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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 6, 1998
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UNITED AUTO GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12297 22-3086739
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
375 Park Avenue, New York, New York 10152
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(Address of principal executive offices) (Zip Code)
(212) 223-3300
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 6, 1998, United Auto Group, Inc. ("UAG') completed the
previously announced acquisition of the Young Automotive Group ("Young") from
Dan E. Young, Alan V. Young, William A. Young, Conway M. Anderson III and
related parties, pending manufacturer approval relating to certain franchises.
Young operates 18 automobile franchises at seven locations in the Carolinas,
Florida, Illinois and Indiana. The aggregate consideration for the acquisition
was $68.6 million, consisting of $50.0 million in cash, 1,040,039 shares of UAG
common stock and a $7.0 million promissory note. UAG has agreed to make a
contingent payment in cash or stock to the extent the shares issued in
connection with this transaction have an aggregate market value of less than
$27.0 million on the date they become freely tradeable. The cash portion of
the consideration was taken from the proceeds of UAG's offering of Senior
Subordinated Notes due 2007. The amount of consideration was arrived at through
arm's length negotiation.
The acquired automobile dealerships own office equipment and furniture
used in the sales and administrative operations, as well as automobile
servicing equipment used in the service operations. UAG intends to continue
such use.
ITEM 5. OTHER EVENTS.
On February 18, 1998, UAG announced earnings for the three months and
year ended December 31, 1997 and commitments for a new $75.0 million credit
facility. For more information, see UAG's press release filed herewith, which
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired:
The financial statements required to be filed in connection with this
transaction will be filed by amendment, on or prior to April 22,
1998.
(b) Pro Forma Financial Information:
The pro forma financial information required to be filed in
connection with this transaction will be filed by amendment, on or
prior to April 22, 1998.
(c) Exhibits:
10.19.1.1 Stock Purchase Agreement, dated as of September 25, 1997
among United Auto Group, Inc., UAG Young, Inc., Dan Young
Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc.,
Young Management Group, Inc., Alan V. Young, William A.
Young, Dan E. Young, Conway M. Anderson III, Shirley J.
Young Irrevocable GRAT Trust, Dan E. Young Irrevocable GRAT
Trust, Irrevocable Trust for Alan V. Young and Irrevocable
Trust for William A. Young (incorporated herein by
reference to the identically numbered exhibit to the
Company's Quarterly report on Form 10-Q filed on November
14, 1997, File No. 1-12297).
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10.19.1.2 Agreement and Plan of Merger, dated as of September 25,
1997 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., Alan V. Young, William A.
Young, Jennifer Y. Taggart, Cathy Y. Dyer, Young/AVY II
Irrevocable Trust fbo Lara A. Young, Young/AVY II
Irrevocable Trust fbo Courtney E. Young, Young/AVY II
Irrevocable Trust fbo Daniel A. Young, Young/Way II
Irrevocable Trust, Young/Taggart II Irrevocable Trust fbo
William E. Taggart, Young/Taggart II Irrevocable Trust fbo
Mary K. Taggart, Young/Dyer II Irrevocable GRAT Trust,
Shirley J. Young Irrevocable GRAT Trust and Dan E. Young
Irrevocable GRAT Trust (incorporated herein by reference to
the identically numbered exhibit to the Company's Quarterly
report on Form 10-Q filed on November 14, 1997, File No.
1-12297).
10.19.1.3 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., Alan V.
Young, William A. Young, Dan E. Young, Conway M. Anderson
III, Shirley J. Young Irrevocable GRAT Trust, Dan E. Young
Irrevocable GRAT Trust, Irrevocable Trust for Alan V. Young
and Irrevocable Trust for William A. Young.
10.19.1.4 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., Alan
V. Young, William A. Young, Jennifer Y. Taggart,
Cathy Y. Dyer, Young/AVY II Irrevocable Trust fbo Lara A.
Young, Young/AVY II Irrevocable Trust fbo Courtney E.
Young, Young/AVY II Irrevocable Trust fbo Daniel A. Young,
Young/Way II Irrevocable Trust, Young/Taggart II
Irrevocable Trust fbo William E. Taggart, Young/Taggart II
Irrevocable Trust fbo Mary K. Taggart, Young/Dyer II
Irrevocable GRAT Trust, Shirley J. Young Irrevocable GRAT
Trust and Dan E. Young Irrevocable GRAT Trust.
99.1 Press release announcing UAG earnings for the three months
and year ended December 31, 1997 and commitments for a new
$75.0 million credit facility.
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SIGNATURES
Pursuant to the requirements 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.
UNITED AUTO GROUP, INC.
DATE: February 20, 1998 By: /s/ James R. Davidson
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James R. Davidson
Executive Vice President
and Chief Accounting Officer
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EXHIBIT INDEX
Exhibit No. Document
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10.19.1.1 Stock Purchase Agreement, dated as of September 25, 1997
among United Auto Group, Inc., UAG Young, Inc., Dan Young
Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc.,
Young Management Group, Inc., Alan V. Young, William A.
Young, Dan E. Young, Conway M. Anderson III, Shirley J.
Young Irrevocable GRAT Trust, Dan E. Young Irrevocable GRAT
Trust, Irrevocable Trust for Alan V. Young and Irrevocable
Trust for William A. Young (incorporated herein by
reference to the identically numbered exhibit to the
Company's Quarterly report on Form 10-Q filed on November
14, 1997, File No. 1-12297).
10.19.1.2 Agreement and Plan of Merger, dated as of September 25, 1997
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., Alan V. Young, William A.
Young, Jennifer Y. Taggart, Cathy Y. Dyer, Young/AVY II
Irrevocable Trust fbo Lara A. Young, Young/AVY II
Irrevocable Trust fbo Courtney E. Young, Young/AVY II
Irrevocable Trust fbo Daniel A. Young, Young/Way II
Irrevocable Trust, Young/Taggart II Irrevocable Trust fbo
William E. Taggart, Young/Taggart II Irrevocable Trust fbo
Mary K. Taggart, Young/Dyer II Irrevocable GRAT Trust,
Shirley J. Young Irrevocable GRAT Trust and Dan E. Young
Irrevocable GRAT Trust (incorporated herein by reference to
the identically numbered exhibit to the Company's Quarterly
report on Form 10-Q filed on November 14, 1997, File No.
1-12297).
10.19.1.3 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., Alan V. Young, William
A. Young, Dan E. Young, Conway M. Anderson III, Shirley J.
Young Irrevocable GRAT Trust, Dan E. Young Irrevocable GRAT
Trust, Irrevocable Trust for Alan V. Young and Irrevocable
Trust for William A. Young.
10.19.1.4 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., Alan V.
Young, William A. Young, Jennifer Y. Taggart, Cathy Y.
Dyer, Young/AVY II Irrevocable Trust fbo Lara A. Young,
Young/AVY II Irrevocable Trust fbo Courtney E. Young,
Young/AVY II Irrevocable Trust fbo Daniel A. Young,
Young/Way II Irrevocable Trust, Young/Taggart II
Irrevocable Trust fbo William E. Taggart, Young/Taggart II
Irrevocable Trust fbo Mary K. Taggart, Young/Dyer II
Irrevocable GRAT Trust, Shirley J. Young Irrevocable GRAT
Trust and Dan E. Young Irrevocable GRAT Trust.
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99.1 Press release announcing UAG earnings for the three months
and year ended December 31, 1997 and commitments for a new
$75.0 million credit facility.
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Exhibit 10.19.1.3
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement (the "Amendment") is made and
entered into as of this 31st day of January, 1998 between and among United Auto
Group, Inc., a Delaware corporation, UAG Young, Inc., a Delaware corporation,
Dan Young, Inc., an Indiana corporation, Dan Young Chevrolet, Inc., an Indiana
corporation, Parkway Chevrolet, Inc., an Indiana corporation, Young Management
Group, Inc., an Indiana corporation, Alan V. Young, an individual resident of
the state of Indiana, William A. Young, an individual resident of the state of
Indiana, Dan E. Young, an individual resident of the state of Florida, Conway
M. Anderson, III, an individual resident of the state of South Carolina,
Shirley J. Young Irrevocable GRAT Trust u/a dated 3/1/97, Dan E. Young
Irrevocable GRAT Trust u/a dated 3/1/97, Irrevocable Trust for Alan V. Young
u/a dated 8/31/90 and Irrevocable Trust for William A. Young u/a dated 8/31/90.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Stock Purchase
Agreement dated as of September 25, 1997 (the "Stock Purchase Agreement");
WHEREAS, the parties hereto desire to further amend the terms of the
Stock Purchase Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Stock Purchase Agreement.
