. Mitigation/Set Off. (a) Executive shall not be required to seek other
employment or to attempt in any way to reduce amounts payable to him pursuant to
this Agreement. Further, except as otherwise provided in this Section 2.3, the
amount of the Severance Benefit payable under this Agreement shall not be
reduced by any compensation earned by or other benefits provided to Executive as
a result of employment by another employer or otherwise.

     (b) Notwithstanding the foregoing provisions of this Section 2.3, the
Company's obligation to make payment of Severance Benefits and otherwise to
perform its obligations hereunder shall be reduced to the extent of any amounts
owed by Executive to the Company which relate to or arise out of Executive's
employment prior to the Termination Date.

                                  ARTICLE III

                             RESTRICTIVE COVENANTS

     3.1. Confidentiality. All material and information which is confidential to
the Company or to any of its subsidiaries or affiliates, whether tangible or
intangible, made available, disclosed or otherwise known to Executive as a
result of his employment with the Company, shall be considered the sole property
of the Company. Executive shall not disclose such material or information to
others except with the Company's prior written approval or as may otherwise be
required by law or legal process. If disclosure of material and information
which is confidential to the Company is sought by a court or administrative
agency of competent jurisdiction or an officer of the court or administrative
agency, either by subpoena or other method, Executive shall, prior to making
disclosure, immediately notify by telephone and confirm in writing to Company's
General Counsel, the circumstances requiring disclosure. The Company shall have
the opportunity, at its own expense, to respond and object (on behalf of itself
or the Executive) to the disclosure, including, but not limited to, an
opportunity to object to the court or administrative agency order, to move to
quash any subpoena, and to take such further action as may be necessary to
protect the terms of this Agreement and to limit or cause to be limited the
extent to which such disclosure shall be made.

     3.2. Nonsolicitation. During the Severance Term, Executive shall not
attempt to influence, persuade or induce, or assist any other person in so
persuading or inducing, any employee of the Company to give up, or to not
commence, employment or a business relationship with the Company.

                                        2
   3

     3.3. Non-Compete. Executive agrees that, during the Severance Term, except
with the prior written consent of either the Chairman of the Board or the
President of the Company, which will not be unreasonably withheld, he or she
shall not, directly or indirectly, for himself or herself or on behalf of or in
conjunction with any person, partnership, corporation or other entity, compete,
own, operate, control, or participate or engage in the ownership, management,
operation or control of, or be connected with as an officer, employee, partner,
director, shareholder, representative, consultant, independent contractor,
guarantor, advisor or in any other similar capacity or otherwise have a
financial interest in, a business organization or enterprises that competes with
the business of the Company or any of its subsidiaries and whose outstanding
capital stock or other equity interests are traded on any national stock
exchange or in the national over-the-counter market ("Public Companies"). For
purposes hereof, the Company shall be deemed to be in the business of operating
dealerships located in the United States of America or the Commonwealth of
Puerto Rico that engage in the retail sale of new or used automobiles or
light-duty trucks and businesses ancillary thereto, provided, however, that for
any business of Executive to be deemed competitive for purposes hereof, it must
be located within a fifty (50) mile radius of any automobile or truck dealership
or ancillary business in which the Company (or any subsidiary thereof), directly
or indirectly has an ownership interest of 20% or more at the time the competing
activities commence. During the Severance Period, Executive shall not interfere
with or disrupt, or attempt to interfere with or disrupt, the relationship,
contractual or otherwise, between the Company or any of its subsidiaries or
their affiliates and any customer, client, supplier, manufacturer, distributor,
consultant, independent contractor, employee or landlord of the Company or any
of its subsidiaries or their affiliates.

     Unless otherwise agreed, any request for consent under this provision that
is not acted on by the Chairman of the Board or President of the Company within
ten (10) calendar days of receipt of the request shall be deemed granted.

     Notwithstanding anything in this Subsection 3.3 to the contrary, Executive
may own, directly or indirectly, up to 1% of the outstanding capital stock or
other equity interests of any competitive business having a class of capital
stock which is traded on any national stock exchange or in the national
over-the-counter market.

                                        3
   4

                                   ARTICLE IV

                                 MISCELLANEOUS

     4.2. Amendment. This Agreement may not be amended without the written
consent of both parties.

     4.2. Withholding. The Company shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any obligations it reasonably
believes it may have to withhold federal, state or local income or other taxes
incurred by reason of payments pursuant to this Agreement. In lieu thereof, the
Company shall have the right to withhold the amount of such taxes from any other
sums due or to become due from the Company to Executive upon such terms and
conditions as the Company may decide.

     4.3. Severability. Should any provisions of this Agreement be deemed or
held to be unlawful or invalid for any reason, such fact shall not adversely
affect the other provisions of this Agreement. Notwithstanding the above, if any
covenant set forth in Sections 3.1, 3.2 or 3.3 hereof is deemed invalid, illegal
or unenforceable because its scope is considered excessive, such covenant will
be modified so that scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.

     4.4. Controlling Law. This Agreement shall be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.

     4.5. Binding on Successors. The Company shall require any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Agreement, in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had
taken place.

     4.6. Effect of Agreement. This Agreement shall not be construed as creating
any contract of employment between the Company and Executive. Executive shall
not have any right to be retained in the employ or service of the Company for
any length of time by reason of this Agreement, and this Agreement shall not
affect the right of the Company to deal with Executive in all respects relating
to Executive's employment, including Executive's discharge, compensation, and
conditions of employment.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                                                   /s/ ROBERT NELSON
                                          --------------------------------------
                                                 Robert Nelson, Executive

                                          UNITED AUTO GROUP, INC.,
                                          a Delaware corporation

                                          By:      /s/ PAUL F. WALTERS
                                            ------------------------------------
                                            Name: Paul F. Walters
                                            ------------------------------------
                                            Title: Executive Vice President
                                            ------------------------------------

                                        4

EX-10.22

   1

                                                                   EXHIBIT 10.22

                              SEVERANCE AGREEMENT

     This Severance Agreement is dated as of August 2, 1999, and is entered into
between United Auto Group, Inc., a Delaware corporation (the "Company"), and
James Davidson ("Executive").

     WHEREAS, Executive is currently employed by the Company as an executive
officer of the Company; and

     WHEREAS, Executive and the Company desire to embody in this Agreement the
terms, conditions and benefits to be provided to Executive in the event of
Executive's termination of employment with the Company following a Change in
Control (as defined below); and

     WHEREAS, This Agreement shall supersede all prior oral and written
agreements, arrangements and understandings relating to the terms and conditions
of Executive's employment termination.

     NOW, THEREFORE, the parties hereby agree:

                                   ARTICLE I

                                  DEFINITIONS

     1.1. "BOARD" shall mean the Board of Directors of the Company.

