[LOGO] CHRYSLER
FINANCIAL
SECURITY AGREEMENT AND MASTER CREDIT AGREEMENT
This Security Agreement and Master Credit Agreement (hereinafter called the
"Agreement"), made as of this 26th day of August, 1996; and effective September
1, 1984 or the date hereof, whichever is later, is by and between Shaker's,
Inc., having its principal place of business at 1355 So. Main St. Waterbury, CT
06706 (hereinafter called "Debtor"), and Chrysler Financial Corporation, a
Michigan corporation, having offices located at 27777 Franklin Road, Southfield,
Michigan 48034-8286 (hereinafter called "Secured Party").
WHEREAS, Debtor is engaged in business as an authorized dealer of Chrysler
Corporation and desires Secured Party to finance the acquisition by Debtor in
the ordinary course of its business of new and unused vehicles sold and
distributed by Chrysler Corporation and/or other authorized sellers and of used
vehicles (all such unused and used vehicles being hereinafter collectively
called the "Vehicles").
WHEREAS, Secured Party is willing to provide wholesale financing to Debtor to
finance the acquisition of Vehicles by Debtor (1) by agreeing with Chrysler
Corporation to purchase from Chrysler Corporation receivables evidencing credit
sales of Vehicles by Chrysler Corporation to Debtor, and (2) by making loans or
advances to Debtor to finance the acquisition by Debtor of Vehicles from other
sellers.
NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration paid by each party to the other, the
receipt and sufficiency of vehicle is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1.0 Financing - Secured Party agrees to extend to Debtor wholesale financing
as follows:
(a) to purchase receivables from Chrysler Corporation evidencing credit
sales of Vehicles by Chrysler Corporation to Debtor, at 100% of the
face amount of such receivables; or
(b) by making loans or advances to Debtor to finance the acquisition by
Debtor of Vehicles from sellers thereof, on the terms and conditions
set forth in Paragraph 2.1 herein or as set forth in the Vehicle
financing terms and conditions as they may be made available to
Debtor from time to time by Secured Party.
For the purposes of this Agreement, amounts applied by Secured Party to
acquire Debtor's receivables from Chrysler Corporation as contemplated by
clause (a) are herein called "Receivable Purchase Advances", and loans or
advances provided by Secured Party directly to either Debtor or to the
seller of Vehicles to Debtor as contemplated by clause (b) are herein
called "Direct Loan Advances", and all such amounts, loans and advances
provided by Secured Party contemplated by clause (a) and clause (b) are
herein collectively called "Advances". Debtor acknowledges that (x) the
maximum amount of Advances which will be made by Secured Party hereunder
will be established from time to time by Secured Party in its sole
discretion and (y) all such Advances shall be made on and shall be subject
to the terms and conditions of this Agreement. It is understood and agreed
that the making of any Advance hereunder shall be at the option of Secured
Party and shall not be obligatory, and that the right of Debtor to request
that Secured Party make Advances may be terminated at any time by Secured
Party at its election without notice.
2.0 Evidence of Advances and Payment Terms - Each Receivable Purchase Advance
shall be evidenced by and made against a Credit Sales Agreement of
Chrysler Corporation delivered to Secured Party, and Secured Party shall
be entitled to make Receivable Purchase Advances against such Credit Sale
Agreement appropriately completed and executed on behalf of Debtor by
Chrysler Corporation by facsimile signature or otherwise under Power of
Attorney given by Debtor, without any duty to inquire as to the continued
effectiveness of such power or to verify with Debtor the amount of, or
Vehicles listed upon such Credit Sale Agreement and each such Credit Sale
Agreement shall evidence the valid and binding payment obligation of
Debtor. Each Direct Loan Advance shall be made at such time as Debtor
shall request in accordance with the then-effective Vehicle financing
terms and conditions referred to above. Debtor will execute and deliver to
Secured Party from time to time its demand promissory notes in aggregate
principal amount equal to that amount agreed to by Debtor and Secured
Party from time to time, such demand promissory notes (the "Promissory
Notes") to evidence the liability of Debtor to Secured Party on account of
all Direct Loan Advances and to constitute additional evidence of Debtor's
obligation in respect of the receivables underlying the Receivable
Purchase Advances. The maximum liability of Debtor under this Agreement
shall at any time be equal to the aggregate principal amount of all
Advances at the time outstanding hereunder plus interest and such other
amounts as may be due under this Agreement. Debtor will pay to Secured
Party on demand the aggregate principal amount of all Advances from time
to time outstanding, and will pay upon demand the interest due thereon and
such other additional charges as Secured Party shall determine from time
to time.
