UNITED AUTO GROUP INC (Form: 10-K, Received: 03/29/2001 16:08:50)

________________________________________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

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

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 1-12297

UNITED AUTO GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

13400 Outer Drive West,

Detroit, Michigan

(Address of principal executive offices)

22-3086739

(I.R.S. Employer

Identification No.)

48239

(Zip Code)

Registrant’s telephone number, including area code (313) 592-7311

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


		Name of each Exchange
Title of each class		on which registered

Voting Common Stock, par value $0.0001 per share		New York Stock Exchange

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

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

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

The aggregate market value of the voting common stock held by non-affiliates as of March 23, 2001 was $151,886,521.

As of March 23, 2001, there were 23,317,192 shares of voting common stock outstanding.

Portions of the registrant’s proxy statement to be filed in connection with the annual meeting of stockholders, presently scheduled to be held on May 16, 2001, are incorporated by reference in Part III of this Form 10-K.

TABLE OF CONTENTS


PART I
	ITEM 1. BUSINESS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
	ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
New Accounting Pronouncements
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
PART IV
	ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Amended Credit Agreement
Purchase Agreement
Rights Agreement
Purchase Agreement
Rights Agreement
Amended Stockholder Agreement
Letter Agreement
Subsidiaries
Accoutants Consent
Accountants Consent

TABLE OF CONTENTS


Items			Page

PART I




	1.	Business		1




	2.	Properties		5




	3.	Legal Proceedings		5




	4.	Submission of Matters to a Vote of Security-Holders		5




PART II




	5.	Market for Registrant’s Common Equity and Related Stockholder Matters		6




	6.	Selected Consolidated Financial Data		6




	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7




	7A.	Quantitative and Qualitative Disclosures about Market Risk		14




	8.	Financial Statements and Supplementary Data		15




	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		15




PART III




	10.	Directors and Executive Officers of the Registrant		16




	11.	Executive Compensation		16




	12.	Security Ownership of Certain Beneficial Owners and Management		16




	13.	Related Party Transactions and Section 16(a) Beneficial Ownership Reporting Compliance		16




PART IV




	14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		17

PART I

ITEM 1. BUSINESS

Overview

United Auto Group, Inc. (“UAG” or the “Company”) is a leading operator of franchised automobile and light truck dealerships and related businesses. At the end of 2000, the Company operated franchises located in 17 states and Puerto Rico. In addition, the Company has an investment in three retail automotive dealerships in Brazil. As an integral part of its dealership operations, UAG also sells used vehicles. All of UAG’s franchised dealerships include integrated service and parts operations, which are an important source of recurring revenues. In addition, UAG dealerships market a complete line of aftermarket automotive products and services.

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

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

The following table sets forth information with respect to dealerships acquired by the Company during 2000:


	Date
Acquiree	Acquired		Locations	Franchises

Long Ford		1/00	Jacksonville, AR	Ford
Mercedes Benz of San Diego		2/00	San Diego, CA	Mercedes Benz
Huntersville Motors, Inc,		2/00	Huntersville, NC	Ford
Cavallino Ferrari		3/00	Phoenix, AZ	Ferrari
Jones Toyota-Volvo, Inc.		4/00	Little Rock, AR	Toyota
Motorcars Group		5/00	Bedford, OH	Mercedes Benz(2)/Infiniti(2)
Dellen Group		6/00	Indianapolis, IN	Oldsmobile/Lincoln-Mercury
Great Western Entities		7/00	Houston, TX	Honda(2)/GMC/Pontiac
Cerritos BPGMC		7/00	Cerritos, CA	Buick/Pontiac/GMC
Rinke Auto Group		10/00	Detroit, MI	Cadillac/Pontiac/ GMC/ Toyota
Gene Norris Honda		10/00	Mentor, OH	Honda
Continental Auto Group		10/00	Fairfield, CT	Mercedes Benz/Porsche/ Audi/ Volkswagen
Mel Farr Imports, Inc.		11/00	Bloomfield Hills, MI	Toyota
Volvo on Camelback		12/00	Phoenix, AZ	Volvo
Clark Toyota		12/00	Springdale, AR	Toyota

UAG purchases substantially all of its new car inventories directly from manufacturers. Each of the Company’s dealerships operates pursuant to a franchise agreement between the applicable manufacturer and the subsidiary of the Company that operates such dealership. In accordance with the individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of manufacturers to influence the operations of a dealership, or the loss of a franchise agreement, could have a negative impact on the Company’s operating results. Manufacturers allocate inventory based on the size and location of dealerships, but actual shipments result from negotiations with individual dealers. The Company

believes that larger dealers, such as UAG, are better positioned to secure favorable inventory shipments and optimize manufacturer allocations. UAG finances its inventory purchases through revolving credit arrangements known in the industry as floor plan facilities.

Business Strategy

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

Acquire and Integrate Profitable Dealership Operations

UAG seeks to selectively acquire dealerships with significant earnings growth potential. The Company principally targets dealerships or dealership groups with established records of profitability and with experienced management willing to remain in place. The Company focuses on opportunities in geographic markets with above-average projected population and job growth and attempts to create regional hubs of dealerships that will be able to share administrative and other functions to reduce costs.

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

Grow Higher-Margin Operating Businesses

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

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

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

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

Service and Parts. Each of UAG’s new vehicle dealerships offers a fully integrated service and parts department. The service and parts business provides an important recurring revenue stream to the Company’s dealerships, which may help to mitigate the effects of downturns in the automobile sales cycle. Unlike independent service shops or used car dealerships with service operations, UAG is qualified to perform work covered by manufacturer warranties. Since warranty service work is paid for by the manufacturer, consumers are motivated to service their vehicles at a dealership for the warranty period. In recent years, manufacturers have generally lengthened standard warranty coverage on new cars and introduced warranty coverage on used

cars, further enhancing customer retention opportunities in the service area. To increase the service and parts businesses, UAG dealerships have implemented programs to track maintenance records of customers and contact them regarding dealership promotions and maintenance schedules. In addition, the Company is actively marketing warranty-covered services to potential customers such as municipalities and corporations with large fleets of automobiles located near certain of its dealerships. The Company is able to offer repair services to such customers on a more efficient and less costly basis than such customers generally can perform themselves. The Company also believes that its market share will grow at the expense of independent mechanics’ shops, which may be unable to address the increased mechanical and electronic sophistication of today’s motor vehicles and the increased expenses of compliance with more stringent environmental regulations.

Collision repair centers

The Company currently owns 21 collision repair centers, each of which is operated as an integral part of a new vehicle franchise. In light of the recurring stream of referral work from the Company’s new vehicle franchises and the higher margins associated with repair center revenues, the Company has embarked on an effort to increase such revenues. As such, the Company is currently exploring the possibility of constructing several new regional repair centers to act as central collision repair centers in geographic hubs. If constructed, the Company believes that these centers may increase the recurring stream of non-vehicle sales, which may help to mitigate the effects on the Company of downturns in the automobile sales cycles.

Implement “Best Practices‘

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

Emphasize Customer Service

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

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

Competition

Automobile Dealerships

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

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

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

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

The Company competes against other franchised dealers to perform warranty repairs and against other automobile dealers, franchised and unfranchised service center chains, and independent garages for non-warranty repair and routine maintenance business. The Company competes with other automobile dealers, service stores and auto parts retailers in its parts operations. The Company believes that the principal competitive factors in parts and service sales are price, the use of factory-approved replacement parts, the familiarity with a manufacturer’s brands and models and the quality of customer service. A number of regional or national chains offer selected parts and services at prices that may be lower than the Company’s prices.

Employees and Labor Relations

As of December 31, 2000, UAG employed approximately 7,500 people, approximately 275 of whom are covered by collective bargaining agreements with labor unions. Relations with employees are considered by the Company to be satisfactory. The Company’s policy is to motivate its key managers through, among other things, variable compensation programs tied principally to dealership profitability and grants of stock options.

Environmental Matters

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

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

ITEM 2. PROPERTIES

The Company seeks to structure its operations so as to minimize the ownership of real property. As a result, the Company leases or subleases substantially all of its facilities, including dealerships and office space used for corporate activities. As of December 31, 2000, the Company has leases at the majority of its dealerships, which can include facilities for (i) new and used vehicle sales, (ii) vehicle service operations, (iii) retail and wholesale parts operations, (iv) body shop operations, (v) storage and (vi) general office use. Such leases are generally for a period of between five and twenty years and typically include renewal options for an additional five to ten years in favor of the Company. In addition, the Company leases office space in Detroit, MI and Secaucus, NJ for the Company’s administrative headquarters and other corporate related activities.

ITEM 3. LEGAL PROCEEDINGS

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

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

a) A Special Meeting of Stockholders (the “Meeting”) was held on December 13, 2000.

b) Proxies for the Meeting were solicited pursuant to regulation 14A under the Securities Exchange Act of 1934, as amended.

c) The following matter was voted upon at the Meeting:

1. Approval of an amendment to the Company’s Third Restated Certificate of Incorporation increasing the authorized shares of Common Stock from 40,000,000 to 80,000,000. The results of the vote follow:


For	Against		Abstain

15,587,679		1,097,230		980

PART II


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

The Company’s Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “UAG.” As of March 16, 2001, there were 106 holders of record of the Common Stock.

The following table sets forth the high and low sales prices as reported on the NYSE during each fiscal quarter during 2000 and 1999.

2000

?1999

Quarter Ended

High

Low

High

Low

March 31

3/8

7/16

1/2

13/16

June 30

1/2

7/8

3/4

1/2

September 30

11/16

9/16

3/16

1/8

December 31

3/16

1/8

1/16

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

The indentures governing the Company’s 11% Senior Subordinated Notes due 2007 (the “Notes”) limit the Company’s ability to pay dividends based on a formula, which takes into account, among other things, the Company’s consolidated net income.

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

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

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial and other data of the Company as of and for the five years in the period ended December 31, 2000. Such financial information has been derived from the Company’s consolidated financial statements. During the five year period, the Company made a number of acquisitions, each of which has been accounted for using the purchase method of accounting. Accordingly, the Company’s financial statements include the results of operations of the acquired dealerships from the date of acquisition. As a result, the Company’s period to period results of operations vary depending on the dates of such acquisitions. The selected consolidated financial data should be read in conjunction with the Company’s consolidated financial statements and related footnotes included elsewhere herein.

SELECTED CONSOLIDATED FINANCIAL DATA(1)(2)



	Years Ended December 31,

	2000			1999			1998(3)			1997(4)			1996


	(Dollars in thousand, except per share data)




Statement of Operations Data:




Auto Dealerships Total revenues	$	4,883,989		$	4,022,517		$	3,343,147		$	2,092,593		$	1,302,031




Gross profit		677,957			549,437			455,617			276,359			158,150




Income (loss) from continuing operations		34,000			26,710			13,378			(7,936	)		8,976




Net income (loss)		30,031			27,488			(797	)		(10,140	)		3,047




Income (loss) from continuing operations per diluted common share		1.16			1.01			0.64			(0.44	)		0.82




Net income (loss) per diluted common share		1.02			1.04			(0.04	)		(0.56	)		0.28




Other Auto Dealership Data:




Gross profit margin		13.9	%		13.7	%		13.6	%		13.2	%		12.1	%




New cars sold at retail		112,676			93,259			77,403			50,985			36,802




Used cars sold at retail		58,252			52,027			46,724			31,253			18,344



	As of December 31,

	2000		1999		1998		1997		1996


	(Dollars in thousands)




Balance Sheet Data:




Intangible assets, net	$	657,710	$	494,957	$	482,049	$	326,774	$	177,194




Total assets		1,755,895		1,279,337		1,184,194		971,064		525,373




Long-term debt, including current portion		419,177		228,924		313,021		248,531		16,565




Total stockholders’ equity		461,670		430,865		341,650		300,557		284,501


(1)	During 1998, the Company discontinued the auto finance business of its wholly owned subsidiary, United Auto Finance, Inc. (“UAF”). As a result, UAF no longer engages in the purchase or sale of automotive loans. Consequently, UAF has been reported as a discontinued operation for all periods presented. See footnotes to consolidated financial statements.

(2)	During 1997, the Company changed its method of accounting for new vehicle inventory from LIFO to the specific identification method. The effect of the change in accounting for new vehicle inventories was to increase net income and income before extraordinary item by $573 ($0.05 per diluted share) in 1996.

(3)	Includes a $12,550 pre-tax charge for estimated future repair costs under the terms of approximately 51,000 warranty and extended service contracts sold from January 1, 1997 to October 31, 1998. See footnotes to consolidated financial statements.

(4)	Includes a $31,660 charge recorded during 1997 to realign certain elements of the Company’s business.


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

General

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

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

parts and collision repair revenues include fees paid for repair and maintenance service, the sale of replacement parts and body shop repairs.

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

Also, the Company made a number of dealership acquisitions in 2000, 1999 and 1998. Each of these acquisitions has been accounted for using the purchase method of accounting and as a result, the Company’s financial statements include the results of operations of the acquired dealerships from the date of acquisition.

Results of Operations

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Revenues. Retail revenues, which exclude revenues relating to fleet and wholesale transactions, increased by $855.7 million, or 23.9%, from $3.6 billion to $4.4 billion. The overall increase in revenues is due primarily to: (i) a $196.1 million, or 6.2%, increase in retail revenues at dealerships owned prior to January 1, 1999 and (ii) dealership acquisitions made subsequent to January 1, 1999; partially offset by a decrease in revenues resulting from the divestiture of certain dealerships. The overall increase in retail revenues at dealerships owned prior to January 1, 1999 reflects 6.3%, 5.1%, 7.3% and 7.9% increases in new retail vehicle, used retail vehicle, finance and insurance and service and parts revenues, respectively. Revenues of $446.2 million from fleet and wholesale transactions were consistent with the prior year.

Retail sales of new vehicles, which exclude fleet sale transactions, increased by $593.0 million, or 26.4%, from $2.2 billion to $2.8 billion. The increase is due primarily to: (i) a $125.0 million, or 6.3%, increase at dealerships owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1999 is due primarily to a 4.0% increase in new retail unit sales and an increase in comparative average selling prices per vehicle. Aggregate retail unit sales of new vehicles increased by 20.8%, due principally to: (i) the net increase at dealerships owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by the decrease due to divested dealerships. The Company retailed 112,676 new vehicles (65.9% of total retail vehicle sales) during the year ended December 31, 2000, compared with 93,259 new vehicles (64.2% of total retail vehicle sales) during the year ended December 31, 1999. Fleet sales decreased $39.5 million, or 23.2%, versus the comparable prior year period due primarily to a 31.9% decrease in fleet unit sales.

Retail sales of used vehicles, which exclude wholesale transactions, increased by $142.3 million, or 18.5%, from $769.6 million to $912.0 million. The increase is due primarily to: (i) a $35.2 million, or 5.1%, increase at dealerships owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships. The increase at dealerships owned prior to January 1, 1999 is due primarily to a 1.5% increase in used retail unit sales and an increase in comparative average selling prices per vehicle. Aggregate retail unit sales of used vehicles increased by 12.0%, due principally to: (i) the net increase at dealerships owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by the decrease due to divested dealerships. The Company retailed 58,252 used vehicles (34.1% of total retail vehicle sales) during the year ended December 31, 2000 compared with 52,027 used vehicles (35.8% of total retail vehicle sales) during the year ended December 31, 1999. Wholesale revenues increased $45.2 million, or 16.7%, versus the comparable prior year period. The increase in wholesale revenues is due primarily to: acquisitions made subsequent to January 1, 1999, offset in part by (i) a $8.2 million, or 3.5%, decrease at dealerships owned prior to January 1, 1999 and (ii) a decrease resulting from the divestiture of certain dealerships.

Finance and insurance revenues increased by $27.4 million, or 16.5%, from $165.8 million to $193.1 million. The increase is due primarily to: (i) a $8.8 million, or 7.3%, increase at dealerships owned prior to

January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships.

Service and parts revenues increased by $93.0 million, or 23.3%, from $398.8 million to $491.8 million. The increase is due primarily to: (i) a $27.1 million, or 7.9%, increase at dealerships owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships.

Gross Profit. Retail gross profit, which excludes gross profit on fleet and wholesale transactions, increased $125.9 million, or 22.9%, from $549.6 million to $675.5 million. The increase in gross profit is due to: (i) a $30.6 million, or 6.5%, increase in retail gross profit at stores owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues on retail transactions decreased from 15.3% to 15.2%. Gross profit as a percentage of revenues for new vehicle retail, used vehicle retail, finance and insurance and service and parts revenues was 8.8%, 10.7%, 58.7%, and 43.8%, respectively, compared with 8.6%, 11.1%, 58.8% and 43.4% in comparable prior year period. The decrease in gross profit as a percentage of revenues on retail transactions is primarily attributable to: (i) an increase in the relative proportion of lower margin new vehicle sales revenues to total retail revenues during 2000 and (ii) decreases in gross profit margins on used retail vehicle revenues; partially offset by increases in gross profit margins on new retail vehicle and service and parts revenues and an increase in service and parts revenues as a percentage of total revenues. Aggregate gross profit on fleet and wholesale transactions increased by $2.6 million to $2.4 million.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $94.6 million, or 21.2%, from $445.1 million to $539.7 million. Such expenses as a percentage of revenue were 11.1%, which is consistent with the prior year, and decreased as a percentage of gross profit from 81.0% to 79.6%. The aggregate increase in selling, general and administrative expenses is due principally to: (i) a $26.6 million, or 7.3%, increase at stores owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999; partially offset by a decrease resulting from the divestiture of certain dealerships. The increase in selling, general and administrative expense at stores owned prior to January 1, 1999 is due in large part to increased selling expenses, including increased variable compensation, as a result of the 6.5% increase in retail gross profit over the prior year.

Floor Plan Interest Expense. Floor plan interest expense increased by $15.7 million, or 54.8%, from $28.7 million to $44.4 million. The increase in floor plan interest expense is due to: (i) a $6.0 million, or 24.3%, increase at stores owned prior to January 1, 1999 and (ii) acquisitions made subsequent to January 1, 1999, offset in part by decreases relating to (i) the effect of the Company’s interest rate swaps hedging floorplan interest rates and (ii) the divestiture of certain dealerships. The increase at stores owned prior to January 1, 1999 is due to an increase in inventory levels compared to 1999 and an increase in the Company’s weighted average borrowing rate during 2000.

Other Interest Expense. Other interest expense increased by $3.4 million, or 11.7%, from $29.3 million to $32.8 million. The increase is due primarily to increased acquisition related indebtedness, offset in part by (i) the effect of refinancing the Notes and certain other indebtedness with lower interest borrowings under the Company’s Credit Agreement, dated as of August 3, 1999, as amended and restated (the “Credit Agreement”) and (ii) the paydown of indebtedness with proceeds from equity offerings during 1999.

Income Taxes. Income taxes increased by $5.1 million from $21.4 million to $26.6 million. The increase is due to an increase in pre-tax income compared with 1999, offset in part by a decrease in the Company’s annual effective income tax rate. The decrease in the comparative effective rate is due primarily to a decrease in the Company’s effective state tax rate resulting from certain tax planning initiatives and a change in the geographic mix of the Company’s earnings.

Extraordinary Item. The $4.0 million extraordinary item in 2000 represents a loss resulting from the redemption premium paid for the Notes and the write-off of unamortized deferred financing costs relating to the Notes. The $0.7 million extraordinary item in 1999 represents the after tax gain arising from the

retirement of $49.0 million of Notes, offset in part by the write-off of a portion of the deferred financing costs relating to the Notes.

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

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

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

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

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

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

Gross Profit. Gross profit increased by $93.8 million, or 20.6%, from $455.6 million to $549.4 million. The increase in gross profit is due to (i) an aggregate 11.1% increase in retail gross profit at stores owned prior to January 1, 1998 and (ii) acquisitions made subsequent to January 1, 1998, offset by a decrease resulting from the divestiture of certain dealerships. Gross profit as a percentage of revenues increased from 13.6% to 13.7%. The increase in gross profit as a percentage of revenues is primarily attributable to (i) an increase in higher margin finance and insurance and service and parts revenues as a percentage of total revenues during 1999, (ii) the impact of a $12.6 million charge to gross profit in 1998 and (iii) improved gross profit margins on service and parts revenues, partially offset by (i) a decrease in gross profit margins on new and used retail vehicle sales revenues and (ii) a decrease in gross profit margins on finance and insurance revenues.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $70.1 million, or 18.7%, from $375.0 million to $445.1 million. Such expenses as a percentage of revenue decreased from 11.2% to 11.1%, and such expenses as a percentage of gross profit decreased from 82.3% to 81.0%. The aggregate increase in selling, general and administrative expense is due principally to (i) a 12.9%

increase at stores owned prior to January 1, 1998, (ii) acquisitions made subsequent to January 1, 1998, and (iii) $2.5 million of compensation expense arising from contractual commitments associated with the issuance by the Company of equity securities in the second and third quarters of 1999, offset by a decrease resulting from the divestiture of certain dealerships. The increase in selling, general and administrative expenses at stores owned prior to January 1, 1998 is due in large part to increased selling expenses, including increased variable compensation, as a result of the increase in gross profit compared with the prior year.

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

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

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

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

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

Liquidity and Capital Resources

Cash and Liquidity Requirements

The cash requirements of the Company are primarily for the acquisition of new dealerships, working capital and the improvement of existing facilities. Historically, these cash requirements have been met through issuances of equity and debt instruments and cash flow from operations. At December 31, 2000, the Company had working capital of $93.1 million.

In December 2000, the Company issued 2,139,535 shares of Common Stock to Penske Corporation for $10.75 per share. Aggregate proceeds, amounting to $23.0 million, were used to reduce debt. In February 2001, the Company issued 1,302,326 shares of Common Stock to Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. (together with Mitsui & Co., Ltd. “Mitsui”) for $10.75 per share. Aggregate proceeds, amounting to $14.0 million, were used to reduce borrowings under the Credit Agreement.

In 1999, the Company announced that its Board of Directors authorized the repurchase of up to 10% of the Company’s outstanding stock. Pursuant to such authorization, the Company repurchased 2,990,856 shares through open market purchases and negotiated transactions at an aggregate cost of $27.2 million.

variable and increase or decrease based on movements in prime or LIBOR interest rates. As of December 31, 2000, the Company’s outstanding borrowings under floor plan arrangements amounted to $689.7 million.

The Credit Agreement provides for up to $520.0 million in revolving loans to be used for acquisitions, working capital, the repurchase of common stock and general corporate purposes. In addition, the Credit Agreement provides for up to $186.0 million to be used to repurchase Notes. Loans under the Credit Agreement bear interest at either LIBOR plus 2.00% or LIBOR plus 2.25%, other than borrowings to repurchase Notes which bear interest at LIBOR plus 3.00%. The Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries and contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. Substantially all of the Company’s assets not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement. As of December 31, 2000, the Company’s outstanding borrowings under the Credit Agreement amounted to $390.6 million, $186.0 million of which was incurred in connection with the repurchase of Notes.

The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental indebtedness. Such indentures also limit the Company’s ability to pay dividends based on a formula which takes into account, among other things, the Company’s consolidated net income, and contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions. The Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries.

The indentures governing the Notes also contain a provision which requires the Company to offer to purchase all of the then outstanding Notes at a purchase price in cash equal to 101% of their principal amount in the event of a change in control. A change in control is deemed to have occurred if a purchaser, as defined, beneficially obtains 40% of the voting power, as defined, of the voting stock of the Company. During 2000, the Company repurchased approximately three million shares of Common Stock through open market purchases, negotiated transactions, or other means based upon market conditions. Such repurchase increased the beneficial ownership interest of Penske Capital Partners and certain affiliated entities above 40%. As a result, the Company made an offer to purchase the outstanding Notes at a change of control redemption price of 101% of face value. In May 2000, the Company completed the tender for the then outstanding Notes, pursuant to which it repurchased $147.4 million face value of Notes. As of December 31, 2000, $3.6 million of Notes remain outstanding.

On April 12, 1999, the Company and International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (“IMCG II”), Delaware limited liability companies controlled by Penske Capital Partners, L.L.C. (together, the “Purchaser”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Purchaser agreed to purchase (i) an aggregate of 7,903.124 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), (ii) an aggregate of 396.876 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and (iii) warrants (the “Warrants”) to purchase (a) 3,898,665 shares of Common Stock and (b) 1,101,335 shares of the Company’s non-voting Common Stock, par value $0.0001 per share (the “Non-Voting Common Stock”) for $83.0 million. The shares of Series A Preferred Stock and Series B Preferred Stock entitle the Purchaser to dividends at a rate of 6.5% per year, payable in kind for the first two years, except that IMCG II’s dividends will be paid in shares of Series B Preferred Stock. After two years, all such dividends are payable in cash. The Series A Preferred Stock is convertible into an aggregate of 7,903,124 shares of Common Stock and the Series B Preferred Stock is convertible into an aggregate of 396,876 shares of Non-Voting Common Stock. The Warrants are exercisable at a price of $12.50 per share for the thirty months following the date of issuance, and $15.50 per share thereafter until May 2, 2004. Pursuant to the anti-dilution provisions of the Warrants and as a result of

the issuance by the Company of 1,306,326 shares of Common Stock to Mitsui in February 2001 at $10.75 per share (the “Mitsui Transaction”), (a) the warrants to purchase 3,898,665 shares of the Company’s Common Stock were increased to 3,915,580 shares (3,935,884 shares after February 3, 2002) and (b) the warrants to purchase 1,101,335 shares of the Company’s Non-Voting Common Stock were increased to 1,106,113 shares (1,111,849 shares after February 3, 2002). In addition, as a result of the Mitsui Transaction the warrants are exercisable at a price of $12.45 per share for thirty months after August 1999 and $15.35 per share thereafter until May 2, 2004.

During 2000, cash flow from operations amounted to $46.6 million. Net cash used in investing activities during the year ended December 31, 2000 totaled $234.5 million, relating to dealership acquisitions and capital expenditures. Net cash provided by financing activities during the year ended December 31, 2000 totaled $170.3 million, relating to net borrowings of $179.6 million for acquisitions and $16.9 million relating to the issuance of Common Stock, offset in part by $26.2 million used to repurchase Common Stock. In addition, the Company has received distributions amounting to $5.3 million from United Auto Finance, Inc.

As of December 31, 2000, the Company had approximately $7.4 million of cash available to fund operations and future acquisitions. In addition, $200.4 million is available for borrowing under the Credit Agreement as of March 23, 2001. The Company is a holding company whose assets consist primarily of the indirect ownership of the capital stock of its operating subsidiaries. Consequently, the Company’s ability to pay dividends is dependent upon the earnings of its subsidiaries and their ability to distribute earnings and other advances and payments by such subsidiaries to the Company.

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

New Accounting Pronouncements

Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities , as amended and interpreted (“SFAS No. 133”), is effective for all fiscal years beginning after June 15, 2000. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Under SFAS 133, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. SFAS 133 defines requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value would be recorded in earnings immediately. If the derivative is designated in a fair-value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated in a cash-flow hedge, effective changes in the fair value of the derivative are recorded in other comprehensive income and recorded in the income statement when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. The Company adopted SFAS 133 on January 1, 2001 and recorded $10.2 million as a cumulative transition adjustment (reducing other comprehensive income) relating to an interest rate swap (cash flow hedge) the Company entered into prior to the adoption of SFAS 133. Pursuant to SFAS 133, the cumulative transition adjustment will be amortized and reflected as additional floorplan interest expense over the remaining life of the interest rate swap.

Cyclicality

Unit sales of motor vehicles, particularly new vehicles, historically have been cyclical, fluctuating with general economic cycles. During economic downturns, the automotive retailing industry tends to experience similar periods of decline and recession as the general economy. The Company believes that the industry is

influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, interest rates and credit availability.

Seasonality

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

Effects of Inflation

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

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

Forward Looking Statements

Certain portions of this Annual Report contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Annual Report or incorporated herein by reference regarding the Company’s financial position and business strategy may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations, some of which are described in greater detail elsewhere in this Annual Report, include the following: (i) the Company is subject to the influence of various manufacturers whose franchises it holds; (ii) the Company is leveraged and subject to restrictions imposed by the terms of its indebtedness; (iii) the Company’s growth depends in large part on the Company’s ability to manage expansion, control costs in its operations and consummate and consolidate dealership acquisitions; (iv) many of the Company’s franchise agreements impose restrictions on the transferability of the Company’s Common Stock; (v) the Company will require substantial additional capital to acquire automobile dealerships and purchase inventory; (vi) unit sales of motor vehicles historically have been cyclical; (vii) the automotive retailing industry is highly competitive; (viii) the automotive retailing industry is a mature industry; (ix) the Company’s success depends to a significant extent on key members of its management; and (x) the Company’s business is seasonal. In light of the foregoing, readers of this Annual Report are cautioned not to place undue reliance on the forward-looking statements contained herein. Additional information concerning these factors, or other factors which could cause the actual results to differ materially, is set forth elsewhere in this Annual Report and is contained from time to time in the Company’s other filings with the Securities Exchange Commission.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Rates. Substantially all of the Company’s business is conducted in the United States where its revenues and expenses are transacted in U.S. dollars. As a result, the majority of the Company’s results of operations are not subject to foreign exchange rate fluctuations. The Company does not hedge against foreign exchange rate fluctuations due to the limited financial exposure it faces with respect to such risk. In common with other automobile retailers, the Company purchases certain of its new car inventories from foreign manufacturers. The Company’s business in this regard is subject to certain risks,

including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions and foreign exchange rate volatility. The Company’s future results could be materially and adversely impacted by changes in these or other factors.

