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EXHIBIT 10.31.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, effective March 1, 2001 (the "Pledge
Agreement"), is given by THE MILLER CONTINENTAL GROUP LLC, ("Miller"), in favor
of UAG Connecticut, LLC ("UAG") and Automotive Group Realty, LLC ("AGR").
A. Miller and UAG have entered into an Operating Agreement effective March
1, 2001, (the "Operating Agreement") pursuant to which Miller has
acquired from UAG a Membership Interest in UAG Connecticut I, LLC (the
"Miller Membership Interest"), upon the terms and conditions therein;
B. As consideration for its purchase of the Miller Membership Interest,
Miller has, among other things, executed a Promissory Note dated March
1, 2001 in favor of UAG (the "Promissory Note");
C. Miller, UAG Connecticut I, LLC ("Company"), AGR, UAG and UAG Realty,
LLC have entered into a Letter Agreement effective March 1, 2001 (the
"Real Property Agreement"), pursuant to which Miller has acquired a
twenty percent (20%) share of any appreciation in certain real property
located in Fairfield, Connecticut (the "Real Property") owned by AGR
and used in connection with the Company's operations and as
consideration thereof has agreed to guarantee twenty percent (20%) of
the lease payments due to AGR concerning the Real Property under a
certain Lease Agreement dated September 29, 2000; and
D. As security for its obligations under the Operating Agreement, Real
Property Agreement and the Note, Miller has agreed to pledge and grant
a priority security interest to UAG and AGR in and to the Miller
Membership Interest on the terms and conditions set forth herein.
NOW THEREFORE, the parties agree as follows:
1. Miller hereby grants to UAG and AGR a priority lien in, security
interest in, and pledge of the Miller Membership Interest to be held
for the benefit of UAG and AGR to secure all of Miller's obligations
under the Operating Agreement, the Real Property Agreement and the
Promissory Note (collectively, the "Obligations") in accordance with
the terms and conditions of this Pledge Agreement.
2. Miller represents and warrants that it is the owner of the Miller
Membership Interest free from all liens, encumbrances, or security
interests, that it has complete authority to pledge the Miller
Membership Interest as provided herein, and that the execution and
delivery of this Pledge Agreement by it will not constitute a breach or
default, or an event which, with the giving of notice or passage of
time or both, would constitute a breach or default, under any
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agreement or restriction to which it is a party or by which it is
bound.
3. Subsequent to an Event of Default (as herein defined) Miller will pay
all expenses and, upon request, take any action reasonably deemed
advisable by UAG or AGR to preserve the Miller Membership Interest or
to establish, determine priority of, perfect, continue to perfect or
enforce UAG's and AGR's interest therein or rights under this Pledge
Agreement.
4. None of the following will affect the liabilities of Miller under this
Pledge Agreement, the Obligations, or the rights of UAG or AGR with
respect to the Miller Membership Interest: (a) acceptance or retention
by UAG or AGR of other property or interests as security for
Obligations; (b) the release of all or any of the Miller Membership
Interest or other security for any of the Obligations; (c) any release,
extension, renewal, modification or compromise of any of the
Obligations or the liability of any obligor thereon; (d) failure by UAG
or AGR to resort to other security or any person liable for any of the
Obligations before resorting to the Miller Membership Interest; (e) any
increase in the amount of the Obligations secured hereunder, for any
reason whatsoever; and (f) any exercise of, or failure to exercise, any
remedy.
5. The occurrence of any one or more of the following will be deemed
Events of Default:
a. If Miller fails to make any payment required by or fails to
perform any provision of either: (a) this Pledge Agreement;
(ii) the Operating Agreement; (iii) the Real Property
Agreement; or (iv) the Promissory Note, and such failure or
breach is not cured by Miller within 30 days after written
notice with respect thereto or sooner if so dictated by the
Operating Agreement, Promissory Note or Real Property
Agreement;
b. If Miller becomes the subject of bankruptcy proceedings or any
proceedings for the reorganization or rehabilitation of
debtors.
6. Upon the occurrence of an Event of Default, UAG and AGR will have all
rights and remedies for default provided by the Connecticut Uniform
Commercial Code, as well as any other applicable law and any evidence
of or document or agreement relating to the Obligations. With respect
to such rights and remedies:
a. Written notice sent to Miller as provided in Section 10 at
least 20 calendar days (counting the day of sending) before
the date of a proposed disposition of the Miller Membership
Interest is reasonable notice to Miller.
b. On demand by UAG or AGR, Miller will reimburse UAG and AGR for
any expense incurred by them in protecting or enforcing their
rights under this Pledge Agreement, including, without
limitation, reasonable fees and charges of counsel and court
costs, and all expenses of the preparing for
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disposition and disposing of the Miller Membership Interest.
After deduction of all expenses not reimbursed by Miller, UAG
or AGR shall apply the proceeds of disposition to the
Obligations in such order as set forth in the Collateral
Agency Agreement.
c. UAG or AGR may permit Miller or any endorser, guarantor or
surety upon the Obligations to remedy any default without
waiving the default so remedied, and UAG or AGR may waive any
default as it applies to it without waiving any other
subsequent or prior default by Miller or any other person.
d. Unless and until there is an event of default that has not
been cured within any applicable grace period, Miller shall be
entitled to receive and enjoy all of the benefits and rights
of ownership of the Miller Membership Interest.