Notwithstanding any inconsistent terms of any agreement between Debtor and
Chrysler Corporation in respect of Debtor's liability under any Credit
Sale Agreement, in consideration of Secured Party's making of Receivable
Purchase Advances and Direct Loan Advances. Debtor will pay to Secured
Party interest at the rate(s) per annum designated by Secured Party from
time to time on the amount of each Advance made by Secured Party hereunder
from the date of such Advance until the date of repayment to Secured Party
of the full amount thereof. For the purposes of the preceding sentence,
each Receivable Purchase Advance shall be deemed to have been made by
Secured Party on the date on which payment shall have been made by Secured
Party to Chrysler Corporation for the related receivable of Debtor
purchased by Secured Party from Chrysler Corporation. Secured Party will
give notice to Debtor of the interest rate(s) established by it from time
to time under the terms hereof, and each such notice shall constitute an
agreement between Debtor and Secure interest rate(s) established by it
from time to time under the terms hereof, and each such notice shall
constitute an agreement between Debtor and Secured Party as to the
applicability to the Advances of the interest rate(s) contained therein,
to be applicable from the dates stated in such notice until such interest
rate(s) are changed by subsequent notice given by Secured Party pursuant
to this sentence. All interest accrued on the Advances shall be payable
monthly by Debtor, and shall be due upon receipt by Debtor of the
Statement of Secured Party setting forth the amount of such accrued
interest.
2.1 Debtor agrees that financing pursuant to this Agreement shall be used
exclusively for the purpose of acquiring Vehicles for Debtor's inventory
and Debtor shall not sell or otherwise dispose of such Vehicles except by
sale in the ordinary course of business. If so requested by Secured Party,
Debtor agrees to maintain separate bank account into which all cash
proceeds of such sales or other dispositions of such Vehicle will be
deposited. Debtor further agrees that upon the sale of each Vehicle with
respect to which an Advance has been made by Secured Party. Debtor will
promptly remit to Secured Party the total amount then outstanding of
Secured Party's Advance on each such Vehicle unless other terms of
repayment have been agreed to by Secured Party. Debtor agrees to hold
trust for Secured Party and shall forthwith remit to Secured Party, to the
extent of any unpaid and past due indebtedness hereunder, all proceeds of
each Vehicle when Received by Debtor, or to allow Secured Party to make
direct collection thereof and credit Debtor with all sums received by
Secured Party.