Interest Rates. The Company is exposed to market risk from changes in the interest rates on a significant portion of its outstanding indebtedness. Outstanding balances under the Credit Agreement bear interest at a variable rate based on a margin over LIBOR. Based on the amount outstanding as of March 23, 2001, a 100 basis point change in interest rates would result in an approximate $5.1 million change to the Company’s annual interest expense. Similarly, amounts outstanding under floor plan financing arrangements bear interest at a variable rate based on a margin over LIBOR or Prime. Based on the average aggregate outstanding amounts under floor plan financing arrangements during the year ended December 31, 2000, a 100 basis point change in interest rates would result in an approximate $5.5 million change to the Company’s annual floor plan interest expense. During 2000, the Company entered into swap agreements pursuant to which a notional $200.0 million of the Company’s floating rate debt has been exchanged for fixed rate debt for a period of five years. The fixed rate interest to be paid by the Company is based on LIBOR, as adjusted, and amounts to approximately 7.1%. For fixed rate debt including the Notes, certain seller financed promissory notes and obligations under certain capital leases, interest rate changes effect the fair market value of such debt, but do not impact the Company’s earnings or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


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

On May 19, 1999, the Company dismissed PricewaterhouseCoopers LLP, which served as the Company’s independent public accountants since 1992. The reports issued by PricewaterhouseCoopers LLP on the financial statements of the Company for prior fiscal years did not contain an adverse opinion nor a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. Based on the recommendation of the Audit Committee, the Company’s Board of Directors approved the decision to change independent public accountants. In connection with its audits for prior fiscal years and through May 19, 1999, there were no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference thereto in their report on the financial statements for such years or such interim periods.

The Company engaged Deloitte & Touche LLP as its new independent public accountants as of May 19, 1999. The Company’s Board of Directors approved this on May 19, 1999. During prior fiscal years preceding their appointment and through May 19, 1999, the Company did not consult with Deloitte & Touche LLP regarding either:

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

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

PART III

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

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


Name	Office	Occupation

Roger S. Penske	Director, Chairman and Chief Executive Officer of the Company	Chairman of the Board and Chief Executive Officer of Penske Corporation




Samuel X. DiFeo	Director, President and Chief Operating Officer of the Company	President and Chief Operating Officer of the Company




James A. Hislop	Director	President and Chief Executive Officer of Penske Capital Partners, LLC




Richard J. Peters	Director	President of Penske Corporation




Lucio A. Noto*	Director	Retired, Vice Chairman, Exxon Mobil Corporation




Eustace W. Mita	Director	Director and Executive Vice President, The Reynolds and Reynolds Company




Donald J. Hofmann, Jr.	Director	General Partner of J.P. Morgan Capital Partners, LLC




Marshall S. Cogan	Director	Consultant




Michael R. Eisenson	Director	Managing Director and Chief Executive Officer of Charlesbank Capital Partners, LLC




John J. Hannan	Director	Principal of Apollo Advisors, L.P. and Apollo Real Estate Advisors, L.P.




Ronald G. Steinhart	Director	Retired Chairman and Chief Executive Officer, Commercial Banking Group, Bank One Texas




Motokazu Yoshida	Director	Operating Officer, Motor Vehicles, Marine and Aerospace Group of Mitsui & Co., Ltd.




James R. Davidson	Executive Vice President — Finance of the Company	Executive Vice President — Finance of the Company




Robert H. Kurnick, Jr.	Executive Vice President — General Counsel and Secretary of the Company	Executive Vice President of Penske Corporation




Paul H. Walters	Executive Vice President — Administration of the Company	Executive Vice President — Administration of Penske Corporation


*	It is expected that Mr. Noto will be elected to the Board of Directors of the Company prior to the 2001 Annual Meeting of Stockholders.

PART IV


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

(a) Financial Statements

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

(b) Reports on Form 8-K.

The Company filed the following Current Reports on Form 8-K during the three month period ended December 31, 2000:

1. October 19, 2000, reporting under Items 7 and 9 (announcement of the Company’s earnings for the three and nine month periods ended September 30, 2000).

2. November 2, 2000, reporting under Items 7 and 9 (announcing the acquisition of the Audi, Volkswagen, Mercedes-Benz and Porsche dealerships formerly owned by Continental Motors, Inc. in Fairfield, Connecticut).


3.1(l)		Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999.
3.2(b)		Restated Bylaws.
4.1(b)		Specimen Common Stock Certificate.
4.2(f)		Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee.
4.4(f)		Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee.
4.5(k)		Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999.
10.1.1(b)		Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996.
10.1.4(b)		Form of Warrant.
10.1.8(b)		Stock Option Plan of the Company.
10.1.8.1(i)		Amendment to Stock Option Plan of the Company.
10.1.8.2(p)		First Amended and Restated Stock Option Plan of the Company.
10.1.13(b)		Non-employee Director Compensation Plan of the Company.
10.1.15(b)		Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo.
10.1.19.6(a)		Amended and Restated Credit Agreement, dated as of December 22, 2000, among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent.
10.2(k)		Non-Competition and Standstill Agreement, dated as of April 12, 1999 by and between Marshall S. Cogan and the Company.


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


10.15.1(e)		Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet-Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William B. Bradshaw, as amended May 31, 1997.
10.18.1(f)		Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended).
10.19.1.1(f)		Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein.
10.19.1.2(f)		Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein.
10.19.1.3(h)		Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein.
10.19.1.4(h)		Amendment to Agreement and Plan of Merger, dated January 31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein.
10.20.1(j)		Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.
10.20.2(j)		Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.3(j)		Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.
10.20.4(j)		Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.7(k)		Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.22(m)		Severance Agreement, dated August 2, 1999 between the Company and James Davidson.
10.23(m)		Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.
10.24(o)		CarsDirect.com, Inc. Series D Preferred Stock Purchase and Warrant Agreement.
10.25(o)		Operating Agreement dated May 12, 2000 between the Company, Penske Automotive Group, Inc and CarsDirect.com, Inc.
10.26(a)		Purchase Agreement by and between Penske Automotive Holdings Corp. and the Company dated as of December 22, 2000.
10.26.1(a)		Registration Rights Agreement among the Company and Penske Automotive Holdings Corp. dated as of December 22, 2000.
10.27(a)		Purchase Agreement by and between Mitsui & Co., Ltd. and the Company dated as of December 22, 2000.


10.27.1(a)		Registration Rights Agreement among the Company, Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. dated as of February 28, 2001.
10.27.2(a)		Amended and Restated Stockholders Agreement by and among AI II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Mitsui & Co., Ltd., Mitsui & Co. (U.S.A.), Inc. and the Company dated as of February 28, 2001.
10.27.3(a)		Letter Agreement among Penske Corporation, the Company, Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. dated February 28, 2001.
21.1(a)		Subsidiaries of the Company.
23.1.1(a)		Consent of PricewaterhouseCoopers LLP.
23.1.2(a)		Consent of Deloitte & Touche LLP.
99.1(p)		Risk Factors.


	(a)	Filed herewith.

	(b)	Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429.

	(c)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December 24, 1996, File No. 001-12297.

	(d)	Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297.

	(e)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297.

	(f)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297.

	(g)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 001-12297.

	(h)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February 20, 1998, File No. 001-12297.

	(i)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 001-12297.

	(j)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297.

	(k)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297.

	(l)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297.

	(m)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, file No. 001-12297.

	(n)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, File No. 001-12297.

	(o)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, File No. 001-12297.

	(p)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, File No. 001-12297.

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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York on March 28, 2001.

UNITED AUTO GROUP, INC.

By: /s/ ROGER S. PENSKE

Roger S. Penske

Chairman of the Board and

Chief Executive Officer

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


Signature	Title	Date

/s/ ROGER S. PENSKE Roger S. Penske	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 28, 2001
/s/ SAMUEL X. DIFEO Samuel X. DiFeo	President, Chief Operating Officer and Director	March 28, 2001
/s/ JAMES R. DAVIDSON James R. Davidson	Executive Vice President — Finance (Principal Accounting Officer)	March 28, 2001
/s/ DONALD J. HOFMANN, JR. Donald J. Hofmann, Jr.	Director	March 28, 2001
/s/ EUSTACE W. MITA Eustace W. Mita	Director	March 28, 2001
/s/ RICHARD J. PETERS Richard J. Peters	Director	March 28, 2001
/s/ JAMES A. HISLOP James A. Hislop	Director	March 28, 2001
/s/ MICHAEL R. EISENSON Michael R. Eisenson	Director	March 28, 2001
/s/ JOHN J. HANNAN John J. Hannan	Director	March 28, 2001
/s/ MARSHALL S. COGAN Marshall S. Cogan	Director	March 28, 2001
/s/ MOTOKAZU YOSHIDA Motokazu Yoshida	Director	March 28, 2001
/s/ RONALD G. STEINHART Ronald G. Steinhart	Director	March 28, 2001

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS






United Auto Group, Inc.




Reports of Independent Accountants				F-2




Consolidated Balance Sheets as of December 31, 2000 and 1999.				F-4




Consolidated Statements of Operations for the years ended December 31, 2000, 1999, and 1998.				F-5




Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2000, 1999 and 1998.				F-6




Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.				F-7




Notes to Consolidated Financial Statements				F-8

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

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

Detroit, Michigan

We have audited the accompanying consolidated balance sheets of United Auto Group, Inc. (the “Company”) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE

New York, New York

January 26, 2001, (February 28, 2001 as to Note 16)

F-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of United Auto Group, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the consolidated results of United Auto Group, Inc.’s (the “Company”) operations and cash flows for the year ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

Princeton, New Jersey

March 29, 1999

F-3

UNITED AUTO GROUP, INC.

CONSOLIDATED BALANCE SHEETS



			December 31,

			2000		1999


			(Dollars in thousands)




ASSETS




	Cash and cash equivalents		$	7,413	$	19,847




	Accounts receivable, net			190,792		140,473




	Inventories			737,942		508,289




	Other current assets			15,469		10,723

		Total current assets		951,616		679,332




Property and equipment, net				107,085		68,232




Intangible assets, net				664,510		494,957




Other assets				39,484		36,816

		Total Assets	$	1,762,695	$	1,279,337

LIABILITIES AND STOCKHOLDERS’ EQUITY




	Floor plan notes payable		$	689,687	$	478,460




	Accounts payable			55,344		47,113




	Accrued expenses			72,075		46,328




	Current portion of long-term debt			41,456		10,389

		Total current liabilities		858,562		582,290




Long-term debt				377,721		218,535




Other long-term liabilities				64,742		47,647

		Total Liabilities		1,301,025		848,472

Commitments and contingent liabilities




Stockholders’ Equity




	Preferred Stock			—		—




	Common Stock			2		2




	Additional paid-in-capital			420,166		414,318




	Retained earnings			41,502		16,545

		Total Stockholders’ Equity		461,670		430,865

		Total Liabilities and Stockholders’ Equity	$	1,762,695	$	1,279,337

See Notes to Consolidated Financial Statements.

F-4

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS



		Year Ended December 31,

		2000			1999			1998


		(In thousands, except per share amounts)




New vehicle sales		$	2,971,468		$	2,417,906		$	1,958,885




Used vehicle sales			1,227,597			1,040,026			922,793




Finance and insurance			193,121			165,751			127,405




Service and parts			491,803			398,834			334,064

	Total revenues		4,883,989			4,022,517			3,343,147




Cost of sales			4,206,032			3,473,080			2,887,530

	Gross profit		677,957			549,437			455,617




Selling, general and administrative expenses			539,704			445,142			375,043

Operating income			138,253			104,295			80,574




Floor plan interest expense			(44,406	)		(28,676	)		(28,718	)




Other interest expense			(32,777	)		(29,344	)		(31,462	)




Other income (expense), net			—			2,571			4,800

Income from continuing operations before minority interests, income tax provision and extraordinary item			61,070			48,846			25,194




Minority interests			(512	)		(722	)		(262	)




Income tax provision			(26,558	)		(21,414	)		(11,554	)

Income from continuing operations			34,000			26,710			13,378




Income (loss) from discontinued operations, net of income taxes			—			46			(12,940	)

Income before extraordinary item			34,000			26,756			438




Extraordinary item, net of income taxes			(3,969	)		732			(1,235	)

Net income (loss)		$	30,031		$	27,488		$	(797	)

Basic income from continuing operations per common share		$	1.46		$	1.10		$	0.66

Basic net income (loss) per common share		$	1.26		$	1.14		$	(0.04	)

Income from continuing operations per diluted common share		$	1.16		$	1.01		$	0.64

Net income (loss) per diluted common share		$	1.02		$	1.04		$	(0.04	)

Shares used in computing basic per share data			20,207			21,950			20,377

Shares used in computing diluted per share data			29,415			26,526			20,932

See Notes to Consolidated Financial Statements

F-5

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY



	Class A				Class B				Voting and
	Convertible				Convertible				Non-voting
	Preferred Stock				Preferred Stock				Common Stock
														Additional			Retained
	Issued				Issued				Issued					Paid-in			Earnings
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			(Deficit)			Total


	(Dollars in thousands)




Balances, December 31, 1997		—	$	—		—	$	—		18,898,146		$	2	$	310,373		$	(9,818	)	$	300,557




Issuance of stock for acquisitions		—		—		—		—		1,683,638			—		39,632			—			39,632




Issuance of stock — exercise of stock options		—		—		—		—		156,600			—		2,586			—			2,586




Unrealized loss on marketable securities — UAF		—		—		—		—		—			—		—			(328	)		(328	)




Net loss		—		—		—		—		—			—		—			(797	)		(797	)

Balances, December 31, 1998		—		—		—		—		20,738,384			2		352,591			(10,943	)		341,650




Issuance of stock for acquisitions		—		—		—		—		1,261,327			—		(13,960	)		—			(13,960	)




Repurchase of common stock		—		—		—		—		(118,000	)		—		(992	)		—			(992	)




Issuance of preferred stock and warrants		7,904		—		397		—		—			—		76,679			—			76,679




Net income		—		—		—		—		—			—		—			27,488			27,488

Balances, December 31, 1999		7,904		—		397		—		21,881,711			2		414,318			16,545			430,865




Issuance of common stock		—		—		—		—		2,981,011			—		26,950			—			26,950




Repurchase of common stock		—		—		—		—		(2,872,856	)		—		(26,176	)		—			(26,176	)




Payment in kind dividends		438		—		124		—		—			—		5,074			(5,074	)		—




Net income		—		—		—		—		—			—		—			30,031			30,031

Balances, December 31, 2000		8,342	$	—		521	$	—		21,989,866		$	2	$	420,166		$	41,502		$	461,670

See Notes to Consolidated Financial Statements.

F-6

UNITED AUTO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



				Year Ended December 31,

				2000			1999			1998


				(Dollars in thousands)




Operating activities:




	Net income (loss)			$	30,031		$	27,488		$	(797	)




	Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations:




		Depreciation and amortization			24,174			19,131			16,464




		Deferred income taxes			10,897			10,007			8,561




		Minority interests			512			722			262




		Extraordinary item			5,613			—			—




		Non-cash compensation expense			—			2,250			—




		(Income) loss from discontinued operations			—			(46	)		12,940




		Unusual items			—			—			12,550




	Changes in operating assets and liabilities:




		Accounts receivable			(33,144	)		(11,090	)		(4,709	)




		Inventories			(67,942	)		(73,687	)		39,648




		Floor plan notes payable			69,186			59,371			(29,587	)




		Accounts payable and accrued expenses			24,478			2,690			9,138




		Other			(17,219	)		3,922			(9,422	)

			Net cash provided by operating activities of continuing operations		46,586			40,758			55,048

Investing activities:




	Purchase of equipment and improvements				(37,384	)		(22,161	)		(12,085	)




	Dealership acquisitions, net				(197,148	)		(28,251	)		(138,139	)

			Net cash used in investing activities of continuing operations		(234,532	)		(50,412	)		(150,224	)

Financing activities:




	Proceeds from borrowings of long-term debt				339,449			65,000			68,400




	Payments of long-term debt and capital leases				(159,863	)		(159,147	)		(17,956	)




	Proceeds from issuance of common stock, preferred stock and warrants				16,852			76,679			2,020




	Repurchase of common stock				(26,176	)		(992	)		—




	Deferred financing costs				—			(227	)		(1,842	)

			Net cash provided by (used in) financing activities of continuing operations		170,262			(18,687	)		50,622

			Net cash distributed by (invested in) discontinued operations		5,250			9,650			(11,343	)

			Net decrease in cash and cash equivalents		(12,434	)		(18,691	)		(55,897	)




Cash and cash equivalents, beginning of year					19,847			38,538			94,435

Cash and cash equivalents, end of year				$	7,413		$	19,847		$	38,538

See Notes to Consolidated Financial Statements

F-7

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands, Except Per Share Amounts)

1. Organization and Summary of Significant Accounting Policies

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

Principles of Consolidation

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

Cash and Cash Equivalents

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

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt, including floor plan notes payable, and an interest rate swap used to hedge future cash flows. The carrying amount of all significant financial instruments, except the interest rate swap, approximates fair value due either to length of maturity or the existence of variable interest rates that approximate prevailing market rates. The fair value of the interest rate swap, based on the discounted cash flows of future payments the Company would be expected to make under the interest rate swap over its remaining term, approximated $10,187.

Revenue Recognition

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

Inventory Valuation

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

Property and Equipment

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

F-8

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Income Taxes

Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS 109”). Deferred tax assets or liabilities are computed based upon the difference between financial reporting and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is provided when it is more likely than not that taxable income will not be sufficient to fully realize deferred tax assets.

Intangible Assets

Intangible assets of $664,510, consisting primarily of excess of cost over the fair value of net assets acquired in purchase business combinations, are being amortized on a straight-line basis over periods not exceeding 40 years. Accumulated amortization at December 31, 2000 amounted to $49,367. Amortization expense for the years ended December 31, 2000, 1999 and 1998 was $15,408, $12,996 and $11,560, respectively.

Impairment of Long-Lived Assets

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

Defined Contribution Plans

The Company sponsors a number of defined contribution plans covering a significant majority of the Company’s employees. Company contributions to such plans are discretionary and are typically based on the level of compensation and contributions by plan participants. The Company incurred expense of $1,389, $1,315 and $600 relating to such plans during the years ended December 31, 2000, 1999 and 1998, respectively.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts which require the use of significant estimates are accounts receivable, inventories, income taxes, intangible assets, and accrued expenses.

Advertising

Advertising costs are expensed as incurred. The Company incurred advertising costs of $51,248, $43,165 and $37,318 during the years ended December 31, 2000, 1999 and 1998, respectively.

F-9

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

Net Income (Loss) Per Common Share

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



	Year Ended December 31,

	2000		1999		1998

Weighted average number of common shares outstanding		20,207		21,950		20,377




Effect of stock options, preferred stock and warrants		9,208		4,576		77




Effect of minimum share price guarantee		—		—		478

Weighted average number of common shares outstanding, including effect of dilutive securities		29,415		26,526		20,932

Derivative Instruments

Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted (“SFAS No. 133”), is effective for all fiscal years beginning after June 15, 2000. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Under SFAS 133, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. SFAS 133 defines requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value would be recorded in earnings immediately. If the derivative is designated in a fair-value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated in a cash-flow hedge, effective changes in the fair value of the derivative are recorded in other comprehensive income and recorded in the income statement when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. The Company adopted SFAS 133 on January 1, 2001 and recorded $10,187 as a cumulative transition adjustment (reducing other comprehensive income) relating to an interest rate swap (cash-flow hedge) the Company entered into prior to the adoption of SFAS 133. Pursuant to SFAS 133, the cumulative transition adjustment will be amortized and reflected as floorplan interest expense over the remaining life of the interest rate swap.

2. Unusual Items

Between January 1, 1997 and October 31, 1998, the Company sold approximately 51,000 warranty and extended service contracts. The repair obligations for these contracts had been contractually assumed by Trace International Holdings, Inc. (“Trace”) and its subsidiary Alpha Automotive, Inc. (“Alpha”). As a result of uncertainty about Trace and Alpha’s ability to perform their contractual obligations, the Company entered into an insurance agreement under which the repair obligations relating to the 51,000 warranty and extended service contracts were assumed by the insurance company in exchange for a fixed premium payable over time. As a result, the Company has no further financial obligations related to these contracts other than to make specified premium payments. During 1998, the Company recorded a $12,550 pre-tax charge (the “Alpha Charge”), representing the estimated present value of those payments, which was recorded in cost of goods

F-10

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

sold in the consolidated statement of operations. Trace and Alpha remain liable with respect to the warranty and extended service contracts sold prior to November 1, 1998. Future recoveries from Trace and Alpha will reduce the cost of the insurance agreement. On July 21, 1999, Trace and its subsidiaries filed for protection in the bankruptcy court for the Southern District of New York. The case was converted from a Chapter 11 to a Chapter 7 bankruptcy proceeding on January 24, 2000. As a result, further recoveries from Trace are unlikely.

3. Discontinued Operations

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

Summarized financial information of UAF follows:



	Year Ended December 31,

	2000		1999		1998

Revenues	$	1,995	$	3,482	$	5,108




Income (loss) from operations, net of tax provision of $26 in 1999 and tax benefit of $2,089 in 1998		—		46		(3,714	)




Loss on disposal, net of tax benefit of $5,189		—		—		(9,226	)




Net income (loss)		—		46		(12,940	)




Net loss per diluted common share		—		—		(0.62	)



	As of December 31,

	2000		1999

Cash and cash equivalents	$	2,372	$	2,852




Restricted cash		—		4




Finance assets, net		9,185		12,883




Other assets		294		429




Short-term debt, accrued liabilities and other liabilities		3,394		2,421

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

4. Business Combinations

During 2000 and 1999, the Company completed a number of acquisitions. Each of these acquisitions has been accounted for using the purchase method of accounting. As a result, the Company’s financial statements include the results of operations of the acquired dealerships from the date of acquisition.

During 2000, the Company acquired 35 automobile dealership franchises. The aggregate consideration paid in connection with such acquisitions amounted to $225,623, consisting of approximately $204,975 in cash, the issuance of 841,476 shares of Common Stock and $10,550 of seller financed promissory notes. The consolidated balance sheets include preliminary allocations of the purchase price relating to these acquisitions, which are subject to final adjustment. Such allocations resulted in recording approximately $188,466 of goodwill. Acquisitions during 1999 were not material.

F-11

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

In connection with one of the acquisitions consummated during 2000, the Company agreed to make a contingent payment in cash to the extent the Common Stock issued in connection with such acquisition has a market value of less than $12.00 per share during specified future periods.

During 2000, the Company paid $6,147 in cash in final settlement of its obligation with respect to a guarantee relating to 375,404 shares of Common Stock issued in connection with an acquisition that took place prior to 1998.

Pro Forma Results of Operations

The following unaudited consolidated pro forma results of operations of the Company for the years ended December 31, 2000 and 1999 give effect to acquisitions consummated during 2000 as if they had occurred on January 1, 1999.



	December 31,

	2000		1999

Revenues	$	5,390,394	$	5,143,767




Income before minority interests and income taxes		65,791		55,863




Net income		36,642		30,632




Net income per diluted common share		1.22		1.12

5. Inventories

Inventories consisted of the following:



		December 31,

		2000		1999

New vehicles		$	564,159	$	378,311




Used vehicles			136,980		102,332




Parts, accessories and other			36,803		27,646

	Total Inventories	$	737,942	$	508,289

6. Property and Equipment

Property and equipment consisted of the following:



				December 31,

				2000		1999

Furniture, fixtures and equipment				$	58,069	$	30,615




Equipment under capital lease					3,806		11,328




Buildings and leasehold improvements					69,357		42,531

	Total				131,232		84,474




		Less: Accumulated depreciation and amortization			24,147		16,242

			Property and equipment, net	$	107,085	$	68,232

F-12

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

Depreciation and amortization expense for the years ended December 31, 2000, 1999 and 1998 was $8,766, $6,135 and $4,904, respectively. Accumulated amortization at December 31, 2000 and 1999 on equipment under capital lease, included in accumulated depreciation and amortization above, amounted to $1,629 and $1,806, respectively.

7. Floor Plan Notes Payable

The Company finances the majority of its new and a portion of its used vehicle inventory under revolving floor plan financing arrangements with various lenders. The Company makes monthly interest payments on the amount financed, but is not required to make loan principal repayments prior to the sale of new and used vehicles. Outstanding borrowings under floor plan financing arrangements amounted to $689,687 and $478,460 as of December 31, 2000 and 1999, respectively. The floor plan agreements grant a security interest in the financed vehicles, as well as the related sales proceeds, and require repayment after a vehicle’s sale. Interest rates on the floor plan agreements are variable and increase or decrease based on movements in prime or LIBOR borrowing rates. Floor plan interest expense for the years ended December 31, 2000, 1999 and 1998 was $44,406, $28,676 and $28,718, respectively. The weighted average interest rate on floor plan borrowings was 7.92%, 7.33% and 7.60% for the years ended December 31, 2000, 1999 and 1998, respectively.

8. Long-Term Debt

Long-term debt consisted of the following:



			December 31,

			2000		1999

Credit Agreement — Revolving Loans, weighted average interest — 8.39% and 8.97% at December 31, 2000 and 1999, respectively			$	204,595	$	19,580




Credit Agreement — Term Loans, weighted average interest — 9.20% and 8.97% at December 31, 2000 and 1999, respectively				186,000		35,000




Seller financed promissory notes payable through 2002, weighted average interest — 6.60% and 7.23% at December 31, 2000 and 1999, respectively				15,492		12,681




Term loans, weighted average interest — 6.95% and 7.72% at December 31, 2000 and 1999, respectively				5,433		4,014




Series A and B Senior Subordinated Notes due 2007, less net un-amortized discount of $1,044 at December 31, 1999.				3,650		149,956




Capitalized lease obligations				4,007		7,211




Other				—		482

	Total long-term debt			419,177		228,924




		Less: Current portion		41,456		10,389

	Net long-term debt		$	377,721	$	218,535

F-13

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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







2001		$	41,456




2002			3,154




2003			27,137




2004			1,172




2005			25,500




2006 and thereafter			320,758

	Total long-term debt	$	419,177

The Company’s Credit Agreement, dated as of August 3, 1999, as amended and restated (the “Credit Agreement”), provides for up to $520.0 million in revolving loans to be used for acquisitions, working capital, the repurchase of common stock and general corporate purposes. In addition, the Credit Agreement provides for up to $186.0 million to be used to repurchase the Company’s 11% Senior Subordinated Notes due 2007 (the “Notes”). Loans under the Credit Agreement bear interest at either LIBOR plus 2.00% or LIBOR plus 2.25%, other than borrowings to repurchase Notes which bear interest at LIBOR plus 3.00%. Outstanding letters of credit under the Credit Agreement as of December 31 2000 amounted to $1,600. The Credit Agreement replaced the Company’s previous bank borrowing facility, which was terminated upon the effective date of the Credit Agreement. The Company incurred an extraordinary charge during 1999 of $494 ($0.02 per diluted share), net of income taxes of $396, resulting from the write-off of unamortized deferred financing costs relating to the Company’s previous bank borrowing facility. The Company recorded an extraordinary charge during 1998 of $1,235 ($0.06 per diluted share), net of income taxes of $859, relating to the write-off of unamortized deferred financing costs relating to a previous borrowing facility.

The Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries and contains a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, the Company is required to comply with specified ratios and tests, including debt to equity, debt service coverage and minimum working capital covenants. The Credit Agreement also contains typical events of default including change of control, material adverse change and non-payment of obligations. Substantially all of the Company’s assets not subject to security interests granted to floor plan lending sources are subject to security interests granted to lenders under the Credit Agreement.

During 1997, the Company completed the sale of $200,000 aggregate principal amount of Notes. The sale was exempt from registration under the Securities Act of 1933 pursuant to Rule 144A thereunder. The indentures governing the Notes require the Company to comply with specified debt service coverage ratio levels in order to incur incremental indebtedness. Such indentures also limit the Company’s ability to pay dividends based on a formula which takes into account, among other things, the Company’s consolidated net income, and contain other covenants which restrict the Company’s ability to purchase capital stock, incur liens, sell assets and enter into other transactions. The Notes are fully and unconditionally guaranteed on a joint and several basis by the Company’s auto dealership subsidiaries.

F-14

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

101% of face value. In May 2000, the Company completed the tender for the then outstanding Notes, pursuant to which it repurchased $147,400 million face value of Notes. As a result, the Company recorded a $3,969 loss, net of $3,118 of tax, relating to the redemption premium paid for the Notes and the write-off of unamortized deferred financing costs. During 1999, the Company repurchased and retired $49,000 of the Notes. As a result, the Company recorded an extraordinary gain of $1,226 ($0.04 per diluted share), net of $1,001 of tax.

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

9. Operating Lease Obligations

The Company leases its dealership facilities and corporate offices under non-cancelable operating lease agreements with expiration dates through 2025, including all option periods available to the Company. Minimum future rental payments required under non-cancelable operating leases in effect as of December 31, 2000 follow:






2001	$	43,299




2002		41,420




2003		40,246




2004		39,640




2005		38,738




2006 and thereafter		356,412

	$	559,755

Rent expense for the years ended December 31, 2000, 1999 and 1998 amounted to $35,113, $29,493 and $26,917, respectively. A number of the dealership leases are with former owners who continue to operate the dealerships as employees of the Company or with other affiliated entities. Of the total rental payments, $5,575, $8,466 and $11,140, respectively, were made to related parties during 2000, 1999 and 1998, respectively.

10. Related Party Transactions

As discussed in Note 9, the Company is the tenant under a number of non-cancelable lease agreements with employees of the Company and certain other affiliated entities. The terms of the leases with the former owners were negotiated prior to acquisition and the Company believes all such leases are on terms no less favorable to the Company than would be obtained through arm’s-length negotiations with unaffiliated third parties. The Company believes the terms of the leases with affiliated entities are on terms no less favorable to the Company than would be obtained through arm’s-length negotiations with unaffiliated third parties.

The Company is currently a tenant under a number of non-cancelable lease agreements with Automotive Group Realty, LLC (“AGR”). AGR is a wholly-owned subsidiary of Penske Corporation. During Fiscal 2000, the Company paid $1,260 to AGR under these lease agreements. In addition, in Fiscal 2000 the Company sold AGR real property and improvements which were subsequently leased by AGR to the Company. The sale of each parcel of property was valued at a price which was either independently confirmed by an third party appraiser or at the price at which the Company purchased the property. Pursuant to these purchases, AGR paid the Company $23,365 in Fiscal 2000. The Company believes that the terms of these transactions are no less favorable than the terms available from unaffiliated third parties negotiated on an arm’s length basis.