7. Whenever UAG or AGR or Miller would have the right under this Pledge
Agreement to sell any Miller Membership Interest which is in the form
of investment securities, the parties agree that if, in the opinion of
UAG or AGR or their legal counsel, sales of such securities by UAG or
AGR or Miller without registration of the securities under the
Securities Act of 1922 (the "Act") or any similar state statute might,
unless accomplished by one or more of the methods described in
subsections a, b, or c below, be unlawful or constitute either UAG or
AGR or Miller an "underwriter," as that term is defined in section
2(11) of the Act or such similar state statute, it will be commercially
reasonable for UAG or AGR or both without registration to:
a. sell all or part of the securities in compliance with Rule
144, Rule 237 or Regulation A under the Act as then in effect,
or pursuant to any other rules or regulations under the Act
then in effect, compliance with which would make applicable to
the sale of the exemptions provided pursuant to sections 3(b)
or 4(1) of the Act; or
b. sell all or part of the securities in an intrastate public
offering within the meaning of section 3(a)(11) of the Act; or
c. sell all or part of the securities in one or more private
transactions not involving any public offering in order to
secure the exemption provided in section 4(2) of the Act, if:
(i) the securities are sold for cash to the
highest bidder after offers to purchase have
been received from at least two offerors;
(ii) UAG or AGR have reasonable grounds to
believe and do believe that each such
offeror has sufficient financial resources
to enable him to purchase the securities
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offered and that the offer was made in good
faith;
(iii) each such offeror was informed, prior to the
time he or she made his or her offer to
purchase, that offers to purchase the
securities were also being solicited from
others; and
(iv) UAG or AGR have, for at least 30 days prior
to the sale, solicited offers to purchase
the securities within the restrictions
imposed by federal or state securities laws.
Nothing in this paragraph will prevent UAG or AGR from making any
other commercially reasonable disposition of the Miller Membership Interest, and
no sale of such Miller Membership Interest will be commercially unreasonable
solely because it was not made in compliance with this section.
8. In addition to UAG's and AGR's other rights, Miller irrevocably
appoints AGR as proxy, with full power of substitution and revocation,
upon the occurrence and during the continuance of any Event of Default,
to exercise Miller's rights to attend meetings, vote, consent to and/or
take any action respecting the Miller Membership Interest or the
Company as fully as it might do. This proxy is coupled with an interest
and will be irrevocable, so long as any of the Obligations are unpaid.
9. UAG and AGR acknowledge that Miller has delivered certificates
representing the Miller Membership Interest to UAG in order to perfect
UAG's and AGR's security interests therein. This Agreement is subject
to the terms and conditions of the Collateral Agency Agreement dated
effective March 1, 2001 among UAG, the Company and AGR which, among
other things, sets forth the manner in which the proceeds from the
disposition of the Miller Membership Interest shall be shared by UAG
and AGR. Upon the occurrence of an Event of Default, UAG or AGR, as the
case may be, shall send written notice to the other party.
10. Any request, notice, direction or other service required or permitted
to be made or given by any party hereto including without limitation
any service of process in connection with any action brought to
enforce, or in connection with this Agreement will be in writing and
will be deemed sufficiently given or served for all purposes if (i)
delivered in person, or (ii) sent by recognized overnight courier, with
all charges prepaid, or (iii) mailed by first class mail, registered or
certified, with return receipt requested and postage prepaid to the
party entitled thereto; and if sent by courier or mail, addressed to
UAG at: UAG Connecticut LLC, c/o United Auto Group, Inc., 13400 Outer
Drive West, B-36, Detroit, MI 48239, Attention: General Counsel; or
addressed to Miller at: Miller Continental Group LLC, c/o Richard F.
Koppelman, 342 West Putnam Avenue, Greenwich, CT 07840; or if addressed
to AGR: Automotive Group Realty, LLC, c/o Penske Corporation, 13400
Outer Drive West, B-36, Detroit, MI 48239, Attention:
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General Counsel; or such other address as may have been previously
specified by notice given to the other parties hereto as specified in
this paragraph.
11. This Pledge Agreement may not be modified except by a writing signed by
the party against who such modification is sought to be enforced.
12. If any provision of this Pledge Agreement is determined to be illegal,
invalid or otherwise unenforceable, such illegality, invalidity or
unenforceability will have no effect on any of the other provisions
hereof, and all such other provisions will remain valid, operative and
enforceable.
13. This Pledge Agreement is made under, and will be governed by the laws
of the State of Connecticut excluding any such laws which require the
application of the law of any other jurisdiction.
14. When this Pledge Agreement refers to any action to be taken or consent
to be given by UAG, action or consent of the members of UAG holding a
majority of the membership interests of UAG held by all of UAG's will
be sufficient for all purposes.
15. If a party breaches this Pledge Agreement and if counsel is employed to
enforce this Agreement, then the successful party will be entitled to
its legal costs and reasonable fees and charges of counsel for the
enforcement of this Pledge Agreement.
16. This Pledge Agreement will be binding on the parties hereto and their
respective successors and assigns.
17. This Pledge Agreement may be executed in counterparts and by facsimile
signatures.
[SIGNATURES ON NEXT PAGE]
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THE MILLER CONTINENTAL GROUP LLC
/s/ Richard S. Koppelman
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By: Richard S. Koppelman
Its: Manager
UAG CONNECTICUT, LLC
/s/ Robert H. Kurnick, Jr.
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By: Robert H. Kurnick, Jr.
Its: Assistant Secretary
AUTOMOTIVE GROUP REALTY, LLC
/s/ Peter E. Mogk
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By: Peter E. Mogk
Its: Treasurer
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