3.0 Security - Debtor hereby grants to Secured Party a first and prior
security interest in and to each and every Vehicle financed hereunder,
whether now owned or hereafter acquired by way of replacement
substitution, addition or otherwise, together with all additions and
accessions thereto and all proceeds thereof subject only to any prior
security interest in a Vehicle financed by a Receivable Purchase Advance
which has been granted by Debtor to Chrysler Corporation and assigned by
Chrysler Corporation to Secured Party in connection with the making of
such Receivable Purchase Advance. Further, Debtor also hereby grants the
Secured Party a security interest in and to all Chattel Paper. Accounts
whether or not earned by performance and including without limitation all
amounts due from the manufacturer or distributor of the Vehicles or any of
its subsidiaries or affiliates. Contract Rights, Documents, Instruments,
General Intangible Consumer Goods, Inventory of Automotive Parts,
Accessories and Supplies, Equipment, Furniture, Fixtures, Machinery,
Tools, and Leasehold improvements whether now owned or hereafter acquired
by way of replacement, substitution, addition or otherwise, together with
all additions and accessions thereto and proceeds thereof, as additional
security for each and every indebtedness and obligation of Debtor as set
forth herein. The security interest hereby granted shall secure the
prompt, timely and full payment of (1) all Advances, (2) all interest
accrued thereon in accordance with the terms of this Agreement and the
Promissory Notes, (3) all other indebtedness and obligations of Debtor
under the Promissory Notes, (4) all costs and expenses incurred by Secured
Party in the collection or enforcement of the Promissory Notes or of the
receivable underlying any Receivable Purchase Advance or of the
obligations of the Debtor under this Agreement, (5) all monies advanced by
Secured Party on behalf of Debtor for taxes, levies, insurance and repairs
to and maintenance of any Vehicle or other collateral, and (6) each and
every other indebtedness or obligation now or hereafter owning by Debtor
to Secured Party including any collection, enforcement costs and expenses
or monies advanced on behalf of Debtor in connection with any such other
indebtedness or obligations. Nothing in this Agreement shall require
Debtor, in respect of any receivable Purchase Advance, to proceed first
under the security interest created by this Agreement or [ILLEGIBLE] under
the security interest granted by Debtor to Chrysler Corporation to secure
the receivable underlying such Receivable Purchase Advance and assigned by
Chrysler Corporation to Secured Party and the remedies of Secured Party
under each security interests shall be cumulative.
3.1 All said security set forth in Paragraph 3.0 above shall hereinafter
collectively be called "Collateral". Debtor hereby expressly agrees that
the term "proceeds" as used in Paragraph 3.0 above shall include without
limitation all insurance proceeds on the Collateral, money, chattel paper,
goods received in trade including without limitation vehicles received in
trade, contract rights, instruments, documents, accounts whether or not
earned by performance, general intangibles, claims and tort recoveries
relating to the Collateral. Notwithstanding that Advances hereunder are
made from time to time with respect to specific Vehicles, each Vehicle and
the proceeds thereof and all other Collateral hereunder shall constitute
security for all obligations of Debtor to Secured Party secured hereunder.
3.2 Debtor hereby agrees that upon request of the Secured Party it will take
such action and/or execute and deliver to Secured Party any and all
documents (and pay all costs and expenses of recording the same), in form
and substance satisfactory to Secured Party, which will perfect in Secured
Party a security interest in the Collateral in which Secured Party has or
is to have a security interest under the terms of this Agreement.
3.3 Secured Party's security interest in the Collateral shall attach to the
full extent provided or permitted by law to the proceeds, in whatever
form, of a disposition of said Collateral or to any part thereof by Debtor
until such proceeds are remitted and accounted for as provided herein.
Debtor will notify Secured Party before Debtor signs, executes or
authorizes any financing statement regardless of coverage.
3.4 Debtor shall be responsible for all loss and damage to the Collateral and
agrees to keep Collateral insured against loss or damage by fire, theft,
collision, vandalism and against such other risks as Secured Party may
require from time to time. Insurance policies evidencing such insurance
shall be [ILLEGIBLE] such companies, in such amount and such form as shall
be satisfactory to Secured Party. If so requested by Secured Party, any or
all such policies or insurance shall contain an endorsement, in form and
substance satisfactory to Secured Party, showing loss payable to Secured
Party as its interest [ILLEGIBLE] appear, and a certificate of insurance
evidencing such coverage will be provided to Secured Party.
4.0 Debtor's Warranties - Debtor warrants and agrees that the Collateral now
is and shall always be kept free of all taxes, liens and encumbrances,
except as specifically disclosed in Paragraph 4.1 below or provided for in
Paragraph 3.0 above, and Debtor shall defend the Collateral against all
other claims and demand whatsoever and shall indemnify, hold harmless and
defend Secured Party in connection therewith. Any sum of money that may be
paid by Secured Party in relation to or discharge of any taxes, liens or
encumbrances shall be paid to Secured Party on demand as an additional
part of the obligation secured hereunder. Debtor hereby agrees not to
mortgage, pledge or loan (except for designated demonstrators as agreed to
in advance by Secured Party in writing) the Vehicles and shall not
license, title use, transfer or otherwise dispose of them except as
provided in this Agreement. Debtor agrees that it will execute in favor of
Secured Party a form of document which may be required to evidence further
Advances by Secured Party hereunder, and shall execute such additional
documents as Secured Party may at any time request in order to conform or
perfect Debtor's title to or Secured Party's security interest in the
Vehicles. Execution by Debtor of notes, [ILLEGIBLE] or other instruments
for the amount advanced shall be deemed evidence of Debtor's obligation
and not payment therefor until collected in full by Secured Party.
