EXECUTION COPY
===============================================================================
UNITED AUTO GROUP, INC.
STOCKHOLDERS AGREEMENT
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
UNITED AUTO GROUP, INC.
Dated as of May 3, 1999
===============================================================================
0583844
(ii)
TABLE OF CONTENTS
Page #
------
ARTICLE I. DEFINITIONS 1
Section 1.1. Definitions 1
Section 1.2. Rules of Construction............................................................................3
ARTICLE II. BOARD COMPOSITION AND VOTING AGREEMENTS..............................................................4
Section 2.1. Board Composition from the Initial Closing Date through the Second Closing Date..................4
Section 2.2. Board Composition from the Second Closing Date...................................................4
Section 2.3. Composition of Committees of the Board of Directors..............................................5
Section 2.4. Voting Agreement.................................................................................5
Section 2.5. Reduction in Right of PCP Entities to Designate Directors........................................5
Section 2.6. Suspension of Right to Designate Directors.......................................................6
Section 2.7. Replacement Directors............................................................................6
Section 2.8. Resignation of PCP Directors.....................................................................7
Section 2.9. Termination of Article II........................................................................7
ARTICLE III. STANDSTILL PROVISIONS...............................................................................7
Section 3.1. Standstill Provisions............................................................................7
Section 3.2. Exceptions to the Standstill Provisions..........................................................8
ARTICLE IV. TRANSFER RESTRICTIONS................................................................................9
Section 4.1. Restrictions on Transfer of Restricted Securities................................................9
Section 4.2. Tag-Along Rights.................................................................................9
Section 4.3. Transferees; Noncomplying Transfers.............................................................10
Section 4.4. Restrictions on Transfers of Interests in the PCP Entities......................................10
ARTICLE V. CERTAIN COVENANTS....................................................................................11
Section 5.1. Legend on Certificates..........................................................................11
Section 5.2. ▇▇▇▇▇ ▇▇▇▇▇▇ to Serve as Chairman and Chief Executive Officer...................................11
Section 5.3. Approval of Company Action Under the Securities Purchase Agreement.................................12
Section 5.4. Trace Shelf Registration Statement...............................................................12
Section 5.5. Further Assurances..............................................................................12
(i)
ARTICLE VI. MUTUAL REPRESENTATIONS AND WARRANTIES...............................................................12
Section 6.1. Organization....................................................................................12
Section 6.2. Authorization, Validity and Enforceability......................................................12
Section 6.3. No Violation or Breach..........................................................................13
Section 6.4. Beneficial Ownership of Common Stock............................................................13
ARTICLE VII. TERM................................................................................................13
Section 7.1. Term............................................................................................13
Section 7.2. Effects of Termination..........................................................................14
ARTICLE VIII. MISCELLANEOUS PROVISIONS..........................................................................14
Section 8.1. Survival........................................................................................14
Section 8.2. Notices.........................................................................................14
Section 8.3. Amendments......................................................................................15
Section 8.4. Assignment and Parties in Interest..............................................................15
Section 8.5. Expenses........................................................................................16
Section 8.6. Entire Agreement................................................................................16
Section 8.7. Descriptive Headings............................................................................16
Section 8.8. Counterparts....................................................................................16
Section 8.9. Governing Law; Jurisdiction.....................................................................16
Section 8.10. Severability....................................................................................17
Section 8.11. Specific Performance............................................................................17
Schedule 6.3 - Conflicts
Schedule 6.4 - Equity Ownership
(ii)
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement") dated as of May 3,
1999 by and among AIF II, L.P., a Delaware limited partnership ("Apollo"),
Aeneas Venture Corporation, a Delaware corporation ("Harvard"), International
Motor Cars Group I, L.L.C. ("PCP I"), International Motor Cars Group II, L.L.C.
("PCP II" and, together with PCP I, the "PCP Entities"), Trace International
Holdings, Inc. ("Trace" and together with Apollo, Harvard and the PCP Entities,
the "Restricted Stockholders"), and United Auto Group, Inc. (the "Company").