2. Prior to the Closing, UAG Young and UAG Young II, Inc., a Delaware
corporation shall form D. Young Chevrolet, LLC, a Delaware limited liability
company ("DYCLLC"). UAG Young and UAG Young II, Inc. shall constitute the
members of DYCLLC. Also prior to the Closing, UAG and certain Stockholders of
Dan Young Chevrolet will form a Delaware limited liability company known as Dan
Young Motors, LLC. A. Young and W. Young shall acquire and own a fifty-one
percent (51%) interest in the profits (after taking into account preferred
returns on contributed capital) and losses of Dan Young Motors, LLC and shall
have majority control of Dan Young Motors, LLC. Dan Young Chevrolet shall have
a forty-nine percent (49%) interest in the profits (after taking into account
preferred returns on contributed capital) and losses of Dan Young Motors, LLC.
3. At the Closing (i) DYCLLC shall acquire all of the assets of Dan Young
Chevrolet except for (a) those assets used exclusively in connection with Dan
Young Chevrolet's Honda dealership and (b) those assets arising out of or
relating to that certain 22.22% undivided interest in one (1) Cessna Citation
650, Serial Number 650-0028, FAA Registration Number N328QS and two (2) Garrett
TFE 731-3B-100S Engines, Serial Numbers P87161C and P87124C (the "Cessna
Citation") (such assets, exclusive of those described in (a) and (b), herein
collectively referred to as the "Chevrolet and Isuzu Assets") and Dan Young
Chevrolet shall sell, assign, convey and transfer to DYCLLC all of its right,
title and interest in and to the Chevrolet and Isuzu Assets; and (ii) DYCLLC
shall assume all of the liabilities of Dan Young Chevrolet except for those
liabilities arising out of or relating to Dan Young Chevrolet's Honda
dealership or the Cessna Citation. UAG shall cause DYCLLC to pay in full,
contemporaneously with Closing, the Assumed Loans constituting part of such
assumed liabilities. Immediately after DYCLLC's acquisition of the
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Chevrolet and Isuzu Assets in exchange for DYCLLC's transfer to Dan Young
Chevrolet of the cash purchase price for such assets as set forth on the
Allocation Schedule, such purchase price consideration from such sale shall be
distributed as a dividend to the Stockholders of Dan Young Chevrolet prior to
transfer of the Shares of Dan Young Chevrolet as provided in Section 4 below.
4. At the Closing, the Shares of Dan Young Chevrolet (the "DYC Shares")
together with stock powers relating thereto shall be delivered to and held by
Rogers & Hardin LLP as escrow agent (the "Escrow Agent") pursuant to the terms
of an escrow agreement agreed to by the parties (the "Honda Escrow Agreement")
and the purchase price for the DYC Shares as set forth on the Allocation
Schedule shall be paid to the Stockholders of Dan Young Chevrolet. The Honda
Escrow Agreement shall provide that the Escrow Agent shall deliver the DYC
Shares to UAG Young on the earlier of (i) the date that is no more than three
(3) Business Days after receipt of Honda's approval of the transactions
contemplated hereby or (ii) the date on which the Escrow Agent receives written
notice from UAG Young directing the Escrow Agent to transfer the DYC Shares to
UAG Young, or (iii) December 16, 1998, on which date Escrow Agent shall be
deemed to have received written notice from UAG Young directing the Escrow
Agent to transfer the DYC Shares to UAG Young.
5. After the Closing Date but prior to the DYC Shares being transferred
to UAG Young by the Escrow Agent, Dan Young Chevrolet shall contribute to Dan
Young Motors, LLC all assets owned by Dan Young Chevrolet exclusively and
specifically relating to Dan Young Chevrolet's Honda dealership, and Dan Young
Motors, LLC shall assume all liabilities of Dan Young Chevrolet relating to
such assets.
6. At the Closing, the purchase price for the Shares of Heritage (the
"Heritage Shares") as set forth on the Allocation Schedule shall be paid to the
Heritage Stockholders, and the Heritage Shares together with irrevocable stock
powers relating thereto shall be delivered to and held by the Escrow Agent
pursuant to the terms of an escrow agreement to be agreed to by the parties
(the "Heritage Escrow Agreement"). The Heritage Escrow Agreement shall provide
that the Escrow Agent shall deliver the Heritage Shares to UAG Young on the
earlier of the date (i) that is no more than three (3) Business Days after
receipt of BMW's approval of the transactions contemplated hereby or (ii) the
date on which the Escrow Agent receives written notice from UAG Young directing
the Escrow Agent to transfer the Heritage Shares to UAG Young, or (iii)
December 16, 1998, on which date Escrow Agent shall be deemed to have received
written notice from UAG Young directing the Escrow Agent to transfer the DYC
Shares to UAG Young.
7. At the Closing, (a) Dan Young Chevrolet and DYCLLC shall enter into a
management agreement pursuant to which DYCLLC shall manage the operations of
Dan Young Chevrolet in return for a management fee and (b) UAG Young or UAG
Young Automotive Group, LLC ("UAG/YAG") and Heritage shall enter into a
management agreement pursuant to which UAG/YAG shall manage the operations of
Heritage in return for a management fee.
8. (a) UAG shall indemnify each Stockholder who holds Shares in Dan Young
Chevrolet immediately prior to Closing for an amount equal to the excess of (i)
Taxes payable by the Stockholder in connection with the sale of the Chevrolet
and Isuzu Assets and the related distribution to the Stockholders as
contemplated by this Amendment plus the sale (as contemplated by this
Amendment) of the Shares of Dan Young Chevrolet owned by the Stockholder over
(ii) the Taxes which would have been payable by such Stockholder had the Shares
of Dan Young Chevrolet owned by such Stockholder been sold as contemplated by
the Stock Purchase Agreement prior to this
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Amendment when Dan Young Chevrolet owned the Chevrolet and Isuzu Assets as well
as the assets related to Dan Young Chevrolet's Honda dealership and the Cessna
Citation. Section 5.12 of the Stock Purchase Agreement shall apply to the sale
of the Shares of Dan Young Chevrolet as contemplated by this Amendment. UAG
shall further indemnify each such Stockholder and any other person holding an
ownership interest in Dan Young Chevrolet from and after January 31, 1998
(each, a "DYC Continuing Stockholder") in an amount equal to the excess of (i)
Taxes payable by the DYC Continuing Stockholder for any taxable period after
January 31, 1998 on the income and gain of Dan Young Chevrolet attributable to
the DYC Continuing Stockholder under applicable tax law (with the amount of
such Taxes calculated as if the income and gain giving rise to such Taxes is
the marginal taxable income of the DYC Continuing Stockholder for the
applicable tax period), over (ii) the DYC Continuing Stockholder's
proportionate share of all cash distributions made by Dan Young Chevrolet to
the DYC Continuing Stockholders during the applicable tax period. In addition,
UAG shall indemnify each of A. Young, W. Young and any of their respective
successors-in-interest holding an ownership interest in Dan Young Motors, LLC
(each a "Young Owner") in an amount equal to the excess of (i) the Taxes
payable by the Young Owner for any taxable period on income and gain of Dan
Young Motors, LLC attributable to the Young Owner (or gain on a disposition of
an ownership interest in Dan Young Motors, LLC) under applicable tax law (with
the amount of such Taxes calculated as if the income (or gain) giving rise to
such Taxes is the marginal taxable income of the Young Owner for the applicable
tax period), over (ii) the Young Owner's proportionate share of all cash
distributions by Dan Young Motors, LLC to its members (or of cash proceeds to
the Young Owner from disposition of an interest in Dan Young Motors, LLC)
during the applicable tax period. UAG shall further indemnify each DYC
Continuing Stockholder and each Young Owner from and against all liabilities,
losses, damages, demands, claims, actions, proceedings, judgments, costs and
expenses (including reasonable attorneys' fees) relating to, arising from or in
connection with the operation after Closing of any business or other activity
of Dan Young Chevrolet or Dan Young Motors, LLC. In all of the above
situations, UAG shall also pay the indemnified party an additional amount
necessary to cover any Taxes imposed on such party as a result of payments
received under this Subsection (a), including for this purpose payments
received pursuant to this sentence.
(b) UAG shall indemnify each Stockholder who holds Shares in Heritage
immediately prior to the Closing for an amount equal to the excess of (i) Taxes
payable by the Stockholder in connection with the sale of such Shares (as
contemplated by this Amendment), over (ii) the Taxes which would have been
payable by such Stockholder had the Stockholder's Shares in Heritage been sold
as contemplated by the Stock Purchase Agreement prior to this Amendment.