4.1 Disclosure of Taxes, Liens and Encumbrances -
(If there are any, list them here; if none, so state.)
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PLACE FILED DATE OF FILING NAME AND ADDRESS OF CREDITOR
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5.0 Signatory Authorization - Debtor hereby authorizes Secured Party or any of
its officers, employees, agents or any other person Secured Party may
designate to execute any and all documents pursuant to the terms and
conditions of that certain Power of Attorney and Signatory Authorization
of even date herewith.
6.0 Events of Default and Remedies/Termination - Time is of the essence herein
and it is understood and agreed that Secured Party may, at its option and
notwithstanding any inconsistent terms in any agreement between Debtor and
Chrysler Corporation and/or Secured Party with respect to the receivable
underlying any Receivable Purchase Advance by Secured Party, terminate
this Agreement, refuse to advance funds hereunder, convert outstanding
installment payment obligations to payment on Vehicle sale obligations,
and declare the aggregate of all Advances outstanding hereunder
immediately due and payable upon the occurrence of any of the following
events (each hereinafter called an "Event of Default"), and that Debtor's
liabilities under this sentence shall constitute additional obligations of
Debtor secured under this Agreement.
(a) Debtor shall fail to make any payment to Secured Party, whether
constituting the principal amount of any Advance, interest thereon
or any other payment due hereunder, when and as due in accordance
with the terms of this Agreement or with any demand permitted to be
made by Secured Party under this Agreement or any Promissory Note,
or shall fail to pay when due any other amount owing to Secured
Party under any other agreement between Secured Party and Debtor, or
shall fail in the due performance or compliance with any other term
of condition hereof or thereof, or shall be in default in the
payment of any liabilities constituting indebtedness for money
borrowed or the deferred payment of the purchase price of property
or a rental payment with respect to property material to the conduct
of Debtor's business;
(b) A tax lien or notice thereof shall have been filed against any of
the Debtor's property or a proceeding in bankruptcy, insolvency or
receivership shall be instituted by or against Debtor or Debtor's
property or an assignment shall have been made by Debtor for the
benefit of creditors;
(c) In the event that Secured Party deems itself insecure for any reason
or the Vehicles are deemed by Secured Party to be in danger of
misuse, loss, seizure or confiscation or other disposition not
authorized by this Agreement;
(d) Termination of any franchise authorizing Debtor to sell Vehicles;
(e) A misrepresentation by Debtor for the purpose of obtaining credit or
an extension of credit or a refusal by Debtor to execute documents
relating to the Collateral and/or Secured Party's security interest
therein or to furnish financial information to Secured Party at
reasonable intervals to or permit persons designated by Secured
Party to examine Debtor's books or records and to make periodic
inspections of the Collateral; or
(f) Debtor, without Secured Party's prior written consent, shall
guarantee, endorse or otherwise become surety for or upon the
obligations of others except as may be done in the ordinary course
of Debtor's business, shall transfer or otherwise dispose of any
proprietary, partnership or share interest Debtor has in his
business, or all or substantially all of the assets thereof, shall
enter into any merger or consolidation, if a corporation, or shall
make any substantial disbursements or use of funds of Debtor's
business, except as may be done in the ordinary course of Debtor's
business, or assign this Agreement in whole or in part or any
obligation hereunder.