WHEREAS, pursuant to the terms of a Securities Purchase
Agreement, between the Company and the PCP Entities, dated as of April 12, 1999
(the "Securities Purchase Agreement"), the PCP Entities are acquiring Series A
Convertible Preferred Stock, par value $.0001 per share, of the Company (the
"Series A Preferred Stock"), Series B Convertible Preferred Stock, par value
$.0001 per share (the "Series B Preferred Stock") and warrants (the "Warrants")
to acquire the Company's voting Common Stock, par value $.0001 per share, and
non-voting Common Stock, par value $.0001 per share (together, the "Common
Stock"), of the Company;
WHEREAS, Apollo, Harvard and Trace are existing stockholders
of the Company; and
WHEREAS, the parties wish to provide for certain matters
relating to the ownership and transfer of the Common Stock.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein,
the terms defined in the introductory paragraph and the Recitals to this
Agreement shall have the respective meanings specified therein, and the
following terms shall have the meanings specified below:
"Adjusted Beneficial Ownership" is defined in Section 2.5.
"Affiliate" means affiliate as defined in Rule 405
promulgated under the Securities Act.
"Apollo" has the meaning set forth in the preamble.
"Beneficial Ownership" means "beneficial ownership" as
defined in Rule 13d-5 promulgated under the Exchange Act. The term
"Beneficial Owner" shall have a correlative meaning.
"Business Day" means a calendar day, other than (a) a
Saturday or Sunday and (b) a day on which commercial banks are
required or permitted by law or other governmental action to close in
New York, New York, United States of America.
"Common Stock" has the meaning set forth in the recitals
hereto, and includes any securities issued with respect to such shares
by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, amalgamation, merger,
consolidation or other reorganization or otherwise.
"Company" has the meaning set forth in the recitals hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Harvard" has the meaning set forth in the recitals hereto.
"Independent Directors" (a) initially means two persons who
were members of the Audit Committee of the Company's Board of
Directors as of December 31, 1998 and who shall be selected by a
majority of said Audit Committee and (b) after the Initial Closing
Dates means persons nominated by the immediately preceding Independent
Directors who are not Affiliates of either the PCP Entities or their
respective Affiliates (other than the Company).
"Initial Closing Date" means the date of the "Initial
Closing" (as defined in the Securities Purchase Agreement).
"PCP Directors" has the meaning set forth in Section 2.1.
"PCP Entities" has the meaning set forth in the recitals
hereto.
"PCP I" has the meaning set forth in the recitals hereto.
"PCP II" has the meaning set forth in the recitals hereto.
"Permitted Transferee" of a person means (i) a corporation,
partnership or other entity wholly owned by such person; provided that
such corporation, partnership or
- 2 -
other entity shall agree in writing that it shall transfer to such
person any Restricted Securities which it holds prior to such time as
it ceases to be wholly owned by such person, and (ii) the equity
owners of such person to the extent such equity owners receive a pro
rata distribution of Restricted Securities.
"Restricted Securities" means any Common Stock or other
equity security of the Company Beneficially Owned by a Restricted
Stockholder and any securities convertible, exercisable or
exchangeable for Common Stock or such other equity securities,
including, without limitation, the Series A Preferred Stock and the
Warrants.
"Restricted Stockholder" has the meaning set forth in the
preamble.
"Second Closing Date" means the date of the "Second Closing"
(as defined in the Securities Purchase Agreement).
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Purchase Agreement" has the meaning set forth in
the recitals hereto.
"Series A Preferred Stock" has the meaning set forth in the
recitals hereto.
"Series B Preferred Stock" has the meaning set forth in the
recitals hereto.
"Tag-Along Notice" is defined in Section 4.2.
"Tag-Along Stockholders" is defined in Section 4.2.
"Trace" has the meaning set forth in the recitals hereto.
"Transfer" means any direct or indirect transfer, sale,
assignment, gift, pledge, mortgage, hypothecation or other disposition
of any interest. The term "Transferee" shall have a correlative
meaning.
"Warrants" has the meaning set forth in the recitals hereto.
SECTION 1.2. RULES OF CONSTRUCTION. Unless the context
otherwise requires: (a) a term has the meaning assigned to it by this
Agreement; (b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles in
effect in the United States of America; (c) "or" is not exclusive; and (d)
words in
- 3 -
the singular include the plural, and in the plural include the singular. The
language used in this Agreement shall be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party. Any references to any statute or law shall
also refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
ARTICLE II.