     1.2. "CAUSE" shall mean (with regard to Executive's termination of
employment with the Company): (a) Executive's conviction of a felony (other than
a traffic violation), (b) Executive's embezzlement, willful breach of fiduciary
duty or fraud with regard to the Company or any of its assets or businesses, or
(c) Executive's substantial and continuing failure to perform the material
duties of his position.

     1.3. "CHANGE IN CONTROL" shall mean the consummation of the transactions
contemplated by the "Second Purchase" as such term is defined in the Securities
Purchase Agreement, dated as of April 12, 1999, by and among the Company,
International Motor Cars Group I, L.L.C., a Delaware limited liability company,
and International Motor Cars Group II, L.L.C., a Delaware limited liability
company.

     1.4. "COMPANY" shall mean United Auto Group, Inc., a Delaware corporation,
and any successor as provided in Section 4.5 hereof.

     1.5. "GOOD REASON" shall mean (with respect to Executive's termination of
employment with the Company) Executive's voluntary termination of employment
with the Company due to: (i) a material diminution in Executive's
responsibilities or a reduction in Executive's basic annual salary from the 1999
budgeted annual salary for Executive, (ii) the elimination of Executive's
position responsibilities, or (iii) the company's requiring Executive to be
based at any office or location that is more than fifty (50) miles further from
Executive's present job location on the date hereof. No termination of
employment shall be treated as for Good Reason unless, before the termination of
his employment, Executive has given the Company thirty (30) days' notice and
opportunity to cure the action which is the basis for the assertion of Good
Reason and such notice is given not more than ninety (90) days after the action
alleged to constitute Good Reason.

     1.6. "SALARY" shall mean Executive's 1999 budgeted annual salary plus
$100,000.00 over an annual period.

     1.7. "SEVERANCE BENEFIT" shall mean the benefit paid or provided to
Executive by the Company in accordance with Section 2.1 hereof.

     1.8. "TERMINATION DATE" shall mean the last official work day for which
Executive receives pay for service with the Company and specifically excludes
any period for which a Severance Benefit is made.
   2

                                   ARTICLE II

                                    BENEFITS

     2.1. Change in Control Benefits. In the event that before expiration of the
twelve-month period immediately following a Change in Control, Executive's
employment is terminated by the Company without Cause or by the Executive for
Good Reason: (i) the Company shall pay to Executive all amounts and benefits
that have accrued or were earned but remain unpaid through the Termination Date
in respect of salary, bonus and unreimbursed expenses, including accrued and
unused vacation, within thirty (30) days following the Termination Date, (ii)
Executive shall continue to receive the Salary (less any applicable withholding
or similar taxes) in accordance with the Company's prevailing payroll practices
for a period of 18 months following the Termination Date (the "Severance Term"),
and (iii) all outstanding stock options in respect of Company common stock
previously granted to the Executive shall vest, to the extent unvested, and be
immediately exercisable until the scheduled date of expiration, but without
regard to the Executive's termination of employment. Anything in this Section
2.1 to contrary, the payments and benefits to be provided to the Executive as
set forth in this Section 2.1 shall be lieu of any and all benefits otherwise
provided under any severance pay policy, plan or program maintained from time to
time by the Company for its employees.

     2.2. Continuation of Benefits in the Event of Death. In the event Executive
dies prior to receipt of his entire Severance Benefit, the remaining portion of
such Severance Benefit shall continue to be paid, in the same form as described
in Section 2.1 above to Executive's spouse, or, if Executive is not married on
the date of death, to Executive's estate.

     2.3. Mitigation/Set Off. (a) Executive shall not be required to seek other
employment or to attempt in any way to reduce amounts payable to him pursuant to
this Agreement. Further, except as otherwise provided in this Section 2.3, the
amount of the Severance Benefit payable under this Agreement shall not be
reduced by any compensation earned by or other benefits provided to Executive as
a result of employment by another employer or otherwise.

     (b) Notwithstanding the foregoing provisions of this Section 2.3, the
Company's obligation to make payment of Severance Benefits and otherwise to
perform its obligations hereunder shall be reduced to the extent of any amounts
owed by Executive to the Company which relate to or arise out of Executive's
employment prior to the Termination Date.

                                  ARTICLE III

                             RESTRICTIVE COVENANTS

     3.1. Confidentiality. All material and information which is confidential to
the Company or to any of its subsidiaries or affiliates, whether tangible or
intangible, made available, disclosed or otherwise known to Executive as a
result of his employment with the Company, shall be considered the sole property
of the Company. Executive shall not disclose such material or information to
others except with the Company's prior written approval or as may otherwise be
required by law or legal process. If disclosure of material and information
which is confidential to the Company is sought by a court or administrative
agency of competent jurisdiction or an officer of the court or administrative
agency, either by subpoena or other method, Executive shall, prior to making
disclosure, immediately notify by telephone and confirm in writing to Company's
General Counsel, the circumstances requiring disclosure. The Company shall have
the opportunity, at its own expense, to respond and object (on behalf of itself
or the Executive) to the disclosure, including, but not limited to, an
opportunity to object to the court or administrative agency order, to move to
quash any subpoena, and to take such further action as may be necessary to
protect the terms of this Agreement and to limit or cause to be limited the
extent to which such disclosure shall be made.

     3.2. Nonsolicitation. During the Severance Term, Executive shall not
attempt to influence, persuade or induce, or assist any other person in so
persuading or inducing, any employee of the Company to give up, or to not
commence, employment or a business relationship with the Company.

                                        2
   3

     3.3. Non-Compete. Executive agrees that, during the Severance Term, except
with the prior written consent of either the Chairman of the Board or the
President of the Company, which will not be unreasonably withheld, he or she
shall not, directly or indirectly, for himself or herself or on behalf of or in
conjunction with any person, partnership, corporation or other entity, compete,
own, operate, control, or participate or engage in the ownership, management,
operation or control of, or be connected with as an officer, employee, partner,
director, shareholder, representative, consultant, independent contractor,
guarantor, advisor or in any other similar capacity or otherwise have a
financial interest in, a business organization or enterprises that competes with
the business of the Company or any of its subsidiaries. For purposes hereof, the
Company shall be deemed to be in the business of operating dealerships located
in the United States of America or the Commonwealth of Puerto Rico that engage
in the retail sale of new or used automobiles or light-duty trucks and
businesses ancillary thereto, provided, however, that for any business of
Executive to be deemed competitive for purposes hereof, it must be located
within a fifty (50) mile radius of any automobile or truck dealership or
ancillary business in which the Company (or any subsidiary thereof), directly or
indirectly has an ownership interest of 20% or more at the time the competing
activities commence, provided, further, however, that where Executive is
employed by or becomes a shareholder or partner or member of any business
organization that consults for or advises retail automobile dealerships, the
employment or the holding of the shareholder, partnership or membership interest
shall not be deemed competition unless Executive is or will be personally
engaged, or responsible for, providing advisory or consulting service to
entities that compete with the Company or any of its subsidiaries. During the
Severance Period, Executive shall not interfere with or disrupt, or attempt to
interfere with or disrupt, the relationship, contractual or otherwise, between
the Company or any of its subsidiaries or their affiliates and any customer,
client, supplier, manufacturer, distributor, consultant, independent contractor,
employee or landlord of the Company or any of its subsidiaries or their
affiliates.

