<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-1)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)
United Auto Group, Inc.
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(Name of Issuer)
Voting Common Stock, $0.0001 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
909440109
--------------------------
(CUSIP Number)
Tami E. Nason, Esq. COPY TO: Christopher A. Klem, Esq.
Charlesbank Capital Partners, LLC Ropes & Gray
600 Atlantic Avenue One International Place
Boston, MA 02210 Boston, MA 02110
(617) 619-5400 (617) 951-7410
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 3, 1999
---------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
<PAGE>
SCHEDULE 13D
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CUSIP NO. 909440109 PAGE 2 OF 6 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charlesbank Capital Partners, LLC
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(a) [_]
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(b) [_]
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SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Massachusetts
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SOLE VOTING POWER
7
NUMBER OF 2,843,656 shares
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
----
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,843,656 shares
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
----
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,843,656 shares
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [X]
CERTAIN SHARES*
12
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
13.4%
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TYPE OF REPORTING PERSON*
14
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
------------
United Auto Group, Inc.
-----------------------
Amendment No. 2
---------------
This Amendment No. 2 hereby amends the initial Schedule 13D filed on July
10, 1998 and Amendment No. 1 to the initial Schedule 13D filed on April 22,
1999. Terms used but not defined in this Amendment No. 2 have the meanings
defined in the initial Schedule 13D and Amendment No. 1 to the initial Schedule
13D.
Item 4. Purpose of Transaction.
----------------------
Item 4 is amended and supplemented be adding the following:
The Initial Closing under the Purchase Agreement was held on May 3, 1999.
In connection with the Initial Closing and pursuant to the Stockholders' Consent
Agreement, AIF, Aeneas, the Purchaser, Trace and the Issuer entered into a
Stockholders Agreement.
For a summary of the Stockholders Agreement, see Item 6, which is hereby
incorporated into this Item 4 by reference in its entirety.
Except as described above, Charlesbank does not have any plans or proposals
which relate to or would result in any of the actions set forth in parts (a)
through (j) of Item 4.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
------------------------------------------------------------------------
the Securities of the Issuer.
-----------------------------
Item 6 is amended and supplemented by adding the following thereto:
Stockholders Agreement: Pursuant to the Stockholders Agreement, dated May 3,
1999, among AIF, Aeneas, the Purchaser, Trace and the Issuer, Aeneas has agreed
that it will use its reasonable best efforts to (i) from the Initial Closing
through the Second Closing, cause the Issuer's Board to consist of three members
nominated by the Purchaser (one of the three members to be Roger Penske), one
member to be nominated by Trace, one member to be the Issuer's Chief Operating
Officer (or in his absence, another person designated by the independent
directors) and two members to be independent directors; (ii) on the Initial
Closing, have Roger Penske appointed as the Issuer's Chairman and Chief
Executive Officer; (iii) prior to the Second Closing, expand the size of the
Board to nine members and nominate for election to the Board by the Issuer's
stockholders, two members designated by the Purchaser; (iv) on the Second
Closing, fill the vacancies created by such expansion of the Board with the
directors elected by the stockholders; and (v) from the earlier of the first
meeting of the stockholders following the Second Closing and the first vacancy
on the Board following the Second Closing, cause the Board to consist of five
members designated by the Purchaser (including Roger Penske), one member
designated by Trace and three independent directors. The Stockholders Agreement
also provides for, among other things, the composition of certain committees of
the Board, restrictions on the acquisition or disposition of shares of the
Issuer, restrictions on participation in certain types of transactions in
connection with the Issuer and "tag along" rights with respect to sales of the
Issuer's stock by the Purchaser. The foregoing summary of the Stockholders
Agreement is qualified in its entirety by reference to the Stockholders
Agreement, a copy of which is attached as Exhibit D and is incorporated herein
by reference.
Page 3 of 6 Pages
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Item 7. Material to be Filed as Exhibits.
--------------------------------
Item 7 is amended in its entirety to read as follows:
Exhibit A -- Information concerning Reporting Person's managing members./*/
Exhibit B -- Stockholder Voting Agreement, dated April 12, 1999, among Aeneas
Venture Corporation, International Motor Cars Group I, L.L.C. and
International Motor Cars Group II, L.L.C./**/
Exhibit C -- Stockholders' Consent Agreement, dated as of April 12, 1999,
among Trace International Holdings, Inc., AIF II, L.P., Aeneas
Venture Corporation and the Issuer./**/
Exhibit D -- Stockholders Agreement, dated as of May 3, 1999, among AIF II,
L.P., Aeneas Venture Corporation, International Motor Cars Group
I, L.L.C., International Motor Cars Group II, L.L.C., Trace
International Holdings, Inc. and the Issuer.
- --------------------
/*/ Previously filed with the initial Schedule 13D on July 10, 1998.
/**/ Previously filed with Amendment No. 1 to the initial Schedule 13D on April
22, 1999.