Section 5.12 of the Stock Purchase Agreement shall apply to the sale of Shares
in Heritage as contemplated by this Amendment. In addition, UAG shall indemnify
each such Stockholder and any other person holding an ownership interest in
Heritage from and after January 31, 1998 (each, a "Heritage Continuing
Stockholder") in an amount equal to the excess of (i) Taxes payable by the
Heritage Continuing Stockholder for any taxable period after January 31, 1998
on the income and gain of Heritage attributable to the Heritage Continuing
Stockholder under applicable tax law (with the amount of such Taxes calculated
as if the income and gain giving rise to such Taxes is the marginal taxable
income of the Heritage Continuing Stockholder for the applicable tax period),
over (ii) the Heritage Continuing Stockholder's proportionate share of all cash
distributions made by Heritage to the Heritage Continuing Stockholders during
the applicable tax period. UAG shall further indemnify each Heritage Continuing
Stockholder from and against all liabilities, losses, damages, demands, claims,
actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees) relating to, arising from or in connection with the operation
after January 31, 1998 of any business or other activity of Heritage. In all of
the above situations, UAG shall also pay the indemnified party an
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additional amount necessary to cover any Taxes imposed on such party as a
result of payments received under this Subsection (b), including for this
purpose payments received pursuant to this sentence.
(c) Amounts required to be indemnified under this Section shall be paid
upon UAG's receipt of written statements reasonably evidencing the
indemnifiable amount owed by the indemnified party, provided that UAG shall not
be required to make an indemnity payment more than ten (10) days prior to the
date on which the indemnified party is required to pay such amount.
9. This Amendment may be executed by facsimile signature and any number
of counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original. If any one or more of the
provisions of this Amendment shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Amendment shall not be affected thereby.
10. This Amendment shall supersede all prior amendments to the Stock
Purchase Agreement and shall survive the Closing Date and the consummation of
the transactions contemplated by the Stock Purchase Agreement.
11. This Amendment shall be governed by and construed in accordance with
the laws of the state of Indiana without giving effect to any choice or
conflict of law provision or rule that would cause laws of any other
jurisdiction to apply.
12. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, transferees and assigns.
13. Schedules 2.11(a), 2.11(c), 2.11(d) and 2.11(e) delivered herewith
are hereby substituted for the corresponding schedules previously furnished to
UAG and Schedules 2.10(d) and 2.15 are supplemented by the Supplements to
Schedules 2.10(d) and 2.15 delivered herewith.
14. The purchase price payable under the Stock Purchase Agreement shall
be allocated as set forth on the attached Allocation Schedule.
15. The obligation of UAG and its Affiliates under the Stock Purchase
Agreement and this Amendment to perform their respective covenants and
agreements with respect to the transactions contemplated by the Stock Purchase
Agreement and this Amendment involving or relating to Dan Young Chevrolet,
Shares of Dan Young Chevrolet, Heritage or Shares of Heritage shall not, from
and after the date hereof, be subject to any condition precedent (regardless of
whether specified in the Stock Purchase Agreement) except the continuing
accuracy (other than as affected by the transactions contemplated by this
Agreement) of the representations and warranties under Section 3.1 of the Stock
Purchase Agreement.
16. The obligations of UAG and its Affiliates under this Amendment, and
each Stockholder's right to enforce such obligations and to recover Costs
arising out of or resulting from any breach of such obligations, shall not be
subject to or in any manner limited by (i) the Stockholders Threshold Amount or
the Stockholders Cap or (ii) the proviso in clause (ii) of the first sentence
of Section 9.2(a) but shall be subject to the procedures set forth in Section
9.3 of the Stock
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Purchase Agreement and any claims asserted by the Internal Revenue Service or
any other taxing authority for which UAG and its Affiliates may be liable
pursuant to the provisions of this Amendment shall be deemed to constitute
Third Party Claims for purposes of Section 9.3 of the Stock Purchase Agreement.
17. Section 9.2(b) of the Stock Purchase Agreement is hereby amended by
(i) correcting the reference to "Section 9.2(b)" in the first line thereof to
read "Section 9.2(a)" and (ii) deleting the parenthetical "(as defined in this
Agreement and the Merger Agreement)" that begins in the third line of Section
9.2(b)(ii).
18. To the extent that the terms or provisions of this Amendment conflict
or are inconsistent with those of the Stock Purchase Agreement, the terms and
provisions of this Amendment shall control and modify those of the Stock
Purchase Agreement. Except as so modified, the terms and provisions of the
Stock Purchase Agreement shall remain in full force and effect. All references
in the Stock Purchase Agreement to "this Agreement" shall include reference to
this Amendment, and to the Stock Purchase Agreement as amended by this
Amendment, for purposes of applying the terms and provisions of the Stock
Purchase Agreement.
19. The right of any UAG Indemnified Party to recover Costs or any other
damages arising from or in connection with Environmental Concerns, including
On-Site Concerns, Off-Site Concerns, On-Site Considerations, and Off-Site
Considerations, as such terms are defined in the Environmental Indemnification
Agreement dated as of January 31 by and between Alan V. Young, William A.
Young, UAG and the other signatories thereto (the "Environmental
Indemnification Agreement"), shall in all events be limited to the rights
expressly provided under the Environmental Indemnification Agreement.
20. The right of any UAG Indemnified Party to recover Costs or any other
damages arising from a matter specifically dealt with under Section 10 of the
Closing Date Agreement of even date herewith between certain of the parties
hereto and others ("CDA") shall in all events be limited to the rights
expressly set forth in the CDA.
21. (a) The Final Net Worth, as such term is defined in Section 1.4(g) of
the Stock Purchase Agreement, shall equal the Final Net Worth determined in
accordance with Section 1.4(a)-(f) and this Section, plus the additional amount
of $28,702, which additional amount shall be allocated to the Companies as
shown on the attached Incremental Net Worth Adjustment Schedule.
(b) The parties acknowledge that the Closing Date Balance Sheet
will include the General Motors factory receivables relating to Tipton
Chevrolet included in general ledger accounts 261-4667, 261 Collect and 261R
(the "Tipton Receivables"). To the extent that the amount of the Tipton
Receivables actually collected from General Motors after January 31, 1998 is
less than the amount of the Tipton Receivables on the Closing Date Balance
Sheet, the amount of such shortfall shall be deducted from the Final Net Worth.
To the extent that the amount of the Tipton Receivables actually collected by
Tipton Chevrolet after the Closing Date exceeds the amount of the Tipton
Receivables, such amounts shall be added to the Final Net Worth. UAG shall
cause Tipton Chevrolet to cooperate with the Youngs and use diligence to
collect as much of the Tipton Receivables as possible until such time as the
Tipton Receivables matter is resolved with General Motors although Tipton
Chevrolet shall have no obligation to commence any proceedings against General
Motors. If resolution of the Tipton Receivables matter occurs after payment is
made with respect to Final Net
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Worth, the appropriate party shall promptly pay the other the amount of the
shortfall or excess in the Tipton Receivables. Any outstanding amount with
respect to the Tipton Receivables shall be deemed to have been finally resolved
with General Motors for purposes hereof on the earlier of the date that the
Tipton Receivables matter is agreed to with General Motors or December 15,
1998.
(c) Clause (f) of Section 1.8 of the Stock Purchase Agreement
contemplates that certain cash dividends to Stockholders of the Companies shall
be declared and paid by the Companies on or before the Closing Date. To the
extent such dividends have not been declared and paid on or before such date as
contemplated in such clause (f) (the "unpaid dividends"), no unpaid dividends
shall thereafter be payable under such clause, and the Net Worth as of the
Closing shall reflect that the unpaid dividends have not been accrued or paid
for purposes of Section 1.4.
22. The Closing Date and Closing for purposes of the Stock Purchase
Agreement shall be deemed to be January 31, 1998. The Closing Date Balance
Sheet to be delivered pursuant to Section 1.4 of the Stock Purchase Agreement
shall be prepared and dated as of January 31, 1998.