     Unless otherwise agreed, any request for consent under this provision that
is not acted on by the Chairman of the Board or President of the Company within
ten (10) calendar days of receipt of the request shall be deemed granted.

     Notwithstanding anything in this Subsection 3.3 to the contrary, Executive
may own, directly or indirectly, up to 1% of the outstanding capital stock of
any competitive business having a class of capital stock which is traded on any
national stock exchange or in the over-the-counter market.

                                   ARTICLE IV

                                 MISCELLANEOUS

     4.1. Amendment. This Agreement may not be amended without the written
consent of both parties.

     4.2. Withholding. The Company shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any obligations it reasonably
believes it may have to withhold federal, state or local income or other taxes
incurred by reason of payments pursuant to this Agreement. In lieu thereof, the
Company shall have the right to withhold the amount of such taxes from any other
sums due or to become due from the Company to Executive upon such terms and
conditions as the Company may decide.

     4.3. Severability. Should any provisions of this Agreement be deemed or
held to be unlawful or invalid for any reason, such fact shall not adversely
affect the other provisions of this Agreement. Notwithstanding the above, if any
covenant set forth in Sections 3.1, 3.2 or 3.3 hereof is deemed invalid, illegal
or unenforceable because its scope is considered excessive, such covenant will
be modified so that scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.

     4.4. Controlling Law. This Agreement shall be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.

     4.5. Binding on Successors. The Company shall require any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this

                                        3
   4

Agreement, in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place.

     4.6. Effect of Agreement. This Agreement shall not be construed as creating
any contract of employment between the Company and Executive. Executive shall
not have any right to be retained in the employ or service of the Company for
any length of time by reason of this Agreement, and this Agreement shall not
affect the right of the Company to deal with Executive in all respects relating
to Executive's employment, including Executive's discharge, compensation, and
conditions of employment.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                                                 /s/ JAMES R. DAVIDSON
                                          --------------------------------------
                                                James Davidson, Executive

                                          UNITED AUTO GROUP, INC.,
                                          a Delaware corporation

                                          By:      /s/ PAUL F. WALTERS
                                            ------------------------------------
                                            Name: Paul F. Walters
                                            ------------------------------------
                                            Title: Executive Vice President
                                            ------------------------------------

                                        4

EX-10.23

   1
                                                             EXHIBIT 10.23



                             UNITED AUTO GROUP, INC.
                                375 FIFTH AVENUE
                            NEW YORK, NEW YORK 10152



                              As of August 3, 1999

Samuel X. DiFeo
141 Lorraine Avenue
Spring Lake, N.J. 10152

Dear Sam:

        This letter sets forth our mutual agreement regarding (i) the terms and
conditions on which Samuel X. DiFeo (hereinafter sometimes the "Executive") will
continue to serve as President and Chief Operating officer of United Auto Group,
Inc. (the "Company") and (ii) the rights, entitlements and obligations of the
Executive and the Company, respectively, upon the termination of the Executive's
current employment as President and Chief Operating Officer of the Company
("President"), as set forth in Section 2 hereafter.

        1. TERM, PAYMENTS AND BENEFITS. In consideration for services to be
rendered by the Executive as President for the Term (defined below), the Company
hereby agrees to compensate the Executive, in consideration for such service and
without regard to such other compensation and benefits to which the Executive
has been entitled pursuant to the Executive's existing agreements and
understandings with the Company, and to otherwise provide benefits to the
Executive as follows:

           (a) Term. The Executive shall continue to serve as President of the
Company, through December 31, 1999, subject to the Company's right to extend the
Executive's service as President of the Company through May 31, 2000 upon
written notice of the Company's election to so extend the Executive's employment
as President hereunder, such notice to be delivered by the Company to the
Executive on or before December 1, 1999.


           (b) Compensation. As President of the Company, the Executive shall be
compensated at the rate of $360,000 per annum, together with such bonus as the
Company shall determine to be appropriate for services rendered by the Executive
as President of the Company during any applicable period in light of the
Executive's contribution to the Company during such period and additional
factors deemed relevant by the Company.

   2

Samuel X. DiFeo
August 3, 1999
Page 2

           (c) Stock Options. The Company shall confirm the immediate vesting
(i.e., August 3, 1999) of all options held by the Executive to purchase shares
of voting common stock, par value $0.0001 per share (the "Common Stock") of the
Company, which options shall thereafter be exercisable at any time after August
3, 1999, through and including the termination of the exercise period
attributable to each option as set forth below, notwithstanding any agreements
to the contrary. Such immediate vesting and exercise rights shall apply to all
options previously granted to the Executive, including without limitation, as
follows:



                (i)     20,000 shares at the exercise price of $10.00 per share
                        pursuant to Stock Option Agreement dated as of April 23,
                        1996, with an exercise termination date of April 23,
                        2006;

                (ii)    21,267 shares at the exercise price of $30.00 per share
                        pursuant to Option Certificate dated as of October 28,
                        1996, with an exercise termination date of October 28,
                        2061;'

                (iii)   20,000 shares at the exercise price of $17.00 per share
                        pursuant to Stock Option Agreement dated as of May 14,
                        1997, with an exercise termination date of May 14, 2007;

                (iv)    100,000 shares at the exercise price of $17.50 per share
                        pursuant to Stock Option Agreement dated as of April 13,
                        1998, with an exercise termination date of April 13,
                        2008; and

                (v)     120,000 shares at the exercise price of $7.0625 per
                        share pursuant to Stock Option Agreement dated as of
                        March 3, 1999, with an exercise termination date of
                        March 3, 2009.

        2. TERMINATION OF EMPLOYMENT.

          (a) Termination of Employment. The Executive's employment as President
of the Company shall be deemed terminated upon the occurrences of any of the
following (each a "Termination Event"):

              (i) Immediately upon the death of the Executive.


   3



Samuel X. DiFeo
August 3, 1999
Page 3


                (ii)   By the Company at any time after the Permanent Disability
of the Executive, subject to compliance by the Company with the Americans With
Disabilities Act, and by the Executive at any time after his Permanent
Disability.

                (iii)  By the Company at any time for Cause.