BOARD COMPOSITION AND VOTING AGREEMENTS
SECTION 2.1. BOARD COMPOSITION FROM THE INITIAL CLOSING DATE
THROUGH THE SECOND CLOSING DATE. From the Initial Closing Date through and
including the Second Closing Date, the Restricted Stockholders shall use their
reasonable best efforts to have the Board of Directors of the Company consist
of seven (7) persons as follows:
(a) ▇▇▇▇▇ ▇▇▇▇▇▇, and two (2) additional directors nominated
by the PCP Entities (nominating as a single group) (Mr. Penske and any
additional directors nominated by the PCP Entities are collectively
referred to as the "PCP Directors").
(b) One (1) director nominated by Trace.
(c) The chief operating officer of the Company as of the date
immediately prior to the Initial Closing Date, or in his absence,
another person designated by the Independent Directors.
(d) Two (2) Independent Directors.
SECTION 2.2. BOARD COMPOSITION FROM THE SECOND CLOSING DATE.
The Restricted Stockholders shall use their reasonable best efforts to:
(a) Prior to the Second Closing Date:
(i) expand the size of the Board of Directors of the
Company to nine (9) persons effective as of the Second
Closing Date; and
(ii) nominate for election by the Company's
stockholders two additional PCP Directors to fill the
vacancies created by the expansion of the size of the Board
of Directors.
(b) On the Second Closing Date, fill the vacancies created by
the expansion of the size of the Board of Directors with the directors
elected by the stockholders.
- 4 -
(c) From and after the earlier of (x) the first meeting of
stockholders of the Company following the Second Closing Date, and (y)
the first vacancy on the Board of Directors following the Second
Closing Date, cause the Board of Directors to consist of:
(i) ▇▇▇▇▇ ▇▇▇▇▇▇, and four (4) additional PCP
Directors.
(ii) One (1) director nominated by Trace.
(iii) Three (3) Independent Directors.
SECTION 2.3. COMPOSITION OF COMMITTEES OF THE BOARD OF
DIRECTORS.
(a) From the Initial Closing Date through the Second Closing
Date, the Restricted Stockholders shall use their reasonable best
efforts to have PCP Directors appointed to committees of the Board of
Directors of the Company as follows:
(i) PCP Directors shall be appointed to constitute
no less than one-half of the members of the Executive
Committee, if any.
(ii) One PCP Director shall be appointed to each
other committee of the Board of Directors and other members
of which not less than 2 (two) shall be Independent
Directors.
(b) From and after the Second Closing Date, the Restricted
Stockholders shall use their reasonable best efforts to have the
Compensation Committee of the Board of Directors of the Company
consist of four persons as follows:
(i) ▇▇▇▇▇ ▇▇▇▇▇▇ and one (1) additional PCP
Director.
(ii) Two (2) Independent Directors.
SECTION 2.4. VOTING AGREEMENT. Each of the Restricted
Stockholders agrees to vote all of the voting securities of the Company
Beneficially Owned by it in favor of the persons to be nominated as directors
pursuant to Section 2.1 or 2.2, and to take all other reasonable action to
cause such Persons to be elected as the only directors of the Company.
SECTION 2.5. REDUCTION IN RIGHT OF PCP ENTITIES TO DESIGNATE
DIRECTORS. Notwithstanding anything to the contrary contained in this
Agreement, at such time after the Second Closing Date as the percentage
Beneficial Ownership in the Company of the PCP Entities, taken together, and
excluding Common
- 5 -
Stock Beneficially Owned as a result of unexercised Warrants ("Adjusted
Beneficial Ownership") is reduced below 20% then the number of PCP Directors
shall be reduced to the applicable number in the chart below:
If such Adjusted
Beneficial Ownership No. of PCP Directors
is equal to or to be designated
greater than: but less than thereafter
--------------------- ------------- --------------------
17.5% 20.0% 4
15.0% 17.5% 3
12.5% 15.0% 2
10.0% 12.5% 1
The number of PCP Directors to be designated shall be further reduced
as such Adjusted Beneficial Ownership is further reduced, as provided in the
chart above. Any reduction resulting from application of this Section 2.5 shall
take place on the earlier to occur of (x) the first meeting of stockholders of
the Company following the determination of such reduction, and (y) the first
vacancy on the Board of Directors following the determination of such
reduction.
SECTION 2.6. SUSPENSION OF RIGHT TO DESIGNATE DIRECTORS.