23. In the event that a Stockholder or other Person who is entitled under
the Stock Purchase Agreement or this Amendment to receive reimbursement of
Taxes is a grantor trust or other entity (such trust or other entity referred
to as "Entity") not itself subject to the payment of Taxes, such Entity shall,
for purposes of any reimbursement of Taxes under the Stock Purchase Agreement
and this Amendment, be deemed liable for payment of any Taxes payable by its
grantor beneficiary, or owner, provided that all payments required to be made
under the Stock Purchase Agreement or this Amendment for reimbursement of any
such Taxes shall be made directly to such Entity.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ George G. Lowrance
---------------------------
George G. Lowrance
Executive Vice President
UAG YOUNG, INC.,
By: /s/George G. Lowrance
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George G. Lowrance
Executive Vice President
DAN YOUNG, INC.
By: /s/ Alan V. Young
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Its: President
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SIGNATURES CONTINUED ON FOLLOWING PAGE
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DAN YOUNG CHEVROLET, INC.
By: /s/ Alan V. Young
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Its: President
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PARKWAY CHEVROLET, INC.
By: /s/ Conway M. Anderson III
---------------------------
Its: President
-----------------------
YOUNG MANAGEMENT GROUP, INC.
By: /s/ Alan V. Young
---------------------------
Its: President
----------------------
/s/ Alan V. Young
------------------------------
ALAN V. YOUNG, individually
/s/ William A. Young
------------------------------
WILLIAM A. YOUNG, individually
/s/ Dan E. Young
-------------------------------
DAN E. YOUNG, individually
/s/ Conway M. Anderson III
--------------------------------
CONWAY M. ANDERSON, III, individually
SHIRLEY J. YOUNG IRREVOCABLE GRAT
TRUST U/A DATED 3/1/97
/s/ Alan V. Young
----------------------------------
ALAN V. YOUNG, TRUSTEE
SIGNATURES CONTINUED ON FOLLOWING PAGE
<PAGE>
/s/ William A. Young
--------------------------------------
WILLIAM A. YOUNG, TRUSTEE
DAN E. YOUNG IRREVOCABLE GRAT TRUST
U/A DATED 3/1/97
/s/ Alan V. Young
--------------------------------------
ALAN V. YOUNG, TRUSTEE
/s/ William A. Young
--------------------------------------
WILLIAM A. YOUNG, TRUSTEE
IRREVOCABLE TRUST FOR ALAN V. YOUNG
U/A DATED 8/31/90
/s/ Robert P. Kassing
--------------------------------------
ROBERT P. KASSING, TRUSTEE
/s/ Jan Chenowith
--------------------------------------
JAN CHENOWETH, TRUSTEE
IRREVOCABLE TRUST FOR WILLIAM A.
YOUNG U/A DATED 8/31/90
/s/ Robert P. Kassing
--------------------------------------
ROBERT P. KASSING, TRUSTEE
/s/ Jan Chenowith
--------------------------------------
JAN CHENOWETH, TRUSTEE
<PAGE>
Exhibit 10.19.1.4
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment (the "Amendment") to Agreement and Plan of Merger (the
"Merger Agreement") is made and entered into this 31st day of January, 1998
between and among United Auto Group, Inc., a Delaware corporation, UAG
Kissimmee Motors, Inc., a Delaware corporation, UAG Paramount Motors, Inc., a
Delaware corporation, UAG Century Motors, Inc., a Delaware corporation,
Kissimmee Motors, Inc., an Indiana corporation, Paramount Chevrolet Geo, Inc.,
an Indiana corporation, Century Chevrolet Geo, Inc., an Indiana corporation,
Alan V. Young, an individual resident of the state of Indiana, William A.
Young, an individual resident of the state of Indiana, Jennifer Y. Taggart, an
individual resident of the state of Indiana, Cathy Y. Dyer, an individual
resident of the state of Indiana, Young/AVY II Irrevocable Trust u/a dated
12/31/96 fbo Lara A. Young, Young/AVY II Irrevocable Trust u/a dated 12/31/96
fbo Courtney E. Young, Young/AVY II Irrevocable Trust u/a dated 12/31/96 fbo
Daniel A. Young, Young/Way II Irrevocable Trust u/a dated 12/31/96,
Young/Taggart II Irrevocable Trust u/a dated 12/31/96 fbo William E. Taggart,
Young/Taggart II Irrevocable Trust u/a dated 12/31/96 fbo Mary K. Taggart,
Young/Dyer II Irrevocable Trust u/a dated 12/31/96, Shirley J. Young
Irrevocable GRAT Trust u/a dated 3/1/97, and Dan E. Young Irrevocable GRAT
Trust u/a dated 3/1/97.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Agreement and
Plan of Merger dated as of September 25, 1997 (the "Merger Agreement");
WHEREAS, the parties hereto desire to amend the terms of the Agreement
as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Agreement.
2. At the Closing, (i) certificates representing the Kissimmee Shares,
together with irrevocable stock powers relating thereto, (ii) certificates for
UAG Shares issued to the Stockholders as set forth on Exhibit A hereto (the
"Merger Shares"), and (iii) the Merger Certificates in respect of the Merger of
Kissimmee Toyota with and into UAG Kissimmee (the "Kissimmee Merger
Certificates") shall be delivered to Bose, McKinney & Evans, as escrow agent
(the "Escrow Agent") pursuant to the terms of an escrow agreement to be agreed
to by the parties. The Escrow Agent shall hold the Merger Shares as agent for
the Kissimmee Stockholders in order to perfect a security interest therein
hereby granted by UAG Kissimmee and UAG as security for the performance of UAG
Kissimmee's obligations under Section 4 of this Agreement.
3. The Escrow Agent shall hold the Kissimmee Shares, the Merger Shares,
and the Kissimmee Merger Certificates until the earlier of (a) the date that
UAG Kissimmee notifies the Escrow Agent in writing that Toyota Motor Sales,
Inc. ("Toyota") has consented to the transactions contemplated by the Merger
Agreement (the "Approval Notice") or (b) the date that UAG Kissimmee notifies
the Escrow Agent in writing to complete the Merger of Kissimmee Toyota with and
into UAG Kissimmee (the "Closing Notice"), at which time the Escrow Agent shall
(i) file the Kissimmee Merger Certificates with the appropriate offices, (ii)
deliver to the Stockholders of Kissimmee Toyota (the "Kissimmee Stockholders")
the Merger Shares and (iii) deliver to UAG Kissimmee the
<PAGE>
Kissimmee Shares together with the stock powers relating thereto. The date on
which the Escrow Agent makes the deliveries set forth in the preceding sentence
shall be the "Kissimmee Closing Date."
4. If the Escrow Agent does not receive the Closing Notice or the
Approval Notice on or before December 15, 1998, then on December 16, 1998, UAG
Kissimmee shall deliver to the Escrow Agent cash in the amount of Fourteen
Million Three Hundred Three Thousand Five Hundred Sixty-Two and 46/100ths
($14,303,562.46) ("Purchase Funds"). Upon receipt of the Purchase Funds, the
Escrow Agent shall (i) deliver to the Kissimmee Stockholders the Purchase
Funds, and (ii) destroy the Kissimmee Merger Certificates. Upon delivery of the
Purchase Funds to the Kissimmee Stockholders, the Escrow Agent shall deliver
the Kissimmee Shares together with the stock powers related thereto and the
Merger Shares to UAG Kissimmee. If the Escrow Agent does not receive the
Closing Notice or the Approved Notice on or before December 15, 1998, and UAG
does not deliver the Purchase Funds to the Escrow Agent within three (3)
Business Days of December 15, 1998, then, at the Kissimmee Stockholders' option
(which option must be unanimously exercised), the Kissimmee Stockholders may
direct the Escrow Agent to (i) deliver the Merger Shares to UAG Kissimmee; (ii)
deliver the Kissimmee Shares together with the stock powers relating thereto to
the Kissimmee Stockholders and (iii) destroy the Kissimmee Merger Certificates.
If the Kissimmee Stockholders do not exercise such option, the Kissimmee
Stockholders shall be entitled to pursue all other remedies available under the
Merger Agreement as hereby amended or otherwise available at law or in equity
in connection with UAG Kissimmee's failure to deliver the Purchase Funds.
5. From the date hereof until the earlier of December 16, 1998 or the
Kissimmee Closing Date, the Kissimmee Stockholders shall not affirmatively take
any action to terminate Kissimmee Toyota's Subchapter S status and, immediately
prior to the Kissimmee Closing Date or the delivery of the Purchase Funds,
Kissimmee Toyota shall distribute a dividend to the Kissimmee Stockholders
equal to the greater of the (i) cash from profits before federal, state and
local income Taxes, as adjusted for non-cash items in the calculation of such
profits, from the date hereof through the date of such dividend (but in no
event greater than the amount of such profits) or (ii) cash equal to the amount
of Taxes incurred by the Kissimmee Stockholders as a result of the operations
of Kissimmee Toyota from the date hereof through the date of such dividend.