                 (iv)  By the Company at any time without Cause.

                  (v)  By the Executive's voluntary resignation.

           (b)  Cause. For purposes hereof, Cause shall mean: (i) active

participation by the Executive in fraudulent conduct, (ii) conviction of, or  a
guilty plea to, a felony (iii) a deliberate act or series of deliberate acts
which results in material injury to the business, operations or business
reputation of the Company, (iv) an act or series of acts of  dishonesty,
recklessness or gross-negligence which results in  material injury to the
business operations or business reputation of the Company or (v) the Executive's
willful and continued failure to perform any of his material duties as President
which results in material injury to the business operations or business
reputation of the Company; provided, however there shall not be Cause in the
case of (x) clause (iii) or (iv) if the Executive promptly and diligently, after
receipt of written notice form the Company, takes such action which causes the
Company, in its reasonable judgment, to believe that such act or series of acts
would not likely result in  material injury to the business, operations  or
business reputation of the Company, or that any such injury, if already
incurred, has been rectified, or (y) clause (v), if the Executive promptly and
diligently, after receipt of written notice form the Company, discontinues his
failure to perform and rectifies any injury which resulted form his failure to
perform.  Any repetition of any such deliberate, or substantially similar, act,
or such willful, or substantially similar, failure to perform, shall be Cause
without any further opportunity to cure.


           (c)  Permanent Disability. For the purposes hereof, Permanent
Disability shall be determined as follows:


               (i) Determination. The Executive's "Permanent Disability" shall
be deemed to have occurred one (1) day after (x) one hundred fifty (150) days in
the aggregate during any consecutive twelve (12) month period, or (y) one
hundred fifty (150) consecutive days that, in either case, the Executive, by
reason of his physical or mental disability or illness, shall have been unable
to discharge fully his duties as President.


   4

Samuel X. DiFeo
August 3, 1999
Page 4

               (ii) Resolution of Disagreement. If either the Company or the
Executive, after receipt of notice of the executive's Permanent Disability from
the other, disagrees that the Executive's Permanent Disability shall have
occurred, the Executive shall promptly submit to a physical examination by, or
at the direction of, the chief of medicine of any major accredited hospital in
the New York, New York metropolitan area and, unless such physician shall issue
a written statement to the effect that, in such physician's opinion, based on
such physician's diagnosis, the Executive is capable of resuming his employment
and devoting his full time and energy to discharging fully his duties hereunder
within thirty (30) days after the date of such statement, such Permanent
Disability shall be deemed to have occurred on a date determined in accordance
with Section 2(c)(i) above.


      3.   SEVERANCE COMPENSATION.

           (a) Termination By Death. If the Executive's employment is terminated
by death, the Executive's estate shall be entitled to receive (v) any unpaid
salary and other compensation and benefits accrued and earned by the Executive
through the date of the Executive's death, including a pro rata share of any
bonus applicable to the calendar year in which death occurs, (w) severance
compensation, within ninety (90) days after the date of death, in a lump sum
payment equal to Eight Hundred Thousand ($800,000) Dollars, (x) any amounts
owing in accordance with the terms of any profit sharing, retirement and other
benefit plans in which the Executive is a participant, (y) any other benefits
to which the Executive is then entitled, payable within ninety (90) days after
the date of death, accrued up to and including the date of the Executive's death
and (z) benefits, if any, provided by any insurance policies to Executive or
Executive's estate in accordance with their terms.

           (b) Termination for Cause. If the Executive's employment is
terminated by the Company for Cause, the Company shall not have any other or
further obligations to the Executive under this Agreement, except (w) as may be
provided in accordance with the terms of any profit sharing, retirement and
other benefit plans to which the Executive is a participant (x) as to that
portion of any unpaid salary and other compensation and benefits accrued and
earned by the Executive through the date of such termination, (y) any other
benefits to which the Executive is then entitled, payable within ninety (90)
days after the date of such termination, accrued up to and including the date of
such termination and (z) as to the benefits, if any, provided by any insurance
policies in accordance with their terms.


   5


Samuel X. DiFeo
August 3, 1999
Page 5

     (c).  Termination without Cause or For Permanent Disability.


           (i) If the Executive's employment is terminated by the Company
without Cause, the Executive shall be entitled to receive (v) salary and other
compensation and benefits payable to the Executive hereunder through December
31, 1999 or such later date to which the term of employment hereunder shall have
been extended (the "Contract Term Expiration Date"), together with any bonus
applicable to the calendar year in which such termination occurs that would have
been payable to the Executive had such termination not occurred (w) the benefit
of the Consulting Agreement (the "Consulting Agreement") a copy of which is
attached hereto as Exhibit A (x) any amounts owing in accordance with the terms
of any profit sharing, retirement and other benefit plans in which the Executive
is a participant (y) any other benefits to which the Executive is entitled,
payable within ninety (90) days after the Contract Term Expiration Date, accrued
up to and including the Contract Term Expiration Date and (z) benefits, if any,
provided by any insurance policies in accordance with their terms.


     (ii) If the Executive's employment is terminated because of his Permanent
Disability, the Executive shall be entitled to receive (v) salary and other
compensation and benefits payable to the Executive hereunder through December
31, 1999 or such later date to which the term of employment hereunder shall have
been extended (the "Contract Term Expiration Date"), together with any bonus
applicable to the calendar year in which such termination occurs that would have
been payable to the Executive had such termination not occurred, (w) the benefit
of the Consulting Agreement, (x) any amounts owing in accordance with the terms
of any profit sharing, retirement and other benefit plans in which the Executive
is a participant, (y) any other benefits to which the Executive is entitled,
payable within ninety (90) days after the Contract Term Expiration Date, accrued
up to and including the Contract Term Expiration Date and (z) benefits, if any,
provided by any insurance policies to Executive or Executive's estate in
accordance with their terms.


     (d)   Involuntary Resignation. If the Executive resigns from all offices
and directorships of the Company and all entity affiliates of the Company for
any of the reasons set forth in clauses (i) through (viii) of this  Section
3(d), such resignation shall be deemed to be an "Involuntary Resignation," and
the Executive shall be entitled to receive the same severance compensation and
other benefits as are provided for in Section 3(c) above.

           (i) The Company materially changes the Executive's duties and
responsibilities as President without his prior written consent, which consent
may be granted or withheld by the Executive in his absolute and sole discretion.
The Executive

   6

Samuel X. DiFeo
August 3, 1999
Page 6



shall be deemed to have consented to any proposal of the Board of Directors of
the Company calling for a material change in his duties and responsibilities
only if he shall give written notice of his consent thereto to the Board of
Directors of the Company within thirty (30) days after receipt of such written
proposal. If the Executive shall have failed to give such consent, the Company
shall have the opportunity to withdraw such proposed material change by written
notice to the Executive given within ten (10) days after the end of such thirty
(30) day period.