F-15

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

The Company is also party to operating agreements with Roger S. Penske, Jr., the son of Roger S. Penske, the Company’s Chairman and Chief Executive Officer, reflecting (a) the ownership by Mr. Penske, Jr. of 20% of UAG Cerritos, LLC and the ownership by the Company of the remaining 80% of UAG Cerritos, LLC, and (b) the ownership by Mr. Penske, Jr. of 4.7% of United Auto do Brasil, Ltda. and by the Company of 90.6% of United Auto do Brasil, Ltda. Mr. Penske, Jr. contributed approximately $1,838 for his 20% interest in UAG Cerritos, LLC and the Company contributed $7,352 for its 80% interest in UAG Cerritos, LLC. The Company contributed approximately $3,571 for its 90.6% interest in United Auto do Brasil, Ltda. and Mr. Penske, Jr. contributed approximately $185 for his 4.7% interest in United Auto do Brasil, Ltda. The Company from time to time provides to these subsidiaries working capital and other debt financing at costs that are comparable to the costs charged by the Company to its other subsidiaries.

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

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

From time to time, the Company pays and/or receives fees from the Purchaser (as hereinafter defined) and its affiliates for services rendered in the normal course of business, including rents paid to AGR. These transactions reflect the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions are on terms at least as favorable as those which could be obtained from an unrelated third party. Aggregate payments relating to such transactions amounted to $3,721 and $311 for the years ended December 31, 2000 and 1999, respectively.

From time to time, the Company paid and/or received fees from Trace and its affiliates for services rendered in the normal course of business. The Company no longer engages in such transactions. These transactions reflected the provider’s cost or an amount mutually agreed upon by both parties. It is the Company’s belief that the payments relating to these transactions were on terms at least as favorable as those which would have been obtained from an unrelated third party. Aggregate payments relating to such transactions amounted to $131 and $260 for the years ending December 31, 1999 and 1998, respectively.

11. Stock Compensation Plans

During 1996, the Company’s Board of Directors and stockholders adopted a Stock Option Plan. Under the Stock Option Plan, all full-time employees of the Company and its subsidiaries and affiliates are eligible to participate. During 2000, the Company granted options to purchase 588,353 shares at the fair market value of the Company’s stock on the date of the grant. Options granted under the Stock Option Plan have a ten year life and typically vest on a pro-rata basis over three or five years. As of December 31, 2000, the aggregate number of shares of Common Stock for which stock options may be granted under the Stock Option Plan may not exceed 3,000,838. As of December 31, 2000, 645,265 shares of Common Stock were available for the grant

F-16

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

of options under the Stock Option Plan. Presented below is a summary of the status of stock options held by eligible employees during 2000 and 1999:



	2000				1999

			Weighted				Weighted
			Average				Average
			Exercise				Exercise
Stock Options	Shares		Price		Shares		Price

Options outstanding at beginning of year		1,431,794	$	15.16		1,227,390	$	18.06




Granted		588,353		9.89		332,790		7.23




Exercised		—		—		—		—




Forfeited		—		—		128,386		20.25

Options outstanding at end of year		2,020,147	$	13.63		1,431,794	$	15.16

The following table summarizes the status of UAG’s employee stock options outstanding and exercisable at January 1, 2001:

Weighted

Range of

Stock

Average

Stock

Average

Exercise

Options

Remaining

Exercise

Options

Exercise

Prices

Outstanding

Contractual Life

Price

Exercisable

Price

$ 7 to $13

1,090,443

8.23

9.09

201,998

9.09

$13 to $30

929,704

7.42

18.94

479,389

19.66

2,020,147

681,387

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



	Year Ended December 31,

	2000		1999		1998

Income from continuing operations	$	32,032	$	24,516	$	12,253




Income from continuing operations per diluted share		1.09		0.92		0.59




Net income (loss)		28,063		25,294		(1,922	)




Net income (loss) per diluted share		0.95		0.95		(0.09	)

The weighted average fair value of the Company’s stock options was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: no dividend yield; expected volatility of 40.3% in 2000, 49.7% in 1999 and 30.0% in 1998; risk-free interest rate of 7.75% in 2000, 8.00% in 1999 and 7.00% in 1998; and expected lives of five years. The weighted average fair value of options granted during the years ended December 31, 2000, 1999 and 1998 is $4.67, $3.85 and $6.99 per share, respectively.

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

F-17

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

12. Stockholders’ Equity

At December 31, 2000 and 1999, the following classes of stock are authorized, issued or outstanding (share amounts in thousands):






Series A Preferred Stock, $0.0001 par value; 10 shares authorized, 8 issued and outstanding		$	—	$	—




Series B Preferred Stock, $0.0001 par value; 10 shares authorized, 1 issued and outstanding			—		—




Common Stock, $0.0001 par value, 80,000 shares authorized; 21,990 shares issued, including 3,434 treasury shares, at December 31, 2000; 21,882 shares issued, including 561 treasury shares, at December 31, 1999			2		2




Non-voting Common Stock, $0.0001 par value; 7,125 shares authorized, none issued and outstanding, at December 31, 2000 and 1999			—		—




Class C Common Stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding			—		—




Additional paid-in-capital			420,166		414,318




Retained earnings			41,502		16,545

	Total stockholders’ equity	$	461,670	$	430,865

In December 2000, the Company issued 2,139,535 shares of Common Stock to Penske Corporation in a private placement for $10.75 per share. Aggregate proceeds, amounting to $23,000, were used to reduce debt. In addition, in December 2000, the Company’s Third Restated Certificate of Incorporation was amended to increase the number of authorized shares of Common Stock from 40,000,000 shares to 80,000,000 shares.

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

The transaction was consummated in two steps: first, the acquisition of approximately $33,550 of Series A Preferred Stock and, second, the acquisition of approximately $49,450 of Series A Preferred Stock, Series B Preferred Stock and Warrants. The first step of the transaction closed on May 3, 1999. The Series A Preferred Stock issued on May 3, 1999 was subject to mandatory redemption by the Company at the Purchaser’s option under certain circumstances prior to the second closing. On August 3, 1999, the transaction was approved by

F-18

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

the Company’s stockholders, after which the second step of the transaction closed. Proceeds from the issuance of the securities pursuant to the Securities Purchase Agreement were used to prepay the remaining $44,400 of term loans and $18,400 of revolving loan commitments outstanding under the Company’s credit agreement, to pay approximately $6,800 of fees incurred in connection with the execution of the Securities Purchase Agreement and fund certain acquisition related costs.

13. Income Taxes

The income tax provision relating to income from continuing operations consisted of the following:



			Year Ended December 31,

			2000		1999		1998

Current:




	Federal		$	11,950	$	7,091	$	278




	State and local			3,269		3,352		3,687




	Foreign			442		964		228

		Total current		15,661		11,407		4,193

Deferred:




	Federal			9,397		9,085		4,733




	State and local			1,255		517		1,937




	Foreign			245		405		691

		Total deferred		10,897		10,007		7,361

Income tax provision relating to continuing operations before extraordinary item			$	26,558	$	21,414	$	11,554

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



	Year Ended December 31,

	2000		1999		1998

Income tax provision at the Federal statutory rate of 35%	$	21,374	$	17,096	$	8,818




State and local income taxes, net of federal benefit		2,941		2,516		1,994




Impact of change in effective state rate on temporary differences, net of federal benefit		—		—		1,641




Valuation allowance		—		—		(1,700	)




Non-deductible amortization of goodwill		1,864		1,330		1,412




Revision to estimated liabilities		—		—		(903	)




Other		379		472		292

Income tax provision relating to continuing operations	$	26,558	$	21,414	$	11,554

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS 109”). Under SFAS 109, deferred income taxes reflect the estimated tax effect of temporary differences between assets and liabilities reported for financial

F-19

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

accounting purposes and those amounts as measured by tax laws and regulations. The components of deferred tax assets and liabilities at December 31, 2000 and 1999 were as follows:


		2000			1999

Deferred Tax Assets




Net operating loss carryforwards		$	2,565		$	2,105




Accrued liabilities			7,567			2,534




Partnership investments			—			346




Capital loss carryforwards			3,031			3,007




Sale of finance receivables and other items			548			1,913




Issuance of compensatory stock options			810			810




Other			1,662			1,013

Total deferred tax assets			16,183			11,728




Valuation allowance			(1,490	)		(1,490	)

	Net deferred tax assets		14,693			10,238

Deferred Tax Liabilities




Depreciation and amortization			(19,021	)		(15,679	)




Partnership investments			(17,440	)		—

	Total deferred tax liabilities		(36,461	)		(15,679	)

	Net deferred tax liabilities	$	(21,768	)	$	(5,441	)

At December 31, 2000, the Company has $49,226 of state net operating loss carryforwards that expire at various dates through 2020.

14. Supplemental Cash Flow Information

The following table presents supplementary cash flow information:


		2000		1999		1998

Cash paid interest		$	77,560	$	57,073	$	55,401




Cash paid income taxes			14,149		9,587		3,234




Non-cash financing and investing activities:




	Dealership acquisition costs financed by issuance of stock		10,098		—		36,100




	Dealership acquisition cost financed by long-term debt		10,550		1,500		12,200

15. Summary of Quarterly Financial Data (Unaudited)


		First		Second		Third		Fourth
		Quarter		Quarter		Quarter		Quarter
Statements of Operations Data(1)(2):
2000




	Total revenues	$	1,110,767	$	1,204,149	$	1,331,173	$	1,237,900




	Gross profit		152,113		166,780		182,613		176,451




	Income from continuing operations		5,640		11,064		11,179		6,117




	Net income		5,640		7,095		11,179		6,117




	Income from continuing operations per diluted common share		0.19		0.38		0.40		0.21




	Net income per diluted common share		0.19		0.24		0.40		0.21

F-20

UNITED AUTO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued


		First		Second		Third		Fourth
		Quarter		Quarter		Quarter		Quarter
Statements of Operations Data(1)(2):
1999




	Total revenues	$	904,732	$	1,043,598	$	1,085,366	$	988,821




	Gross profit		124,758		141,832		146,484		136,363




	Income from continuing operations		3,698		8,620		8,969		5,423




	Net income		3,698		8,620		9,317		5,853




	Income from continuing operations per diluted common share		0.16		0.35		0.31		0.18




	Net income per diluted common share		0.16		0.35		0.32		0.19


(1)	As discussed in Note 3, the results of UAF have been recorded as discontinued operations.

(2)	As discussed in Note 8, the Company recorded a $3,969 extraordinary loss in the second quarter of 2000, an extraordinary gain of $320 in the third quarter of 1999 and an extraordinary gain of $412 in the fourth quarter of 1999.

The per share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year per share amounts.

16. Subsequent Events

In February 2001, the Company issued 1,302,326 shares of Common Stock to Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. (together with Mitsui & Co., Ltd. “Mitsui”) in a private placement for $10.75 per share (the “Mitsui Transaction”). Aggregate proceeds, amounting to $14,000, were used to reduce borrowings under the Credit Agreement. Pursuant to the anti-dilution provisions of the Warrants and as a result of the Mitsui Transaction (a) the warrants to purchase 3,898,665 shares of the Company’s Common Stock were increased to 3,915,580 shares (3,935,884 shares after February 3, 2002), (b) the warrants to purchase 1,101,335 shares of the Company’s Non-Voting Common Stock were increased to 1,106,113 shares (1,111,849 shares after February 3, 2002). In addition, as a result of the Mitsui Transaction the warrants are exercisable at a price of $12.45 per share for thirty months after August 1999 and $15.35 per share thereafter until May 2, 2004.

F-21

Exhibit Index


3.1(l)		Certificate of Amendment of Certificate of Incorporation of the Company dated August 3, 1999.
3.2(b)		Restated Bylaws.
4.1(b)		Specimen Common Stock Certificate.
4.2(f)		Indenture, dated as of July 23, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including form of Note and Guarantee.
4.4(f)		Indenture, dated as of September 16, 1997, among the Company, the Guarantors party thereto and The Bank of New York, as Trustee, including from of Series B Note and Guarantee.
4.5(k)		Certificate of Designation of Series A Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on April 30, 1999.
10.1.1(b)		Registration Rights Agreement, dated as of October 15, 1993, among the Company and the investors listed therein, as amended July 31, 1996.
10.1.4(b)		Form of Warrant.
10.1.8(b)		Stock Option Plan of the Company.
10.1.8.1(i)		Amendment to Stock Option Plan of the Company.
10.1.8.2(p)		First Amended and Restated Stock Option Plan of the Company.
10.1.13(b)		Non-employee Director Compensation Plan of the Company.
10.1.15(b)		Form of Option Certificate of the Company in favor of Samuel X. DiFeo and Joseph C. DiFeo.
10.1.19.6(a)		Amended and Restated Credit Agreement, dated as of December 22, 2000, among the Company, various financial institutions and Chrysler Financial Company, L.L.C., as Agent.
10.2(k)		Non-Competition and Standstill Agreement, dated as of April 12, 1999 by and between Marshall S. Cogan and the Company.


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


10.15.1(e)		Stock Purchase Agreement, dated April 12, 1997, among the Company, Gene Reed Chevrolet, Inc., Michael Chevrolet-Oldsmobile, Inc., Reed-Lallier Chevrolet, Inc., Gene Reed, Jr., Michael L. Reed, Michael G. Lallier, Deborah B. Lallier, John P. Jones, Charles J. Bradshaw, Charles J. Bradshaw, Jr., Julia D. Bradshaw and William B. Bradshaw, as amended May 31, 1997.
10.18.1(f)		Stock Purchase Agreement, dated July 25, 1997 among the Company, UAG Classic, Inc., Classic Auto Group, Inc., Cherry Hill Classic Cars, Inc., Classic Enterprises, Inc., Classic Buick, Inc., Classic Chevrolet, Inc., Classic Management, Inc., Classic Turnersville, Inc., Classic Imports, Inc., and Thomas J. Hessert, Jr. (as amended).
10.19.1.1(f)		Stock Purchase Agreement, dated as of September 25, 1997 among the Company, UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein.
10.19.1.2(f)		Agreement and Plan of Merger, dated as of September 25, 1997 among the Company, UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein.
10.19.1.3(h)		Amendment to Stock Purchase Agreement, dated January 31, 1998, between and among United Auto Group, Inc., UAG Young, Inc., Dan Young Chevrolet, Inc., Dan Young, Inc., Parkway Chevrolet, Inc., Young Management Group, Inc., and certain parties named therein.
10.19.1.4(h)		Amendment to Agreement and Plan of Merger, dated January 31, 1998, between and among United Auto Group, Inc., UAG Kissimmee Motors, Inc., UAG Paramount Motors, Inc., UAG Century Motors, Inc., Kissimmee Motors, Inc., Paramount Chevrolet-Geo, Inc., Century Chevrolet-Geo, Inc., and certain parties named therein.
10.20.1(j)		Securities Purchase Agreement, dated as of April 12, 1999, among the Company and International Motorcars Group I, L.L.C., and International Motor Cars Group II, L.L.C.
10.20.2(j)		Stockholder Voting Agreement, dated April 12, 1999, between Trace International Holdings, Inc., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.3(j)		Stockholder Voting Agreement, dated April 12, 1999, between Aeneas Venture Corporation, International Motorcars Group I, L.L.C. and International Motorcars Group II, L.L.C.
10.20.4(j)		Stockholder Voting Agreement, dated April 12, 1999, between AIF II, L.P., International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.20.7(k)		Registration Rights Agreement, dated as of May 3, 1999, by and among the Company, International Motorcars Group I, L.L.C., and International Motorcars Group II, L.L.C.
10.22(m)		Severance Agreement, dated August 2, 1999 between the Company and James Davidson.
10.23(m)		Letter Agreement dated August 3, 1999 between the Company and Samuel X. DiFeo.
10.24(o)		CarsDirect.com, Inc. Series D Preferred Stock Purchase and Warrant Agreement.
10.25(o)		Operating Agreement dated May 12, 2000 between the Company, Penske Automotive Group, Inc and CarsDirect.com, Inc.
10.26(a)		Purchase Agreement by and between Penske Automotive Holdings Corp. and the Company dated as of December 22, 2000.
10.26.1(a)		Registration Rights Agreement among the Company and Penske Automotive Holdings Corp. dated as of December 22, 2000.
10.27(a)		Purchase Agreement by and between Mitsui & Co., Ltd. and the Company dated as of December 22, 2000.


10.27.1(a)		Registration Rights Agreement among the Company, Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. dated as of February 28, 2001.
10.27.2(a)		Amended and Restated Stockholders Agreement by and among AI II, L.P., Aeneas Venture Corporation, International Motor Cars Group I, L.L.C., International Motor Cars Group II, L.L.C., Mitsui & Co., Ltd., Mitsui & Co. (U.S.A.), Inc. and the Company dated as of February 28, 2001.
10.27.3(a)		Letter Agreement among Penske Corporation, the Company, Mitsui & Co., Ltd. and Mitsui & Co. (U.S.A.), Inc. dated February 28, 2001.
21.1(a)		Subsidiaries of the Company.
23.1.1(a)		Consent of PricewaterhouseCoopers LLP.
23.1.2(a)		Consent of Deloitte & Touche LLP.
99.1(p)		Risk Factors.


	(a)	Filed herewith.

	(b)	Incorporated herein by reference to the Company’s Registration Statement on Form S-1, Registration No. 333-09429.

	(c)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on December 24, 1996, File No. 001-12297.

	(d)	Incorporated herein by reference to the identically number exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 001-12297.

	(e)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 001-12297.

	(f)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, File No. 001-12297.

	(g)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 001-12297.

	(h)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Current Report on Form 8-K filed on February 20, 1998, File No. 001-12297.

	(i)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 001-12297.

	(j)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on April 15, 1999, File No. 001-12297.

	(k)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 10, 1999, File No. 001-12297.

	(l)	Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on August 13, 1999, File No. 001-12297.

	(m)	Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, file No. 001-12297.

	(n)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, File No. 001-12297.

	(o)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, File No. 001-12297.

	(p)	Incorporated herein by reference to the identically numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, File No. 001-12297.

EXHIBIT 10.1.19.6

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF DECEMBER 22, 2000

AMONG

UNITED AUTO GROUP, INC.,

VARIOUS FINANCIAL INSTITUTIONS

AND

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

TABLE OF CONTENTS

SECTION 1   DEFINITIONS.........................................................1
     1.1  Definitions...........................................................1
     1.2  Other Interpretive Provisions........................................13
     1.3  Addition of New Lenders..............................................13

SECTION 2   COMMITMENTS OF THE LENDERS; BORROWING AND LETTER OF
            CREDIT PROCEDURES..................................................14
     2.1  Commitments..........................................................14
            2.1.1  Revolving Loan Commitment...................................14
            2.1.2  Acquisition Loan Commitment.................................14
            2.1.3  L/C Commitment..............................................14
            2.1.4  Term Loans..................................................14
     2.2  Loan Procedures......................................................14
     2.3 Letter of Credit Procedures...........................................15
            2.3.1  L/C Applications............................................15
            2.3.2  Participations in Letters of Credit.........................15
            2.3.3  Reimbursement Obligations...................................16
            2.3.4  Limitation on Obligations of Issuing Lender.................16
            2.3.5  Funding by Lenders to Issuing Lender........................16
     2.4  Commitments Several..................................................17
     2.5 Certain Conditions....................................................17

SECTION 3   NOTES EVIDENCING LOANS.............................................17
     3.1  Notes................................................................18
     3.2  Recordkeeping........................................................18

SECTION 4   INTEREST...........................................................18
     4.1  Interest Rate........................................................18
     4.2  Interest Payment Dates...............................................18
     4.3  Computation of Interest..............................................18

SECTION 5   FEES...............................................................18
     5.1  Letter of Credit Fees................................................18

SECTION 6   REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT
            AMOUNT AND THE ACQUISITION COMMITMENT AMOUNT;
            PREPAYMENTS........................................................19
     6.1.  Voluntary Reduction or Termination of Commitment Amounts............19
     6.2   Voluntary Prepayments...............................................19
     6.3   Mandatory Prepayments...............................................19
     6.4   All Prepayments of Term Loans.......................................20

-i-

SECTION 7   MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES....................20
     7.1  Making of Payments...................................................20
     7.2  Application of Certain Payments......................................20
     7.3  Due Date Extension...................................................20
     7.4  Setoff...............................................................20
     7.5  Proration of Payments................................................20
     7.6  Taxes................................................................21

SECTION 8   WARRANTIES.........................................................22
     8.1  Organization.........................................................22
     8.2  Authorization; No Conflict...........................................22
     8.3  Validity and Binding Nature..........................................22
     8.4  Financial Condition..................................................22
     8.5  No Material Adverse Change ..........................................23
     8.6  Litigation and Contingent Liabilities................................23
     8.7  Ownership of Properties; Liens.......................................23
     8.8  Subsidiaries.........................................................23
     8.9  Pension Plans........................................................23
     8.10  Investment Company Act..............................................24
     8.11  Public Utility Holding Company Act..................................24
     8.12  Regulation U........................................................24
     8.13  Taxes...............................................................24
     8.14  Solvency, etc.......................................................24
     8.15  Environmental Matters...............................................24
     8.16  Insurance...........................................................25
     8.17  Information.........................................................25
     8.18  Intellectual Property...............................................26
     8.19  Burdensome Obligations..............................................26
     8.20  Labor Matters.......................................................26
     8.21  No Default..........................................................26
     8.22  Securities Purchase Agreement.......................................26
     8.23  Senior Debt.........................................................27

SECTION 9   COVENANTS..........................................................27
     9.1  Reports, Certificates and Other Information..........................27
             9.1.1  Annual Report..............................................27
             9.1.2  Interim Reports............................................27
             9.1.3  Compliance Certificates/Asset Reports......................28
             9.1.4  Reports to the SEC and to Shareholders.....................28
             9.1.5  Notice of Default, Litigation and ERISA Matters............28
             9.1.6  Management Reports.........................................29
             9.1.7  Subordinated Debt Notices..................................29

-ii-

             9.1.8  Subordinated Notes.........................................29
             9.1.9  Other Information..........................................29
     9.2  Books, Records and Inspections.......................................29
     9.3  Maintenance of Property; Insurance...................................30
     9.4  Compliance with Laws; Payment of Taxes and Liabilities...............30
     9.5  Maintenance of Existence, etc........................................31
     9.6  Financial Covenants..................................................31
             9.6.1  Ratio of Funded Debt to Stockholders' Equity...............31
             9.6.2  Ratio of Non-Floorplan Debt to Stockholders' Equity........31
             9.6.3  Funded Debt to EBITDA Ratio................................31
             9.6.4  Working Capital............................................31
     9.7  Limitations on Debt..................................................31
     9.8  Liens................................................................32
     9.9  Restricted Payments..................................................33
     9.10  Mergers, Consolidations, Sales......................................34
     9.11  Modification of Organizational Documents............................35
     9.12  Use of Proceeds.....................................................35
     9.13  Further Assurances..................................................35
     9.14  Transactions with Affiliates........................................36
     9.15  Employee Benefit Plans..............................................36
     9.16  Environmental Matters...............................................36
     9.17  Inconsistent Agreements.............................................36
     9.18  Business Activities.................................................36
     9.19  Investments.........................................................37
     9.20  Restriction of Amendments to Certain Documents......................38
     9.21  Limitation on Floor Plan Amendments.................................38
     9.22  Amendments to Subordinated Note Indentures..........................38

SECTION 10 EFFECTIVENESS; CONDITIONS OF LENDING, ETC...........................38
     10.1 Conditions to Effectiveness..........................................38
             10.1.1  Notes.....................................................38
             10.1.2  Resolutions...............................................38
             10.1.3  Consents, etc.............................................38
             10.1.4  Incumbency and Signature Certificates.....................39
             10.1.5  Reaffirmation.............................................39
             10.1.6  Opinion of Counsel........................................39
             10.1.7  Payment of Fees...........................................39
             10.1.8  Solvency Certificate......................................39
             10.1.9  Closing Certificate.......................................39
             10.1.10 Other.....................................................39
     10.2  Conditions..........................................................39
             10.2.1  Compliance with Warranties, No Default, etc...............39
             10.2.2  Confirmatory Certificate..................................40

-iii-

     10.3  Further Conditions to Acquisition Loans.............................41

SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT..................................41
     11.1  Events of Default...................................................41
             11.1.1  Non-Payment of the Loans, etc.............................41
             11.1.2  Non-Payment of Other Debt.................................41
             11.1.3  Other Material Obligations................................42
             11.1.4  Bankruptcy, Insolvency, etc...............................42
             11.1.5  Non-Compliance with Loan Documents........................42
             11.1.6  Warranties................................................42
             11.1.7  Pension Plans.............................................42
             11.1.8  Judgments.................................................43
             11.1.9  Invalidity of Guaranty, etc...............................43
             11.1.10  Invalidity of Collateral Documents, etc..................43
             11.1.11  Invalidity of Subordination Provisions, etc..............43
             11.1.12  Change of Control........................................43
             11.1.13  Securities Purchase Agreement; Put of Stock..............43
     11.2  Effect of Event of Default..........................................43

SECTION 12 THE AGENT...........................................................44
     12.1  Appointment and Authorization.......................................44
     12.2  Delegation of Duties................................................44
     12.3  Liability of Agent..................................................45
     12.4  Reliance by Agent...................................................45
     12.5  Notice of Default...................................................45
     12.6  Credit Decision.....................................................46
     12.7  Indemnification.....................................................46
     12.8  Agent in Individual Capacity........................................46
     12.9  Successor Agent.....................................................47
     12.10  Collateral Matters.................................................47
     12.11  Funding Reliance...................................................47

SECTION 13 GENERAL.............................................................48
     13.1  Waiver; Amendments..................................................48
     13.2  Confirmations.......................................................49
     13.3  Notices.............................................................49
     13.4  Computations........................................................49
     13.5  Regulation U........................................................49
     13.6  Costs, Expenses and Taxes...........................................50
     13.7  Subsidiary References...............................................50
     13.8  Captions............................................................50
     13.9  Assignments; Participations.........................................50
             13.9.1  Assignments...............................................50

-iv-

        13.9.2  Participations............................................51
13.10  Governing Law......................................................52
13.11  Counterparts.......................................................52
13.12  Successors and Assigns.............................................52
13.13  Indemnification by the Company.....................................52
13.14  Nonliability of Lenders............................................53
13.15  Forum Selection and Consent to Jurisdiction........................53
13.16  Waiver of Jury Trial...............................................54
13.17  CFC Right of First Refusal on Floor Plan Financing.................54
13.18  Confidentiality....................................................54

-v-

SCHEDULES

SCHEDULE 2.1     Lenders and Pro Rata Shares
SCHEDULE 8.6     Litigation and Contingent Liabilities
SCHEDULE 8.8     Subsidiaries
SCHEDULE 8.15    Environmental Matters
SCHEDULE 8.16    Insurance
SCHEDULE 8.19    Burdensome Obligations
SCHEDULE 8.20    Labor Matters
SCHEDULE 9.7     Permitted Existing Debt
SCHEDULE 9.8     Permitted Existing Liens
SCHEDULE 9.17    Permitted Restrictions
SCHEDULE 9.19    Investments
SCHEDULE 13.3    Addresses for Notices

EXHIBITS

EXHIBIT A   Form of Note (Section 3.1)
EXHIBIT B   Form of Compliance Certificate (Section 9.1.3)
EXHIBIT C   Guaranty (Section 1.1)
EXHIBIT D   Security Agreement (Section 1.1)
EXHIBIT E   Pledge Agreement (Section 1.1)
EXHIBIT F   Form of Solvency Certificate (Section 10.1.8)
EXHIBIT G   Form of Assignment Agreement (Section 13.9.1)
EXHIBIT H   Form of Reaffirmation of Loan Documents (Section 10.1.5)
EXHIBIT I   Subordination Provisions Applicable to Subordinated Debt
            (Section 1.1)
EXHIBIT J   Form of L/C Application (Section 1.1)
EXHIBIT K   Form of Accountant's Report (Section 9.1.8)

-vi-

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 22, 2000 (this "Agreement") is entered into among UNITED AUTO GROUP, INC. (the "Company"), the financial institutions that are or may from time to time become parties hereto (together with their respective successors and assigns, the "Lenders") and CHRYSLER FINANCIAL COMPANY L.L.C. (in its individual capacity, "CFC"), as agent for the Lenders.

WHEREAS, the Company and CFC are parties to a Credit Agreement, dated as of August 3, 1999 (as amended or otherwise modified from time to time prior to the date hereof, the "Existing Agreement");

WHEREAS, the Company and the Lenders desire to amend and restate the Existing Agreement to increase the commitments of the Lenders to $706,000,000 and to make certain other changes as hereinafter set forth; it being the intention of the Company, the Agent and the Lenders that this Agreement and the execution and delivery of any substituted promissory notes not effect a novation of the obligations of the Company and the Lenders under the Existing Agreement but merely a restatement and, where applicable, substitution of the terms governing and evidencing such obligations hereafter; and

WHEREAS, the Company and the Lenders have agreed that on the Effective Date (as defined below) the Existing Agreement shall be amended and restated in the form of this Agreement and that the outstanding loans and letters of credit under the Existing Agreement shall be deemed to be Loans and Letters of Credit hereunder;

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

SECTION 1 DEFINITIONS.

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

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

Acquisition Commitment Amount means, on any date, (x) $520,000,000, as reduced from time to time pursuant to Section 6.1 minus (y) the Revolving Outstandings on such date.

Acquisition Loan - see Section 2.1.2.

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

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

Agreement - see the Preamble.

Asset Value - means, at any time, the book value of the Net Tangible Assets on which the Agent has a Lien of the Company and its Subsidiaries as reported on the most recent asset report of the Company pursuant to Section 9.1.3 that has been delivered to the Agent.

Assignment Agreement - see Section 13.9.1.

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

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

Base LIBO Rate - see definition of "Interest Rate."

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

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

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

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

CERCLA - see Section 8.15.

CFC - see the Preamble.

Closing Date means October 8, 1999.

Code means the Internal Revenue Code of 1986.

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

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

Company - see the Preamble.