6. Section 1.12 of the Merger Agreement is hereby amended by deleting the
section in its entirety therefrom and substituting therefor the following:
"1.12 Stock Price Adjustment
If, on any Adjustment Date, the UAG Market Value as of such
Adjustment Date is less than Twenty-Five and 9605/10,000 Dollars
($25.9605) (the amount of any such deficiency as of an Adjustment Date
being referred to herein as the "Stock Price Deficiency"), then no later
than ten (10) Business Days thereafter and as additional consideration
for the stock of the Companies, UAG shall pay to each Stockholder (the
"Stock Price Guaranty Payment") an amount equal to the number of the
Stockholder's Initial Transition UAG Shares for such Adjustment Date,
multiplied by the Stock Price Deficiency as of such Adjustment Date (the
"Deficiency Amount"). Each Stock Price Guaranty Payment shall include
(but not be increased by) interest at the Applicable Federal Rate in
accordance with Section 1274(d) of the Code. UAG may, in the exercise of
its sole discretion, make any Stock Price
2
<PAGE>
Guaranty Payment in cash, UAG Common Stock having an aggregate UAG Market
Value on the Adjustment Date equal to the Deficiency Amount, or a
combination of cash or shares of such UAG Common Stock; provided,
however, that the aggregate cash paid to the Stockholders in connection
with any one of the tax-free reorganizations under this Agreement may not
at any time exceed the amount of cash permitted to be received under
federal tax law without causing such reorganization to fail to qualify as
a tax-free reorganization. Any shares of UAG Common Stock issued in
respect of the payment of any Stock Price Guaranty Payment or Secondary
Stock Price Guaranty Payment (as defined below) are hereinafter referred
to as "Additional Shares".
If, on any Adjustment Date, the UAG Market Value as of such
Adjustment Date is less than the UAG Market Value on the date that any
Additional Shares were issued, then with respect to any such Additional
Shares that are Secondary Transition UAG Shares as of such date, no later
than ten (10) Business Days thereafter and as additional consideration
for the stock of the Companies, UAG shall pay to each Stockholder (the
"Secondary Stock Price Guaranty Payment") an amount equal to the number
of the Stockholder's Secondary Transition UAG Shares for such Adjustment
Date multiplied by the Secondary Stock Price Deficiency (as defined
below) with respect to each such share (the "Secondary Deficiency
Amount"). Secondary Stock Price Deficiency for each Additional Share that
is a Secondary Transition UAG Share as of an Adjustment Date shall mean
the amount, if any, by which the UAG Market Value for such share as of
such Adjustment Date is less than the UAG Market Value on the date such
share was issued. Each Secondary Stock Price Guaranty Payment shall
include (but not be increased by) interest at the Applicable Federal Rate
in accordance with Section 1274(d) of the Code. UAG may, in the exercise
of its sole discretion, make any Secondary Stock Price Guaranty Payment
in cash, UAG Common Stock having an aggregate UAG Market Value on the
Adjustment Date equal to the aggregate Secondary Deficiency Amount, or a
combination of cash or shares of such UAG Common Stock, subject, however,
to the proviso in the foregoing paragraph. The intent of the foregoing
provisions is to guaranty to the Stockholders that the UAG Market Value
of any Additional Share issued to such Stockholder shall be no less than
the UAG Market Value of such share on the date such share becomes an
Unrestricted UAG Share.
For purposes of this Agreement, the following terms shall have the meanings
defined below:
(i) "Adjustment Date" with respect to any Stockholder shall
mean each date on which any UAG Shares of the Stockholder (with UAG
Shares for purposes of this Section 1.12 to include any Additional
Shares issued in payment of all or any portion of any Deficiency
Amount or Secondary Deficiency Amount) first become Unrestricted
UAG Shares;
(ii) "Initial Transition UAG Shares" with respect to any
Stockholder shall mean as of any Adjustment Date the portion of the
Stockholder's UAG Shares (not including any Additional Shares) that
first become Unrestricted UAG Shares on such Adjustment Date;
(iii) "Secondary Transition UAG Shares" with respect to any
Stockholder shall mean as of any Adjustment Date the portion of the
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<PAGE>
Stockholder's Additional Shares that first become Unrestricted UAG
Shares; and
(iv) "Unrestricted UAG Shares" with respect to any
Stockholder shall mean as of any date (A) the portion, if any, of
such Stockholder's UAG Shares that have been registered on or
before such date pursuant to the Registration Rights Agreement (as
defined in Section 1.14 hereof), plus (B) the portion, if any, of
such Stockholder's other UAG Shares that could have been or could
be sold by the Stockholder on or before such date pursuant to Rule
144 of the Securities and Exchange Commission, determined for
purposes of this clause (B) as if (1) the maximum number of such
Stockholder's other UAG Shares that could have been sold pursuant
to Rule 144 during the three (3) month period immediately preceding
such date (and all prior three (3) month periods) were in fact sold
on the first day of each such three (3) month period and (2) all of
such Stockholder's UAG Shares (other than those registered pursuant
to the Registration Rights Agreement or otherwise registered with
the consent of such Stockholder) are unregistered for purposes of
applying Rule 144.
The parties acknowledge that UAG may be required to make more than one
Stock Price Guaranty Payment or Secondary Stock Price Guaranty Payment to
a particular Stockholder pursuant to this Section 1.12 in the event that
all of the Stockholder's UAG Shares as of an Adjustment Date for the
Stockholder are not Unrestricted UAG Shares as of such Adjustment Date,
but that in no event shall UAG be required to make more than one payment
under this Section 1.12 with respect to each share of UAG Common Stock
issued pursuant to this Agreement. If the cash portion of any Stock Price
Guaranty Payment or Secondary Stock Price Guaranty Payment paid to any
Stockholder exceeds an amount equal to Five Dollars ($5) per UAG Share in
respect of which the Stock Price Guaranty Payment or Secondary Stock
Price Guaranty Payment is being made (the amount of any such excess cash
being referred to as the "Excess Amount"), then UAG will indemnify such
Stockholder for an amount equal to the sum of (i) the difference between
the amount of Taxes actually imposed on such Stockholder in respect of
such Excess Amount (determined as if the Excess Amount is the
Stockholder's marginal taxable income for the applicable tax year) minus
the Taxes that would be imposed on such Stockholder if the Excess Amount
were taxed at a twenty percent (20%) federal long-term capital gains
rate, plus (ii) the additional amount necessary to cover any Taxes
imposed on the Stockholder as a result of cash payments received pursuant
to this sentence, including for this purpose payments received pursuant
to this clause (ii). UAG covenants and agrees that the subsidiary
ownership structure through which UAG will acquire indirect ownership of
the Companies will not be altered in a manner that would cause any of the
reorganizations contemplated by the Merger Agreement as hereby amended
not to qualify for tax-free treatment under federal income tax law.
Notwithstanding anything contained herein to the contrary, the right to
receive payments under this Section shall be assignable to and
enforceable by any holder of the UAG Shares provided that such holder has
received such shares in compliance with applicable law.
7. In the event that the acquisition of Kissimmee Toyota is treated as a
taxable
4
<PAGE>
transaction rather than a tax-free reorganization under federal tax law, the
parties agree that such taxable transaction shall be separate from and have no
effect upon either of the other Mergers which the parties intend will
independently qualify as tax-free reorganizations.
8. Schedules 1.11, 2.11(a), 2.11(c), 2.11(d) and 2.11(e) delivered with
this Amendment are hereby substituted for the corresponding schedules
previously furnished to UAG for the Merger Agreement. Schedules 2.10(d) and
2.15 to the Merger Agreement are hereby supplemented by the Supplements to
Schedule 2.15 and Schedule 2.10(d) delivered herewith.
9. (a) UAG shall indemnify each Stockholder who holds Shares in Kissimmee
Toyota immediately prior to Closing, in the event the disposition of Kissimmee
Toyota as contemplated by the Merger Agreement and this Amendment is treated as
a taxable disposition rather than a tax-free reorganization, in an amount equal
to the excess of (i) the Taxes payable by the Stockholder in connection with
such taxable disposition over (ii) the Taxes which the Stockholder would have
paid if the gain on such disposition were taxed at a twenty percent (20%)
federal long-term capital gains rate. UAG shall also be required to pay the
indemnified party any additional amounts necessary to cover any Taxes imposed
on such party as a result of payments received under this Subsection (a),
including for this purpose payments received pursuant to this sentence; except
that if the Kissimmee Merger is consummated under state corporate law as
contemplated by the Merger Agreement and this Amendment, UAG shall not be
required to pay the indemnified party any additional amounts necessary to cover
any Taxes imposed on such party as a result of payments received under this
Subsection (a).