                  (ii) The Executive's place of employment is located or
relocated more than fifty (50) road miles from either 375 Park Avenue, New York,
New York or Jersey City, New Jersey

                  (iii) The Company, without the Executive's prior written
consent, reduces the Executive's current base salary of $360,000.

                  (iv) The Company imposes requirements on the Executive, or
gives instructions or directions to the Executive, which are: (x) contrary to or
in violation of (a) rules, principles, or codes of professional responsibility
or (b) law (as set forth in written statutes or regulations thereunder), which
the Executive is obligated to follow; (y) such that compliance by the Executive
with such requirements, instructions or directions would likely (a) have a
material adverse effect on the Executive or (b) cause the Executive to suffer
substantial liability, and (z) not withdrawn by the Company after written
request by the Executive, which written request sets forth the Executive's
complete explanation as to why he believes the requirements, instructions or
directions should be withdrawn.

                  (v) There occurs a material breach by the Company of any of
its obligations under this Agreement or any other agreement between the
Executive and the Company regarding the Executive's compensation, benefits or
otherwise, which breach has not been cured in all material respects within
thirty (30) days after the Executive gives written notice thereof to the
Company, which notice sets forth in reasonable detail the nature and
circumstances of such breach.

                  (vi) The Company or any majority owned subsidiary of the
Company violates a federal for state criminal law involving moral turpitude
which would likely (a) have a material adverse effect on the Executive or (b)
cause the Executive to suffer substantial liability, and the Executive was
unaware of such unlawful activity at the time of its occurrence.


   7


Samuel X. DiFeo
August 3, 1999
Page 7



                  (vii) The Executive resigns upon the occurrence of a "change
in control," such change occurring after August 3, 1999.

                  (viii) In the event of termination of the Executive by the
Company within six (6) months following a "change in control," other than a
termination by the Company for Cause.

         The term "change in control" means the first to occur of the following
events:

              A. The acquisition by any person, entity or "group" within the
meaning of ss.13(d) or 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five (25%) percent or more of
either the then outstanding equity interests in the Company or the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of the Board of Directors; or

              B. The Company's stockholders approve an agreement to merge or
consolidate with another corporation or other entity resulting (whether
separately or in connection with a series of related transactions) in a change
in ownership of twenty percent (20%) or more of the voting control of, or
beneficial rights to, the voting capital stock of the Company, or an agreement
to sell or otherwise dispose of all or substantially all of the Company's assets
(including, without limitation a plan of liquidation or dissolution), or
otherwise approve of a fundamental alteration in the nature of the Company's
business;

provided, however, that the term "change of control" shall specifically not
include the announced transaction whereby Penske Capital Partners and its
affiliates are acquiring interests in the Company.

              (e) Voluntary Resignation. If the Executive voluntarily resigns,
the Executive's employment shall be terminated. In the event of such voluntary
resignation, the Executive shall be entitled to (w) any unpaid salary and other
compensation and benefits accrued and earned by the Executive through the date
of such termination, including a pro rata portion of any bonus applicable to the
calendar year in which such termination occurs, (x) any amounts owing in
accordance with the terms of any profit sharing, retirement and other benefit
plans in which the Executive is a participant, (y) other benefits to which the
Executive is entitled, payable within ninety (90) days after the date of such
termination, accrued to and including the date of such termination, and (z)
benefits, if any, provided by any insurance policies in accordance with their
terms.



   8





Samuel X. DiFeo
August 3, 1999
Page 8





         4. SEVERANCE AGREEMENTS.


              (a) Resignation from Office. Upon the occurrence of any
Termination Event, the Executive shall be deemed to have thereupon resigned
immediately from all offices and directorships held by the Executive in the
Company and all affiliates of the Company, and the Executive shall sign and
deliver to the Company and all entity affiliates of the Company, as the case may
be, written resignations from all such offices and directorships.


              (b) Consulting Agreement. Upon the occurrence of a Termination
Event as set forth in Sections 3(c)(i) or (ii) or 3(d), or if a Termination
Event as set forth in Sections 3(c)(i) or (ii) or 3(d) has not occurred prior to
the Contract Term Expiration Date, upon the Contract Term Expiration Date
(unless the Executive's employment has been terminated by the Company for Cause
or the Executive has voluntarily resigned from the Company prior to the Contract
Term Expiration Date), the Executive shall continue to be employed as a
consultant by the Company in accordance with the terms and conditions of that
certain Consulting Agreement.


              (c) Press Release. Upon the occurrence of a Termination Event, the
form of press release confirming the termination of the Executive as President
shall be subject to the mutual agreement of the Executive and the Company. Any
statements by the Company or the Executive to third parties or to employees of
the Company regarding the termination of the Executive's employment as President
shall be consistent with such press release or subject to the mutual agreement
of the Executive and the Company.

              (d) Non-Compete. Upon the termination of the Executive as
contemplated hereunder, the Executive shall be under no obligation to seek other
employment and there shall be no offset against amounts due the Executive
hereunder, under the Consulting Agreement or under any other agreement between
the Executive and the Company, on account of any remuneration attributable to
any subsequent or additional employment the Executive may obtain; provided,
however, the Executive shall not seek or accept employment in the automotive
industry for so long as the Consulting Agreement is in effect without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed, and, provided further, that any such permitted subsequent employment
shall have no effect on the Executive's rights and entitlements under this
Agreement, the Consulting Agreement or any other agreement between the Executive
and the Company or the Company's rights with respect to the Executive's
responsibility to maintain the confidentiality of this letter agreement and
confidential data of the Company, its affiliates, and its suppliers and
manufacturers.


   9





Samuel X. DiFeo
August 3, 1999
Page 9




              (e) Confidentiality. The Executive and the Company hereby agree
that for so long as this letter agreement is otherwise confidential, neither the
Executive nor the Company will disclose the fact of this letter or any of its
terms or provisions to any person without the prior written consent of the other
party hereto; provided, however, that nothing herein shall prohibit disclosure
of such information to the extent required by law, nor prohibit disclosure by
the Executive to any legal or financial consultant, member of the Executive's
immediate family or prospective employer, if such person first agrees to be
bound by the confidentiality provisions of this Section 4(e). Notwithstanding
the foregoing, it is acknowledged by the parties hereto that this letter may be
filed by the Company with the Securities and Exchange Commission pursuant to
applicable law.

         5. GENERAL PROVISIONS.

              (a) This letter may be executed in any number of counterparts,
each of which when so executed and delivered shall constitute an original and
which all together shall constitute one agreement, with such counterparts being
deliverable by facsimile with the original being transmitted by overnight
courier.