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

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

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

Debt of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, whether or not evidenced by bonds, debentures, notes or similar instruments, (b) all obligations of such Person as lessee under Capital Leases which have been recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable and accrued expenses in the ordinary course of business), (d) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person, (e) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn) and banker's acceptances issued for the account of such Person (including the Letters of Credit), (f) all Hedging Obligations of such Person, (g) all Suretyship Liabilities of such Person and (h) except to the extent the terms of such Debt provide that such Person is not liable thereunder, all Debt of any partnership of which such Person is a general partner.

Disposal - see the definition of "Release".

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

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

Effective Date - see Section 10.1.

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

Environmental Laws means all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative

orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to Environmental Matters.

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

ERISA means the Employee Retirement Income Security Act of 1974.

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

Existing Agreement - see the recitals.

Existing Letters of Credit means a letter of credit issued under the Existing Agreement which is outstanding on the Effective Date.

Federal Funds Rate means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor publication, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent.

Fiscal Quarter means a fiscal quarter of a Fiscal Year.

Fiscal Year means the fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal Year 2000") refer to the Fiscal Year ending on December 31 of such calendar year.

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

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

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

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

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

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

Funded Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio of (i) Funded Debt as of such day (minus Debt under Floor Plan Financings and Subordinated Debt and excluding the lesser of (x) all Debt outstanding under Capital Leases and (y) $50,000,000) to (ii) EBITDA for the Computation Period ending on such day. If the Company or any Subsidiary makes any Acquisition during any Computation Period, EBITDA for such Computation Period will be determined on a pro forma basis as if such Acquisition were made, and all Debt incurred in connection therewith was incurred, on the first day thereof. In determining the pro forma adjustments to EBITDA to be made with respect to any Acquisition for periods prior to the acquisition date thereof, actions taken by the Company and its Subsidiaries prior to the first anniversary of such acquisition date that result in cost savings with respect to such Acquisition will be deemed to have been taken on the first day of the Computation Period (with the intent that such cost savings be effectively annualized by extrapolation from the demonstrated cost savings since the related acquisition date).

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

Guaranty means the Guaranty dated as of October 8, 1999, executed by each Subsidiary of the Company (other than Foreign Subsidiaries), a copy of which is attached as Exhibit C.

Hazardous Substances - see Section 8.15.

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

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

Indemnified Liabilities - see Section 13.13.

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

Interest Rate means, for each day, a rate per annum equal to the sum of (a) that rate of interest per annum initially equal to 6.70% and adjusting on the first day of each month during the term of this Agreement (a "Calculation Date"), and for each succeeding day until the date of the next monthly recalculation, the average of (x) the LIBO Rate for such Calculation Date (or, if such date is not a Business Day, for the immediately preceding Business Day) and (y) the LIBO Rate for the 16th day of the immediately preceding month (or, if such date is not a Business Day, for the immediately preceding Business Day)
(the rate set forth in this clause (a) being the "Base LIBO Rate") plus (b)(x)
in the case of all Term Loans and, if the Company uses the proceeds of any Revolving Loans to repurchase, redeem, repay or defease the Subordinated Notes, with respect to such Revolving Loans, three percent (3.00%) per annum, and (y) in the case of Revolving Loans (other than Revolving Loans described in clause
(b)(x) above) and Acquisition Loans, (1) to the extent that the aggregate principal amount of Revolving Loans plus the aggregate principal amount of all Acquisition Loans is less than or equal to the total of (A) the Asset Value, minus (B) the Stated Amount of all Letters of Credit, then two percent (2.00%) per annum and (2) in all other cases, two and one quarter percent (2.25%) per annum. For purposes of this definition, "LIBO Rate" means, for each date of calculation, (1) the rate of interest (rounded upwards, if necessary, to the next 1/16th of 1%) published in the Wall Street Journal on such day (or the immediately preceding Business Day, if such date is not a Business Day) in its "Money Rates" column as the one month London Interbank Offered Rate for United States dollar denominated deposits (if the Wall Street Journal ceases to publish such a rate or substantially changes the methodology used to determine such rate, then the rate shall be the rate of interest (rounded upwards, if necessary, to the next 1/16th of 1%) published by Reuters Monitor Rates Service on such day (or the immediately preceding Business Day, if such date is not a Business Day) as the one month London Interbank Offered Rate for United States dollar denominated deposits or (2) if such rate is not published or available, such rate as shall be otherwise independently determined by the Agent on a basis substantially similar to the methodology used by the Wall Street Journal on the date of this Agreement.

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

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

L/C Application means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form of Exhibit J.

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

Letter of Credit - see Section 2.1.3. The term "Letter of Credit" includes each Existing Letter of Credit.

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

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

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

Loans means Acquisition Loans, Revolving Loans and Term Loans.

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

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

Morgan - see Section 9.8(i).

Morgan Swap - see Section 9.8(i).

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

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

Net Tangible Assets means (i) the total assets of the Company and its Subsidiaries, excluding goodwill, organizational expenses and similar intangible assets in accordance with GAAP minus (ii) all liabilities of the Company and its Subsidiaries (other than the Loans and other obligations of the Company hereunder and under the other Loan Documents).

New Lender - see Section 1.3.

Note - see Section 3.1.

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

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

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

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

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

Pledge Agreement means the Pledge Agreement dated as of October 8, 1999, executed by the Company and each Subsidiary which itself owns any Subsidiary (to the extent not prohibited by a Permitted Restriction in favor of an auto manufacturer), a copy of which is attached as Exhibit E.

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

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

RCRA - see Section 8.15.

Refinancing Agreement - see Section 10.2.1(c).

Reaffirmation means a reaffirmation of loan documents in substantially the form of Exhibit H.

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

Regulation U means Regulation U of the FRB.

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

Required Lenders means Lenders having Pro Rata Shares aggregating more than 65%.

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

Revolving Loan - see Section 2.1.1.

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

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

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

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

Security Agreement means the Security Agreement dated as of October 8, 1999, executed by the Company and each Subsidiary (other than Foreign Subsidiaries), a copy of which is attached as Exhibit D.

Seller Subordinated Debt means unsecured indebtedness of the Company that:

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

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

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

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

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

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

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

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

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

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

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

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

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

Taxes - see Section 7.6.

Term Loan Termination Date means December 23, 2007.

Term Loans - see Section 2.1.4.

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

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

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

Young JV Agreement - see Section 9.9.

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

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

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

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

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

(g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company, the Lenders and the other parties thereto and are the products of all parties. Accordingly, they shall not be construed

against the Agent or the Lenders merely because of the Agent's or Lenders' involvement in their preparation.

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

1.3 Addition of New Lenders. On the Effective Date, (a) each financial institution listed on the signature pages hereof that was not a party to the Existing Agreement (each, a "New Lender") shall automatically become a party hereto and be entitled to the benefits, and have the obligations, of a "Lender" hereunder, and (b) each New Lender shall deliver to the Agent immediately available funds to cover such New Lender's Pro Rata Share of all outstanding Loans and, from such funds, the Agent shall disburse to each Lender that was a party to the Existing Agreement an amount in cash such that, after giving effect to such disbursement, such Lender has an amount of Loans outstanding equal to its Pro Rata Share of all outstanding Revolving Loans, Acquisition Loans and Term Loans. To facilitate the foregoing, the Company agrees that on the Effective Date the Company will pay to the Agent for the account of each Lender which is a party to the Existing Agreement all interest and fees owed to such Lender under the Existing Agreement.

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

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

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

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

2.1.3 L/C Commitment. (a) The Issuing Lender will issue letters of credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to the Issuing Lender (each a "Letter of Credit"), at the request of and for the account of the Company from time to time before the date which is 30 days prior to the Revolving Termination Date and (b) as more fully set forth in Section 2.3.2, each Lender agrees to purchase

a participation in each such Letter of Credit; provided that (i) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed $10,000,000 and (ii) the Revolving Outstandings will not at any time exceed the Revolving Commitment Amount.

2.1.4 Term Loans. Each Lender which was a party hereto prior to the Effective Date has heretofore made term loans to the Company (each such loan, a "Term Loan") in such Lender's Pro Rata Share of $186,000,000. No amount paid or prepaid with respect to any Term Loan may be reborrowed.

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

2.3 Letter of Credit Procedures.

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

inconsistency between the terms of any L/C Application and the terms of this Agreement, the terms of this Agreement shall control.

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

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

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

2.3.5 Funding by Lenders to Issuing Lender. If the Issuing Lender makes any payment or disbursement under any Letter of Credit and the Company has not reimbursed the Issuing Lender in full for such payment or disbursement by 10:00
A.M., Detroit time, on the date of such payment or disbursement, or if any reimbursement received by the Issuing Lender from the

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

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

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

SECTION 3 NOTES EVIDENCING LOANS.

3.1 Notes. The Loans of each Lender shall be evidenced by a promissory note (each a "Note") substantially in the form set forth in Exhibit A, with appropriate insertions, payable to the order of such Lender as follows:

(a) each Revolving Loan and Acquisition Loan of such Lender shall be paid in full on the Revolving Termination Date; and

(b) each Term Loan of such Lender shall be paid in installments equal to such Lender's Pro Rata Share of the aggregate principal amount of the installments of the Term Loans to be paid on the following dates:

Payment Date                       Payment Amount
------------                       --------------
December 23, 2001                  $25,000,000 (or, if less, the aggregate
                                   amount of all Term Loans then
                                   outstanding)
December 23, 2003                  $25,000,000 (or, if less, the aggregate
                                   amount of all Term Loans then
                                   outstanding)
December 23, 2005                  $25,000,000 (or, if less, the aggregate
                                   amount of all Term Loans then
                                   outstanding)
Term Loan Termination Date         The aggregate amount of all Term Loans then
                                   outstanding.

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

SECTION 4 INTEREST.

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

4.2 Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears for each month on the 20th day of the next succeeding month and at maturity. After maturity, accrued interest on all Loans shall be payable on demand.

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

SECTION 5 FEES.

5.1 Letter of Credit Fees. The Company agrees to pay to the Agent for the account of each Lender a fee for each Letter of Credit equal to 0.50% per annum of such Lender's Pro Rata Share (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days). Such letter of credit fee shall be payable in arrears (x) at all times prior to the Revolving Termination Date, within 30 days after being invoiced therefor by the Agent and (y) on the Revolving Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated.

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

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

(b) The Company may from time to time on at least one Business Day's prior written notice to the Agent (which shall promptly advise each Lender thereof) permanently reduce the Acquisition Commitment Amount to an amount not less than the aggregate outstanding principal amount of all Acquisition Loans. Concurrently with any reduction of the Acquisition Commitment Amount to zero, the Company shall pay all interest on the Acquisition Loans.

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

6.2 Voluntary Prepayments. The Company may, upon not less than one Business Day's notice to the Agent, from time to time prepay the Loans in whole or in part, without premium or penalty. All such prepayments of the Term Loans shall be applied to the remaining installments thereof in inverse order of maturity.

6.3 Mandatory Prepayments. (a) If the Company or any Subsidiary shall receive any Net Cash Proceeds from the issuance of any Subordinated Debt (other than Seller Subordinated Debt and other than Refinancing Debt in respect of any portion of the Subordinated Notes that has not

been repurchased, redeemed, defeased or otherwise repaid with the proceeds of Loans) or any other Debt that is not permitted by Section 9.7, the Company shall, concurrently with such receipt, make a prepayment of the Term Loans in an amount equal to 100% of such Net Cash Proceeds.

(b) If at any time (A) the sum of (i) the Revolving Outstandings plus (ii) the aggregate principal amount of the Term Loans plus (iii) the aggregate principal amount of the Acquisition Loans exceeds (B) the sum of (i) the Asset Value in effect at such time plus (ii) $300,000,000, the Company shall immediately prepay Loans and/or Cash Collateralize Letters of Credit, or do a combination of the foregoing, in an amount sufficient to eliminate such excess. To the extent Cash Collateral is provided for any Letter of Credit as provided in the immediately preceding sentence, the Agent agrees, upon request of the Company, to release such Cash Collateral if at any time when no Event of Default exists clause (A) of the immediately preceding sentence does not exceed clause (B) of such sentence.

6.4 All Prepayments of Term Loans. Each prepayment of the Term Loans shall be applied to the remaining installments thereof in inverse order of maturity.

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

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

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

7.3 Due Date Extension. If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.

7.4 Setoff. The Company agrees that the Agent and each Lender have all rights of set-off provided by applicable law, and in addition thereto, the Company agrees that at any time any Event of Default exists, the Agent and each Lender may apply to the payment of any obligations of the Company hereunder, whether or not then due, any and all balances, credits, deposits,

accounts or moneys of the Company then or thereafter with the Agent or such Lender. The Agent or the Lender exercising the set-off shall promptly notify the Company thereof after making such exercise; provided that failure to give such notice shall not affect the validity of the set-off.

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

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

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

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

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

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

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

Each Lender that (a) is organized under the laws of a jurisdiction other than the United States of America or a state thereof and (b)(i) is a party hereto on the Effective Date or (ii) becomes an assignee of an interest under this Agreement under Section 13.9.1 after the Effective Date (unless such Lender was already a Lender hereunder immediately prior to such assignment) shall execute and deliver to the Company and the Agent one or more (as the Company or the Agent may reasonably request) United States Internal Revenue Service Form W-8ECI or Form W-8BEN or such other forms or documents, appropriately completed, as may be applicable to establish that such Lender is exempt from withholding or deduction of Taxes. The Company shall not be required to pay additional amounts to any Lender pursuant to this Section 7.6 to the extent that the obligation to pay such additional amounts would not have arisen but for the failure of such Lender to comply with this paragraph.

SECTION 8 WARRANTIES.

To induce the Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans and issue and participate in Letters of Credit hereunder, the Company warrants to the Agent and the Lenders that:

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

8.2 Authorization; No Conflict. Each of the Company and each other Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, the Company is duly authorized to borrow monies hereunder and each of the Company and each other Loan Party is duly authorized to perform its obligations under each Loan Document to which it is a party. The execution, delivery and performance by the Company of this Agreement and by each of the Company and each other Loan Party of each Loan Document to which it is a party, and the borrowings by the Company hereunder, do not and will not (a) require any consent or approval of any governmental agency or authority (other than any consent or approval which has been obtained and is in full force and effect),
(b) conflict with (i) any provision of law, (ii) the charter, by-laws or other organizational documents of the Company or any other Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is

binding upon the Company or any other Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of the Company, any Subsidiary or any other Loan Party (other than Liens in favor of the Agent created pursuant to the Collateral Documents).

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

8.4 Financial Condition. The audited consolidated financial statements of the Company and its Subsidiaries as at December 31, 1999 and the unaudited consolidated condensed financial statements of the Company and its Subsidiaries as at September 30, 2000, copies of each of which have been delivered to the Agent for distribution to each Lender, were prepared in accordance with GAAP.

8.5 No Material Adverse Change. Since December 31, 1999 there has been no material adverse change in the financial condition, operations, assets, business, properties or prospects of the Company and its Subsidiaries taken as a whole.

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

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

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

8.9 Pension Plans. (a) During the twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement or the making of any Loan or the issuance of any Letter of Credit, (i) no steps have been taken to terminate any Pension Plan and (ii) no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien

under Section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which could result in the incurrence by the Company of any material liability, fine or penalty.

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

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

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

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

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

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

required to pay their debts and will have capital sufficient to carry on their business as then constituted.

8.15 Environmental Matters.

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

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

(c) Handling of Hazardous Substances. Except as set forth on Schedule 8.15, (i) no portion of the real property or other assets of the Company or any Subsidiary has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance in all material respects with applicable Environmental Laws and no underground tank or other underground storage receptacle for Hazardous Substances is located on such properties; (ii) in the course of any activities conducted by the Company, any Subsidiary or the operators of any real property of the Company or any Subsidiary, no Hazardous Substances have been generated or are being used on such properties except in accordance in all material respects with applicable Environmental Laws; (iii) there have been no Releases or threatened Releases of Hazardous Substances on, upon, into or from any real property or other assets of the Company or any Subsidiary, which Releases singly or in the aggregate might reasonably be expected to have a material adverse effect on the value of such real property or assets; (iv) there have been no Releases on, upon, from or into any real property in the vicinity of the real property or other

assets of the Company or any Subsidiary which, through soil or groundwater contamination, may have come to be located on, and which might reasonably be expected to have a material adverse effect on the value of, the real property or other assets of the Company or any Subsidiary; and (v) any Hazardous Substances generated by the Company and its Subsidiaries have been transported offsite only by properly licensed carriers and delivered only to treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are operating in compliance in all material respects with such permits and applicable Environmental Laws.

8.16 Insurance. Set forth on Schedule 8.16 is a complete and accurate summary of the property and casualty insurance program of the Company and its Subsidiaries as of the Effective Date (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, annual premiums, exclusions, deductibles, self-insured retention, and a description in reasonable detail of any self-insurance program, retrospective rating plan, fronting arrangement or other risk assumption arrangement involving the Company or any Subsidiary).

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

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

8.19 Burdensome Obligations. Neither the Company nor any Subsidiary is a party to any agreement or contract or subject to any corporate or partnership restriction which might reasonably be expected to have a Material Adverse Effect, excluding those items set forth in Schedule 8.19.

8.20 Labor Matters. Except as set forth on Schedule 8.20, neither the Company nor any Subsidiary is subject to any labor or collective bargaining agreement. There are no existing or threatened strikes, lockouts or other labor disputes involving the Company or any Subsidiary that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Company and its Subsidiaries are not in violation of the Fair Labor Standards Act or any other applicable law, rule or regulation dealing with such matters.

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

8.22 Securities Purchase Agreement. (a) The execution and delivery of the Securities Purchase Agreement did not, and the consummation of the transactions contemplated thereby will not, violate any statute or regulation of the United States (including any securities law) or of any state or other applicable jurisdiction, or any order, judgment or decree of any court or governmental body binding on the Company or any Subsidiary or result in a breach of, or constitute a default under, any material agreement, indenture, instrument or other document, or any judgment, order or decree, to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound.

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

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

SECTION 9 COVENANTS.

Until the expiration or termination of the Commitments and thereafter until all obligations of the Company hereunder and under the other Loan Documents are paid in full and all Letters of Credit have been Cash Collateralized or terminated, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent (except as provided in Section 13.1) in writing, it will:

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

9.1.1 Annual Report. Promptly when available and in any event within 90 days after the close of each Fiscal Year: (a) a copy of the annual report of the Company and its Subsidiaries for

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

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

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

9.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of the Company or any Subsidiary filed with the SEC; copies of all registration statements of the Company or any Subsidiary filed with

the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to security holders generally.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

9.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, except where failure to comply could not reasonably be expected to have a Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior to delinquency, all taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, might become a Lien on any of its property; provided that the foregoing shall not require the Company or any Subsidiary to pay any such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP.

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

9.6 Financial Covenants.

9.6.1 Ratio of Funded Debt to Stockholders' Equity. Not permit the ratio of Funded Debt to Stockholders' Equity to be greater than (x) 2.5:1 at any time during the period from the Effective Date through December 31, 2000 and (y) 2.75:1 at any time thereafter.

9.6.2 Ratio of Non-Floorplan Debt to Stockholders' Equity. Not permit the ratio of

Funded Debt (less Debt under Floor Plan Financings) to Stockholders' Equity to be greater than 1.3:1 at any time.

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

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

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

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

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

(d) unsecured Debt of the Company to Subsidiaries;

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

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

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

(h) Debt with respect to any Floor Plan Financing provided to the Company or any Subsidiary by General Motors Acceptance Corporation, BMW Financial Services NA, Inc., Ford Motor Credit Corporation, World Omni Financial Corporation (with respect to Toyota make new vehicles only in five states and used vehicles manufactured by various manufacturers), Toyota Motor Credit Corporation or Toyota Credit de Puerto Rico Corp. or any other Person to whom CFC, in its sole discretion, consents;

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

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

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

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

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

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

(d)(i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), (ii) Liens existing on property at the time of the acquisition thereof by the Company or any Subsidiary (and not created in contemplation of such acquisition) and (iii) Liens that constitute purchase money security interests on any property securing Debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within 60 days of the acquisition thereof and attaches solely to the property so acquired;

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

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

(g) Liens arising under the Loan Documents;

(h) Liens on any asset of an Automobile Dealership securing Debt permitted by Sections 9.7(h), (i) and (j) (in the case of Debt under Sections 9.7(h) and (j), (x) such Liens under agreements entered into after August 3, 1999 may attach only to the inventory floorplanned by such Debt and proceeds thereof, accounts receivable and payment intangibles owing by the relevant Dealer to the manufacturer with whom the provider of the financing is affiliated (and, with respect to World Omni Financial Corp., owing to Southeast Toyota Distributors, Inc.) (and all other rights to payment in which any such financing provider could exercise a right of setoff or recoupment) and service loaner vehicles manufactured by a manufacturer and financed by a financing provider permitted under Section 9.7(h) or (j) (collectively, "Permitted Floorplan Collateral") and (y) to the extent that such Liens under agreements in existence on August 3, 1999 attach to assets in addition to Permitted Floorplan Collateral, such Liens on such assets other than Permitted Floorplan Collateral must be subordinated to the security interest of the Agent in form and substance satisfactory to the Agent; and

(i) Liens arising in connection with cash collateral provided in support of that certain Swap Confirmation (deal no. 421023) with Morgan Guaranty Trust Company of New York ("Morgan") dated as of January 12, 2000 (the "Morgan Swap").

9.9 Restricted Payments. Not, and not permit any Subsidiary to, (a) make any distribution to any of its shareholders, (b) purchase or redeem any of its capital stock or other equity interests or any warrants, options or other rights in respect thereof, (c) pay any management fees or similar fees to any of its shareholders or any Affiliate thereof, (d) make any redemption, prepayment, defeasance or repurchase of any Subordinated Debt or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make other distributions to the Company or another Subsidiary and
(ii) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, the Company and its Subsidiaries may (1) pay dividends to its stockholders and purchase or redeem its capital stock, (2) pay management fees to Young Automotive Group, LLC, an Indiana limited liability company ("YAG"), and its Affiliates (collectively, "Young") in connection with joint ventures formed by the Company and its Subsidiaries pursuant to that certain Joint Venture Formation Agreement, dated as of January 31, 1998, among the Company, YAG and certain other parties (the "Young JV Agreement"), in an amount not to exceed 30% of the annual pre-tax income of all Persons in which Investments are made pursuant to the Young JV Agreement, (3) pay management fees to minority investors in UAG Cerritos, LLC and [Brazil] in an amount not to exceed 20% of the annual pre-fix income of UAG Cerritos LLC or
[Brazil], as the case may be, (4) repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes using the proceeds of up to $ 5,000,000 of Revolving Loans and (5) repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes using the proceeds of an offering of equity securities, which equity securities are issued by the Company.

9.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to, be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any receivables, except for: (a) any such merger, consolidation, sale, transfer, conveyance, lease or assignment of or by any Subsidiary into the Company or into, with or to any other Subsidiary; (b) any such purchase or other acquisition by the Company or any Subsidiary of the assets or stock of any Subsidiary; (c) any Acquisition by the Company or any Subsidiary if (1) immediately before and after giving effect to such Acquisition, no Event of Default or Unmatured Event of Default shall exist, (2) immediately after giving effect to such Acquisition, the Company is in pro forma compliance with all the financial ratios and restrictions set forth in Section 9.6, (3) in the case of the Acquisition of any Person, the Board of Directors of such Person has approved such Acquisition and all auto manufacturers doing business with such Person have consented to such Acquisition (provided that the auto manufacturers doing business with the acquired Person need not have consented to such Acquisition at the time of consummation thereof if the Company or the Subsidiary making such Acquisition has an irrevocable option, on terms and conditions (including cash escrow) satisfactory to the Agent in its sole discretion, to put the Person acquired in such Acquisition back to the seller thereof for a price in cash at least equal to the total amount of cash consideration paid by the Company or such Subsidiary in such Acquisition (including purchase price, noncompetition payments, earnout payments and other similar consideration) within 180 days if such auto manufacturers have not consented to such Acquisition, which option is otherwise unconditional, and which option must be exercised by the Company or the applicable Subsidiary within such period if such consents are not obtained), (4) after giving effect to such Acquisition, at least 20% of the total consideration (including cash and noncash purchase price, liabilities assumed, deferred purchase price, noncompetition payments and the like) paid by the Company in respect of all Acquisitions consummated after June 28, 2000 at any time has been paid otherwise than by means of any Debt incurred by the Company or any Subsidiary (provided that, for purposes of this clause (4) only, "Debt" shall not include Acquisition Loans and Revolving Loans to the extent that the aggregate principal amount of all Acquisition Loans and Revolving Loans is less than or equal to $200,000,000) and (5) prior to and after such Acquisition, the Chief Financial Officer of the Company has delivered a certificate to the Agent confirming that the conditions set forth in clauses
(1) - (4) above will be (in the case of a certificate delivered prior to such Acquisition) or have been (in the case of a certificate delivered after such Acquisition) met; and (d) sales and dispositions ("Dispositions") of assets (including the stock of Subsidiaries) for at least fair market value (as determined by the Board of Directors of the Company) so long as the net book value of all assets sold or otherwise disposed of in any Fiscal Year does not exceed $50,000,000 (exclusive of any Disposition the net cash proceeds of which are used within 180 days to purchase another asset performing the same or a similar function as the asset disposed of).

9.11 Modification of Organizational Documents. Not permit the Certificate or Articles of Incorporation, By-Laws or other organizational documents of the Company or any Subsidiary

to be amended or modified in any way which might reasonably be expected to materially adversely affect the interests of the Lenders.

9.12 Use of Proceeds. Use the proceeds of the Revolving Loans and Acquisition Loans, and the Letters of Credit, solely for working capital, for Acquisitions permitted by Section 9.10, for capital expenditures, to repurchase, redeem, defease or otherwise repay all or any of the Subordinated Notes (to the extent permitted by Section 9.9) to make Investments permitted hereunder, to repurchase the Company's capital stock and for other general corporate purposes (including, in the case of Revolving Loans, to pay Term Loans); and not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock.

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

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

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

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

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

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

9.18 Business Activities. Not, and not permit any Subsidiary to, engage in any line of business other than the businesses engaged in on August 3, 1999 and businesses reasonably related thereto.

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

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

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

(d) Cash Equivalent Investments;

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

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

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

(h) Investments listed on Schedule 9.19;

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

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

provided that (x) any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), (g) or (i) shall be permitted to be made if, immediately before or after giving effect thereto, any Event of Default or Unmatured Event of Default exists; and (z) the aggregate amount of Foreign Investments made during the period from and after August 3, 1999 shall not exceed $25,000,000 (provided that any Investment made with the proceeds of any offering of equity securities or Subordinated Debt of the Company shall be disregarded when determining compliance with the aggregate dollar limit in this clause (z)).

9.20 Restriction of Amendments to Certain Documents. Not amend or otherwise modify, or waive any rights under, either Subordinated Notes Indenture, the Subordinated Notes or the Morgan Swap, in any case, if such amendment, modification or waiver could reasonably be expected to be adverse to the Lenders in any respect; and not take any action to terminate the Morgan Swap if it is a condition to such termination that the Company make any payment to Morgan, or if a consequence of such termination would permit Morgan to retain or sell any collateral or to demand any payment from the Company.

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

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

SECTION 10 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

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

10.1 Conditions to Effectiveness. This Agreement shall become effective, and all Loans outstanding under the Existing Agreement and the Existing Letters of Credit shall be deemed to be issued and outstanding hereunder (as more fully set forth in Section 1.3), on the date on which the Agent shall have received all of the following, each duly executed and dated the date hereof (or such other date as shall be satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent (and the date on which all such conditions precedent have been satisfied or waived in writing by the Agent and the Lenders is called the "Effective Date"):

10.1.1 Notes. A Note executed by the Company in favor of each New Lender.

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

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

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

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

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

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

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

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

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

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

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

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

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

(c) unless the proceeds of such borrowing are to be used to repurchase, redeem or repay all outstanding Subordinated Notes, for so long as either Subordinated Notes Indenture is in effect (unless the obligations of the Company with respect to all

Subordinated Notes thereunder have been, or are concurrently with such borrowing to be, defeased in accordance with the terms of such Subordinated Notes Indenture), if after giving effect to such borrowing or the issuance of such Letter of Credit, the sum of the aggregate principal amount of all outstanding Loans plus the Stated Amount of all Letters of Credit would exceed the maximum amount of Debt permitted under each of Section 4.04(ii) of the Series A Subordinated Notes Indenture or Section 4.4(ii) of the Series B Subordinated Notes Indenture (or any similar provision in any instrument, indenture or agreement governing Refinancing Debt with respect to the Subordinated Notes (a "Refinancing Agreement") that limits the maximum amount of Debt that the Company may incur under this Agreement or any other senior credit facility of the Company without recourse to any other provision of such Refinancing Agreement), the Agent shall be satisfied that such borrowing or such issuance of a Letter of Credit will not violate either Subordinated Notes Indenture (or any Refinancing Agreement) and that the Company's obligations to the Agent and the Lenders in respect of such borrowing or Letter of Credit are "Senior Debt" under and as defined in each Subordinated Notes Indenture that is in effect at the time of such borrowing; and

(d) (i) if the proceeds of any borrowing are to be used to finance a tender offer for Subordinated Notes, (x) all terms and conditions of any such tender offer shall be satisfactory to the Agent (including the maximum tender price and all fees and commissions paid to any information agent, solicitation agent, dealer manager or Person performing any similar role) and each such tender offer shall comply with the offer documents applicable thereto and all applicable laws (including Rule 14e-1 under the Securities Exchange Act of 1934 and other Federal and state securities laws and regulations) and (y) there shall have been delivered to the Agent true and correct copies of all offer documents applicable thereto, all of which shall be in form and substance reasonably satisfactory to the Agent (the Agent agrees to review any such documents received by it reasonably promptly following receipt) and (ii) if the proceeds of any borrowing are to be used in connection with any solicitation of consents to amend any Subordinated Notes Indenture, all terms and conditions of each such consent solicitation shall be reasonably satisfactory to the Agent (the Agent agrees to review any such documents received by it reasonably promptly following receipt).

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

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

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

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

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

SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT.