Notwithstanding anything to the contrary contained in this Agreement, the right
of the PCP Entities or Trace to designate directors of the Company shall be
suspended at such time as either:
(a) such Restricted Stockholder's Beneficial Ownership in the
Company (with respect to the PCP Entities, their Adjusted Beneficial
Ownership) is reduced below 10%; or
(b) in the case of the PCP Entities, if either (i) they are
in default of Section 5.2(b) other than as a result of the death,
incapacity, or capture and detention of Mr. Penske, or (ii) one or
both of the PCP Entities has requested that the Company repurchase all
or a portion of its Restricted Securities pursuant to the terms of the
Securities Purchase Agreement.
SECTION 2.7. REPLACEMENT DIRECTORS . During such time as the
right of either the PCP Entities or Trace to nominate directors is reduced or
suspended pursuant to Section 2.5 or 2.6, the Restricted Stockholders shall use
their reasonable best efforts to have the successors to such directors both:
(a)be selected by a majority of the remaining Board of Directors,
- 6 -
excluding the director whose position is no longer entitled to be designated by
Trace or the PCP Entities, and (b) not be Affiliates of the PCP Entities and
their Affiliates (other than the Company and its subsidiaries).
SECTION 2.8. RESIGNATION OF PCP DIRECTORS . Upon exercise by
the PCP Entities of their right pursuant to Section 7.2 or 7.4 of the
Securities Purchase Agreement, the PCP Entities shall cause all of the PCP
Directors to immediately resign as members of the Board of Directors of the
Company.
SECTION 2.9. TERMINATION OF ARTICLE II. The provisions
contained in this Article II shall terminate and be of no further effect from
and after the third anniversary of the Initial Closing Date.
ARTICLE III.
STANDSTILL PROVISIONS
SECTION 3.1. STANDSTILL PROVISIONS. Subject to Section 3.2,
at any time prior to the third anniversary of the Initial Closing Date, each
Restricted Stockholder shall not, and shall cause its Affiliates not to, either
alone or as part of a "group" (as such term is used in Section 13d-5 (as such
rule is currently in effect) of the Exchange Act), directly or indirectly:
(a) acquire or seek to acquire, by purchase or otherwise,
ownership (including, but not limited to, Beneficial Ownership) of (i)
any capital stock of the Company, or direct or indirect rights
(including convertible securities) or options to acquire such capital
stock or (ii) any of the assets or businesses of the Company, or
direct or indirect rights or options to acquire such assets or
businesses;
(b) offer, seek or propose to enter into any transaction of
merger, consolidation, sale of substantial assets or any other
business combination involving the Company or any of its Affiliates,
whether or not any parties other than such Restricted Stockholder and
its Affiliates are involved;
(c) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act) or become a "participant" in
any "election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any voting
securities of the Company of any of its
- 7 -
Affiliates, except as set forth in Article II of this Agreement;
(d) initiate or propose any stockholder proposals for
submission to a vote of stockholders, whether by action at a
stockholder meeting or by written consent, with respect to the Company
or any of its Affiliates, or except as provided in this Agreement
propose any person for election to the Board of Directors of the
Company;
(e) disclose to any third party, or make any filing under the
Exchange Act, including, without limitation, under Section 13(d)
thereof, disclosing, any intention, plan or arrangement inconsistent
with the foregoing;
(f) form, join or in any way participate in a group to take
any actions otherwise prohibited by the terms of this Agreement;
(g) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing; or
(h) make any public announcement with respect to any of the
foregoing.
SECTION 3.2. EXCEPTIONS TO THE STANDSTILL PROVISIONS.
Notwithstanding the foregoing, the provisions of Section 3.1 shall not
prohibit:
(a) any transaction by a Restricted Stockholder approved by
either (i) a majority of the members of the Board of Directors who are
neither designated by such Restricted Stockholder nor otherwise
affiliated with such Restricted Stockholder, or (ii) a majority of the
stockholders of the Company other than such Restricted Stockholder and
its Affiliates;
(b) in the case of the PCP Entities, the acquisition of
securities pursuant to the terms of the Securities Purchase Agreement;
(c) in the case of the PCP Entities, Harvard and Apollo, the
acquisition of securities or of Beneficial Ownership of securities if,
after giving effect to such acquisition, the Beneficial Ownership of
such Restricted Stockholder in the Company is less than or equal to
49%;
(d) in the case of the PCP Entities, a tender offer for all,
but not less than all, of the outstanding Common Stock of the Company
or a merger with or into the Company;
(e) the granting by the Board of Directors of options to
Affiliates of Restricted Stockholders; or
- 8 -
(f) the exercise of stock options.