(b) UAG shall further indemnify each Kissimmee Continuing Stockholder (as
defined below) in his or her capacity as Stockholder from and against all
liabilities, losses, damages, demands, claims, actions, proceedings, judgments,
costs and expenses (including reasonable attorneys' fees) relating to, arising
from or in connection with the operation after January 31, 1998 of any business
or other activity of Kissimmee Toyota. In addition, UAG shall indemnify each
such Stockholder of Kissimmee Toyota and any other person holding an ownership
interest in Kissimmee Toyota from and after January 31, 1998 (each, a
"Kissimmee Continuing Stockholder") in an amount equal to the excess of (i)
Taxes payable by the Kissimmee Continuing Stockholder for any taxable period
after January 31, 1998 on the income and gain of Kissimmee Toyota attributable
to the Kissimmee Continuing Stockholder under applicable tax law (with the
amount of such Taxes calculated as if the income and gain giving rise to such
Taxes is the marginal taxable income and gain of the Kissimmee Continuing
Stockholder for the applicable tax period), over (ii) the Kissimmee Continuing
Stockholder's proportionate share of all cash distributions made by Kissimmee
Toyota to the Kissimmee Continuing Stockholder during the applicable tax
period. UAG shall also be required to pay the indemnified party any additional
amounts necessary to cover any Taxes imposed on such party as a result of
payments received under this Subsection (b), including for this purpose
payments received pursuant to this sentence.
(c) UAG shall indemnify each Stockholder who holds Shares in Century
and/or Paramount, in the event the disposition of Shares of either as
contemplated by the Merger Agreement and this Amendment is treated as a taxable
disposition rather than as a tax-free reorganization, in an amount equal to the
excess of (i) the Taxes payable by the Stockholder in connection with such
taxable disposition over (ii) the Taxes which the Stockholder would have paid
if the gain on such disposition were taxed at a twenty percent (20%) federal
long-term capital gains rate. UAG shall also be required to pay each such
Stockholder any additional amounts necessary to cover any Taxes
5
<PAGE>
imposed on such Stockholder as a result of payments received under the
foregoing sentence and this sentence; except that if the Kissimmee Merger is
consummated under state corporate law as contemplated by the Merger Agreement
and this Amendment, UAG shall not be required to pay the indemnified party any
additional amounts necessary to cover any Taxes imposed on such party as a
result of payments received under this Subsection (c).
(d) UAG shall further indemnify each Stockholder of Century and/or
Paramount and any other person holding an ownership interest in Century and/or
Paramount from and after January 31, 1998 (each, a "Continuing Stockholder") in
his or her capacity as a Stockholder from and against all liabilities, losses,
damages, demands, claims, actions, proceedings, judgments, costs and expenses
(including reasonable attorneys' fees) relating to, arising from or in
connection with the operation after January 31, 1998 of any business or other
activity of Century and/or Paramount. In addition, UAG shall indemnify each
Continuing Stockholder in an amount equal to the excess of (i) Taxes payable by
the Continuing Stockholder for any taxable period after January 31, 1998 on the
income and gain of Century and/or Paramount attributable to the Continuing
Stockholder under applicable tax law (with the amount of such Taxes calculated
as if the income and gain giving rise to such Taxes is the marginal taxable
income and gain of the Continuing Stockholder for the applicable tax period)
over (ii) the Continuing Stockholder's proportionate share of all cash
distributions made by Century and/or Paramount to the Continuing Stockholder
during the applicable tax period. UAG shall also be required to pay the
indemnified party any additional amounts necessary to cover any Taxes imposed
on such party as a result of payments received under this Subsection (d),
including for this purpose payments received pursuant to this sentence.
(e) Amounts required to be indemnified under this Section shall be paid
upon UAG's receipt of written statements reasonably evidencing the
indemnifiable amount owed by the indemnified party, provided that UAG shall not
be required to make an indemnity payment more than ten (10) days prior to the
date on which the indemnified party is required to pay such amount.
10. The consideration, consisting of UAG Shares and cash, under the
Merger Agreement shall be allocated as set forth on the attached Allocation
Schedule.
11. This Amendment may be executed by facsimile signature and any number
of counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original. If any one or more of the
provisions of this Amendment shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Amendment shall not be affected thereby.
12. This Amendment shall survive the Closing Date and the consummation
of the transactions contemplated by the Stock Purchase Agreement.
13. This Amendment shall be governed by and construed in accordance with
the laws of the state of Indiana without giving effect to any choice or
conflict of law provision or rule that would cause laws of any other
jurisdiction to apply.
14. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, transferees and assigns.
6
<PAGE>
15. The obligations of UAG and its Affiliates under the Merger Agreement
and this Amendment to perform their respective covenants and agreements with
respect to the transactions contemplated by the Merger Agreement and this
Amendment shall not, from and after the date hereof, be subject to any
condition precedent (regardless of whether specified in the Merger Agreement)
except the continuing accuracy (other than as affected by the transactions
contemplated by this Amendment) of the representations and warranties under
Section 3.1 of the Merger Agreement.
16. Section 9.2(b) of the Merger Agreement is hereby amended by (i)
correcting the reference to "Section 9.2(b)" in the first line thereof to read
"Section 9.2(a) and (ii) deleting the parenthetical "(as defined in this
Agreement and the Merger Agreement)" that begins in the third line of Section
9.2(b)(ii).
17. To the extent the terms or provisions of this Amendment conflict or
are inconsistent with those of the Merger Agreement, the terms and provisions
of this Amendment shall control and modify those of the Merger Agreement.
Except as so modified, the terms and provisions of the Merger Agreement shall
remain in full force and effect. All references in the Merger Agreement to
"this Agreement" shall include reference to this Amendment, and to the Merger
Agreement as amended by this Amendment, for purposes of applying the terms and
provisions of the Merger Agreement.
18. The obligations of UAG and its Affiliates under the terms of this
Amendment (including, but not limited to, any Section of the Merger Agreement
amended hereunder), and each Stockholder's right to enforce such obligations
and to recover Costs arising out of or resulting from any breach of such
obligations, shall not be subject to or in any manner limited by (i) the
Stockholders Threshold Amount or the Stockholders Cap or (ii) the proviso in
clause (ii) of the first sentence of Section 9.2(a) but shall be subject to the
procedures set forth in Section 9.3 of the Merger Agreement and any claims
asserted by the Internal Revenue Service or any other taxing authority for
which UAG or its Affiliates may be liable pursuant to the provisions of this
Amendment shall be deemed to constitute Third Party Claims for purposes of
Section 9.3 of the Merger Agreement.
19. The right of any UAG Indemnified Party to recover Costs or any other
damages arising from or in connection with Environmental Concerns, including
On-Site Concerns, Off-Site Concerns, On-Site Considerations, and Off-Site
Considerations, as such terms are defined in the Environmental Indemnification
Agreement dated as of January 31, 1998 by and between Alan V. Young, William A.
Young, UAG and the other signatories thereto (the "Environmental
Indemnification Agreement"), shall in all events be limited to the rights
expressly provided under the Environmental Indemnification Agreement.
20. The right of any UAG Indemnified Party to recover Costs or any other
damages arising from a matter specifically dealt with under Sections 7 and 8 of
the Closing Date Agreement of even date herewith between certain of the parties
hereto and others ("CDA") shall in all events be limited to the rights
expressly set forth in the CDA.
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<PAGE>
21. (a) The Final Net Worth, as such term is used in Section 1.12(g) of
the Merger Agreement, shall equal the Final Net Worth determined in accordance
with Section 1.12(a)-(f) plus the additional amount of $5,298, which additional
amount shall be allocated to Century and Paramount as shown on the attached
Incremental Net Worth Adjustment Schedule.