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

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

11.1.2 Non-Payment of Other Debt. Any default shall occur under the terms applicable to any Debt of the Company or any Subsidiary in an aggregate amount
(for all such Debt so affected) exceeding $20,000,000 and such default shall (a) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable prior to its expressed maturity; or any such Debt shall be required to be prepaid or redeemed (other than by a regularly scheduled prepayment or redemption), purchased or defeased or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or any default shall occur under any Floor Plan Financing provided by any Lender or any Affiliate of a Lender to the Company or any Subsidiary.

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

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

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

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

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

11.1.8 Judgments. Final judgments which exceed an aggregate of $10,000,000 shall be rendered against the Company or any Subsidiary and shall not have been paid, discharged or

vacated or had execution thereof stayed pending appeal within 60 days after entry or filing of such judgments.

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

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

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

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

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

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

Company immediately Cash Collateralize all Letters of Credit, whereupon the Commitments (if they have not theretofore terminated) shall immediately terminate and/or all Loans and all other obligations hereunder shall become immediately due and payable and/or the Company shall immediately become obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind. The Agent shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration. Notwithstanding the foregoing, the effect as an Event of Default of any event described in Section 11.1.1 or Section 11.1.4 may be waived by the written concurrence of all of the Lenders, and the effect as an Event of Default of any other event described in this Section 11 may be waived by the written concurrence of the Required Lenders (except as provided in
Section 13.1). Any cash collateral delivered hereunder shall be held by the Agent (without liability for interest thereon) and applied to reimbursement obligations under the Letters of Credit. After the expiration or termination of the Letters of Credit, such cash collateral shall be applied by the Agent to any remaining obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may direct.

SECTION 12 THE AGENT.

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

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

12.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

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

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

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

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

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

12.8 Agent in Individual Capacity. CFC and its Affiliates may make loans to, issue letters of credit for the account of, acquire equity interests in and generally engage in any kind of business with the Company and its Subsidiaries and Affiliates as though CFC were not the Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, CFC or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor

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

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

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

12.11 Funding Reliance. (a) Unless the Agent receives notice from a Lender by noon, Detroit time, on the day of a proposed borrowing that such Lender will not make available to the Agent an amount equal to its Pro Rata Share of such borrowing, the Agent may assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make a corresponding amount available to the Company. If and to the extent such Lender has not made such amount available to the Agent, such Lender and the Company jointly and severally agree to repay such amount to the Agent forthwith on demand, together with interest thereon at the interest rate applicable to Loans comprising such borrowing or, in the case of any Lender which repays

such amount within three Business Days, the Federal Funds Rate. Nothing set forth in this clause (a) shall relieve any Lender of any obligation it may have to make any Loan hereunder.

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

SECTION 13 GENERAL.

13.1 Waiver; Amendments. No delay on the part of the Agent or any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be effective unless the same shall be in writing and signed and delivered by Lenders having an aggregate Pro Rata Share of not less than the aggregate Pro Rata Share expressly designated herein with respect thereto or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, the Lenders authorize the Agent to act within its discretion (and without notice to or the consent of any Lender) to waive or forbear on behalf of all Lenders any noncompliance by the Company (other than a waiver of, or forbearance with respect to, any Event of Default under Section 11.1.4) with this Agreement (provided that no such waiver shall be for a period in excess of 90 days). No amendment, modification, waiver or consent shall change the Pro Rata Share of any Lender without the consent of such Lender. No amendment, modification, waiver or consent shall (i) increase the Revolving Commitment Amount or the Acquisition Commitment Amount, (ii) extend the date for payment of any principal of or interest on the Loans or any fees payable hereunder, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, (iv) release the Guaranty or all or any substantial part of the collateral granted under the Collateral Documents, (v) amend or modify Section 9.6.1 so as to increase the maximum ratio of Funded Debt to Stockholder's Equity permitted at any time, (vi) amend or modify Section 9.6.2 so as to increase the maximum ratio of Funded Debt (less Debt under Floor Plan Financings) to Stockholder's Equity permitted at any time, (vii) amend or modify Section 9.6.4 so as to permit any Subsidiary to maintain working capital at levels less than the requirements set forth in such Subsidiary's franchise agreements, (viii) amend or modify Section 9.6.3 so as to increase the maximum Funded Debt to EBITDA Ratio permitted at any time, (ix) amend, modify or waive
Section 11.1.2 to the extent such Section expressly refers to

Floor Plan Financings, (x) amend, modify or waive Section 6.3(b) or (xi) reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent without, in each case, the consent of all Lenders. No provision of Section 12 or other provision of this Agreement affecting the Agent in its capacity as such shall be amended, modified or waived without the consent of the Agent. No provision of this Agreement relating to the rights or duties of the Issuing Lender in its capacity as such shall be amended, modified or waived without the consent of the Issuing Lender.

13.2 Confirmations. The Company and each holder of a Note agree from time to time, upon written request received by it from the other, to confirm to the other in writing (with a copy of each such confirmation to the Agent) the aggregate unpaid principal amount of the Loans then outstanding under such Note.

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

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

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

13.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent (including Attorney Costs) in connection with the preparation, execution, syndication, delivery and administration of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any amendment, supplement or waiver to any Loan Document), and all out-of-pocket costs and expenses (including Attorney Costs) incurred by the Agent and each Lender after an Event of Default in connection with the enforcement of this Agreement, the other Loan Documents or any such other documents. In addition, the Company agrees to pay, and to save the Agent and the Lenders harmless from all liability for, (a) any stamp or other taxes (excluding income taxes and franchise taxes based on net income) which may be payable in connection with the execution and delivery of this Agreement, the borrowings hereunder, the issuance of the Notes or the execution and delivery of any other Loan Document or any other document provided for herein or delivered or to be delivered hereunder or in connection herewith and (b) any fees of the Company's auditors in connection with any reasonable exercise by the Agent and the Lenders of their rights pursuant to Section 9.2. All obligations provided for in this Section 13.6 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit and termination of this Agreement.

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

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

13.9 Assignments; Participations.

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

Lender in connection with the interests so assigned and delegated to an Assignee until the date when all of the following conditions shall have been met:

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

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

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

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

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

13.9.2 Participations. Any Lender may at any time sell to one or more commercial banks or other Persons participating interests in any Loan owing to such Lender, the Note held by such Lender, the Commitment of such Lender, the interest of such Lender in any Letter of Credit or any other interest of such Lender hereunder (any Person purchasing any such participating interest being herein called a "Participant"). In the event of a sale by a Lender of a participating interest to

a Participant, (x) such Lender shall remain the holder of its Note for all purposes of this Agreement, (y) the Company and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations hereunder and (z) all amounts payable by the Company shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender. No Participant shall have any direct or indirect voting rights hereunder except with respect to any of the events described in the fourth sentence of Section 13.1. Each Lender agrees to incorporate the requirements of the preceding sentence into each participation agreement which such Lender enters into with any Participant. The Company agrees that if amounts outstanding under this Agreement and the Notes are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or such Note; provided that such right of setoff shall be subject to the obligation of each Participant to share with the Lenders, and the Lenders agree to share with each Participant, as provided in Section 7.5. The Company also agrees that each Participant shall be entitled to the benefits of Section 7.6 as if it were a Lender (provided that no Participant shall receive any greater compensation pursuant to Section 7.6 than would have been paid to the participating Lender if no participation had been sold).

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

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

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

13.13 Indemnification by the Company. In consideration of the execution and delivery of this Agreement by the Agent and the Lenders and the agreement to extend the Commitments provided hereunder, the Company hereby agrees to indemnify, exonerate and hold the Agent, each Lender and each of the officers, directors, employees, Affiliates and agents of the Agent and each Lender (each a "Lender Party") free and harmless from and against any and all actions, causes of action, suits, losses, liabilities, damages and expenses, including Attorney Costs (collectively, the "Indemnified Liabilities"), incurred by the Lender Parties or any of them as a result of, or arising out of, or relating to (i) any tender offer, merger, purchase of stock, purchase of assets or other similar transaction financed or proposed to be financed in whole or in part, directly or indirectly, with the proceeds of any of the Loans, (ii) the use, handling, release, emission, discharge, transportation, storage, treatment or disposal of any hazardous substance at any property owned or leased by the Company or any Subsidiary, (iii) any violation of any Environmental Laws with respect to conditions at any property owned or leased by the Company or any Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup or remediation of offsite locations at which the Company or any Subsidiary or their respective predecessors are alleged to have directly or indirectly disposed of hazardous substances or (v) the execution, delivery, performance or enforcement of this Agreement or any other Loan Document by any of the Lender Parties, except for any such Indemnified Liabilities arising on account of the applicable Lender Party's gross negligence or willful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section 13.13 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit, any foreclosure under, or any modification, release or discharge of, any or all of the Collateral Documents and termination of this Agreement.

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

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

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

13.17 CFC Right of First Refusal on Floor Plan Financing. Each Subsidiary that is engaged in the retail sale or lease of motor vehicle inventory shall not obtain any wholesale motor vehicle financing from any Person other than CFC (and other than Floor Plan Financings permitted under Section 9.7(h)) unless and until it shall have submitted a bona fide written proposal (a "Proposal") to CFC for such financing and CFC has declined to provide the same. Each Proposal shall set forth all salient terms of the underlying financing. For purposes hereof, CFC will be deemed to have declined to provide the financing described in a Proposal if it shall have failed to respond to the Subsidiary that submitted the Proposal within ten Business Days of receiving such Proposal. If CFC declines to provide any financing described in a Proposal, the Subsidiary that submitted the Proposal may then obtain the financing described in the Proposal

from another Person on terms no more favorable to such Person than those contained in the Proposal and otherwise on terms substantially identical to those in the Proposal.

13.18 Confidentiality. Each Lender agrees to take, and to cause its Affiliates to take, normal and reasonable precautions and exercise due care to maintain the confidentiality of all non-public information provided to it by the Company or any Subsidiary, or by the Agent on the Company's or any Subsidiary's behalf, under this Agreement or any other Loan Document, and neither such Lender nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary, except to the extent such information was or becomes generally available to the public other than as a result of disclosure by such Lender or was or becomes available on a non-confidential basis from a source other than the Company (provided that such source is not bound by a confidentiality agreement with the Company or any Subsidiary known to such Lender); provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any governmental authority to which such Lender is subject or in connection with an examination of such Lender by any such authority, (B) pursuant to subpoena or other court process, when required to do so in accordance with the provisions of any applicable requirement of law, (C) to the extent reasonably required in connection with any litigation or proceeding to which the Agent or any Lender or any of their respective Affiliates may be party, (D) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document, (E) to such Lender's independent auditors and other professional advisors, (F) to any participant or assignee, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder, (G) as to any Lender or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Lender or such Affiliate, (H) to its Affiliates and (I) any nationally recognized rating agency that requires access to information about such Lender's investment portfolio in connection with ratings issued to such Lender.

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

UNITED AUTO GROUP, INC.

By
Title

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

By
Title

TOYOTA MOTOR CREDIT CORPORATION,
as a Lender

By
Title

SCHEDULE 2.1

LENDERS AND PRO RATA SHARES

                          Pro Rata Share     Pro Rata Share
                           of Revolving      of Acquisition
                           Commitment        Commitment                         Pro Rata
Lender                       Amount            Amount          Term Loans        Share
------                       ------            ------          ----------        -----
Chrysler Financial         $ 76,250,000      $317,200,000     $113,460,000        61%
Company L.L.C.

Toyota Motor               $ 48,750,000      $202,800,000     $ 72,540,000        39%
Credit Corporation

TOTALS                     $125,000,000      $520,000,000     $186,000,000       100%

SCHEDULE 8.6

LITIGATION AND CONTINGENT LIABILITIES

SCHEDULE 8.8

SUBSIDIARIES

SCHEDULE 8.15

ENVIRONMENTAL MATTERS

SCHEDULE 8.16

INSURANCE

SCHEDULE 8.19

BURDENSOME OBLIGATIONS

SCHEDULE 8.20

LABOR MATTERS

SCHEDULE 9.7

PERMITTED EXISTING DEBT

SCHEDULE 9.8

PERMITTED EXISTING LIENS

SCHEDULE 9.17

PERMITTED RESTRICTIONS

SCHEDULE 9.19

INVESTMENTS

SCHEDULE 13.3

ADDRESSES FOR NOTICES

UNITED AUTO GROUP, INC.

1 Harmon Plaza
Secaucus, New Jersey 07094
Attn: James R. Davidson

Telephone No.: (201) 325-3303
Facsimile No.: (201) 325-3351

with a copy to:

Robert H. Kurnick, Jr., Esquire
Executive Vice President and General Counsel United Auto Group, Inc.
13400 Outer Drive, West
Suite B-36
Detroit, MI 48239-4001

Telephone No.: (313) 592-7550
Facsimile No.: (313) 592-7340

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

Notices of Borrowing and Requests for Letter of Credit Issuance

27777 Franklin Road, 25th Floor
Southfield, Michigan 48034-8286
Attention: Michele Nowak
Telephone: (248) 948-4860
Facsimile: (248) 948-3848

All Other Notices

27777 Franklin Road, 25th Floor
Southfield, Michigan 48034-8286
Attention: Michele Nowak
Telephone: (248) 948-4860
Facsimile: (248) 948-3848

TOYOTA MOTOR CREDIT CORPORATION, as a Lender

19001 South Western Avenue
Torrance, California 90509
Attention: Tom Brubaker
Telephone: (310) 468-3756
Facsimile: (310) 468-3854

With a Copy To

19001 South Western Avenue
Torrance, California 90509
Attention: General Counsel
Telephone: (310) 468-3552
Facsimile: (310) 468-3501

EXHIBIT A

FORM OF
NOTE

, 200
Detroit, Michigan

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

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

This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Amended and Restated Credit Agreement, dated as of December 22, 2000 (as amended or otherwise modified from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, certain financial institutions (including the Lender) and the Agent, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or its due date accelerated.

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

UNITED AUTO GROUP, INC.

By:

Title:

Schedule attached to Note dated , 200 of UNITED AUTO GROUP, INC. payable to the order of

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EXHIBIT H

FORM OF REAFFIRMATION OF
LOAN DOCUMENTS

December 22, 2000

Chrysler Financial Company L.L.C., as Agent and the other parties
to the Amended and Restated Credit Agreement referred to below
27777 Franklin Road, 25th Floor
Southfield, Michigan 48034
Attn: Michele Nowak

RE: REAFFIRMATION OF LOAN DOCUMENTS

Ladies and Gentlemen:

Please refer to:

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

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

(c) The Pledge Agreement dated as of October 8, 1999 (the "Pledge Agreement") executed by the Company and certain of its subsidiaries.

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

Each of the undersigned acknowledges that the Company, the Lenders and the Agent have executed the Amended and Restated Credit Agreement (the "Amended Agreement") to the Credit Agreement dated as of August 3, 1999 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement").

Each of the undersigned hereby confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and that, upon such effectiveness, all references in such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended and restated by the Amended Agreement.

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

UAG NORTHEAST, INC.
DIFEO PARTNERSHIP, INC.
UAG HUDSON, INC.
SOMERSET MOTORS INC.
UAG NORTHEAST BODY SHOP, INC.
UNITED LANDERS, INC.
LANDERS AUTO SALES, INC.
LANDERS UNITED AUTO GROUP NO. 2, INC.
LANDERS UNITED AUTO GROUP NO. 6, INC.
LANDERS BUICK-PONTIAC, INC.
LANDERS FORD NORTH, INC.
UNITED AUTO GROUP, INC.
UAG SOUTHEAST, INC.
UAG DULUTH, INC.
UNITED NISSAN, INC. (GA)
UNITED NISSAN, INC. (NV)
UNITED NISSAN, INC. (TN)
PEACHTREE NISSAN, INC.
UAG TENNESSEE, INC.
UAG WEST, INC.
SA AUTOMOTIVE, LTD.
SL AUTOMOTIVE, LTD.
SPA AUTOMOTIVE, LTD.
LRP, LTD.
SUN MOTORS, LTD.
SCOTTSDALE MANAGEMENT GROUP, LTD.
SAU AUTOMOTIVE, LTD.
SK MOTORS, LTD.
KMT/UAG, INC.
RELENTLESS PURSUIT ENTERPRISES, INC.
TRI-CITY LEASING, INC.
HT AUTOMOTIVE LTD.

B-I-2

UAG TEXAS, INC.
UAG TEXAS II, INC.
UAG EAST, INC.
WESTBURY SUPERSTORE, LTD.
PALM AUTO PLAZA, INC.
FLORIDA CHRYSLER PLYMOUTH, INC.
WEST PALM NISSAN, INC.
WEST PALM INFINITI, INC.
NORTHLAKE AUTO FINISH, INC.
J & S AUTO REFINISHING, LTD.
JS IMPORTS, INC.
WEST PALM AUTO MALL, INC.
AUTO MALL PAYROLL SERVICES, INC.
AMITY AUTO PLAZA, LTD.
AMITY NISSAN OF MASSAPEQUA, LTD.
UAG CAROLINA, INC.
REED-LALLIER CHEVROLET, INC.
MICHAEL CHEVROLET-OLDSMOBILE, INC.
GENE REED CHEVROLET, INC.
UNITEDAUTO DODGE OF SHREVEPORT, INC.
COVINGTON PIKE DODGE, INC.
THE NEW GRACELAND DODGE, INC.
UAG GRACELAND II, INC.
UAG MEMPHIS II, INC.
UAG MEMPHIS IV, INC.
UAG MEMPHIS V, INC.
UAG-CARIBBEAN, INC.
DAN YOUNG CHEVROLET INC.
YOUNG MANAGEMENT GROUP, INC.
UAG YOUNG II, INC.
UAG PARAMOUNT MOTORS, INC.
UAG KISSIMMEE MOTORS, INC.
UAG CITRUS, INC.
UAG CLASSIC, INC.
CLASSIC AUTO GROUP, INC.
CHERRY HILL CLASSIC CARS, INC.
CLASSIC OF CHERRY HILL, INC.
CLASSIC MANAGEMENT COMPANY, INC.
CLASSIC CHEVROLET, INC.
CLASSIC AUTO GROUP HOLDINGS, INC.
CLASSIC IMPORTS, INC.
UNITEDAUTO ENTERPRISES, INC.

B-I-3

UNITED AUTOCARE, INC.
UNITED AUTOCARE PRODUCTS, INC.
UNITEDAUTO FOURTH FUNDING INC.
UNITEDAUTO FIFTH FUNDING INC.
UAG FINANCE COMPANY, INC.
CLASSIC MOTOR SALES LLC
D. YOUNG CHEVROLET LLC
DAN YOUNG MOTORS LLC
UAG YOUNG AUTOMOTIVE GROUP LLC
YOUNG AUTOMOTIVE HOLDINGS LLC
EUROPA AUTO IMPORTS, INC.
UAG LAKE NORMAN, LLC
UAG INDIANAPOLIS, LLC
MOTORCARS ACQUISITION, LLC
MOTORCARS ACQUISITION II, LLC
MOTORCARS ACQUISITION III, LLC
SCOTTSDALE FERRARI, LLC
UAG OLDSMOBILE OF INDIANA, LLC
ATLANTIC AUTO FUNDING CORPORATION
ATLANTIC AUTO SECOND FUNDING CORPORATION
ATLANTIC AUTO THIRD FUNDING CORPORATION
GOODSON NORTH, LLC
GOODSON PONTIAC GMC, LLC
GOODSON SPRING BRANCH, LLC
PIONEER FORD WEST, LLC
UAG CERRITOS, LLC
UAG CONNECTICUT, LLC
UAG CONNECTICUT REALTY, LLC
UAG FAIRFIELD CA, LLC
UAG FAIRFIELD CM, LLC
UAG FAIRFIELD CP, LLC
UAG HOUSTON ACQUISITION, LLC
UAG INTERNATIONAL HOLDINGS, INC.
UAG LANDERS SPRINGDALE, LLC
UAG MENTOR ACQUISITION, LLC
UAG MICHIGAN CADILLAC, LLC
UAG MICHIGAN PONTIAC-GMC, LLC
UAG MICHIGAN T1, LLC
UAG MICHIGAN TMV, LLC
UAG PHOENIX VC, LLC
UAG REALTY, LLC

B-I-4

UAG SPRING, LLC
UNITED AUTO FINANCE, INC.
UNITED RANCH AUTOMOTIVE, LLC

By:

Title:

DIFEO HYUNDAI PARTNERSHIP
DIFEO NISSAN PARTNERSHIP
DIFEO CHRYSLER PLYMOUTH JEEP EAGLE
PARTNERSHIP
DIFEO LEASING PARTNERSHIP
DANBURY AUTO PARTNERSHIP
DIFEO TENAFLY PARTNERSHIP
OCT PARTNERSHIP
HUDSON MOTORS PARTNERSHIP
COUNTY AUTO GROUP PARTNERSHIP
SOMERSET MOTORS PARTNERSHIP
By: DIFEO PARTNERSHIP, INC.
a general partner

By:

Title:

B-I-5

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

By:

Title:

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

By:

Title:

CLASSIC ENTERPRISES, LLC
CLASSIC NISSAN OF TURNERSVILLE, LLC
By: UAG CLASSIC, INC.
Member

By:

Title:

LANDERS FORD, INC
NATIONAL CITY FORD, INC.
CENTRAL FORD CENTER, INC.
PIONEER FORD SALES, INC.

By:

Title:

B-I-6

ACKNOWLEDGED AND AGREED
as of the date first written above

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

By:
Title:

B-I-7

EXHIBIT I

SUBORDINATION PROVISIONS APPLICABLE TO
SUBORDINATED DEBT

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

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

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

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

Period, after which, in the case of clauses (ii), (iii), (iv) and (v), the Company shall resume making payments in respect of the subordinated notes, unless clause (a) or (b) above is then applicable.

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

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

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

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

(h) "Superior Indebtedness" means (a) all obligations of the Company under or in connection with the Amended and Restated Credit Agreement, dated as of December 22, 2000 among the Company, various financial institutions and Chrysler Financial Company L.L.C. ("CFC"), as agent (as amended, restated, amended and restated or otherwise modified from time to time, the "Credit Agreement"), whether for principal, interest (including any interest that would accrue but for the filing of a petition initiating any bankruptcy, insolvency or like proceeding, whether or not such interest is an allowed claim enforceable against the debtor), fees, expenses or otherwise and (b) all other obligations of the Company to CFC, howsoever arising or evidenced.

EXHIBIT J

FORM OF
L/C APPLICATION

TO: CHRYSLER FINANCIAL COMPANY L.L.C.
27777 Franklin Road, 25th Floor
Southfield, Michigan 48034
Telephone:(248) 948-4860
Facsimile: (248) 948-3138
Attention: Michele Nowak

Ladies and Gentlemen:

We hereby request Chrysler Financial Company L.L.C., as Issuing Lender under the Credit Agreement referred to below, to establish a Letter of Credit (the "Credit") for our account as follows:

BENEFICIARY:

APPLICANT:

AMOUNT:

EXPIRY DATE:

AVAILABLE BY SIGHT DRAFTS TO BE ACCOMPANIED BY:

SPECIAL INSTRUCTIONS:

Chrysler Financial Company L.L.C.,
as Issuing Lender
, 200

Page 2 of 2

PURPOSE OF CREDIT:

The Credit is subject to the terms and provisions of the Amended and Restated Credit Agreement, dated as of December 22, 2000 (as amended or otherwise modified from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, certain financial institutions and the Issuing Lender, to which Credit Agreement reference is hereby made for a statement of the terms and provisions regarding the issuance of Letters of Credit and the reimbursement obligations arising in connection therewith.

The undersigned hereby confirms that, both before and after giving effect to the issuance of the Credit, (a) the representations and warranties of the undersigned and each Subsidiary set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects with the same effect as if made on the date hereof (except to the extent such representations and warranties relate to a specific earlier date) and (b) no Event of Default or Unmatured Event of Default has occurred or is continuing.

Dated this      day of           , 200  .

                                       UNITED AUTO GROUP, INC.

                                       By:
                                          ---------------------
                                       Its:
                                           --------------------

EXHIBIT K

FORM OF ACCOUNTANT'S LETTER

INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES

United Auto Group, Inc.
One Harmon Plaza
Secaucus, NJ 07094

We have performed the procedures enumerated below, solely to assist you in evaluating United Auto Group, Inc.'s (the "Company") compliance with the financial covenants of the Amended and Restated Credit Agreement dated as of December 22, 2000, as amended, with Chrysler Financial Company L.L.C. ("Chrysler Financial") and Section 4.04 of the Series A Subordinated Notes Indenture and
Section 4.4 of the Series B Subordinated Notes Indenture, as of March 31, 2001. This engagement to apply agreed-upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the Company. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures that we performed and our findings are as follows:

1-We obtained Exhibit A, prepared by the Company's accounting personnel, detailing the financial covenant calculations of Sections 9.6.1, 9.6.2, 9.6.3, 9.7 and 9.9 of the Amended and Restated Credit Agreement dated as of December 22, 2000, as amended, with Chrysler Financial and Section 4.04 of the Series A Subordinated Notes Indenture and Section 4.4 of the Series B Subordinated Notes Indenture (collectively the "Debt Agreements"), as of March 31, 2001. We proved the arithmetic accuracy of the computations in Exhibit A.

2-Where appropriate, we compared the amounts included in Exhibit A to the Company's financial statements as of and for the three months ended March 31, 2001 or to the trial balance at that date, and noted that they were in agreement.

3-We compared the proforma amounts contained in the financial covenant calculations of Sections 9.6.3 and 4.04 to underlying data provided to us by management of the Company and noted that they were in agreement.

4-We compared the required financial covenant amounts included in Exhibit A to the respective sections of the Debt Agreements referred to in 1- above and noted that they were in agreement.

We were not engaged to, and did not, perform an audit, the objective of which would be the expression of an opinion on the specified elements, or items included in Exhibit A. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the Company and Chrysler Financial and is not intended to be and should not be used by anyone other than these specified parties.

DELOITTE & TOUCHE LLP

Date

EXHIBIT 10.26
Execution Copy

PURCHASE AGREEMENT

by and between

PENSKE AUTOMOTIVE HOLDINGS CORP.,

and

UNITED AUTO GROUP, INC.

dated as of

December 22, 2000

PURCHASE AGREEMENT

PURCHASE AGREEMENT dated as of December 22, 2000, by and between UNITED AUTO GROUP, INC., a Delaware corporation (the "Company"), and PENSKE AUTOMOTIVE HOLDINGS CORP., a Delaware corporation (the "Purchaser").

RECITALS

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, 2,139,535 shares of Voting Common Stock, par value $0.0001 per share (the "Voting Common Stock") of the Company, for a purchase price of $10.75 per share;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

SALE AND PURCHASE OF SECURITIES

1.1. The Purchase. At the Closing on the date hereof, subject to completion of all of the Closing Actions, the Purchaser shall purchase (the "Purchase") from the Company, and the Company shall sell to the Purchaser, an aggregate of 2,139,535 shares of Voting Common Stock (the "Securities") at a purchase price of $10.75 per share and an aggregate purchase price of $23,000,001.25 (the "Purchase Price").

1.2. Use of Proceeds. The Company will use the proceeds of the Purchase
[for general corporate purposes].

1.3. The Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place simultaneously with the execution and delivery of this Agreement on the date hereof or on such other date as the Company and the Purchaser may mutually determine (such date, the "Closing Date").

1.4. Actions at the Closing. Simultaneously with, or prior to, the execution and delivery of this Agreement, the following actions shall occur (the "Closing Actions"):

(a) The Company shall issue the Securities to the Purchaser, evidenced by stock certificates in the name of the Purchaser, free and clear of encumbrances thereon other than as provided by the Registration Rights Agreement.

(b) The Purchaser shall pay the Purchase Price to the Company by wire transfer pursuant to instructions provided by the Company.

- 1 -

(c) A registration rights agreement (the "Registration Rights Agreement") among the Company and the Purchaser, substantially in the form of Exhibit A or as otherwise agreed to by the parties, will be duly executed and delivered by the parties thereto. The term "Documents" means collectively this Agreement and the Registration Rights Agreement.

(d) The Company shall deliver to the Purchaser a stock certificate executed by its Secretary, substantially in the form of Exhibit B.

(e) The Company has filed with the New York Stock Exchange an Application for Listing of Additional Shares.

1.5. Legend.

(a) The parties hereby acknowledge and agree that each of the certificates representing the shares of Voting Common Stock shall be subject to stop transfer instructions and shall include the following legend and any other legend required by law:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THESE SHARES ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER, SALE, ASSIGNMENT, PLEDGE OR OTHER DISPOSITION OF SUCH SHARES, AS MORE FULLY SET FORTH IN THE PURCHASE AGREEMENT DATED AS OF DECEMBER 22, 2000 BY AND BETWEEN UNITED AUTO GROUP, INC. AND PENSKE CORPORATION. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY AND IS AVAILABLE FOR INSPECTION BY STOCKHOLDERS OF THE COMPANY.

(b) The requirement that the above securities legend be placed upon certificates evidencing shares of Voting Common Stock shall cease and terminate upon the earliest of the following events: (i) when such shares are transferred in an underwritten public offering, (ii) when such shares are transferred pursuant to Rule 144 in compliance with the Securities Act or (iii) when such shares are transferred in any other transaction if the seller delivers to the Company an opinion of its counsel, which counsel and opinion shall be reasonably satisfactory to the Company, or a "no-action" letter from the staff of the Securities and Exchange Commission, in either case to the effect that such legend is no longer necessary in order to protect the Company against a violation by it of the Securities Act upon any sale or other disposition of such shares without registration thereunder. Upon the consummation of any event requiring the removal of a legend hereunder, the Company, upon the surrender of certificates containing such legend, shall, at its own expense, deliver to the holder of any such shares as to which the requirement for such legend shall have terminated, one or more new certificates evidencing such shares not bearing such legend.

- 2 -

ARTICLE II

REPRESENTATIONS & WARRANTIES CONCERNING THE COMPANY

The Company hereby represents and warrants to the Purchaser as follows as of the date hereof:

2.1. Organization and Good Standing; Power and Authority; Qualifications. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business as presently conducted and as proposed to be conducted. The Company has all requisite corporate power and authority to enter into and carry out the transactions contemplated by the Documents.