ARTICLE IV.
TRANSFER RESTRICTIONS
SECTION 4.1. RESTRICTIONS ON TRANSFER OF RESTRICTED
SECURITIES. Until the third anniversary of the Initial Closing Date, neither of
the PCP Entities nor Trace shall Transfer any of its Restricted Securities
except:
(a) as part of a merger, consolidation or amalgamation of the
Company or a tender offer for Common Stock of the Company which is
open to all stockholders of the Company;
(b) in the case of a PCP Entity, a Transfer of Common Stock
in compliance with Section 4.2 of this Agreement to a Transferee that
has agreed to comply with the provisions of Section 4.2.
(c) to a Permitted Transferee who shall have become a party
to this Agreement by executing a signature page hereto and delivering
such signature page to the Company and the other Restricted
Stockholders, which execution and delivery shall constitute an
agreement by such Permitted Transferee that it and the Restricted
Securities that it acquires shall be bound by and entitled to the
benefits of this Agreement;
(d) pursuant to a Brokers' Transaction (as such term is
defined in Rule 144(g) under the Securities Act) or pursuant to an
underwritten public offering of Common Stock; or
(e) to a pledgee of the Restricted Securities pursuant to a
pledge (or other security) agreement existing as of the date of this
Agreement.
SECTION 4.2. TAG-ALONG RIGHTS
(a) In the event either or both of the PCP Entities desires
to Transfer any Restricted Securities pursuant to Section 4.1(b) at
any time prior to the third anniversary of the Initial Closing Date,
such PCP Entity shall notify Apollo and Harvard (the "Tag-Along
Stockholders") in writing, of such proposed Transfer and its terms and
conditions (the "Tag-Along Notice").
(b) Within ten (10) Business Days of the date of the
Tag-Along Notice, each Tag-Along Stockholder shall notify the PCP
Entities if it elects to participate in such Transfer. Any such
Tag-Along Stockholder that fails to notify either PCP Entity within
such ten (10) Business Day period shall be deemed to have waived its
rights to
- 9 -
participate in such Transfer. Each such Tag-Along Stockholder that so
notifies the PCP Entities shall have the right to Transfer, at the
same price per share of Common Stock and on the same terms and
conditions as the applicable PCP Entity or Entities, an amount of
shares equal to the shares the Transferee actually proposes to
purchase multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock issued and owned by such Tag-Along
Stockholder and the denominator of which shall be the aggregate number
of shares of Common Stock issued and owned by such PCP Entity (or both
PCP Entities, if both are selling pursuant to such transaction) and
each other Tag-Along Stockholder exercising its rights under this
Section (assuming for purposes of calculating such fraction the
conversion of all convertible securities and the exercise of all
options and warrants held by the PCP Entities and each other Tag-Along
Stockholder exercising its rights under this Section).
SECTION 4.3. TRANSFEREES; NONCOMPLYING TRANSFERS. In the
event of any purported Transfer of any Restricted Securities in violation of
Article IV of this Agreement, such purported Transfer shall be void and of no
effect, and no dividend of any kind whatsoever nor any distribution pursuant to
liquidation or otherwise shall be paid by the Company to the purported
transferee in respect of such Restricted Securities (all such dividends and
distributions being deemed waived), and the voting rights of such Restricted
Securities, if any, on any matter whatsoever shall remain vested in the
Transferor, and the Transferor shall not be relieved of any of its obligations
hereunder as the holder of such Restricted Securities. In the event of such a
non-complying Transfer, the Company shall not Transfer any such Restricted
Securities on its books or recognize the purported Transferee as a stockholder,
for any purpose, until all applicable provisions of this Agreement have been
complied with.
SECTION 4.4. RESTRICTIONS ON TRANSFERS OF INTERESTS IN THE
PCP ENTITIES. Until the second anniversary of the Initial Closing Date:
(a) Each of the PCP Entities shall not register or permit any
Transfer of the membership interests in such entity by Penske
Corporation or Penske Capital Partners, L.L.C., except pursuant to a
pro rata Transfer by all of the members of interests valued at up to
$15 million to certain members of the Company's management (a
"Management Incentive Transfer").
(b) Penske Corporation and Penske Capital Partners, L.L.C.
each agrees not to Transfer any interest in the PCP Entities or
Restricted Securities, except for a Management Incentive Transfer.