Upon the occurrence of an Event of Default, Secured Party may take
immediate possession of said Vehicles without demand or further notice and
without legal process; and for the purpose and furtherance thereof, Debtor
shall, if Secured Party so requests, assemble the Vehicles and make them
available to Secured Party at a reasonably convenient place designated by
Secured Party and Secured Party shall have the right, and Debtor hereby
authorizes and empowers Secured Party to enter upon the premises wherever
said Vehicles may be, to remove same. In addition, Secured Party or its
assigns shall have all the rights and remedies applicable under the
Uniform Commercial Code or under any other statute or at common law or in
equity or under this Agreement. Such rights and remedies shall be
cumulative. Debtor hereby agrees that it shall pay all expenses and
reimburse Secured Party for any expenditures, including reasonable
attorneys' fees and legal expenses, in connection with Secured Party's
exercise of any of its rights and remedies under this Agreement.
7.0 Inspection: Vehicles/Books and Records - It is hereby understood by and
between Debtor and Secured Party that Secured Party shall have the right
of access to and inspection of the Vehicles and the right to examine
Debtor's books and records, which Debtor warrants are genuine in all
respects. Debtor hereby certifies to Secured Party that all Vehicles and
books and records shall be kept at the principal place of business of
Debtor as hereinabove stated or at such other locations as approved in
writing by Secured Party, and Debtor shall not remove or permit the
removal of the Vehicles or books and records during the pendency of this
Agreement except in the ordinary course of business and as authorized by
Secured Party.
7.1 Debtor agrees to furnish to Secured Party after the end of each month, for
so long as this Agreement shall be effective, balance sheets and
statements of profit and loss for each month with respect to Debtor's
business in such detail and at such times as Secured Party may require
from time to time.
8.0 General - Debtor and Secured Party further covenant and agree that:
8.1 Any provision hereof prohibited by law shall be ineffective to the extent
of such prohibition without invalidating the remaining provisions hereof.
8.2 This Agreement shall be interpreted according to the laws of the State of
Debtor's principal place of business as identified above.
8.3 This Agreement cannot be modified or amended, except in writing by both
parties unless otherwise specifically authorized herein, and shall be
binding and inure to the benefit of each of the parties hereto and their
respective legal representatives, successors and assigns.
8.4 Interest to be paid in connection herewith shall never exceed the maximum
rate allowable by law applicable hereto, as the parties intend to strictly
comply with all law relating to usury. Notwithstanding any provision
hereof or any other document in connection herewith to the contrary,
Debtor shall not pay nor will Secured Party accept payment of any such
excessive interest, which excessive interest is hereby cancelled, and
Secured Party shall be entitled at its option to refund any such interest
erroneously paid or credit the same to Debtor's obligations hereunder.
8.5 The terms and provisions of this Agreement and of any other agreement
between Debtor and Secured Party or Debtor, Secured Party and Chrysler
Corporation or Debtor and Chrysler Corporation with respect to the
Receivable underlying any Receivable Purchase Advance by Secured Party
should be construed together as one agreement; provided, however, in the
event of any conflict, the terms and provisions of this Agreement shall
govern such conflict.
8.6 No failure or delay on the part of Secured Party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power
hereunder. The remedies herein are in addition to those available in law
or equity, and Secured Party need not pursue any rights it might have as a
Secured Party before pursuing payment and performance by Debtor or any
guarantor or surety.
8.7 This Agreement may not be assigned by Debtor.
9.0 Notices - Any notice given hereunder shall be in writing and given by
personal delivery or shall be sent by U.S. Mail, postage prepaid,
addressed to the party to be charged with such notice at the respective
address set forth below.
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TO DEBTOR TO SECURED PARTY
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Shaker's Inc. Chrysler Financial Corporation
1355 So. Main St. 980 Washington Street
Waterbury, CT 06706 Dedham, MA 02026
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
Shakers, Inc.
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(DEBTOR)
/s/ [Signature] By: /s/ Richard Shaker
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(WITNESS)
Title Vice President
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(WITNESS)
CHRYSLER FINANCIAL CORPORATION
By /s/ Betty Williams
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Title Dealer Credit Dept.