2.2. Authorization of the Documents. The execution, delivery and performance of each of the Documents has been duly authorized by all requisite corporate action on the part of the Company, including by a disinterested majority of the board of directors of the Company in accordance with Section 144 of the Delaware General Corporation Law, and each of the Documents constitutes a legal, valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally.

2.3. No Conflict. The execution, delivery and performance by the Company of the Documents and the consummation by the Company of the transactions contemplated hereby and thereby; and the issuance, sale and delivery by the Company of the Securities will not (a) violate any provision of law, statute, rule or regulation, or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Company or any of its properties or assets, (b) conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or both) a default (or give rise to any right of termination, cancellation or acceleration) under any agreement of the Company, or result in the creation of any mortgage, lien, security interest, loan, charge or encumbrance, upon any of the properties or assets of the Company or (c) violate the Certificate of Incorporation or the by-laws of the Company.

2.4. Consents. No permit, authorization, consent or approval of or by, or any notification of or filing (including any filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) with any person (governmental or private) is required in connection with the execution, delivery and performance by the Company of the Documents or any documentation relating thereto, the consummation by the Company of the transactions contemplated hereby or thereby, or the issuance, sale or delivery of the Securities.

2.5. Closing Actions. Subject to the execution and delivery of the Documents, the Closing Actions that the Company is required to complete have been completed.

- 3 -

ARTICLE III

REPRESENTATIONS & WARRANTIES CONCERNING THE PURCHASER

3.1. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as of the date hereof as follows:

(a) The Purchaser is acquiring the Securities for its own account, for investment and not with a view to the distribution thereof within the meaning of the Securities Act.

(b) The Purchaser understands that (i) the Securities have not been registered under the Securities Act or any state securities laws, and (ii) the Securities may not be sold unless such disposition is registered under the Securities Act and applicable state securities laws or is exempt from registration and/or regulation thereunder as the case may be.

(d) The Purchaser is duly organized and validly existing under the laws of the state of its organization and has all power and authority to enter into and perform the Documents. Each of the Documents has been duly authorized by all necessary action on the part of the Purchaser. Each of the Documents constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally.

(e) The execution, delivery and performance of each of the Documents has been duly authorized by all requisite corporate action on the part of the Purchaser, and each of the Documents constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally.

(f) The execution, delivery and performance by the Purchaser of each of the Documents and the consummation by the Purchaser of the transactions contemplated thereby will not (a) violate any provision of law, statute, rule or regulation, or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Purchaser, or any of its properties or assets or (b) violate the certificate of incorporation or the bylaws of the Purchaser.

(g) No permit, authorization, consent or approval of or by, or any notification of or filing (including any filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) with any person (governmental or private) is required in connection with the execution, delivery and performance by the Company of the Documents or any documentation relating thereto, the consummation by the Company of the transactions contemplated hereby or thereby, or the issuance, sale or delivery of the Securities.

- 4 -

ARTICLE IV

MISCELLANEOUS

4.1. Notices. Except as otherwise provided in this Agreement, all notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or by telecopy (with confirmation promptly sent by regular mail), nationally recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

(i) if to the Company, to:

United Auto Group, Inc. 13400 Outer Drive, West Suite B36 Detroit, Michigan 48239-4001 Attention: General Counsel

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attention: Valerie Ford Jacob, Esq.

Robert C. Schwenkel, Esq.

(ii) if to the Purchaser, to:

Penske Corporation 13400 Outer Drive, West Detroit, Michigan 48239-4001 Attention: General Counsel

All such notices, requests, consents and other communications shall be deemed to have been given when received.

4.2. Amendments and Waivers. This Agreement may be amended, modified, supplemented or waived only upon the written agreement of the party against whom enforcement of such amendment, modification, supplement or waiver is sought.

4.3. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and the personal representatives and assigns of the parties hereto, whether so expressed or not.

- 5 -

4.4. Entire Agreement. This Agreement (with the documents referred to herein or delivered pursuant hereto and together with the Documents) embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof.

4.5. Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York without giving effect (to the fullest extent permitted by law) to the conflicts of law principles thereof which might result in the application of the laws of any other jurisdiction.

4.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. All signatures need not appear on any one counterpart.

4.7. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

4.8. Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to injunctive relief, including specific performance, to enforce such obligations without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

4.9. Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

4.10. Expenses. Each party to this Agreement shall bear its own cost and expenses, including fees of consultant(s), accountant(s), counsel, and other persons acting on behalf of or for such party except as provided for in Article IV.

[Remainder of Page Intentionally Left Blank]

- 6 -

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

COMPANY:

UNITED AUTO GROUP, INC.

By:  /s/ Phillip M. Hartz
     -----------------------------
      Name:  Phillip M. Hartz
      Title: Senior Vice President

PURCHASER:

PENSKE AUTOMOTIVE HOLDINGS CORP.

By:  /s/ Peter E. Mogk
     ----------------------------
      Name:  Peter E. Mogk
      Title: Treasurer

- 7 -

EXHIBIT 10.26.1
Execution Copy

REGISTRATION RIGHTS AGREEMENT

among

UNITED AUTO GROUP, INC.

and

PENSKE AUTOMOTIVE HOLDINGS CORP.

dated as of

December 22, 2000

Execution Copy

REGISTRATION RIGHTS AGREEMENT, dated as of December 22, 2000 among United Auto Group, Inc., a Delaware corporation (the "Company") and Penske Automotive Holdings Corp. ("Penske"), a Delaware Corporation.

The Company and Penske are entering into a Purchase Agreement (the "Purchase Agreement") pursuant to which, Penske is purchasing shares of Common Stock par value 0.0001 per share, of the Company (the "Common Stock").

If Penske, desires to sell shares of Common Stock, it may be desirable to register such shares under the Securities Act (as defined below).

As part of, and as consideration for, the acquisition of shares of the Common Stock from the Company on the date hereof and from time to time hereafter, the Company hereby grants to Penske certain registration and other rights with respect to its shares of Common Stock.

Accordingly, the parties hereto agree as follows:

1. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings:

"Certificate of Incorporation" means the Certificate of Incorporation of the Company, as it may be amended or restated hereafter from time to time.

"Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.

"Common Stock" means any shares of voting common stock, par value $0.0001 per share, of the Company, now or hereafter authorized to be issued, and, any and all securities of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stock pursuant to a merger, consolidation, stock split, stock dividend, recapitalization of the Company or otherwise.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a reference to the comparable section, if any, of any such similar Federal statute.

"Person" means a corporation, an association, a partnership, an organization, a business, a trust, an individual, or any other entity or organization, including a government or political subdivision or an instrumentality or agency thereof.

- 1 -

"Registrable Securities" means (i) any shares of Common Stock owned by Penske or any direct or indirect subsidiary of Penske or Penske Corporation, a Delaware corporation and (ii) any shares of Common Stock issued with respect to the Common Stock referred to in clause (i) by way of a stock dividend, stock split or reverse stock split or in connection with a combination of shares, recapitalization, merger, consolidation or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities
(a) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration of them under the Securities Act, or (c) when such securities shall have been sold in compliance with Rule 144 of the Securities Act. Any certificate evidencing the Registrable Securities shall bear a legend stating that the securities have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the securities.

"Registration Expenses" means all expenses incident to the registration and disposition of the Registrable Securities pursuant to Section 2 hereof, including, without limitation, all registration, filing and applicable national securities exchange fees, all fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel to the underwriters or Penske in connection with "blue sky" qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), all word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of "cold comfort" letters or any special audits required by, or incident to, such registration, all fees and disbursements of underwriters (other than underwriting discounts and commissions), all transfer taxes, and all fees and expenses of counsel to Penske up to a maximum of $50,000 per registration; provided, however, that Registration Expenses shall exclude, and Penske shall pay, underwriting discounts and commissions in respect of the Registrable Securities being registered.

"Securities Act" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. References to a particular section of the Securities Act shall include a reference to the comparable section, if any, of any such similar Federal statute.

- 2 -

2. Registration Under Securities Act, etc.

2.1 Registration on Request.

(a) Request. Penske shall have the right to require the Company to effect the registration under the Securities Act of all or part of the Registrable Securities, by delivering a written request therefor to the Company specifying the number of shares of Registrable Securities and the intended method of distribution. The Company shall (i) use its reasonable best efforts to effect the registration under the Securities Act (including by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested in such request and if the Company is then eligible to use such a registration) of the Registrable Securities which the Company has been so requested to register by Penske, for distribution in accordance with the intended method of distribution set forth in the written request delivered by Penske, such registration to be effected as expeditiously as possible, and (ii) if requested by Penske, use its reasonable best efforts to obtain acceleration of the effective date of the registration statement relating to such registration.

(b) Registration of Other Securities. Whenever the Company shall effect a registration pursuant to this Section 2.1, the Company may include other securities of the Company or which are held by Persons who, by virtue of agreements with the Company, are entitled to include their securities in any such registration. In the case of an underwritten offering pursuant to
Section 2.1, if holders of securities of the Company other than Registrable Securities who are entitled, by contract with the Company, to have securities included in such a registration (the "Other Stockholders") request such inclusion, the Company shall offer to include the securities of such Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Agreement. The Company and the Other Stockholders shall enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected pursuant to Section 2.1(f). Notwithstanding any other provision of this
Section 2, if the representative advises Penske in writing that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by Other Stockholders shall be excluded from such registration to the extent so required by such limitation.

(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as, subject to clause (a)(i) above, shall be selected by the Company and as shall be reasonably acceptable to Penske.

(d) Expenses. The Company shall pay all Registration Expenses in connection with any registration requested pursuant to this Section 2.1.

- 3 -

(e) Effective Registration Statement. A registration requested pursuant to this Section 2.1 shall not be deemed to have been effected (including for purposes of paragraph (h) of this Section 2.1) (i) unless a registration statement with respect thereto has become effective and has been kept continuously effective for a period of at least 180 days (or such shorter period which shall terminate when all the Registrable Securities covered by such registration statement have been sold pursuant thereto), (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to Penske and has not thereafter become effective, or (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived.

(f) Selection of Underwriters. The underwriters of each underwritten offering of the Registrable Securities so to be registered shall be selected by Penske and shall be subject to the approval of the Company, not to be unreasonably withheld or delayed.

(g) Right to Withdraw. If the managing underwriter of any underwritten offering shall advise Penske that the Registrable Securities covered by the registration statement cannot be sold in such offering within a price range acceptable to Penske, then Penske shall have the right to notify the Company in writing that they have determined that the registration statement be abandoned or withdrawn, in which event the Company shall abandon or withdraw such registration statement. In the event of such abandonment or withdrawal, such request shall not be counted for purposes of the requests for registration to which Penske is entitled pursuant to this Section 2.1.

(h) Limitations on Registration on Request. Penske shall be entitled to require the Company to effect, and the Company shall be required to effect, three registrations in the aggregate pursuant to this Section 2.1, provided, however, that the aggregate offering value of the shares to be registered pursuant to any such registration shall be at least $10,000,000 unless Penske then owns shares with an aggregate value less than $10,000,000 (in which case such lesser number of shares may be registered).

(i) Postponement. The Company shall be entitled once in any six-month period to postpone for a reasonable period of time (but not exceeding 90 days) (the "Postponement Period") the filing of any registration statement required to be prepared and filed by it pursuant to this Section 2.1 if the Company determines, in its reasonable judgment, that such registration and offering would materially interfere with any material financing, corporate reorganization or other material transaction involving the Company or any subsidiary, or would require premature disclosure thereof, and promptly gives Penske written notice of such determination, containing a general

- 4 -

statement of the reasons for such postponement and an approximation of the anticipated delay. If the Company shall so postpone the filing of a registration statement, (i) the Company shall use its reasonable best efforts to limit the delay to as short a period as is practicable and (ii) Penske shall have the right to withdraw the request for registration by giving written notice to the Company at any time and, in the event of such withdrawal, such request shall not be counted for purposes of the requests for registration to which Penske is entitled pursuant to this Section 2.1.

2.2 Incidental Registration.

(a) Right to Include Registrable Securities. If the Company at any time proposes to register any of its securities under the Securities Act by registration on Form S-1, S-2 or S-3 or any successor or similar form(s) (except registrations on any such Form or similar form(s) solely for registration of securities in connection with an employee benefit plan or dividend reinvestment plan or a merger or consolidation), whether or not for sale for its own account, it will each such time give prompt written notice to Penske of its intention to do so and of Penske's rights under this Section 2.2. Upon the written request of Penske (which request shall specify the maximum number of Registrable Securities intended to be disposed of by Penske), made as promptly as practicable and in any event within 30 days after the receipt of any such notice (15 days if the Company states in such written notice or gives telephonic notice to Penske, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date), the Company shall use its reasonable best efforts to include in such registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by Penske. Notwithstanding anything to the contrary contained in this Agreement, the Company may in its discretion withdraw any registration commenced pursuant to this Section 2.2 without liability to the holders of Registrable Securities. No registration effected under this Section 2.2 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1. The Company will pay all Registration Expenses in connection with any registration of Registrable Securities requested pursuant to this Section 2.2.

(b) Right to Withdraw. Penske shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 2.2 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of its request to withdraw.

- 5 -

materially adversely affect such offering, then the Company shall include in such registration, to the extent of the number and type which the Company is so advised can be sold in (or during the time of) such offering without so materially adversely affecting such offering (the "Section 2.2 Sale Amount"),
(i) all of the securities proposed by the Company to be sold for its own account or by an Other Stockholder exercising "demand" registration rights; and (ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities requested by Penske to be included in such registration pursuant to Section 2.2(a) and any other securities of the Company requested to be included in such registration by any Other Stockholder having the right to include securities on a pro rata basis, with the amount of securities of Penske and each such Other Stockholder to be included based on the pro rata amount of shares of Common Stock held, or obtainable by exercise or conversion of other securities of the Company, by Penske or such Other Stockholder.

(d) Plan of Distribution. Any participation by holders of Registrable Securities in a registration by the Company shall be in accordance with the Company's plan of distribution.

2.3 Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 2.1 and 2.2 hereof, the Company shall as expeditiously as possible:

(a) prepare and file with the Commission as soon as practicable the requisite registration statement to effect such registration (and shall include all financial statements required by the Commission to be filed therewith) and thereafter use its reasonable best efforts to cause such registration statement to become effective; provided, however, that before filing such registration statement (including all exhibits) or any amendment or supplement thereto or comparable statements under securities or blue sky laws of any jurisdiction, the Company shall as promptly as practicable furnish such documents to Penske and each underwriter, if any, participating in the offering of the Registrable Securities and their respective counsel, which documents will be subject to the reasonable review and comments of Penske, each underwriter and their respective counsel; and provided, further, however, that the Company may discontinue any registration of its securities pursuant to Section 2.2 or which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto;

(b) notify Penske of the Commission's requests for amending or supplementing the registration statement and the prospectus, and prepare and file with the Commission such amendments and supplements to such

- 6 -

registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement for such period as shall be required for the disposition of all of such Registrable Securities in accordance with the intended method of distribution thereof; provided, that except with respect to any such registration statement filed pursuant to Rule 415 under the Securities Act, such period need not exceed 180 days;

(c) furnish, without charge, to Penske and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as Penske and such underwriters may reasonably request;

(d) use its reasonable best efforts (i) to register or qualify all Registrable Securities and other securities covered by such registration statement under such securities or blue sky laws of such States of the United States of America where an exemption is not available and as Penske or any managing underwriter shall reasonably request, (ii) to keep such registration or qualification in effect for so long as such registration statement remains in effect, and (iii) to take any other action which may be reasonably necessary or advisable to enable Penske to consummate the disposition in such jurisdictions of the securities to be sold by Penske, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subsection (d) be obligated to be so qualified or to consent to general service of process in any such jurisdiction;

(e) furnish to Penske and each underwriter, if any, participating in the offering of the securities covered by such registration statement, a signed counterpart of (i) an opinion of counsel for the Company, and (ii) a "comfort" letter signed by the independent public accountants who have certified the Company's or any other entity's financial statements included or incorporated by reference in such registration statement, covering substantially the same matters with respect to such registration statement

- 7 -

(and the prospectus included therein) and, in the case of the accountants' comfort letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' comfort letters delivered to the underwriters in underwritten public offerings of securities (and dated the dates such opinions and comfort letters are customarily dated) and, in the case of the legal opinion, such other legal matters, and, in the case of the accountants' comfort letter, such other financial matters, as the underwriters, may reasonably request;

(f) promptly notify Penske and each managing underwriter, if any, participating in the offering of the securities covered by such registration statement (i) when such registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission for amendments or supplements to such registration statement or the prospectus related thereto or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; (v) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and in the case of this clause (v), at the request of Penske promptly prepare and furnish to Penske and each managing underwriter, if any, participating in the offering of the Registrable Securities, a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and (vi) at any time when the representations and warranties of the Company contemplated by Section 2.4(a) or (b) hereof cease to be true and correct;

- 8 -

(g) otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder, and promptly furnish to Penske a copy of any amendment or supplement to such registration statement or prospectus;

(h) provide and cause to be maintained a transfer agent and registrar (which, in each case, may be the Company) for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration;

(i) (i) use its reasonable best efforts to cause all Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) if no similar securities are then so listed, use its reasonable best efforts to (x) cause all such Registrable Securities to be listed on a national securities exchange or (y) failing that, secure designation of all such Registrable Securities as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of the Commission or (z) failing that, to secure NASDAQ authorization for such shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such shares with the National Association of Securities Dealers, Inc.;

(j) deliver promptly to counsel to Penske and each underwriter, if any, participating in the offering of the Registrable Securities, copies of all correspondence between the Commission and the Company, its counsel or auditors;

(k) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement;

(l) provide a CUSIP number for all Registrable Securities, no later than the effective date of the registration statement; and

(m) make available its employees and personnel and otherwise provide reasonable assistance to the underwriters (taking into account the

- 9 -

needs of the Company's business) in their marketing of Registrable Securities.

The Company may require Penske to furnish the Company such information regarding Penske and the distribution of the Registrable Securities as the Company may from time to time reasonably request in writing. The Company shall be released from any obligation to Penske hereunder for so long as Penske has not delivered such information to the extent required for purposes of the registrations.

Penske agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph (f) (iii), (iv) or (v) of this Section 2.3, Penske will, to the extent appropriate, discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until, in the case of paragraph (f)(v) of this Section 2.3, its receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (f)(v) of this Section 2.3 and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in its possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. If the disposition by Penske of its securities is discontinued pursuant to the foregoing sentence, the Company shall extend the period of effectiveness of the registration statement required pursuant to
Section 2.1(e) by the number of days during the period from and including the date of the giving of notice to and including the date when Penske shall have received copies of the supplemented or amended prospectus contemplated by paragraph (f)(v) of this Section 2.3; and, if the Company shall not so extend such period, Penske's request pursuant to which such registration statement was filed shall not be counted for purposes of the requests for registration to which Penske is entitled pursuant to Section 2.1 hereof.

2.4 Underwritten Offerings.

(a) Requested Underwritten Offerings. If requested by the underwriters for any underwritten offering by Penske pursuant to a registration requested under Section 2.1, the Company shall enter into a customary underwriting agreement (in the form of underwriting agreement used at such time by the managing underwriter(s)) with a managing underwriter or underwriters selected pursuant to Section 2.1(f) which shall contain such terms as are generally prevailing in agreements of the managing underwriter(s), including, without limitation, their customary provisions relating to indemnification and contribution (the "Customary Terms"). Penske shall be party to such underwriting agreement and may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of Penske and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the

- 10 -

obligations of Penske. Penske shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding Penske, its ownership of and title to the Registrable Securities, and its intended method of distribution and other representations that constitute Customary Terms, and any liability of Penske to any underwriter or other person under such underwriting agreement shall be limited to liability arising from breach of its representations and warranties and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from such registration.

(b) Incidental Underwritten Offerings. In the case of a registration pursuant to Section 2.2 hereof, if the Company shall have determined to enter into any underwriting agreements in connection therewith, all of the Registrable Securities to be included in such registration shall be subject to such underwriting agreements.

2.5 Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give Penske, its underwriters, if any, and its respective counsel, accountants and other representatives and agents the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and give each of them such reasonable access to its books and records and such reasonable opportunities to discuss the business of the Company with its officers and employees and the independent public accountants who have certified its financial statements, and supply all other information reasonably requested by each of them, as shall be necessary or appropriate, in the opinion of Penske and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

2.6 Indemnification.

- 11 -

statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse Penske and each such director, officer, member, partner, agent or affiliate, underwriter and controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable in any such case to Penske or any such director, officer, member, partner, agent, affiliate, or controlling person to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of Penske, specifically stating that it is for use in the preparation thereof; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any person from whom the person asserting any such losses, claims, damages or liabilities (the "Claimant") purchased securities, or any person controlling such person, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendment or supplement thereto) was not sent or given by or on behalf of such person to such Claimant, if required by law to have been so delivered, at or prior to the written confirmation of the sale of the securities sold to such Claimant, and if the prospectus (as so amended and supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. Such indemnity shall remain in full force regardless of any investigation made by or on behalf of Penske or any such director, officer, member, partner, agent, affiliate, underwriter or controlling Person and shall survive the transfer of such securities by Penske.

(b) Indemnification by Penske. As a condition to including any Registrable Securities in any registration statement, Penske shall indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.6) the Company, and each director of the Company, each officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, but only to the extent such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of Penske specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus,

- 12 -

summary prospectus, amendment or supplement; provided, however, that the liability of such indemnifying party under this Section 2.6(b) shall be limited to the amount of proceeds (net of expenses and underwriting discounts and commissions) received by such indemnifying party in the offering giving rise to such liability. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer of such securities by Penske.

(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding subsections of this Section 2.6, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action or proceeding; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subsections of this
Section 2.6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to the indemnified party otherwise than under this Section 2.6. In case any such action or proceeding is brought against an indemnified party, the indemnifying party shall be entitled to participate therein and, unless in the opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action or proceeding include both the indemnified party and the indemnifying party and if in the opinion of outside counsel to the indemnified party there may be legal defenses available to such indemnified party and/or other indemnified parties which are in conflict with or in addition to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action or proceeding on behalf of such indemnified party or parties, provided, however, that the indemnifying party shall be obligated to pay for only one counsel and one local counsel for all indemnified parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal expenses subsequently incurred by the latter in connection with the defense thereof (unless the first proviso in the preceding sentence shall be applicable). No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

- 13 -

(d) Contribution. If the indemnification provided for in this Section 2.6 shall for any reason be held by a court to be unavailable to an indemnified party under subsection (a) or (b) hereof in respect of any loss, claim, damage or liability, or any action in respect thereof, then, in lieu of the amount paid or payable under subsection (a) or (b) hereof, the indemnified party and the indemnifying party under subsection (a) or (b) hereof shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating the same), (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other, which resulted in such loss, claim, damage or liability, or action in respect thereof, with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as shall be appropriate to reflect not only the relative fault but also the relative benefits received by the indemnifying party and the indemnified party from the offering of the securities covered by such registration statement as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.6(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the preceding sentence of this Section 2.6(d). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. In addition, no Person shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or claim effected without such Person's consent, which consent shall not be unreasonably withheld. Notwithstanding anything in this subsection (d) to the contrary, no indemnifying party (other than the Company) shall be required to contribute any amount in excess of the proceeds (net of expenses and underwriting discounts and commissions) received by such party from the sale of the Registrable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate.

(e) Other Indemnification. Indemnification and contribution similar to that specified in the preceding subsections of this Section 2.6 (with appropriate modifications) shall be given by the Company and Penske with respect to any required registration or other qualification of securities under any federal, state or blue sky law or regulation of any governmental authority other than the Securities Act. The indemnification agreements contained in this
Section 2.6 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party and shall survive the transfer of any of the Registrable Securities by Penske.

- 14 -

(f) Indemnification Payments. The indemnification and contribution required by this Section 2.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

2.7 Unlegended Certificates. In connection with the offering of any Registrable Securities registered pursuant to this Section 2, the Company shall promptly after the sale of such Registrable Securities (i) facilitate the timely preparation and delivery to Penske and the underwriters, if any, participating in such offering, of unlegended certificates representing ownership of such Registrable Securities being sold in such denominations and registered in such names as requested by Penske or such underwriters and (ii) instruct any transfer agent and registrar of such Registrable Securities to release any stop transfer orders with respect to any such Registrable Securities.

2.8 Limitation on Sale of Securities. The Company hereby agrees that if it shall previously have received a request for registration pursuant to
Section 2.1 hereof, and if such previous registration shall not have been withdrawn or abandoned, (i) the Company shall not effect any public or private offer, sale or distribution of its securities or effect any registration of any of its equity securities under the Securities Act (other than a registration on Form S-8 or any successor or similar form which is then in effect), for sale for its own account, until a period of 120 days (or such shorter period as the Company shall be advised by the managing underwriter) shall have elapsed from the effective date of such previous registration, and the Company shall so provide in any registration rights agreements hereafter entered into with respect to any of its securities; and (ii) the Company shall use its reasonable best efforts to cause each holder of its equity securities purchased from the Company other than as part of a public offering at any time after the date of this Agreement to agree not to effect any public sale or distribution of any such securities during such period, including a sale pursuant to Rule 144 under the Securities Act.

2.9 No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of Penske to sell any Registrable Securities pursuant to any effective registration statement.

3. Rule 144. The Company shall take all actions reasonably necessary to enable holders of Registrable Securities to sell such securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144, or (ii) any similar rule or regulation hereafter adopted by the Commission including, without limiting the generality of the foregoing, filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of Penske, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

- 15 -

4. Amendments and Waivers. This Agreement may be amended, modified or supplemented only by written agreement of the party against whom enforcement of such amendment, modification or supplement is sought.

5. Adjustments. In the event of any change in the capitalization of the Company as a result of any stock split, stock dividend, reverse split, combination, recapitalization, merger, consolidation, or otherwise, the provisions of this Agreement shall be appropriately adjusted.

6. Notice. All notices and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed to have been given when received by the party to whom such notice is to be given at its address set forth below, or such other address for the party as shall be specified by notice given pursuant hereto:

(a) If to Penske, to:

Penske Corporation
13400 Outer Drive, West Detroit, Michigan 48239-4001 Attention: General Counsel

(b) If to the Company, to it at:

United Auto Group
13400 Outer Drive West Suite B36
Detroit, Michigan 48239-4001 Attention: General Counsel

With a copy to:

Fried, Frank, Harris, Shriver & Jacobson One New York Plaza
New York, New York 10004 Attention: Valerie Ford Jacob, Esq.

Robert C. Schwenkel, Esq.

- 16 -

Agreement, in whole or in part, to any purchaser or other transferee of Registrable Securities held by it; provided, however, that any rights to withdraw shares from inclusion in a registration statement pursuant to Section 2 shall be made only by Penske for itself and all such purchasers and transferees; and provided, further, that any decision hereunder made by the holders of the majority of the Registrable Securities shall be binding on all other holders of Registrable Securities.

8. Remedies. The parties hereto agree that money damages or other remedy at law would not be sufficient or adequate remedy for any breach or violation of, or a default under, this Agreement by them and that, in addition to all other remedies available to them, each of them shall be entitled to an injunction restraining such breach, violation or default or threatened breach, violation or default and to any other equitable relief, including without limitation specific performance, without bond or other security being required. In any action or proceeding brought to enforce any provision of this Agreement (including the indemnification provisions thereof), the successful party shall be entitled to recover reasonable attorneys' fees in addition to its costs and expenses and any other available remedy.

9. No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to Penske in this Agreement or otherwise conflicts with the provisions hereof. The Company represents and warrants to Penske that it has not previously entered into any agreement with respect to its securities granting any registration rights to any Person except to affiliates of Penske Capital Partners, LLC, a Delaware limited liability company.

10. Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not control or otherwise affect the meaning hereof.

11. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of New York, without giving effect to the conflicts of law principles thereof. 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 its respective address set forth in Section 6 hereof 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

- 17 -

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.

12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.

13. Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. If any restriction or provision of this Agreement is held unreasonable, unlawful or unenforceable in any respect, such restriction or provision shall be interpreted, revised or applied in a manner that renders it lawful and enforceable to the fullest extent possible under law.

14. Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and things and shall execute and deliver all other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

15. Entire Agreement; Effectiveness. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.

- 18 -

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized.

UNITED AUTO GROUP, INC.

By:  /s/ Phillip M. Hartz
     ----------------------------
     Name:  Phillip M. Hartz
     Title: Senior Vice President

PENSKE AUTOMOTIVE HOLDINGS CORP.

By:  /s/ Peter E. Mogk
     -------------------------
     Name:  Peter E. Mogk

     Title: Treasurer

EXHIBIT 10.27

PURCHASE AGREEMENT

by and between

MITSUI & CO., LTD.

and

UNITED AUTO GROUP, INC.

dated as of

January 31, 2001

PURCHASE AGREEMENT

PURCHASE AGREEMENT (the "Agreement") is dated January 31, 2001, by and between UNITED AUTO GROUP, INC., a Delaware corporation (the "Company"), and MITSUI & CO., LTD., a Japanese company, or one of its affiliates (the "Purchaser").

RECITALS

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, 1,302,326 shares of Voting Common Stock, par value $0.0001 per share of the Company, for a purchase price of $10.75 per share;

NOW, THEREFORE, in consideration of the mutual promises and of the mutual covenants, representations and warranties and obligations hereinafter set forth, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

SALE AND PURCHASE OF SECURITIES

1.1 The Purchase. At the Closing, subject to the terms and conditions hereof, the Purchaser shall purchase (the "Purchase") from the Company, and the Company shall sell to the Purchaser, an aggregate of 1,302,326 shares of Voting Common Stock of the Company (the "Securities") at a purchase price of $10.75 per share and an aggregate purchase price of $14,000,004.50 (the "Purchase Price") payable at the Closing.

1.2 Use of Proceeds. The Company will use the proceeds of the Purchase for general corporate purposes.

1.3 The Closing. The closing of the sale and purchase of the Securities (the "Closing") shall take place at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York, at 10:00 a.m. on February 28, 2001 unless the parties otherwise agree in writing (the "Closing Date").