- 10 -
ARTICLE V.
CERTAIN COVENANTS
SECTION 5.1. LEGEND ON CERTIFICATES. Each certificate for
Restricted Securities of PCP shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED BY THAT CERTAIN STOCKHOLDERS AGREEMENT, BY AND
AMONG UNITED AUTO GROUP, INC., TRACE INTERNATIONAL HOLDINGS,
INC., INTERNATIONAL MOTOR CARS GROUP I, L.L.C., INTERNATIONAL
MOTOR CARS GROUP II, L.L.C., AIF II, L.P. AND AENEAS VENTURE
CORPORATION, A COUNTERPART OF WHICH STOCKHOLDERS AGREEMENT
HAS BEEN PLACED ON FILE BY THE COMPANY AT ITS PRINCIPAL PLACE
OF BUSINESS AND ITS REGISTERED OFFICE. A COPY OF SUCH
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY
THE COMPANY TO THE RECORD HOLDER HEREOF UPON WRITTEN REQUEST
TO THE COMPANY AT THE PRINCIPAL PLACE OF BUSINESS OF THE
COMPANY."
SECTION 5.2. ▇▇▇▇▇ ▇▇▇▇▇▇ TO SERVE AS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER.
(a) On the Initial Closing Date, the Restricted Stockholders
shall use their reasonable best efforts to have ▇▇▇▇▇ ▇▇▇▇▇▇ appointed
as Chairman and Chief Executive Officer of the Company.
(b) From and after the Initial Closing Date, the PCP Entities
shall cause ▇▇▇▇▇ ▇▇▇▇▇▇:
(i) to serve as the Chairman of the Company until
the third anniversary of the Second Closing Date and as Chief
Executive Officer of the Company until the second anniversary
of the Second Closing Date; provided, however, such
obligation shall cease if pursuant to Sections 2.5 or 2.6,
PCP Directors shall no longer constitute a majority of the
Company's Board of Directors, and provided further, that upon
exercise by the PCP Entities of their right pursuant to
Section 7.2 or 7.4 of the Securities Purchase Agreement,
▇▇▇▇▇ ▇▇▇▇▇▇ shall promptly, but in no event later than the
Business Day immediately following such exercise, resign as
Chairman, as a Director and as Chief Executive Officer;
(ii) to receive compensation payable by the Company
no greater than: (x) salary of $1 per annum, (y) a bonus
determined by the Compensation Committee of the Board of
Directors, and (z) options for 400,000 shares of Common Stock
with an exercise price of $10.00
- 11 -
per share to be granted on the Second Closing Date. Such
options shall vest in equal installments over a three year
period from and after the Initial Closing Date, so long as
Mr. Penske continues to serve as Chairman of the Board of
Directors.
SECTION 5.3. APPROVAL OF COMPANY ACTION UNDER THE SECURITIES
PURCHASE AGREEMENT. From and after the Initial Closing Date, all consents,
waivers, amendments or other actions on the part of the Company under the
Securities Purchase Agreement and the other agreements with the PCP Entities
contemplated by the Securities Purchase Agreement shall be undertaken under the
direction of a majority of the Board of Directors (excluding for such purposes
the PCP Directors and any other directors Affiliated with either PCP Entity).
SECTION 5.4. TRACE SHELF REGISTRATION STATEMENT.
(a) From the date hereof through the third anniversary of the
Initial Closing Date, the Company shall use its reasonable best
efforts to maintain effective a registration statement relating to the
sale by Trace of its Restricted Securities, including, without
limitation, filing accountants' consents and updating the disclosure
for material developments.
(b) Trace shall reimburse the Company for its reasonable
out-of-pocket expenses incurred in connection with keeping such
registration statement effective.
SECTION 5.5. FURTHER ASSURANCES. Each of the parties hereto
shall use commercially reasonable efforts to do such additional things and
execute such documents as are reasonably necessary or proper to carry out and
effectuate the intent of this Agreement or any part hereof.
ARTICLE VI.
MUTUAL REPRESENTATIONS AND WARRANTIES
Each of the parties hereto represents and warrants to the
others as follows:
SECTION 6.1. ORGANIZATION. It is duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation,
and has all requisite power and authority to own, lease and operate its assets
and properties and to conduct its business as currently being conducted.