Page 4 of 6 Pages
<PAGE>
Signature
---------
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: May 6, 1999
CHARLESBANK CAPITAL PARTNERS, LLC
By: /s/ Tami E. Nason
--------------------------------------
Name: Tami E. Nason
Title: Vice President, Legal
Page 5 of 6 Pages
<PAGE>
EXHIBIT INDEX
- -------------
Exhibit
Number Description
- ------- -----------
A Information Concerning Reporting
Person's Managing Members/*/
B Stockholder Voting Agreement, dated
April 12, 1999, among Aeneas Venture
Corporation, International Motor Cars
Group I, L.L.C. and International
Motor Cars Group II, L.L.C./**/
C Stockholders' Consent Agreement,
dated as of April 12, 1999, among
Trace International Holdings, Inc.,
AIF II, L.P., Aeneas Venture
Corporation and the Issuer./**/
D Stockholders Agreement, dated as of
May 3, 1999, among AIF II, L.P.,
Aeneas Venture Corporation,
International Motor Cars Group I,
L.L.C., International Motor Cars
Group II, L.L.C., Trace International
Holdings, Inc. and the Issuer.
__________________
/*/ Previously filed with the initial Schedule 13D on July 10, 1998.
/**/ Previously filed with Amendment No. 1 to the initial Schedule 13D on April
22, 1999.
Page 6 of 6 Pages
<PAGE>
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
================================================================================
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TABLE OF CONTENTS
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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. Roger Penske 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
</TABLE>
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<TABLE>
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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
</TABLE>
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<PAGE>
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.
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"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
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such person; provided that such corporation, partnership or 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;
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(c) "or" is not exclusive; and (d) words in 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) Roger Penske, 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
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Directors with the directors elected by the stockholders.
(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) Roger Penske, 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) Roger Penske 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
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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 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:
<TABLE>
<CAPTION>
If such Adjusted Beneficial
Ownership is equal to or No. of PCP Directors to be
greater than: but less than: designated thereafter
- ------------- -------------- ---------------------
<S> <C> <C>
17.5% 20.0% 4
15.0% 17.5% 3
12.5% 15.0% 2
10.0% 12.5% 1
</TABLE>
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,
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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, 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
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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 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
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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
(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").
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(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 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").
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(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.
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. Roger Penske 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 Roger Penske appointed as
Chairman and Chief Executive Officer of the Company.
(b) From and after the Initial Closing Date, the PCP Entities shall
cause Roger Penske:
(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, Roger Penske
shall promptly, but in no event later than the Business Day
immediately following such exercise,
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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 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
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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 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
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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 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.
1999 Avenue of the Stars
Los Angeles, CA 90067
Attention: Michael Weiner
Telecopy: (310) 201-4166
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If to Harvard Aeneas Venture Corporation
c/o Charlesbank Capital Partners,
LLC
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
Attention: Mark A. Rosen
Facsimile No. (617) 619-5402
With a copy to: Ropes & Gray
(which shall not One International Place
constitute notice) Boston, MA 02110
Attention: Larry Jordan Rowe
Facsimile No. (617) 951-7050
If to either
PCP Entity
c/o Penske Capital Partners, L.L.C.
399 Park Avenue
New York, NY 10022
With a copy to: Fried, Frank, Harris, Shriver &
(which shall not Jacobson
constitute notice) One New York Plaza
New York, NY 10004
If to Trace: Trace International Holdings, Inc.
375 Park Avenue
11th Floor
New York, NY 10152
Attention: Philip N. Smith, Jr.
Facsimile No.: (212) 593-1363
If to the Company United Auto Group, Inc.
375 Park Avenue
New York, NY 10152
Attention: Philip N. Smith, Jr., Esq.
Telecopy: (212) 593-1303
With a copy to: Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) New York, NY 10019
Attention: Maurice M. Lefkort, Esq.
Telecopy: (212) 728-8111
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.
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<PAGE>
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 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.
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<PAGE>
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 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
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<PAGE>
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 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.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AIF II, L.P.
/s/ John J. Hannan
By:__________________________
Name: John J. Hannan
Title: Authorized Signatory
AENEAS VENTURE CORPORATION
/s/ Michael R. Eisenson
By:__________________________
Name: Michael R. Eisenson
Title: Authorized Signatory
INTERNATIONAL MOTOR CARS GROUP, I, L.L.C.
/s/ James A. Hislop
By:__________________________
Name: James A. Hislop
Title: Chairman
INTERNATIONAL MOTOR CARS GROUP, II, L.L.C.
/s/ James A. Hislop
By:__________________________
Name: James A. Hislop
Title: Chairman
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<PAGE>
TRACE INTERNATIONAL HOLDINGS, INC.
/s/ Philip N. Smith, Jr.
By:__________________________
Name: Philip N. Smith, Jr.
Title: Senior Vice President
UNITED AUTO GROUP, INC.
/s/ James Davidson
By:__________________________
Name: James Davidson
Title: Executive Vice President
Solely for the purposes
of Section 4.4 hereof:
PENSKE CORPORATION
/s/ James A. Hislop
By:__________________________
Name: James A. Hislop
Title: Director
PENSKE CAPITAL PARTNERS, L.L.C.
/s/ James A. Hislop
By:__________________________
Name: James A. Hislop
Title: President and Chief Executive Officer
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Schedule 6.3
Contraventions
Trace -- Trace has pledged its Common Stock in the Company to the Bank of Nova
Scotia.
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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
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(*) 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.
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