1.4 Actions at the Closing. At Closing, the following actions shall occur (the "Closing Actions"):

(a) The Company shall issue and deliver to the Purchaser the Securities, evidenced by stock certificates in the name of the Purchaser, free and clear of liens and encumbrances thereon.

(b) The Purchaser shall pay the Purchase Price to the account of the Company by wire transfer pursuant to instructions provided by the Company at least five business days prior to the Closing Date.

(d) The Company shall have filed with the New York Stock Exchange an Application for Listing of Additional Shares with respect to the Securities.

1.5 Legend.

(a) The parties hereby acknowledge and agree that each of the certificates representing the Securities shall include the following legend and any other legend required by law:

(b) The requirement that the above securities legend be placed upon certificates evidencing shares of Securities shall cease and terminate upon the earliest of the following events: (i) when such shares are transferred in an underwritten public offering, (ii) when such shares are transferred pursuant to Rule 144 in compliance with the Securities Act or (iii) when such shares are transferred in any other transaction if the seller delivers to the Company an opinion of its counsel, which counsel and opinion shall be reasonably satisfactory to the Company, or a "no-action" letter from the staff of the Securities and Exchange Commission, in either case to the effect that such legend is no longer necessary in order to protect the Company against a violation by it of the Securities Act upon any sale or other disposition of such shares without registration thereunder. Upon the consummation of any event requiring the removal of a legend hereunder, the Company, upon the surrender of certificates containing such legend, shall, at its own expense, deliver to the holder of any such shares as to which the requirement for such legend shall have terminated, one or more new certificates evidencing such shares not bearing such legend.

ARTICLE II

REPRESENTATIONS & WARRANTIES CONCERNING THE COMPANY

The Company hereby represents and warrants to the Purchaser as follows as of the date hereof and as of the Closing Date:

2.1 Organization and Good Standing; Power and Authority; Qualifications. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business as presently conducted and as proposed to be conducted. The Company has all requisite corporate power and authority to enter and deliver this Agreement, to perform its obligations hereunder and carry out the transactions contemplated by the Agreement.

2.2 Authorization of the Agreement. The execution, delivery and performance of the Agreement has been duly authorized by all requisite corporate action on the part of the Company, including by a disinterested majority of the board of directors of the Company in accordance with Section 144 of the Delaware General Corporation Law, and the Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally.

2.3 No Conflict. The execution, delivery and performance by the Company of the Agreement and the consummation by the Company of the transactions contemplated hereby and thereby, and the issuance, sale and delivery by the Company of the Securities will not (a) violate any provision of law, statute, rule or regulation, or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Company or any of its properties or assets, (b) conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or both) a default (or give rise to any right of termination, cancellation or acceleration) under any agreement of the Company, or result in the creation of any mortgage, lien, security interest, loan, charge or encumbrance, upon any of the properties or assets of the Company, or (c) violate the Certificate of Incorporation or the by-laws of the Company.

2.4 Consents. No permit, authorization, consent or approval of or by, or any notification of or filing (including any filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) with any person (governmental or private) is required in connection with the execution and delivery by the Company of the Agreement or any documentation relating thereto, the consummation by the Company of the transactions contemplated hereby or thereby, or the issuance, sale or delivery of the Securities.

2.5 Title to Shares. Upon delivery of the Securities as provided in
Section 1.4, the Securities will be duly authorized and validly issued and the Purchaser will acquire good and valid title to the Securities free and clear of any encumbrances and liens. The Securities shall be fully paid and non-assessable and shall represent approximately 3.17% of the issued and outstanding capital stock of the Company on a fully-diluted basis.

2.6 Disclosure; Undisclosed Liabilities. This Agreement and each certificate or other instrument, or document furnished by or on behalf of the Company to the Purchaser and the filings and reports of the Company under the Securities Act and the Securities Exchange Act of 1934 do not contain any untrue statement of a material fact or omit to state a fact required to be stated herein or therein or necessary to make the statements contained herein or therein in light of the circumstances in which they were made not misleading. The financial forecasts furnished by the Company to the Purchaser have been reasonably prepared and reflect the best currently available estimates and judgment of the Company's Management as to the expected future financial performance of the Company and its subsidiaries. The Company has no liabilities or obligations of any nature, whether known, unknown, absolute, accrued, contingent or otherwise and whether due or to become due, except (i) as disclosed in its filings under the Securities Act, and (ii) as could not reasonably be expected to have a material adverse effect on the properties, business, results of operations or earnings of the Company.

ARTICLE III

REPRESENTATIONS & WARRANTIES CONCERNING THE PURCHASER

3.1 Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as of the date hereof and as of the Closing Date as follows:

(a) The Purchaser is acquiring the Securities for its own account, for investment and not with a view to the distribution thereof within the meaning of the Securities Act.

(d) The Purchaser is duly organized and validly existing under the laws of the jurisdiction of its organization and has all power and authority to enter into this Agreement.

(e) The execution and delivery of this Agreement has been duly authorized by all requisite corporate action on the part of the Purchaser, and the Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally.

(f) The execution, delivery and performance by the Purchaser of the Agreement and the consummation by the Purchaser of the transactions contemplated thereby will not (a) violate any provision of law, statute, rule or regulation, or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Purchaser, or any of its properties or assets, or (b) violate the certificate of incorporation or the bylaws of the Purchaser.

ARTICLE IV

CONDITIONS

4.1 Conditions to Obligations of the Purchaser. The obligations of the Purchaser to consummate the Purchase shall be subject to the fulfillment on or prior to the Closing Date of each of the following conditions:

(a) No statute, rule or regulation or order of any court or administrative agency shall be in effect which prohibits the consummation of the transactions to be consummated at Closing;

(b) All requisite corporate proceedings and approvals of Purchaser in connection with the consummation of the transactions contemplated to be consummated at Closing shall have been obtained on or prior to the Closing Date;

(c) Each of the representations and warranties of the Company contained in this Agreement shall be true and correct as of the Closing (except to the extent such representations and warranties are made as of a particular date, in which case such representations and warranties shall have been true and correct in all material respects of such date) and the Company shall have delivered to the Purchaser a certificate, dated the Closing Date and signed by the Company to the effect set forth in this Section 4.1(c);

(d) The Company in all material respects shall have performed, satisfied and complied with each of its covenants and agreements set forth in this Agreement to be performed, satisfied and complied with prior to or at Closing;

(e) Purchaser and the Company shall have executed a mutually acceptable registration rights agreement that shall grant the Purchaser the opportunity to

participate, in any future registration under the Securities Act of the Company's equity securities, including without limitation any such registration, resulting from the exercise by Penske Corporation or any of its affiliates of its right to require registration of equity securities held by it, subject to terms and conditions to be negotiated;

(f) Purchaser and the Company shall have executed a mutually acceptable amendment of the Stockholders Agreement pursuant to which, among other things, Purchaser shall have the right to (i) appoint one of the members of the Board of Directors of the Company or, at Purchaser's sole discretion, a non-voting observer to the Board of Director of the Company, and (ii) designate one of the senior executives of the Company;

(g) the Purchaser and the Company shall have executed a mutually acceptable collaboration agreement under which both parties shall carry out joint evaluation for exploration of certain business opportunities within the retail automobile industry;

(h) At Closing the Company shall have delivered to the Purchaser all the certificates for the Securities as provided in Section 1.4; and

(i) The Purchaser shall have received an opinion, addressed to it, and dated the Closing Date, from counsel to the Company in form and substance reasonably satisfactory to the Purchaser with respects to completion of corporate action and enforceability.

4.2 Conditions to Obligations of the Company. The obligation of the Company to consummate the Purchase shall be subject to the satisfaction or waiver at or prior to the Closing of each of the following conditions:

(a) Each of the representations and warranties of Purchaser contained in this Agreement shall be true and correct as of Closing (except to the extent such representations and warranties are made as of a particular date, in which case such representations and warranties shall have been true and correct in all material respects as of such date);

(b) Purchaser in all material respects shall have performed, satisfied and complied with each of its covenants and agreements set forth in this Agreement to be performed, satisfied and complied with prior to or at Closing;

(c) Purchaser shall have executed an amendment to the Stockholders Agreement, in a form mutually acceptable to the Company and the Purchaser, which shall serve to add Purchaser as a party to the Stockholders Agreement;

(d) Purchaser shall have paid the Purchase Price in accordance with Section 1.4;

(e) the Purchaser shall have delivered to the Company a certificate dated the Closing Date and signed by the Purchaser to the effect that the execution, delivery and performance of the Agreement has been duly authorized by all requisite corporate action on the part of the Purchaser and the Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally;

(f) Purchaser and the Company shall have executed a mutually acceptable registration rights agreement that shall grant the Purchaser the opportunity to participate, in any future registration under the Securities Act of the Company's equity securities, including without limitation any such registration, resulting from the exercise by Penske Corporation or any of its affiliates of its right to require registration of equity securities held by it, subject to terms and conditions to be negotiated;

(g) Purchaser and the Company shall have executed a mutually acceptable amendment of the Stockholders Agreement pursuant to which, among other things, Purchaser shall have the right to (i) appoint one of the members of the Board of Directors of the Company, or, at Purchaser's sole discretion, a non-voting observer to the Board of Directors of the Company, and (ii) designate one of the senior executives of the Company; and

(h) the Purchaser and the Company shall have executed a mutually acceptable collaboration agreement under which both parties shall carry out joint evaluation for exploration of certain business opportunities within the retail automobile industry.

ARTICLE V

TERMINATION

5.1 Termination. This Agreement may be terminated at any time prior to the Closing Date upon written notice of such termination by the terminating party to the other party setting forth the basis for such termination:

(a) by mutual written consent of the Company and the Purchaser; or

(b) by either the Purchaser or the Company if any of the applicable conditions set forth in Article IV have not been satisfied or waived as of the Closing Date; or

(d) by either the Purchaser or the Company if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining, enjoing or otherwise prohibiting the transactions contemplated by this Agreement; or

(e) by the Purchaser or the Company, (i) if any representation or warranty of the other set forth in this Agreement shall be untrue in any material respect when made to the extent that such first party did not have actual knowledge of such breach as of the date of this Agreement, or (ii) upon a breach in any material respect of any covenant or agreement on the part of the other set forth in this Agreement, in each case which would constitute a failure of the condition to Closing of the first party.

5.2 Effects of Termination. In the event of termination of this Agreement pursuant to Section 5.1, this Agreement shall become void and have no effect, without any liability to any person in respect hereof, except for any liability resulting from such party's breach of this Agreement. Notwithstanding anything to the contrary contained herein, Purchaser shall have no liability to the Company or any other person in the event Purchaser terminates this Agreement pursuant to Section 5.1(c).

5.3 Survival of Representations. The representations and warranties made in this Agreement shall survive for a period ending eighteen months after Closing, provided that the representation and warranties of the Company set forth in Section 2.5 shall survive without limitation.

ARTICLE VI

MISCELLANEOUS

6.1 Notices. Except as otherwise provided in this Agreement, all notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or by telecopy (with confirmation promptly sent by regular mail), nationally recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

(i) if to the Company, to:

United Auto Group, Inc. 13400 Outer Drive, West

Suite B36 Detroit, Michigan 48239-4001 Attention: General Counsel

(ii) if to the Purchaser, to:

Mitsui & Co., Ltd.

First Motor Vehicles Div.
2-1, Ohtemachi 1-chome, Chiyoda-ku
Tokyo, Japan
Attention: General Manager of First Motor
Vehicles Div.

with a copy to:

Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Christopher Smeall, Esq.

All such notices, requests, consents and other communications shall be deemed to have been given when received.

6.2 Amendments and Waivers. This Agreement may be amended, modified, supplemented or waived only upon the written agreement of the party against whom enforcement of such amendment, modification, supplement or waiver is sought.

6.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and the personal representatives and assigns of the parties hereto, whether so expressed or not.

6.4 Entire Agreement. This Agreement (with the documents referred to herein or delivered pursuant hereto and together with the Agreement) embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof.

6.5 Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York without giving effect to the conflicts of law principles thereof which might result in the application of the laws of any other jurisdiction.

6.6 Submission to Jurisdiction. Each of the Company and the Purchaser hereby (i) irrevocably submit to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the State of New York

solely in respect of the interpretation and enforcement of the provisions of this Agreement, and in respect of the transactions contemplated hereby, and (ii) agrees that service of any process, summons or notice by international courier to the address set forth in Section 6.1 shall be effective service of process for any action or proceeding brought against it in any such court.

6.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. All signatures need not appear on any one counterpart.

6.8 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

6.9 Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to injunctive relief, including specific performance, to enforce such obligations without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

6.10 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

6.11 Expenses. Each party to this Agreement shall bear its own cost and expenses, including fees of consultant(s), accountant(s), counsel, and other persons acting on behalf of or for such party.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

COMPANY:

UNITED AUTO GROUP, INC.

By:  /s/ Roger S. Penske
     --------------------------------
       Name:  Roger S. Penske
       Title: Chief Executive Officer

PURCHASER:

MITSUI & CO., LTD.

By:  /s/ Motokazu Yoshida
     -------------------------------
       Name:  Motokazu Yoshida
       Title: Motor Vehicles, Marine
              & Aerospace Group

EXHIBIT 10.27.1

REGISTRATION RIGHTS AGREEMENT

among

UNITED AUTO GROUP, INC.

MITSUI & CO., LTD.

and

MITSUI & CO. (U.S.A.), INC.

dated as of

February 28, 2001

REGISTRATION RIGHTS AGREEMENT, dated as of February 28, 2001, among United Auto Group, Inc., a Delaware corporation (the "Company"), Mitsui & Co., Ltd., a Japanese company ("Mitsui Japan"), Mitsui & Co. (U.S.A.), Inc., a New York corporation ("Mitsui USA" and together with Mitsui Japan, "Mitsui").

On January 31, 2001, the Company and Mitsui entered into a Purchase Agreement (the "Purchase Agreement") pursuant to which, Mitsui agreed to purchase at Closing (as described therein) 1,302,326 shares of voting common stock par value 0.0001 per share of the Company subject to the terms and conditions set forth therein.

If Mitsui desires to sell the shares of Common Stock, it may be desirable to register such shares under the Securities Act (as defined below).

As part of, and as consideration for, the acquisition of shares of the Common Stock from the Company on the date hereof and from time to time hereafter, the Company hereby grants to Mitsui certain registration and other rights with respect to its shares of Common Stock.

Accordingly, the parties hereto agree as follows:

1. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings:

"Certificate of Incorporation" means the Certificate of Incorporation of the Company, as it may be amended or restated from time to time.

"Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.

"Common Stock" means any shares of voting common stock, par value $0.0001 per share, of the Company, now or hereafter authorized to be issued, and, any and all securities of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of shares of voting common stock pursuant to a merger, consolidation, stock split, stock dividend, recapitalization of the Company or otherwise.

a particular section of the Exchange Act shall include a reference to the comparable section, if any, of any such similar Federal statute.

"IMCG" means International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C.

"Penske" means Penske Automotive Holdings Corp.

"Penske Registrable Securities" refers collectively to the "Registrable Securities" as defined in each of the Penske Registration Rights Agreement.

"Penske Registration Rights Agreements" means the Registration Rights Agreement, dated May 3, 1999, by and among the Company, International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C., as amended from time to time, and the Registration Rights Agreement, dated December 22, 2000, by and between the Company and Penske Automotive Holdings Corp., as amended from time to time, and any subsequent agreement between the Company and Penske or Penske Corporation granting to Penske or Penske Corporation registration rights with respect to Common Stock.

"Registrable Securities" means (i) any shares of Common Stock owned by Mitsui, (ii) any shares of Common Stock that Mitsui may acquire after the date hereof, and (iii) any shares of Common Stock issued with respect to the Common Stock referred to in clause (i) by way of a stock dividend, stock split or reverse stock split or in connection with a combination of shares, recapitalization, merger, consolidation or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities
(a) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration of them under the Securities Act, or (c) when such securities shall have been sold in compliance

with Rule 144 of the Securities Act. Any certificate evidencing the Registrable Securities shall bear a legend stating that the securities have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the securities.

"Registration Expenses" means all expenses incident to the registration and disposition of the Registrable Securities pursuant to Section 2 hereof, including, without limitation, all registration, filing and applicable national securities exchange fees, all fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel to the underwriters in connection with "blue sky" qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), all word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of "cold comfort" letters or any special audits required by, or incident to, such registration, all fees and disbursements of underwriters (other than underwriting discounts and commissions), all transfer taxes; provided, however, that Registration Expenses shall exclude, and Mitsui shall pay, underwriting discounts and commissions in respect of the Registrable Securities being registered.

2. Registration Under the Securities Act, etc.

2.1 Incidental Registration.

(a) Right to Include Registrable Securities. If Penske exercises its right to cause the Company to effect the registration under the Securities Act of all or part of the Penske Registrable Securities, pursuant to the Penske Registration Rights Agreements, and if as a result of exercising such right the Company proposes to register any of the Penske Registrable Securities under the Securities Act by registration on Form S-1, S-2 or S-3 or any successor or similar form(s), the Company will each such time give prompt written notice to Mitsui of its intention to register the Penske Registrable Securities and of Mitsui's rights under this Section 2.1. Upon the written request of Mitsui (which request

shall specify the maximum number of Registrable Securities intended to be disposed of by Mitsui), made as promptly as practicable and in any event within 30 days after the receipt of any such notice (15 days if the Company states in such written notice or gives telephonic notice to Mitsui, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date), the Company shall include in such registration under the Securities Act all Registrable Securities which the Company has been so requested to register by Mitsui subject only to the terms and conditions set forth herein. Notwithstanding anything to the contrary contained in this Agreement, but subject in each case to the terms of each Penske Registration Rights Agreement, the Company may in its discretion withdraw any registration commenced pursuant to this Section 2.1 without liability to the holders of Registrable Securities. The Company will pay all Registration Expenses in connection with any registration of Registrable Securities requested pursuant to this Section 2.1.

(b) Right to Withdraw. Mitsui shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 2.1 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of its request to withdraw.

(c) Priority in Incidental Registrations. If the managing underwriter of any underwritten offering shall inform the Company by letter of its belief that the number of Registrable Securities requested to be included in such registration, when added to the number of other securities to be offered in such registration, would materially adversely affect such offering, then, the Company shall include in such registration, to the extent of the number and type of securities which the Company is so advised can be sold in (or during the time of) such offering without so materially adversely affecting such offering (the "Section 2.1 Sale Amount"), (i) all of the securities proposed by the Company to be sold for its own account; (ii) to the extent not included in (i) above, all of the Penske Registrable Securities proposed by each of Penske or IMCG to be sold for its own account pursuant to its rights under the Penske Registration Rights Agreements; (iii) thereafter, to the extent the
Section 2.1 Sale Amount is not exceeded, the Registrable Securities requested by Mitsui to be included in such registration pursuant to Section 2.1(a), and (iv) thereafter, to the extent the Section 2.1 Sale Amount is not exceeded, any other securities of the Company requested to be included in such registration by any other stockholder having the right to include securities in such registration.

(d) The Company represents and warrants that, as of the date hereof, no Person has rights to require the Company to effect the registration under the Securities Act of Common Stock, except as disclosed prior to the date hereof in the Company's filings with the U.S. Securities and Exchange Commission.

(e) After the date hereof, the Company shall not grant to any Person, rights to require the Company to effect a registration under the Securities Act of Common Stock unless the Company simultaneously enters into an amendment of this Agreement pursuant to which Mitsui will be granted rights to require the Company to effect a registration under the Securities Act of Common Stock that are equal to the rights granted to such Person.

(f) After the date hereof, the Company shall not grant to any Person rights to include Common Stock in a registration under the Securities Act of Common Stock that are more favorable to such Person than the rights granted to Mitsui hereunder unless the Company simultaneously enters into an amendment of this Agreement pursuant to which Mitsui will be granted rights to include Common Stock in a registration under the Securities Act that are equal to the rights provided to such Person.

2.2 Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in the Penske Registration Rights Agreements and if, in such event, Mitsui is entitled to register Registrable Securities pursuant to this Agreement, the Company shall, unless and until either Mitsui has withdrawn its request or is no longer entitled to include in such registration, all or any portion of the Registrable Securities, as expeditiously as possible:

in the offering of the Registrable Securities and their respective counsel, which documents will be subject to the reasonable review and comments of Mitsui, each underwriter and their respective counsel; and provided, further, however, that the Company may discontinue any registration of its securities pursuant to Section 2.1 or which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto;

(b) notify Mitsui of the Commission's requests for amending or supplementing the registration statement and the prospectus, and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement for such period as shall be required for the disposition of all of such Registrable Securities in accordance with the intended method of distribution thereof; provided, that except with respect to any such registration statement filed pursuant to Rule 415 under the Securities Act, such period need not exceed 180 days;

(c) furnish, without charge, to Mitsui and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as Mitsui and such underwriters may reasonably request;

or advisable to enable Mitsui to consummate the disposition in such jurisdictions of the securities to be sold by Mitsui, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subsection (d) be obligated to be so qualified or to consent to general service of process in any such jurisdiction;

(e) furnish to Mitsui and each underwriter, if any, participating in the offering of the securities covered by such registration statement, a signed counterpart of (i) an opinion of counsel for the Company, and (ii) a "comfort" letter signed by the independent public accountants who have certified the Company's or any other entity's financial statements included or incorporated by reference in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of the accountants' comfort letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' comfort letters delivered to the underwriters in underwritten public offerings of securities (and dated the dates such opinions and comfort letters are customarily dated) and, in the case of the legal opinion, such other legal matters, and, in the case of the accountants' comfort letter, such other financial matters, as the underwriters, may reasonably request;

(f) promptly notify Mitsui and each managing underwriter, if any, participating in the offering of the securities covered by such registration statement (i) when such registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission for amendments or supplements to such registration statement or the prospectus related thereto or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of

any of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; (v) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and in the case of this clause, and (vi), at the request of Mitsui promptly prepare and furnish to Mitsui and each managing underwriter, if any, participating in the offering of the Registrable Securities, a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

(g) otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder, and promptly furnish to Mitsui a copy of any amendment or supplement to such registration statement or prospectus;

exchange, or (ii) if no similar securities are then so listed, use its reasonable best efforts to (x) cause all such Registrable Securities to be listed on a national securities exchange or (y) failing that, secure designation of all such Registrable Securities as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of the Commission or (z) failing that, to secure NASDAQ authorization for such shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such shares with the National Association of Securities Dealers, Inc.;

(j) deliver promptly to counsel to Mitsui and each underwriter, if any, participating in the offering of the Registrable Securities, copies of all correspondence between the Commission and the Company, its counsel or auditors;

(k) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement;

(l) provide a CUSIP number for all Registrable Securities, no later than the effective date of the registration statement; and

(m) make available its employees and personnel and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company's business) in their marketing of Registrable Securities.

The Company may require Mitsui to furnish the Company such information regarding Mitsui and the distribution of the Registrable Securities as the Company may need for the purpose of effecting a registration of Common Stock, including Registrable Securities, under the Securities Act. The Company shall be excused from any obligation to Mitsui hereunder to the extent that Mitsui's failure to deliver such information has impaired the Company's ability to perform its obligations hereunder and comply with applicable laws and regulations under the Securities Act, and for so long as Mitsui has not delivered such information to the extent required by applicable law.

Mitsui agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph (f) (iii), (iv) or (v) of this Section 2.2, Mitsui will, to the extent appropriate, discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until, in the case of paragraph (f)(v) of this Section 2.2, its receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (f)(v) of this Section 2.2 and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in its possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.

2.3 Incidental Underwritten Offerings. In the case of a registration pursuant to Section 2.1 hereof, if the Company shall have determined to enter into any underwriting agreements in connection therewith, all of the Registrable Securities to be included in such registration shall be subject to such underwriting agreements, and Mitsui shall be party to such underwriting agreements in form and substance reasonably acceptable to it.

2.4 Indemnification.

(a) Indemnification by the Company. The Company agrees that in the event of any registration of any securities of the Company under the Securities Act, the Company shall indemnify and hold harmless Mitsui, its respective directors, officers, members, partners, agents and affiliates and each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls Mitsui or any such underwriter within the meaning of the Securities Act, against any losses, claims, damages, or liabilities, joint or several, to which Mitsui or any such director, officer, member, partner, agent or affiliate or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities, joint or several (or actions or proceedings, whether commenced or threatened, in respect thereof), arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse Mitsui and each such director, officer, member, partner, agent or affiliate, underwriter and controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability,

action or proceeding; provided that the Company shall not be liable in any such case to Mitsui or any such director, officer, member, partner, agent, affiliate, or controlling person to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of Mitsui, specifically stating that it is for use in the preparation thereof; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any person from whom the person asserting any such losses, claims, damages or liabilities (the "Claimant") purchased securities, or any person controlling such person, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendment or supplement thereto) was not sent or given by or on behalf of such person to such Claimant, if required by law to have been so delivered, at or prior to the written confirmation of the sale of the securities sold to such Claimant, and if the prospectus (as so amended and supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. Such indemnity shall remain in full force regardless of any investigation made by or on behalf of Mitsui or any such director, officer, member, partner, agent, affiliate, underwriter or controlling Person and shall survive the transfer of such securities by Mitsui.

(b) Indemnification by Mitsui. As a condition to including any Registrable Securities in any registration statement, Mitsui shall indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.4) the Company, and each director of the Company, each officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, but only to the extent such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of Mitsui specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement; provided, however, that the liability of such indemnifying party under this Section 2.4(b) shall be limited to the amount of proceeds (net of expenses and underwriting discounts and

commissions) received by such indemnifying party in the offering giving rise to such liability. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer of such securities by Mitsui.

(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding subsections of this Section 2.4, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action or proceeding; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subsections of this Section 2.4, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to the indemnified party otherwise than under this Section 2.4. In case any such action or proceeding is brought against an indemnified party, the indemnifying party shall be entitled to participate therein and, unless in the opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action or proceeding include both the indemnified party and the indemnifying party and if in the opinion of outside counsel to the indemnified party there may be legal defenses available to such indemnified party and/or other indemnified parties which are in conflict with or in addition to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action or proceeding on behalf of such indemnified party or parties, provided, however, that the indemnifying party shall be obligated to pay for only one counsel and one local counsel for all indemnified parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal expenses subsequently incurred by the latter in connection with the defense thereof (unless the first provison in the preceding sentence shall be applicable). No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying party shall, without the

consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

(d) Contribution. If the indemnification provided for in this Section 2.4 shall for any reason be held by a court to be unavailable to an indemnified party under subsection (a) or (b) hereof in respect of any loss, claim, damage or liability, or any action in respect thereof, then, in lieu of the amount paid or payable under subsection (a) or (b) hereof, the indemnified party and the indemnifying party under subsection (a) or
(b) hereof shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating the same), (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other, which resulted in such loss, claim, damage or liability, or action in respect thereof, with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as shall be appropriate to reflect not only the relative fault but also the relative benefits received by the indemnifying party and the indemnified party from the offering of the securities covered by such registration statement as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.4(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the preceding sentence of this
Section 2.4(d). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. In addition, no Person shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or claim effected without such Person's consent, which consent shall not be unreasonably withheld. Notwithstanding anything in this subsection (d) to the contrary, no indemnifying party (other than the Company) shall be required to contribute any amount in excess of the proceeds (net of expenses and underwriting discounts and commissions) received by such party from the sale of the Registrable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate.

(e) Other Indemnification. Indemnification and contribution similar to that specified in the preceding subsections of this
Section 2.4 (with appropriate modifications) shall be given by the Company and Mitsui with respect to any required registration or other qualification of securities under any federal, state or blue sky law or regulation of any governmental authority other than the Securities Act. The indemnification agreements contained in this Section 2.4 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party and shall survive the transfer of any of the Registrable Securities by Mitsui.

(f) Indemnification Payments. The indemnification and contribution required by this Section 2.4 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

2.5 Unlegended Certificates. In connection with the offering of any Registrable Securities registered pursuant to this Section 2, the Company shall promptly after the sale of such Registrable Securities (i) facilitate the timely preparation and delivery to Mitsui and the underwriters, if any, participating in such offering, of unlegended certificates representing ownership of such Registrable Securities being sold in such denominations and registered in such names as requested by Mitsui or such underwriters, and (ii) instruct any transfer agent and registrar of such Registrable Securities to release any stop transfer orders with respect to any such Registrable Securities.

2.6 No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of Mitsui to sell any Registrable Securities pursuant to any effective registration statement.

3. Rule 144. The Company shall take all actions reasonably necessary to enable Mitsui to sell its Common Stock without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, or (ii) any similar rule or regulation hereafter adopted by the Commission including, without limiting the generality of the foregoing, filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of Mitsui, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

4. Amendments and Waivers. This Agreement may be amended, modified or supplemented only by written agreement of the parties.

6. Notices. Except as otherwise provided in this Agreement, all notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or by telecopy (with confirmation promptly sent by regular mail), nationally recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

(a) If to Mitsui to:

Mitsui & Co., Ltd.

First Motor Vehicles Div.
2-1, Ohtemachi 1-chome, Chiyoda-ku
Tokyo, Japan
Attention: General Manager of First Motor Vehicles Div.

If to Mitsui USA:

Mitsui & Co. (U.S.A.), Inc.
200 Park Avenue
New York, New York 10166
Attention: General Manager,
Detroit Machinery & Automotive Department,
Second Machinery Division

with a copy to:

Debevoise & Plimpton
875 Third Avenue
New York, N.Y. 10022
Attention: Christopher Smeall, Esq.

(b) If to the Company, to it at:

United Auto Group 13400 Outer Drive West Suite B36
Detroit, Michigan 48239-4001 Attention: General Counsel

7. Assignment; Third Party Beneficiaries; Majority Controls. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. This Agreement may not be assigned by the Company, without the prior written consent of Mitsui. Mitsui may, at its election, at any time or from time to time, assign its rights under this Agreement, in whole or in part, to any purchaser or other transferee of Registrable Securities held by it; provided, however, that any rights to withdraw shares from inclusion in a registration statement pursuant to Section 2 shall be made only by Mitsui for itself and all such purchasers and transferees; and provided, further, that any decision hereunder made by the holders of the majority of the Registrable Securities shall be binding on all other holders of Registrable Securities.

9. Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not control or otherwise affect the meaning hereof.

10. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of New York, without giving effect to the conflicts of law principles thereof which might result in the application of the laws of any other jurisdiction. Each of the parties hereto hereby irrevocably consents to submit to the jurisdiction of the courts of the State of New York and the United States of America located in the County of New York solely in respect of the interpretation and enforcement of the provisions of this Agreement, and in respect of 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 its respective address set forth in Section 6 hereof 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.

11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.

12. Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. If any restriction or provision of this Agreement is held unreasonable, unlawful or unenforceable in any respect, such restriction or provision shall be interpreted, revised or applied in a manner that renders it lawful and enforceable to the fullest extent possible under law.

13. Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and things and shall execute and deliver all other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

14. Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.

[Remainder of page left blank]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized.

UNITED AUTO GROUP, INC.

By:  /s/ Randall E. Seymore
     ---------------------------------
     Name:  Randall E. Seymore
     Title: Vice President

MITSUI & CO., LTD.

By:  /s/ Motokazu Yoshida
     --------------------------------
     Name:  Motokazu Yoshida
     Title: Motor Vehicles, Marine &
            Aerospace Group

MITSUI & CO. (U.S.A.), INC.

By:  /s/ Shozaburo Maruyama
     ---------------------------------
     Name:  Shozaburo Maruyama
     Title: Senior Vice President

EXHIBIT 10.27.2

AMENDED AND RESTATED

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.,

MITSUI & CO., LTD.,

MITSUI & CO. (U.S.A.), INC.,

AND

UNITED AUTO GROUP, INC.

Dated as of February 28, 2001

Table of Contents

Page
----
ARTICLE I. DEFINITIONS................................................................................2

Section 1.1. Definitions................................................................................2

Section 1.2. Rules of Construction......................................................................3

ARTICLE II. BOARD COMPOSITION AND VOTING AGREEMENTS....................................................4

Section 2.1. Board Composition..........................................................................4

Section 2.2. Composition of Committees of the Board of Directors........................................4

Section 2.3. Voting Agreement...........................................................................4

Section 2.4. Reduction in Right of PCP Entities to Designate Directors..................................4

Section 2.5. Suspension of Right to Designate Directors.................................................5

Section 2.6. Replacement Directors......................................................................5

Section 2.7. Resignation of PCP Directors...............................................................5

Section 2.8. Termination of Article II..................................................................6

Section 2.9. Quorum.....................................................................................6

ARTICLE III. STANDSTILL PROVISIONS......................................................................6

Section 3.1. Standstill Provisions......................................................................6

Section 3.2. Exceptions to the Standstill Provisions....................................................7

ARTICLE IV. TRANSFER RESTRICTIONS......................................................................7

Section 4.1. Restrictions on Transfer of Restricted Securities..........................................7

Section 4.2. Tag-Along Rights...........................................................................8

Section 4.3. Transferees; Noncomplying Transfers........................................................8

Section 4.4. Restrictions on Transfers of Interests in the PCP Entities.................................8

ARTICLE V. CERTAIN COVENANTS..........................................................................9

Section 5.1. Legend on Certificates.....................................................................9

Section 5.2. Roger Penske to Serve as Chairman and Chief Executive Officer..............................9

Section 5.3. Approval of Company Action Under the Securities Purchase Agreement........................10

Section 5.4. Confidentiality Obligation................................................................10

Section 5.5. Further Assurances........................................................................10

ARTICLE VI. MUTUAL REPRESENTATIONS AND WARRANTIES.....................................................10

Section 6.1. Organization..............................................................................10

Section 6.2. Authorization, Validity and Enforceability................................................11

Section 6.3. No Violation or Breach....................................................................11

ARTICLE VII. TERM......................................................................................11

Section 7.1. Term......................................................................................11

Table of Contents
(continued)

                                                                                                               Page
                                                                                                               ----
     Section 7.2.     Effects of Termination....................................................................11

ARTICLE VIII.         MISCELLANEOUS PROVISIONS..................................................................12

     Section 8.1.     Survival..................................................................................12

     Section 8.2.     Notices...................................................................................12

     Section 8.3.     Amendments................................................................................13

     Section 8.4.     Assignment and Parties in Interest........................................................13

     Section 8.5.     Expenses..................................................................................14

     Section 8.6.     Entire Agreement..........................................................................14

     Section 8.7.     Descriptive Headings......................................................................14

     Section 8.8.     Counterparts..............................................................................14

     Section 8.9.     Governing Law; Jurisdiction...............................................................14

     Section 8.10.    Severability..............................................................................15

     Section 8.11.    Specific Performance......................................................................15

AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT

THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "Agreement") dated as of February 28, 2001 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., a Delaware limited liability company ("PCP I"), International Motor Cars Group II, L.L.C., a Delaware limited liability company ("PCP II" and, together with PCP I, the "PCP Entities"), Mitsui & Co., Ltd., a Japanese company ("Mitsui Japan"), Mitsui & Co. (U.S.A.), Inc., a New York corporation (Mitsui USA" and together with Mitsui Japan, "Mitsui"), 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 acquired Series A Convertible Preferred Stock, par value $.000l 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, in connection with the completion of the transactions contemplated by the Securities Purchase Agreement, Apollo, Harvard, the PCP Entities and Trace International Holdings, Inc. ("Trace") executed and delivered a Stockholders Agreement, dated as of May 3, 1999 (the "Existing Agreement");

WHEREAS, in December 2000, Penske Corporation ("Penske") purchased all of the shares of Common Stock formerly held by Trace and Trace is no longer a shareholder in the Company;

WHEREAS, on December 14, 2000, the Restricted Stockholders (other than Mitsui) amended the Existing Agreement pursuant to Amendment No. 1 to the Stockholders' Agreement ("Amendment No. 1");

WHEREAS, on February 28, 2001, conditioned upon the execution and delivery of this Agreement and pursuant to the terms of a Purchase Agreement, between the Company and Mitsui, dated as of January 31, 2001 (the "Purchase Agreement"), Mitsui subscribed for 1,302,326 shares of Voting Common Stock of the Company; and

WHEREAS, the parties wish to amend and restate in its entirety the Existing Agreement and Amendment No. 1 to continue to provide for certain matters relating to the ownership and transfer of the Common Stock, on the terms and conditions provided in this Agreement.

NOW, THEREFORE, in consideration of the promises, 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.

Capitalized terms used herein without definition 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.

"Amendment No. 1" has the meaning set forth in the recitals hereto.

"Apollo" has the meaning set forth in the preamble.

"Beneficial Ownership" means "beneficial ownership" as defined in Rule 13d-3 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 and Tokyo, Japan.

"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 preamble.

"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 Date 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)

"Mitsui" has the meaning set forth in the preamble.

"Mitsui Closing Date" means the "Closing Date" (as defined in the Purchase Agreement).

"PCP Directors" has the meaning set forth in Section 2.1.

"PCP Entities" has the meaning set forth in the preamble.

"PCP I" has the meaning set forth in the preamble.

"PCP II" has the meaning set forth in the preamble.

"Penske" has the meaning set forth in the recitals hereto.

"Permitted Transferee" of a person means (a) a corporation, partnership or other entity wholly owned by 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 (b) the equity owners of such person to the extent such equity owners receive a pro rata distribution of Restricted Securities.

"Purchase Agreement" has the meaning set forth in the recitals hereto.

"Registration Rights Agreement" means the Registration Rights Agreement among the Company, Mitsui Japan and Mitsui USA, dated as of the date hereof.

"Restricted Securities" means any Common Stock or other equity security of the Company Beneficially Owned by a Restricted Stockholder (other than Mitsui) 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" means each of Apollo, Harvard, the PCP Entities and Mitsui.

"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 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.

The Restricted Stockholders will vote their shares of Common Stock to elect the following directors:

(i) Roger Penske, and four (4) additional directors designated by the PCP Entities (the "PCP Directors").

(ii) One (1) director nominated by Mitsui.

(iii) Three (3) Independent Directors.

If Mitsui elects not to designate a person for the position of director of the Company, Mitsui shall have the right to nominate a non-voting observer to the Board of Directors of the Company (the "Observer"). The Restricted Stockholders shall cause their nominees on the Board of Directors of the Company to permit the Observer to participate in all meetings of the Board of Directors of the Company. The Observer shall be entitled to receive all materials and information distributed to directors of the Company and shall have access to the Company's management and records as if such Observer were a director.

SECTION 2.2. COMPOSITION OF COMMITTEES OF THE BOARD OF DIRECTORS.

The Restricted Stockholders shall use their reasonable best efforts to have the Compensation and Stock Option 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 2.3. 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 and to take all other reasonable action to cause such Persons to be elected as the only directors of the Company.

SECTION 2.4. REDUCTION IN RIGHT OF PCP ENTITIES TO DESIGNATE DIRECTORS.

Notwithstanding anything to the contrary contained in this Agreement, at such time as the percentage Beneficial Ownership in the Company of the PCP Entities together with the

Beneficial Ownership in the Company of Penske, taken together, and excluding Common Stock Beneficially Owned by the PCP Entities 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 to be
   is equal to or greater than:                        But less than:              designated thereafter
-------------------------------------                  --------------            ---------------------------
                        17.5%                               20.0%                             4
                        15.0%                               17.5%                             3
                        12.5%                               15.0%                             2
                        10.0%                               12.5%                             1

Any reduction resulting from application of this Section 2.4 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 2.5. SUSPENSION OF RIGHT TO DESIGNATE DIRECTORS.

Notwithstanding anything to the contrary contained in this Agreement, the right of the PCP Entities or Mitsui, as the case may be, to designate directors of the Company shall be suspended as follows:

(a) with respect to the PCP Entities, their Adjusted Beneficial Ownership combined with the Beneficial Ownership in the Company of Penske is reduced below 10%; or

(b) with respect to Mitsui together with any of its Affiliates, its Beneficial Ownership is reduced below 2.5%; or

(c) 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 2.6. REPLACEMENT DIRECTORS.

During such time as the right of either the PCP Entities or Mitsui to nominate directors is reduced or suspended pursuant to Section 2.4 or 2.5, 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 Mitsui or the PCP Entities, and (b) not be Affiliates of the PCP Entities and their Affiliates (other than the Company and its subsidiaries).

SECTION 2.7. 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 2.8. 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 this Agreement.

SECTION 2.9. QUORUM.

The presence of at least six Directors shall constitute a quorum for the purpose of meetings of the Board of Directors of the Company.

ARTICLE III.

STANDSTILL PROVISIONS

SECTION 3.1. STANDSTILL PROVISIONS.

Subject to Section 3.2, at any time prior to December 14, 2003, 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 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) (i) in the case of the PCP Entities, the acquisition of securities or of Beneficial Ownership of securities if, after giving effect to such acquisition, the Beneficial Ownership of the PCP Entities in the Company is less than or equal to 65% and (ii) in the case of each of Harvard, Apollo and Mitsui, the acquisition of securities of the Company or of Beneficial Ownership of securities of the Company if, after giving effect to such acquisition, the Beneficial Ownership of each such Restricted Stockholder in the Company is less than or equal to 49%;

(d) the granting by the Board of Directors of options to Affiliates of Restricted Stockholders; or

(e) 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, the PCP Entities shall not Transfer any of their 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) 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; or

(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.

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"); and

(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 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 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.

(a) Each certificate for Restricted Securities held by the PCP Entities 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., INTERNATIONAL MOTOR CARS GROUP I, L.L.C., INTERNATIONAL MOTOR CARS GROUP II, L.L.C., AIF II, L.P., AENEAS VENTURE CORPORATION AND MITSUI & CO., LTD., 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."

(b) Each certificate for shares of Common Stock of the Company held by Mitsui shall include the legend set forth in Section 1.5 of the Purchase Agreement.

SECTION 5.2. ROGER PENSKE TO SERVE AS CHAIRMAN AND CHIEF EXECUTIVE OFFICER.

(a) On the Initial Closing Date, the Restricted Stockholders (other than Mitsui) 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 2.4 or 2.5, 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, 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. CONFIDENTIALITY OBLIGATION.

(a) Mitsui shall treat as secret and confidential any and all confidential information communicated by the Company to the member of the Board of Directors designated by Mitsui or the Observer and shall therefore not disclose or communicate such confidential information to any person or entity, except to those employees and persons within Mitsui and/or its affiliates who need to have access to such information for the purpose of monitoring Mitsui's investment in the Company. Any such employee or person shall be bound by this confidentiality obligation and shall be informed of the confidential nature of the information.

(b) The obligations imposed above shall not apply to information.

(i) which becomes publicly available;

(ii) which Mitsui can establish was already in its possession at the time such information was communicated to it;

(iii) which is received from a third party without restriction and without breach of this Agreement;

(iv) which Mitsui can establish has been independently developed by it; or

(v) which is required to be disclosed by applicable law, legal process or, in connection with any judicial process, arbitration or other proceeding.

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.

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.

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 or shares of Common Stock of the Company, as the case may be, 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.

ARTICLE VII.

TERM

SECTION 7.1. TERM.

This Agreement shall commence on the date hereof, and shall terminate on 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 or any shares of Common Stock of the Company, as the case may be.

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, except for any liability resulting from such party's breach 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 until this Agreement is terminated.

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) two Business Days after the date when sent to the recipient by reputable express courier service (charges prepaid), or (c) 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, LP
                     1999 Avenue of the Stars
                     Los Angeles, CA 90067
                     Attention: Michael Weiner
                     Telecopy: (310) 201-4166

If to Harvard        Aeneas Venture Corporation
                     c/o Charlesbank Capital Partners, LLC
                     600 Atlantic Avenue, 26th Floor
                     Boston, MA 02210
                     Attention: Mark A. Rosen

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     c/o Penske Capital Partners, LLC
Entity               399 Park Avenue
                     New York, NY 10022

With a copy to:      Fried, Frank, Harris, Shriver & Jacobson
(which shall not     One New York Plaza
constitute notice)   New York, NY 10004

If to Mitsui Japan:  Mitsui & Co., Ltd.
                     First Motor Vehicles Div.
                     2-1, Ohtemachi, 1-Chome, Chiyoda-Ku
                     Tokyo, Japan
                     Attention: General Manager of First Motor
                     Vehicles Div.

If to Mitsui USA:    Mitsui & Co. (U.S.A.), Inc.
                     200 Park Avenue
                     New York, New York 10166
                     Attention: General Manager,
                                Detroit Machinery and Automotive
                                Department, Second Machinery
                                Division

With a copy to:      Debevoise & Plimpton
(which shall not     875 Third Avenue
constitute notice)   New York, NY 10022
                     Attention: Christopher Smeall, Esq.
                     Telecopy: (212) 909-6836

If to the Company:   United Auto Group, Inc.
                     13400 Outer Drive West, Suite B36
                     Detroit, MI 48239
                     Attn:  General Counsel
                     Facsimile: (313) 592-7124

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 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 or shares of Common Stock of the Company, as the case may be, 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 and the other documents executed on the date hereof constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede and are 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 or in the other documents executed on the date hereof.

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 without giving effect to the conflicts of law principles thereof which might result in the application of the laws of any other jurisdiction.

(b) Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the jurisdiction of the courts of the State of New York and the United States of America located in the County of New York solely in respect of the interpretation and enforcement of the provisions of this Agreement, and in respect of the transactions contemplated hereby, and further agrees that service of any process, summons, notice or document to its 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, if 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 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.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

AIF II. L.P.

By: /s/ John J. Hannan
   --------------------------------------------
      Name:  John J. Hannan
      Title: Authorized Signatory

AENEAS VENTURE CORPORATION

By: /s/ Michael R. Eisenson
   --------------------------------------------
      Name:  Michael R. Eisenson
      Title: Authorized Signatory

INTERNATIONAL MOTOR CARS GROUP I, LLC

By: /s/ James A. Hislop
   --------------------------------------------
      Name:  James A. Hislop
      Title: Chairman

INTERNATIONAL MOTOR CARS GROUP II, LLC

By: /s/ James A. Hislop
   --------------------------------------------
      Name:  James A. Hislop
      Title: Chairman

MITSUI & CO., LTD.

By: /s/ Motokazu Yoshida
   --------------------------------------------
      Name:  Motokazu Yoshida
      Title: Operating Officer, Motor Vehicles,
             Marine & Aerospace Group

MITSUI & CO. (U.S.A.), INC.

By: /s/ Shozaburo Maruyama
   --------------------------------------------
      Name:  Shozaburo Maruyama
      Title: Senior Vice President

UNITED AUTO GROUP, INC.

By: /s/ Randall E. Seymore
   -------------------------------------
     Name:  Randall E. Seymore
     Title: Vice President

Solely for the purposes
of Section 4.4 hereof:

PENSKE CORPORATION

By: /s/ Robert H. Kurnick, Jr.
   -------------------------------------
     Name:  Robert H. Kurnick, Jr.
     Title: Executive Vice President

PENSKE CAPITAL PARTNERS, L.L.C.

By: /s/ James A. Hislop
   -------------------------------------
     Name:  James A. Hislop
     Title: Chairman

EXHIBIT 10.27.3

February 28, 2001

Mitsui & Co., Ltd.
First Motor Vehicles Div.
2-1, Ohtemachi 1-Chome, Chiyoda-ku
Tokyo, Japan 100-0004

Mitsui & Co. (U.S.A.), Inc.
200 Park Avenue
New York, New York 10166

Dear Ladies and Gentlemen:

Reference is made to the Purchase Agreement, dated as of January 31, 2001 (the "Purchase Agreement"), by and between Mitsui & Co., Ltd. ("Mitsui Japan") and United Auto Group, Inc. ("UAG") pursuant to which, among other things, Mitsui and Mitsui & Co., (U.S.A.), Inc. (together "Mitsui") will acquire 1,302,326 shares of Voting Common Stock of UAG (the "Shares") on the Closing Date. Capitalized terms used in this letter (the "Letter Agreement") but not defined herein have the meanings ascribed to them in the Purchase Agreement. In order to induce Mitsui to purchase the Shares, Penske Corporation ("Penske") hereby agrees as follows:

1. By this Letter Agreement, Mitsui and UAG agree to amend the third line of the preamble to the Purchase Agreement to read as follows: "and Mitsui & Co., Ltd., a Japanese Company, and Mitsui & Co., (U.S.A.), Inc., a New York corporation (the "Purchaser"),"

2. Prior to the second anniversary of the Closing Date, Penske shall not make any direct or indirect sale or transfer of any Voting Common Stock of UAG owned by it or Penske Automotive Holdings Corp. in a private transaction (a "Private Sale") unless, prior to making such Private Sale, Penske gives to Mitsui a written notice (the "Penske Tag-Along Notice") of the proposed Private Sale and its terms and conditions and offers to Mitsui the opportunity to participate in such sale in accordance with this Section 2. Within ten Business Days (as defined in the Amended and Restated Stockholders Agreement, dated as of February 28, 2001, 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., Mitsui & Co., Ltd. and UAG ) of the date of Penske's Tag-Along Notice, Mitsui shall notify Penske if it elects to participate in such Private Sale. If Mitsui fails to notify Penske within such ten Business Day period, it shall be deemed to have waived its right to participate in such Private Sale. If Mitsui notifies Penske that Mitsui wishes to

participate in such Private Sale, Mitsui shall have the right to sell in such Private Sale, a number of Shares equal to the Voting Common Stock of UAG that the purchaser in such Private Sale actually proposes to purchase multiplied by a fraction, the numerator of which shall be the number of Shares held by Mitsui at such time and the denominator of which shall be the aggregate number of shares of Common Stock held by Mitsui, Penske and/or, Penske Automotive Holdings Corp., as the case may be at such time, at the same price per share and on the same terms and conditions as Penske.

3. For so long as Mitsui holds at least 2.5% of the Common Stock of UAG, (i) Penske will, and will cause Penske Automotive Holdings Corp., and all its other Affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) except International Motor Cars Group I, L.L.C. and International Motor Cars Group II, L.L.C. (collectively, the "Penske Affiliates") to vote, all of the voting securities of UAG beneficially owned (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) by it in favor of the person to be nominated as a director of UAG by Mitsui and take all other reasonable action to cause such person to be elected as one of the directors of UAG, and (ii) Mitsui will, and will cause its Affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) to vote, all of the voting securities of UAG beneficially owned (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) by it in favor of the persons to be nominated as directors of UAG by the Penske Affiliates and take all other reasonable action to cause such persons to be elected as directors of UAG. If Mitsui elects not to designate a person for the position of director of UAG, UAG will permit the observer designated by Mitsui to participate in all meetings of the board of directors of UAG. In addition, for so long as Mitsui holds at least 2.5% of the Common Stock of UAG, UAG will appoint to a senior executive position of UAG the nominee selected by Mitsui and any replacement of such person designated by Mitsui from time to time, provided that, after the date hereof, the parties shall negotiate in good faith appropriate compensation arrangements for such person.

4. If, after the date hereof, Mitsui acquires additional Voting Common Stock of UAG such that following such purchase Mitsui will hold, in the aggregate 5% or more, on a fully diluted basis, of the common equity of UAG, UAG will enter into an amendment of the Registration Rights Agreement, dated as of February 28, 2001, by and between UAG and Mitsui, pursuant to which Mitsui's incidental registration rights to include Voting Common Stock of UAG in a registered offering of Common Stock of UAG under the Securities Act of 1933, as amended, will be subject to reduction on a pro rata basis with Penske and Penske Automotive Holdings Corp. in the event of a limitation on the number of shares to be included in such offering.

5. This Letter Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York without giving effect to the conflicts of law principles thereof which might result in the application of the laws of any other jurisdiction. Each party to this Letter Agreement, (i) irrevocably submits to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the State of New York solely in respect of the interpretation and enforcement of the provisions of this Letter Agreement, and in respect of the

transaction contemplated hereby, and (ii) agrees that service of any process, summons or notice by international courier shall be effective service of process for any action or proceeding brought against it in any such court.

6. This Letter Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. All signatures need not appear on any one counterpart.

7. This Letter Agreement will be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns.

[The remainder of this page was left intentionally blank]

Please acknowledge the foregoing agreement by signing the enclosed original of this Letter Agreement and returning the original to the undersigned.

Very truly yours,

PENSKE CORPORATION

By  /s/ Robert H. Kurnick, Jr.
    --------------------------
    Name: Robert H. Kurnick, Jr.
    Title: Executive Vice President

UNITED AUTO GROUP, INC.

By /s/ Randall E. Seymore
   ----------------------
Name: Randall E. Seymore
Title: Vice President

Agreed to by:

MITSUI & CO., LTD.

By   /s/ Motokazu Yoshida
  -----------------------
     Name: Motokazu Yoshida
     Title: Operating Officer, Motor Vehicles
           Marine and Aerospace Group

MITSUI & CO. (U.S.A.), INC.

By   /s/ Shozaburo Maruyama
  -------------------------
     Name: Shozaburo Maruyama
     Title: Senior Vice President and
           General Manager, Second Machinery Division

EXHIBIT 21.1

SUBSIDIARIES OF THE COMPANY

Amity Auto Plaza, Ltd.
Amity Nissan of Massapequa, Ltd.
Atlantic Auto Funding Corporation
Atlantic Auto Second Funding Corporation Atlantic Auto Third Funding Corporation
Auto Mall Payroll Services, Inc.
Brett Morgan Chevrolet-Geo, Inc.
Central Ford Center, Inc.
Classic Auto Group, Inc.
Classic Auto Group Holdings, Inc.
Classic of Cherry Hill, Inc.
Classic Enterprises, LLC
Classic Imports, Inc.
Classic Management Company, Inc.
Classic Motor Sales, LLC
Classic Nissan of Turnersville, LLC
Covington Pike Dodge, Inc.
D. Young Chevrolet, LLC
Dan Young Chevrolet, Inc.
Dan Young Motors, LLC
DiFeo Partnership, Inc.
DiFeo Partnership, Inc. on behalf of
County Auto Group Partnership
Danbury Auto Partnership
DiFeo Chrysler Plymouth Jeep Eagle Partnership DiFeo Hyundai Partnership
DiFeo Leasing Partnership
DiFeo Nissan Partnership
DiFeo Tenafly Partnership
Hudson Motor Partnership
OCT Partnership
Somerset Motors Partnership
Europa Auto Imports, Inc.
Florida Chrysler Plymouth, Inc.
Gene Reed Chevrolet, Inc.
Goodson North, LLC
Goodson Pontiac GMC, LLC
Goodson Spring Branch, LLC
H.B.L., Inc.
HT Automotive, Ltd.
HVP Motor Corporation
H.V.P.H. Motor Corporation
J&S Auto Refinishing, Ltd.
JS Imports, Inc.

KMT/UAG, Inc.
Landers Auto Sales, Inc.
Landers Buick-Pontiac, Inc.
Landers Ford, Inc.
Landers United Auto Group No.2, Inc.
Landers United Auto Group No.6, Inc.
Landers Ford North, Inc.
Lantzsch-Andreas Enterprises, Inc.
LRP, Ltd.
Michael Chevrolet-Oldsmobile, Inc.
Motorcars Acquisition, LLC
Motorcars Acquisition II, LLC
Motorcars Acquisition III, LLC
Motorcars Acquisition IV, LLC
National City Ford, Inc.
Northlake Auto Finish, Inc.
Palm Auto Plaza, Inc.
Peachtree Nissan, Inc.
Pioneer Ford Sales, Inc.
Pioneer Ford West, LLC
PVH Motor Corporation
Reed-Lallier Chevrolet, Inc.
Relentless Pursuit Enterprises, inc.
S.H.V.P. Motor Corp.
SA Automotive, Ltd.
SAU Automotive, Ltd.
Scottsdale Management Group, Ltd.
Scottsdale Ferrari, LLC
SK Motors, Ltd.
SL Automotive, Ltd.
SM Motors, LLC
Somerset Motors, Inc.
SPA Automotive, Ltd.
Sun Motors, Ltd.
The New Graceland Dodge, Inc.
TriCity Leasing, Inc.
UAG Carolina, Inc.
UAG Cerritos, LLC
UAG Citrus Motors, LLC
UAG Citrus, Inc.
UAG CHCC, Inc.
UAG Chevrolet, Inc.
UAG Classic, Inc.
UAG Connecticut, LLC
UAG Connecticut Realty I, LLC
UAG Duluth, Inc.

UAG East, Inc.
UAG Fairfield CA, LLC
UAG Fairfield CM, LLC
UAG Fairfield CP, LLC
UAG Fairfield CM, LLC
UAG Finance Company, Inc.
UAG Graceland II, Inc.
UAG Houston Acquisition, Ltd.
UAG Hudson, Inc.
UAG Indianapolis, LLC
UAG International Holdings, Inc.
UAG Kissimmee Motors, Inc.
UAG Lake Norman, LLC
UAG Landers Springdale, LLC
UAG Memphis II, Inc.
UAG Memphis IV, Inc.
UAG Memphis V, Inc.
UAG Mentor Acquisition, LLC
UAG Michigan Cadillac, LLC
UAG Michigan Pontiac-GMC, LLC
UAG Michigan T1, LLC
UAG Michigan TMV, LLC
UAG Nanuet I, LLC
UAG Nanuet II, LLC
UAG Northeast, Inc.
UAG Northeast Body Shop, Inc.
UAG Oldsmobile of Indiana, LLC
UAG Paramount Motors, Inc.
UAG Phoenix VC, LLC
UAG Realty, LLC
UAG Southeast, Inc.
UAG Spring, LLC
UAG Tennessee, Inc.
UAG Texas II, Inc.
UAG Texas, Inc.
UAG Texas, Inc. on behalf of
Shannon Automotive, Ltd.
UAG VK, LLC
UAG West, Inc.
UAG Young II, Inc.
UAG Young Automotive Group, LLC
UAG-Caribbean, Inc.
United Auto Dodge of Shreveport, Inc.
United Auto Enterprises, Inc.
United AutoCare Products, Inc.
United AutoCare, Inc.

United Nissan, Inc. (NV)
United Nissan, Inc. (TN)
United Nissan, Inc. (GA)
United Auto Fourth Funding, Inc.
United Auto Fifth Funding, Inc.
UnitedAuto Finance, Inc.
United Ranch Automotive, LLC
VPH Motor Corporation
West Palm Auto Mall, Inc.
West Palm Infiniti, Inc.
West Palm Nissan, Inc.
Westbury Superstore, Ltd.
Young Automotive Holdings, LLC
Young Management Group, Inc.

Exhibit 23.1.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statements of United Auto Group, Inc. on Form S-3 (Registration No. 333-39997) and Form S-8 (Registration Nos. 333-14971, 333-26219 and 333-50816) of our report dated March 29, 1999 on our audit of the financial statements of United Auto Group, Inc. as of and for the year ended December 31, 1998 which appear in this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP

Florham Park, New Jersey
March 23, 2001

Exhibit 23.1.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No. 333-39997 of United Auto Group, Inc. ("UAG") on Form S-3 and Registration Nos. 333-14971, 333-26219 and 333-50816 on Form S-8 of our report dated January 26, 2001 (February 28, 2001 as to Note 16), appearing in this Annual Report of UAG for the year ended December 31, 2000.

/s/ Deloitte & Touche LLP

New York, New York
March 21, 2001


	a)	A Special Meeting of Stockholders (the “Meeting”) was held on December 13, 2000.

	b)	Proxies for the Meeting were solicited pursuant to regulation 14A under the Securities Exchange Act of 1934, as amended.

	c)	The following matter was voted upon at the Meeting:


	1.	October 19, 2000, reporting under Items 7 and 9 (announcement of the Company’s earnings for the three and nine month periods ended September 30, 2000).

	2.	November 2, 2000, reporting under Items 7 and 9 (announcing the acquisition of the Audi, Volkswagen, Mercedes-Benz and Porsche dealerships formerly owned by Continental Motors, Inc. in Fairfield, Connecticut).


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



	Roger S. Penske
	Chairman of the Board and
	Chief Executive Officer