SECTION 6.2. AUTHORIZATION, VALIDITY AND ENFORCEABILITY. It
has full power and authority to execute, deliver and perform its obligations
under this Agreement. The execution, delivery and performance by it of this
Agreement and
- 12 -
the consummation by it of the transactions contemplated hereby have been duly
authorized by its board of directors or other governing body and no other
proceedings on its part are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by it, and constitutes the legal, valid and binding obligation of it,
enforceable against it in accordance with the terms hereof, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting rights of creditors
generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
SECTION 6.3. NO VIOLATION OR BREACH. Except as set forth on
Schedule 6.3, the execution, delivery and performance by it of this Agreement
and the consummation of the transactions contemplated hereby, do not and will
not conflict with, result in a violation or breach of, constitute a default (or
an event which with the giving of notice or the lapse of time or both would
constitute a default) or give rise to any right of termination or acceleration
of any right or obligation of it under, or result in the creation or imposition
of any lien, mortgage, pledge, security interest, claim, right of first refusal
or other limitation on transfer or other encumbrance upon any of its Restricted
Securities by reason of the terms of, (a) its memorandum of association,
certificate of incorporation, by-laws or other charter or organizational
document, (b) any contract, agreement, lease, license, mortgage, note, bond,
debenture, indenture or other instrument or obligation to which it is a party
or by or to which it or its assets or properties may be bound or subject, (c)
any order, writ, judgment, injunction, award, decree, law, statute, rule or
regulation applicable to it or (d) any license, permit, order, consent,
approval, registration, authorization or qualification with or under any
governmental agency, other than in the case of clauses (b), (c) or (d) above
any conflict, violation, breach or default which would not, individually or in
the aggregate together with all other such conflicts, violations, breaches or
defaults, have a material adverse effect on it or have a material adverse
effect on its ability to perform its obligations, or consummate the
transactions contemplated, hereunder.
SECTION 6.4. BENEFICIAL OWNERSHIP OF COMMON STOCK. As of the
Initial Closing Date, such Restricted Stockholder Beneficially Owns the shares
of Common Stock set forth opposite its name on Schedule 6.4.
ARTICLE VII.
TERM
SECTION 7.1. TERM. This Agreement shall commence on the date
hereof, and shall terminate on the earliest of (a) the
- 13 -
termination of the Securities Purchase Agreement, (b) in the event that the
Second Closing Date does not occur on or prior to December 31, 1999, January 1,
2000 and (c) December 31, 2009. This Agreement shall terminate with respect to
a Restricted Stockholder at such time as it ceases to Beneficially Own any
Restricted Securities.
SECTION 7.2. EFFECTS OF TERMINATION. Upon termination of this
Agreement, this Agreement (other than Section 8.9) shall thereafter become void
and have no effect, and no party hereto shall have any liability or obligation
to any other party hereto in respect of this Agreement.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
SECTION 8.1. SURVIVAL. All of the representations,
warranties, covenants, and agreements of the parties contained in this
Agreement shall survive the Initial Closing Date and the Second Closing Date
and shall continue in full force and effect forever thereafter.
SECTION 8.2. NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one Business Day after the date when sent to the recipient by
reputable express courier service (charges prepaid), or (d) seven Business Days
after the date when mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties at the addresses indicated below:
If to Apollo Apollo Advisors, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Harvard Aeneas Venture Corporation
c/o Charlesbank Capital Partners, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
- 14 -
With a copy to: Ropes & ▇▇▇▇
(which shall not One International Place
constitute notice) ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to either
PCP Entity
c/o Penske Capital Partners, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: Fried, Frank, Harris, ▇▇▇▇▇▇▇ &
(which shall not ▇▇▇▇▇▇▇▇
constitute notice) ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Trace: Trace International Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
(which shall not ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
constitute notice) ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section 8.2.
SECTION 8.3. AMENDMENTS. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner except
by an instrument in writing duly executed by all of the parties hereto.
SECTION 8.4. ASSIGNMENT AND PARTIES IN INTEREST.
(a) Except as provided in Section 4.1(c), neither this
Agreement nor any of the rights, duties, or obligations of
- 15 -
any party hereunder may be assigned or delegated (by operation of law
or otherwise) by any party hereto except with the prior written
consent of the other parties hereto.