(b) Clause (b) of Section 1.17 of the Merger Agreement contemplates
that certain cash dividends to Stockholders of the Companies shall be declared
and paid by the Companies on or before the Closing Date. To the extent such
dividends have not been declared and paid on or before the Closing Date (or on
or before February 9, 1998 in the case of Kissimmee Toyota) as contemplated in
such clause (b) (the "unpaid dividends"), no unpaid dividends shall thereafter
be payable under such clause, and the Net Worth as of the Closing shall reflect
that the unpaid dividends have not been accrued or paid for purposes of Section
1.15 of the Merger Agreement. Notwithstanding any provisions to the contrary,
any payment of a Net Worth Deficiency by the Stockholders of Kissimmee Toyota
to UAG pursuant to Section 1.15(g)(i) shall be treated in all respects as a
return of dividends by the Stockholders to Kissimmee Toyota, and any Net Worth
Excess under Section 1.15(g)(ii) shall be paid by UAG Kissimmee by depositing
with the Escrow Agent certificates for UAG Shares having a UAG Market Value
equal to the Net Worth Excess on the date of deposit. Such certificates shall
be issued to the Stockholders of Kissimmee Toyota using the same proportions
among such Stockholders as are reflected on Schedule 1.11. For purposes of
Section 1.12 of the Merger Agreement, the UAG Shares represented by such
certificates shall be deemed Additional Shares.
22. In the event that a Stockholder or other Person who is entitled under
the Merger Agreement or this Amendment to receive reimbursement of Taxes is a
grantor trust or other entity (such trust or other entity referred to as
"Entity") not itself subject to the payment of Taxes, such Entity shall, for
purposes of any reimbursement of Taxes under the Merger Agreement and this
Amendment, be deemed liable for payment of any Taxes payable by its grantor
beneficiary, or owner, provided that all payments required to be made under the
Merger Agreement or this Amendment for reimbursement of any such Taxes shall be
made directly to such Entity.
23. The Closing Date and Closing for purposes of the Merger Agreement
shall be deemed to be January 31, 1998. The Closing Date Balance Sheet to be
delivered pursuant to Section 1.15 of the Merger Agreement shall be prepared
and dated as of January 31, 1998.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ George G. Lowrance
--------------------------------
Its: Executive Vice President
UAG KISSIMMEE MOTORS, INC.
By: /s/ George G. Lowrance
--------------------------------
Its: Vice President
UAG PARAMOUNT MOTORS, INC.
By: /s/ George G. Lowrance
--------------------------------
Its: Vice President
UAG CENTURY MOTORS, INC.
By: /s/ George G. Lowrance
--------------------------------
Its: Vice President
KISSIMMEE MOTORS, INC., D/B/A
KISSIMMEE TOYOTA
By: /s/ Alan V. Young
--------------------------------
Its: President
Signatures continued on following page
9
<PAGE>
PARAMOUNT CHEVROLET GEO, INC.
By: /s/ William A. Young
--------------------------------
Its: President
CENTURY CHEVROLET GEO, INC.
By: /s/ William A. Young
--------------------------------
Its: Vice President
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, individually
/s/ William A. Young
--------------------------------
WILLIAM A. YOUNG, individually
/s/ Jennifer Y. Taggart
--------------------------------
JENNIFER Y. TAGGART, individually
/s/ Cathy Y. Dyer
--------------------------------
CATHY Y. DYER, individually
YOUNG/AVY II IRREVOCABLE
TRUST U/A DATED 12/31/96 FBO LARA
A. YOUNG
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, TRUSTEE
Signatures continued on following page
10
<PAGE>
YOUNG/AVY II IRREVOCABLE
TRUST U/A DATED 12/31/96 FBO
COURTNEY E. YOUNG
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, TRUSTEE
YOUNG/AVY II IRREVOCABLE
TRUST U/A DATED 12/31/96 FBO DANIEL
A. YOUNG
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, TRUSTEE
YOUNG/WAY II IRREVOCABLE
TRUST U/A DATED 12/31/96
/s/ William A. Young
--------------------------------
WILLIAM A. YOUNG, TRUSTEE
YOUNG/TAGGART II IRREVOCABLE TRUST
U/A DATED 12/31/96 FBO WILLIAM E.
TAGGART
/s/ Jennifer Y.Taggart
--------------------------------
JENNIFER Y. TAGGART, TRUSTEE
Signatures continued on following page
11
<PAGE>
YOUNG/TAGGART II IRREVOCABLE TRUST
U/A DATED 12/31/96 FBO MARY K.
TAGGART
/s/ Jennifer Y. Taggart
--------------------------------
JENNIFER Y. TAGGART, TRUSTEE
YOUNG/DYER II IRREVOCABLE
TRUST U/A DATED 12/31/96
/s/ Cathy Y.Dyer
--------------------------------
CATHY Y. DYER, TRUSTEE
SHIRLEY J. YOUNG IRREVOCABLE GRAT
TRUST U/A DATED 3/1/97
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, TRUSTEE
/s/ William A. Young
--------------------------------
WILLIAM A. YOUNG, TRUSTEE
DAN E. YOUNG IRREVOCABLE GRAT TRUST
U/A DATED 3/1/97
/s/ Alan V. Young
--------------------------------
ALAN V. YOUNG, TRUSTEE
/s/ William A. Young
--------------------------------
WILLIAM A. YOUNG, TRUSTEE
12
<PAGE>
Exhibit 99.1
[UNITEDAUTO LOGO]
UnitedAuto Group, Inc.
375 Park Avenue, 11th Floor
New York, NY 10152
Contact: Karl Winters Allison Wey Stefanie King
Chief Financial Officer Edelman Financial Edelman Financial
212 230-0400 212 704-4424 212 704-8291
FOR IMMEDIATE RELEASE
- ---------------------
UNITEDAUTO REPORTS FOURTH QUARTER AND YEAR END 1997 RESULTS
------------------------------------------------------------
COMPANY REPORTS NET LOSS OF $26.9 MILLION, INCLUDING PREVIOUSLY ANNOUNCED
CHARGE, OR LOSS OF $1.41 PER SHARE, ON REVENUES OF $546.0 MILLION FOR THE
FOURTH QUARTER; LOSS INCLUDES RESULTS OF NINE FRANCHISES TO BE DIVESTED
------------------------------------------------------------
COMMITMENT FOR $75.0 MILLION CREDIT FACILITY SECURED
------------------------------------------------------------
NEW YORK, NY, FEBRUARY 18, 1998 - UnitedAuto Group, Inc. (NYSE: UAG), the
nation's second largest publicly-traded automotive retailer, today announced
results for the fourth quarter and year ended December 31, 1997.
In the fourth quarter, revenues were $546.0 million as compared to
$372.7 million of pro forma revenues and $347.2 million of actual revenues in
the comparable prior year period.
Gross profit margin for the quarter was 11.0% compared to 11.8% on a
pro forma basis and 11.1% on an actual basis in the comparable prior year
period.
The net loss in the fourth quarter was $26.9 million as compared to
net income of $4.9 million pro forma, or a loss of $3.5 million on an actual
basis, in 1996. The loss per share in the fourth quarter 1997 was $1.41 versus
pro forma earnings per share of $0.27, or a loss of $0.22 per share on an
actual basis, in the comparable prior year period.
As announced on January 13, 1998, fourth quarter results include a
pre-tax charge of $31.7 million ($19.5 million after-tax) taken to realign
certain elements of the Company's operations. This charge relates principally
to the divestiture of nine automotive franchises, subject to manufacturer
approval, as well as other related charges; real estate expenses; the closure
of three stand-alone used vehicle satellite locations in Arkansas; and the
disposal of related inventory. The aggregate charge also includes $6.8 million
pre-tax related to certain corporate activities as well as $1.0 million pre-tax
related to the Company's auto finance subsidiary.
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The Company added that its fourth quarter 1997 results reflect greater
than expected unit volume decline throughout its dealership network as well as
an expected loss at its automotive finance subsidiary.
The results reflect the addition of 32 dealership franchises over the
previous year, and a change in the Company's method of accounting for new
vehicle inventory from LIFO to the Specific Identification Method. Diluted
weighted average shares outstanding were 19,104,000 in the fourth quarter 1997
compared to 17,872,000 and 16,025,000 on a pro forma and actual basis,
respectively, in the comparable prior year period.
Of the $546.0 million in fourth quarter dealership revenues, vehicle
sales represented approximately 86.8%, or $474.0 million of the total; finance
and insurance revenues represented approximately 3.0% or $16.5 million of the
total; and service and parts revenues of $55.5 million represented the
remaining 10.2%.
The Company sold 12,804 new and 7,736 used vehicles during the fourth
quarter versus 9,145 new and 5,162 used vehicles on a pro forma basis for the
comparable 1996 period.
For the fiscal year ended December 31, 1997, revenues were $2.1
billion as compared to $1.6 billion of pro forma revenues and actual revenues
of $1.3 billion in the comparable prior year period.
The net loss for the year was $10.1 million as compared to net income
of $21.8 million pro forma, or $3.0 million on an actual basis in 1996. The
loss per share was $0.54 versus pro forma earnings per share of $1.22 per
share, or $0.28 per share on an actual basis for 1996.