              (b) This letter shall bind and inure to the benefit of the
Executive's and the Company's respective successors and permitted assigns.

              (c) This letter may not be amended, waived or modified, in whole
or in part, except by a writing signed by each of the Executive and the Company.

              (d) This letter shall be construed and enforced in accordance
with, and shall be governed by, the laws of the State of New York without giving
effect to that State's choice of law principles.

              (e) Any disputes arising under or in connection with this letter
shall, at the election of either the Executive or the Company, be resolved by
binding arbitration, to be held in New York City in accordance with the rules
and procedures of the American Arbitration Association. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. The Company shall pay all costs and expenses (including reasonable
attorneys fees) as incurred by the Executive with any such arbitration or
litigation, unless the Executive is the unsuccessful party. Pending the
resolution of any arbitration or court proceeding, the Company shall continue
payment of all amounts due the Executive under this letter and all benefits to
which the Executive is entitled at the time the dispute arises.

              (f) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supercede all prior
agreements


   10



Samuel X. DiFeo
August 3, 1999
Page 10




entered into between the parties with respect to the subject matter hereof,
including, without limitation, any terms or conditions of the Option Agreements
that conflict with any of the terms and conditions set forth in this Agreement.

         If the forgoing is acceptable to you, please sign, date and return the
attached copy of this letter to the undersigned by hand or by express mail.

                                                  Sincerely,

                                                  UNITED AUTO GROUP, INC.



                                                  By:    [SIG]
                                                     ------------------------

AGREED:


/s/ Samuel X. DiFeo
- -----------------------
Samuel X. DiFeo
Date: 8-6-99
     ------------------

EX-21.1

   1
                                                                    EXHIBIT 21.1


                           SUBSIDIARIES OF THE COMPANY

Amity Auto Plaza, Ltd.
Amity Nissan of Massapequa, Ltd.
Atlantic Auto Funding Corporation
Atlantic Auto Second Funding Corporation
Atlantic Auto Third Funding Corporation
Auto Leasing Corporation
Auto Mall Payroll Services, Inc.
Auto Mall Storage, Inc.
BPT Holdings, Inc.
Central Ford Center, Inc.
Cherry Hill Classic Cars, Inc.
Classic Auto Group, Inc.
Classic Auto Group Holdings, Inc.
Classic of Cherry Hill, Inc.
Classic Chevrolet, Inc.
Classic Enterprise, Inc.
Classic Enterprises, LLC
Classic Imports, Inc.
Classic Management Company, Inc.
Classic Motor Sales, LLC
Classic Nissan of Turnersville, LLC
Conyers Nissan, Inc.
Covington Pike Dodge, Inc.
D. Young Chevrolet, LLC
Dan Young Chevrolet, Inc.
Dan Young Motors, LLC
Dan Young Tipton, LLC
Dan Young, Inc.
DiFeo Partnership HCT, Inc.
DiFeo Partnership HCT, Inc. on behalf of
         Hudson Motors Partnership
DiFeo Partnership IX, Inc.
DiFeo Partnership IX, Inc. on behalf of
         OCM Partnership
DiFeo Partnership RCM, Inc.
DiFeo Partnership RCM, Inc. on behalf of
         Rockland Motors Partnership
DiFeo Partnership RCT, Inc.
DiFeo Partnership RCT, Inc. on behalf of
         County Auto Group Partnership
DiFeo Partnership SCT, Inc.
DiFeo Partnership SCT, Inc. on behalf of
         Somerset Motors Partnership




                                       1

   2

                                                                    EXHIBIT 21.1


DiFeo Partnership VIII, Inc.
DiFeo Partnership VIII, Inc. on behalf of
         OCT Partnership
DiFeo Partnership X, Inc.
DiFeo Partnership, Inc.
DiFeo Partnership, Inc. on behalf of
         Danbury Auto Partnership
         Danbury Chrysler-Plymouth Partnership
         DiFeo Chevrolet-Geo Partnership
         DiFeo Chrysler Plymouth Jeep Eagle Partnership
         DiFeo Hyundai Partnership
         DiFeo Leasing Partnership
         DiFeo Nissan Partnership
         DiFeo Tenafly Partnership
         Fair Chevrolet-Geo Partnership
         Fair Hyundai Partnership
         J&F Oldsmobile Partnership
Europa Motors, Inc.
Florida Chrysler Plymouth, Inc.
Gene Reed Chevrolet, Inc.
HT Automotive, Ltd.
HVP Motor Corporation
J&S Auto Refinishing, Ltd.
JS Imports, Inc.
KMT/UAG, Inc.
Landers Auto Sales, Inc.
Landers Buick-Pontiac, Inc.
Landers Ford, Inc.
Landers United Auto Group No.2, Inc.
Landers United Auto Group No.3, Inc.
Landers United Auto Group No.4, Inc.
Landers United Auto Group No.5, Inc.
Landers United Auto Group No.6, Inc.
Landers United Auto Group, Inc.
Landers Ford North, Inc.
LRP, Ltd.
Michael Chevrolet-Oldsmobile, Inc.
Motorcars Acquisiton, LLC
Motorcars Acquisition II, LLC
Motorcars Acquisition III, LLC
National City Ford, Inc.
Northlake Auto Finish, Inc.
Palm Auto Plaza, Inc.
Parkway Chevrolet, Inc.
Peachtree Nissan, Inc.
Pioneer Ford Sales, Inc.




                                       2

   3
                                                                    EXHIBIT 21.1



PVH Motor Corporation
Reed-Lallier Chevrolet, Inc.
Relentless Pursuit Enterprises, Inc.
S.H.V.P. Motor Corp.
SA Automotive, Ltd.
SAU Automotive, Ltd.
Scottsdale Management Group, Ltd.
Scottsdale Ferrari, LLC
SK Motors, Ltd.
SL Automotive, Ltd.
Somerset Motors, Inc.
SPA Automotive, Ltd.
Sun Motors, Ltd.
The New Graceland Dodge, Inc.
TriCity Leasing, Inc.
UAG Atlanta II, Inc.
UAG Atlanta III, Inc.
UAG Atlanta IV Motors, Inc.
UAG Atlanta IV, Inc.
UAG Atlanta V, Inc.
UAG Atlanta VI, Inc.
UAG Atlanta, Inc.
UAG Carolina, Inc.
UAG Century Motors, Inc.
UAG Citrus Motors, LLC
UAG Citrus, Inc.
UAG Classic, Inc.
UAG Duluth, Inc.
UAG East, Inc.
UAG Finance Company, Inc.
UAG Graceland II, Inc.
UAG Graceland, Inc.
UAG Hudson, Inc.
UAG Kissimmee Motors, Inc.
UAG Knoxville II, Inc.
UAG Knoxville, Inc.
UAG Lake Norman, LLC
UAG Memphis II, Inc.
UAG Memphis III, Inc.
UAG Memphis IV, Inc.
UAG Memphis V, Inc.
UAG Memphis, Inc.
UAG Nevada, Inc.
UAG Northeast (NY), Inc.