(b) This Agreement shall not confer any rights or remedies
upon any person or entity other than the parties hereto and their
respective permitted successors and assigns; provided, however, that
(i) the rights set forth in Article II hereof shall not inure to the
benefit of any transferee (other than a Permitted Transferee) without
the prior written consent of each Restricted Stockholder (other than
the Transferor) and (ii) the provisions of this Agreement shall not be
binding on any Transferee of Restricted Securities except as set forth
in Sections 4.1(c) and 4.2.
SECTION 8.5. EXPENSES. Each party to this Agreement shall
bear all of its legal, accounting, investment banking, and other expenses
incurred by it or on its behalf in connection with the transactions
contemplated by this Agreement, whether or not such transactions are
consummated.
SECTION 8.6. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes and is in full substitution for any and all prior
agreements and understandings among them relating to such subject matter, and
no party shall be liable or bound to the other party hereto in any manner with
respect to such subject matter by any warranties, representations, indemnities,
covenants, or agreements except as specifically set forth herein.
SECTION 8.7. DESCRIPTIVE HEADINGS. The descriptive headings
of the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 8.8. COUNTERPARTS. For the convenience of the
parties, any number of counterparts of this Agreement may be executed by any
one or more parties hereto, and each such executed counterpart shall be, and
shall be deemed to be, an original, but all of which shall constitute, and
shall be deemed to constitute, in the aggregate but one and the same
instrument.
SECTION 8.9. GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable to
contracts made and performed therein.
(b) Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of
the courts of the State of New York and the
- 16 -
United States of America located in the County of New York for any
action or proceeding arising out of or relating to this Agreement and
the transactions contemplated hereby (and agrees not to commence any
action or proceeding relating thereto except in such courts), and
further agrees that service of any process, summons, notice or
document by U.S. registered mail to is respective address set forth in
Section 8.2 shall be effective service of process for any action or
proceeding brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any action or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of New York or the United States of America located in the
County of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 8.10. SEVERABILITY. In the event that any one or more
of the provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any
such invalid or unenforceable term or provision, the parties hereto intend that
there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
SECTION 8.11. SPECIFIC PERFORMANCE.
(a) The parties hereto acknowledge and agree that irreparable
damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or was
otherwise breached, and further acknowledge and agree that money
damages are an inadequate remedy for the breach of this Agreement
because of the difficulty of ascertaining the amount of damage that
would be suffered in the event of such breach. The parties hereto
accordingly agree that they each shall be entitled to obtain specific
performance of any provision of this Agreement and injunctive or other
equitable relief to prevent or cure breaches of any provision of this
Agreement, this being in addition to any other remedy to which they
may be entitled by law or equity.
(b) The parties hereto further agree that they shall not be
permitted or have the right to terminate or suspend performance of any
provision of this Agreement, it being agreed that all provisions of
this Agreement shall continue
- 17 -
and be specifically enforceable in all events and under all
circumstances regardless of any events, occurrences, actions or
omissions before or after the date hereof. In furtherance of the
foregoing, the parties hereto agree that they shall not be permitted
to, and shall not, bring any claim seeking to terminate or suspend
performance of any provision of this Agreement or seeking any
determination that any provision of this Agreement (including, without
limitation, this Section 8.11) is invalid, inapplicable or
unenforceable.
[The remainder of this page intentionally left blank.]
- 18 -
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AIF II, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
AENEAS VENTURE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
INTERNATIONAL MOTOR CARS GROUP, I, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
INTERNATIONAL MOTOR CARS GROUP, II, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
- 19 -
TRACE INTERNATIONAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Senior Vice President
UNITED AUTO GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
Solely for the purposes
of Section 4.4 hereof:
PENSKE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
PENSKE CAPITAL PARTNERS, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President &
Chief Executive Officer
- 20 -
SCHEDULE 6.3
CONTRAVENTIONS
Trace -- Trace has pledged its Common Stock in the Company to the Bank of
Nova Scotia.
- 21 -
SCHEDULE 6.4
BENEFICIAL OWNERSHIP AS OF INITIAL CLOSING DATE
RESTRICTED STOCKHOLDER BENEFICIAL OWNERSHIP
Apollo 1,843,656
Harvard 2,843,656
PCP I 0 (*)
PCP II 0 (*)
Trace 4,016,110
----------------------------------
(*) Without giving effect to the acquisition of 2,906.743 shares of Series
A Preferred Stock by PCP-I and 821.1266 shares of Series A Preferred
Stock by PCP-II, in each case in connection with the Initial Closing.
- 22 -