Diluted weighted average shares outstanding were 18,607,000 for fiscal
1997 compared to 17,872,000 and 10,851,00 on a pro forma and actual basis,
respectively in 1996.
Of the $2.1 billion in 1997 dealership revenues, vehicle sales
represented approximately 87.6%, or $1.6 billion of the total; finance and
insurance revenues represented approximately 3.3%, or $68.8 million of the
total; and service and parts revenues of $190.8 million represented the
remaining 9.1%.
The Company said that it sold 50,985 new and 31,253 used vehicles
during 1997 versus 41,621 new and 23,690 used vehicles on a pro forma basis for
the comparable 1996 period.
Marshall S. Cogan, Chairman and Chief Executive Officer, said, "1997
presented UnitedAuto with several challenges in addition to several growth
opportunities. To better position our business for the future, we realigned
certain aspects of our operations during the fourth quarter. Our strategic
direction is clear and correct. We remain committed to our auto retailing
concept."
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Samuel X. DiFeo, President and Chief Operating Officer, added, "The charge
recorded during the fourth quarter 1997 allowed us to eliminate certain
under-performing assets, which we expect to result in enhanced cash flow and an
improved foundation for growth. We have also instituted more rigorous
benchmarking guidelines to better measure our dealership performance."
The Company said that it had completed the sale of two of its Long Island,
NY dealerships and had closed a franchise in Arkansas. The Company added that
it is proceeding with the divestiture of five franchises at its Danbury, CT
location and that plans relating to the previously announced divestiture in its
Atlanta region are nearing completion.
The Company also announced today a commitment for a new $75.0 million
credit facility, including a $50.0 million term loan and a $25.0 million
revolving credit agreement. In connection with this financing, the Company
will terminate its Senior Credit Facility.
UnitedAuto, which has pursued a strategy based on internal growth from its
existing dealerships and from strategic acquisitions, operates franchises in
Arizona, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana,
Nevada, New Jersey, New York, North Carolina, Puerto Rico, South Carolina,
Tennessee, and Texas. UnitedAuto dealerships sell new and used vehicles and
market a complete line of aftermarket automotive products and services through
UnitedAuto Care. The Company also owns UnitedAuto Finance Inc., formerly
Atlantic Auto Finance, a finance company engaged in the purchase, sale and
servicing of primarily prime credit quality automobile loans.
This press release contains forward-looking information, and actual results
may materially vary from those expressed or implied herein. Factors that could
affect these results include those mentioned in the Company's Prospectus filed
with the Securities and Exchange Commission on December 10, 1997.
Editors Note: UnitedAuto's logo and executive photos can be retrieved in
digital form by media without charge from Wieck Photo Database (972) 392-0888.
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UNITEDAUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
($ Thousands, except share and per share data)
<TABLE>
<CAPTION>
Fourth Quarter(a)
---------------------------------------------------
1997 1996 1996
Actual Pro Forma(b) Actual
------ ------------ ------
<S> <C> <C> <C>
AUTO DEALERSHIPS
Vehicle Sales $474,000 $330,415 $310,392
Finance and Insurance 16,474 10,787 8,291
Service and Parts 55,541 31,489 28,564
------ ------ ------
Total Revenues 546,015 372,691 347,247
Cost of Sales, Including Floor Plan Interest 485,856 328,763 308,696
------- ------- -------
Gross Profit 60,159 43,928 38,551
Selling, General and Administrative Expenses 94,699 36,587 34,204
------ ------ ------
Operating Income (34,540) 7,341 4,347
Other Interest Income (Expense) (6,822) 86 (779)
Other Income (Expense) Net -- -- 258
Equity in Loss of Uncombined Investees -- -- (47)
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES - AUTO DEALERSHIPS (41,362) 7,427 3,779
-------- ------ ------
AUTO FINANCE
Revenues 143 194 194
Interest Expense (606) (145) (145)
Operating and Other Expenses (1,898) (813) (813)
------- ----- -----
LOSS BEFORE INCOME TAXES - AUTO FINANCE (2,361) (764) (764)
------- ----- -----
TOTAL COMPANY
Income (Loss) Before Minority Interests, Benefit
(Provision) for Income Taxes and Extraordinary Item (43,723) 6,663 3,015
Minority Interests (20) -- (514)
Benefit (Provision) for Income Taxes 16,817 (1,799) (1,031)
------ ------- -------
Income (Loss) Before Extraordinary Item (26,926) 4,864 1,470
Extraordinary Item -- -- (4,987)
------ ------ -------
Net Income (Loss) $(26,926) $4,864 $(3,517)
=========== ============ ===========
Diluted Income (Loss) Per Share Before Extraordinary Item $(1.41) $0.27 $0.09
Diluted Income (Loss) Per Share $(1.41) $0.27 $(0.22)
=========== ============ ===========
Weighted Average Shares Outstanding 19,104,000 17,872,000 16,025,000
----------- ------------ -----------
EBITDA(c) $(23,256) $8,882 $5,912
</TABLE>
(a) Amounts have been restated to reflect a change in the method of accounting
for new vehicle inventories from the LIFO method to the Specific Identification
Method.
(b) The Pro Forma Consolidated Statement of Operations for 1996 reflects the
Company's completion of its initial public offering of 6,250,000 shares on
October 28, 1996 , 1996 acquisitions and other transactions related to the
Company's IPO.
(c) EBITDA is defined as income before minority interests,
provision for income taxes, interest expense (exclusive of interest expense
relating to floor plan notes payable), and depreciation and amortization.
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UNITEDAUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
($ Thousands, except share and per share data)
<TABLE>
<CAPTION>
Year(a)
-------------------------------------------------
1997 1996 1996
Actual Pro Forma(b) Actual
------ ------------ ------
<S> <C> <C> <C>
AUTO DEALERSHIPS
Vehicle Sales $1,827,609 $1,421,436 $1,164,569
Finance and Insurance 68,754 51,705 43,574
Service and Parts 190,785 126,085 93,888
------- ------- ------
Total Revenues 2,087,148 1,599,226 1,302,031
Cost of Sales, Including Floor Plan Interest 1,830,086 1,410,795 1,156,459
--------- --------- ---------
Gross Profit 257,062 188,431 145,572
Selling, General and Administrative Expenses 255,066 149,633 124,244
------- ------- -------
Operating Income 1,996 38,798 21,328
Other Interest (Expense) (14,071) (969) (4,398)
Other Income Net 297 -- 2,580
Equity in Loss of Uncombined Investees -- -- (74)
------ ------ -------
INCOME (LOSS) BEFORE INCOME TAXES - AUTO DEALERSHIPS (11,778) 37,829 19,436
-------- ------ ------
AUTO FINANCE
Revenues 2,615 1,798 1,798
Interest Expense (1,014) (421) (421)
Operating and Other Expenses (5,336) (2,867) (2,867)
------- ------- -------
LOSS BEFORE INCOME TAXES - AUTO FINANCE (3,735) (1,490) (1,490)
------- ------- -------
TOTAL COMPANY
Income (Loss) Before Minority Interests, Benefit
(Provision) For Income Taxes and Extraordinary Item (15,513) 36,339 17,946
Minority Interests (138) -- (3,306)
Benefit (Provision) for Income Taxes 5,511 (14,536) (6,606)
------- -------- -------
Income (Loss) Before Extraordinary Item (10,140) 21,803 8,034
Extraordinary Item -- -- (4,987)
------- -------- -------
Net Income (Loss) $(10,140) $21,803 $3,047
========= ======== =======
Diluted Income (Loss) Per Share Before Extraordinary Item $(0.54) $1.22 $0.74
Diluted Income (Loss) Per Share $(0.54) $1.22 $0.28
=========== ============ ===========
Weighted Average Shares Outstanding 18,607,000 17,872,000 10,851,000
----------- ------------ -----------
EBITDA(c) $19,413 $46,295 $28,837
</TABLE>
(a) Amounts have been restated to reflect a change in the method of accounting
for new vehicle inventories from the LIFO method to the Specific Identification
Method.
(b) The Pro Forma Consolidated Statement of Operations for 1996 reflects the
Company's completion of its initial public offering of 6,250,000 shares on
October 28, 1996 , 1996 acquisitions and other transactions related to the
Company's IPO.
(c) EBITDA is defined as income before minority interests,
provision for income taxes, interest expense (exclusive of interest expense
relating to floor plan notes payable), and depreciation and amortization.
# # #