                                       3
   4
                                                                    EXHIBIT 21.1


UAG Northeast Body Shop, Inc.
UAG Northeast, Inc.
UAG Oldsmobile of Indiana, LLC
UAG Paramount Motors, Inc.
UAG Tennessee, Inc.
UAG Texas II, Inc.
UAG Texas, Inc.
UAG Texas, Inc. on behalf of
         Shannon Automotive, Ltd.
UAG West, Inc.
UAG West Texas, Inc.
UAG Young Automotive Group, LLC
UAG Young II, Inc.
UAG Young, Inc.
UAG-Caribbean, Inc.
United Auto Dodge of Shreveport, Inc.
United Auto Enterprises, Inc.
United AutoCare Products, Inc.
United AutoCare, Inc.
United Jeep Chrysler Plymouth of Stone Mountain, Inc.
United Landers, Inc.
United Mazda, Inc.
United Nissan, Inc. (NV)
United Nissan, Inc. (TN)
United Nissan, Inc. (GA)
United Auto Fourth Funding, Inc.
United Auto Fifth Funding, Inc.
UnitedAuto Finance, Inc.
VPH Motor Corporation
West Palm Auto Mall, Inc.
West Palm Infiniti, Inc.
West Palm Nissan, Inc.
Westbury Nissan, Ltd.
Westbury Superstore, Ltd.
Young Automotive Holdings, LLC
Young Management Group, Inc.



                                       4

EX-23.1

   1
                                                                    Exhibit 23.1




                       Consent Of Independent Accountants

We consent to the incorporation by reference in the registration statements of
United Auto Group, Inc. on Form S-3 (Registration No. 333-39997) and Form S-8
(Registration Nos. 333-14971 and 333-26219) of our report dated March 29, 1999
on our audits of the consolidated financial statements as of December 31, 1998
and for the years ended December 31, 1998 and 1997, which report is included in
this Annual Report on Form 10-K.


/s/ PricewaterhouseCoopers LLP

Princeton, New Jersey
March 29, 1999

EX-23.2

   1



                                                                    Exhibit 23.2




                       Consent Of Independent Accountants

We consent to the incorporation by reference in Registration Statement No.
333-39997 of United Auto Group, Inc. ("UAG") on Form S-3 and Registration Nos.
333-14971 and 333-26219 of UAG on Form S-8 of our report dated February 1,
2000, appearing in this Annual Report of UAG for the year ended December 31,
1999.



/s/ Deloitte & Touche LLP

New York, New York
February 1, 2000

EX-27.1

 

<ARTICLE> 5
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                          19,847
<SECURITIES>                                         0
<RECEIVABLES>                                  142,372
<ALLOWANCES>                                   (1,899)
<INVENTORY>                                    508,289
<CURRENT-ASSETS>                               679,332
<PP&E>                                          84,473
<DEPRECIATION>                                (16,241)
<TOTAL-ASSETS>                               1,279,337
<CURRENT-LIABILITIES>                          582,290
<BONDS>                                        218,535
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     430,863
<TOTAL-LIABILITY-AND-EQUITY>                 1,279,337
<SALES>                                      4,022,517
<TOTAL-REVENUES>                             4,022,517
<CGS>                                        3,473,080
<TOTAL-COSTS>                                3,918,222
<OTHER-EXPENSES>                                 2,571
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              58,020
<INCOME-PRETAX>                                 48,846
<INCOME-TAX>                                  (21,414)
<INCOME-CONTINUING>                             26,710
<DISCONTINUED>                                      46
<EXTRAORDINARY>                                    732
<CHANGES>                                            0
<NET-INCOME>                                    27,488
<EPS-BASIC>                                       1.14
<EPS-DILUTED>                                     1.04


 

EX-27.2

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               SEP-30-1999
<CASH>                                          44,127
<SECURITIES>                                         0
<RECEIVABLES>                                  139,244
<ALLOWANCES>                                   (1,134)
<INVENTORY>                                    420,759
<CURRENT-ASSETS>                               618,066
<PP&E>                                          73,418
<DEPRECIATION>                                (15,078)
<TOTAL-ASSETS>                               1,218,109
<CURRENT-LIABILITIES>                          525,107
<BONDS>                                        214,340
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                     77,000
<COMMON>                                             2
<OTHER-SE>                                     349,293
<TOTAL-LIABILITY-AND-EQUITY>                 1,218,109
<SALES>                                      3,033,696
<TOTAL-REVENUES>                             3,033,696
<CGS>                                        2,620,622
<TOTAL-COSTS>                                2,952,981
<OTHER-EXPENSES>                                 2,270
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              44,233
<INCOME-PRETAX>                                 38,752
<INCOME-TAX>                                  (16,923)
<INCOME-CONTINUING>                             21,287
<DISCONTINUED>                                      28
<EXTRAORDINARY>                                    320
<CHANGES>                                            0
<NET-INCOME>                                    21,635
<EPS-BASIC>                                       0.99
<EPS-DILUTED>                                     0.86


 

EX-27.3

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               JUN-30-1999
<CASH>                                          43,670
<SECURITIES>                                         0
<RECEIVABLES>                                  142,363
<ALLOWANCES>                                     (860)
<INVENTORY>                                    490,628
<CURRENT-ASSETS>                               656,346
<PP&E>                                          70,977
<DEPRECIATION>                                (13,999)
<TOTAL-ASSETS>                               1,251,321
<CURRENT-LIABILITIES>                          586,496
<BONDS>                                        238,933
<PREFERRED-MANDATORY>                           33,551
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     339,267
<TOTAL-LIABILITY-AND-EQUITY>                 1,251,321
<SALES>                                      1,948,330
<TOTAL-REVENUES>                             1,948,330
<CGS>                                        1,681,740
<TOTAL-COSTS>                                1,896,776
<OTHER-EXPENSES>                                 1,396
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              29,979
<INCOME-PRETAX>                                 22,971
<INCOME-TAX>                                  (10,292)
<INCOME-CONTINUING>                             12,318
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    12,318
<EPS-BASIC>                                       0.56
<EPS-DILUTED>                                     0.53


 

EX-27.4

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               MAR-31-1999
<CASH>                                          23,132
<SECURITIES>                                         0
<RECEIVABLES>                                  129,031
<ALLOWANCES>                                     (842)
<INVENTORY>                                    436,520
<CURRENT-ASSETS>                               606,646
<PP&E>                                          67,561
<DEPRECIATION>                                (12,434)
<TOTAL-ASSETS>                               1,200,232
<CURRENT-LIABILITIES>                          526,259
<BONDS>                                        279,204
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     342,468
<TOTAL-LIABILITY-AND-EQUITY>                 1,200,232
<SALES>                                        904,732
<TOTAL-REVENUES>                               904,732
<CGS>                                          779,974
<TOTAL-COSTS>                                  883,526
<OTHER-EXPENSES>                                   794
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              14,945
<INCOME-PRETAX>                                  7,055
<INCOME-TAX>                                   (3,209)
<INCOME-CONTINUING>                              3,698
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     3,698
<EPS-BASIC>                                       0.17
<EPS-DILUTED>                                     0.16


 

EX-27.5

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               DEC-31-1998
<CASH>                                          38,538
<SECURITIES>                                         0
<RECEIVABLES>                                  126,320
<ALLOWANCES>                                     (860)
<INVENTORY>                                    410,295
<CURRENT-ASSETS>                               590,713
<PP&E>                                          65,897
<DEPRECIATION>                                (14,414)
<TOTAL-ASSETS>                               1,184,194
<CURRENT-LIABILITIES>                          505,529
<BONDS>                                        288,265
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     341,648
<TOTAL-LIABILITY-AND-EQUITY>                 1,184,194
<SALES>                                      3,343,147
<TOTAL-REVENUES>                             3,343,147
<CGS>                                        2,887,530
<TOTAL-COSTS>                                3,262,573
<OTHER-EXPENSES>                                 4,800
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              60,180
<INCOME-PRETAX>                                 25,194
<INCOME-TAX>                                  (11,554)
<INCOME-CONTINUING>                             13,378
<DISCONTINUED>                                (12,940)
<EXTRAORDINARY>                                (1,235)
<CHANGES>                                            0
<NET-INCOME>                                     (797)
<EPS-BASIC>                                     (0.04)
<EPS-DILUTED>                                   (0.04)


 

EX-27.6

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               SEP-30-1998
<CASH>                                          25,332
<SECURITIES>                                         0
<RECEIVABLES>                                  124,971
<ALLOWANCES>                                     (594)
<INVENTORY>                                    359,558
<CURRENT-ASSETS>                               534,098
<PP&E>                                          62,067
<DEPRECIATION>                                 (9,868)
<TOTAL-ASSETS>                               1,141,575
<CURRENT-LIABILITIES>                          455,559
<BONDS>                                        303,394
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     352,027
<TOTAL-LIABILITY-AND-EQUITY>                 1,141,575
<SALES>                                      2,505,134
<TOTAL-REVENUES>                             2,505,134
<CGS>                                        2,158,936
<TOTAL-COSTS>                                2,431,619
<OTHER-EXPENSES>                                 3,627
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              45,735
<INCOME-PRETAX>                                 31,407
<INCOME-TAX>                                  (12,903)
<INCOME-CONTINUING>                             18,378
<DISCONTINUED>                                     341
<EXTRAORDINARY>                                (1,235)
<CHANGES>                                            0
<NET-INCOME>                                    17,484
<EPS-BASIC>                                       0.86
<EPS-DILUTED>                                     0.86


 

EX-27.7

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               JUN-30-1998
<CASH>                                          36,428
<SECURITIES>                                         0
<RECEIVABLES>                                  123,949
<ALLOWANCES>                                     (553)
<INVENTORY>                                    399,443
<CURRENT-ASSETS>                             1,117,354
<PP&E>                                          55,481
<DEPRECIATION>                                (10,638)
<TOTAL-ASSETS>                               1,166,997
<CURRENT-LIABILITIES>                          482,798
<BONDS>                                        301,403
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     342,217
<TOTAL-LIABILITY-AND-EQUITY>                 1,166,997
<SALES>                                      1,608,128
<TOTAL-REVENUES>                             1,608,128
<CGS>                                        1,390,521
<TOTAL-COSTS>                                1,561,528
<OTHER-EXPENSES>                                 1,848
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              30,795
<INCOME-PRETAX>                                 17,653
<INCOME-TAX>                                   (7,251)
<INCOME-CONTINUING>                             10,318
<DISCONTINUED>                                     174
<EXTRAORDINARY>                                (1,235)
<CHANGES>                                            0
<NET-INCOME>                                     9,257
<EPS-BASIC>                                       0.46
<EPS-DILUTED>                                     0.46


 

EX-27.8

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               MAR-31-1998
<CASH>                                          20,524
<SECURITIES>                                         0
<RECEIVABLES>                                  117,035
<ALLOWANCES>                                   (1,506)
<INVENTORY>                                    453,264
<CURRENT-ASSETS>                               610,822
<PP&E>                                          50,698
<DEPRECIATION>                                 (7,257)
<TOTAL-ASSETS>                               1,167,635
<CURRENT-LIABILITIES>                          538,430
<BONDS>                                        273,797
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     333,262
<TOTAL-LIABILITY-AND-EQUITY>                 1,167,635
<SALES>                                        711,709
<TOTAL-REVENUES>                               711,709
<CGS>                                          615,194
<TOTAL-COSTS>                                  693,735
<OTHER-EXPENSES>                                   353
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              14,385
<INCOME-PRETAX>                                  3,942
<INCOME-TAX>                                   (1,617)
<INCOME-CONTINUING>                              2,291
<DISCONTINUED>                                       8
<EXTRAORDINARY>                                (1,235)
<CHANGES>                                            0
<NET-INCOME>                                     1,064
<EPS-BASIC>                                       0.05
<EPS-DILUTED>                                     0.05


 

EX-27.9

 

<ARTICLE> 5

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               DEC-31-1997
<CASH>                                          94,435
<SECURITIES>                                         0
<RECEIVABLES>                                   93,488
<ALLOWANCES>                                     (887)
<INVENTORY>                                    324,330
<CURRENT-ASSETS>                               531,779
<PP&E>                                          44,028
<DEPRECIATION>                                 (6,440)
<TOTAL-ASSETS>                                 971,064
<CURRENT-LIABILITIES>                          414,588
<BONDS>                                        238,550
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                     300,555
<TOTAL-LIABILITY-AND-EQUITY>                   971,064
<SALES>                                      2,092,593
<TOTAL-REVENUES>                             2,092,593
<CGS>                                        1,816,234
<TOTAL-COSTS>                                2,071,300
<OTHER-EXPENSES>                                   297
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              33,368
<INCOME-PRETAX>                               (11,778)
<INCOME-TAX>                                     3,980
<INCOME-CONTINUING>                            (7,936)
<DISCONTINUED>                                 (2,204)
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (10,140)
<EPS-BASIC>                                     (0.56)
<EPS-DILUTED>                                   (0.56)