Inventory security agreement.

_________[date]

The undersigned ("debtor"), whose place of business is _________ Street, _________ City, _________ County, _________ State, to secure indebtedness of _________ dollars ($_____) and all other liabilities of debtor to the _________ Bank, _________[address] ("bank"), represents and agrees as follows:

1. Other places of business.

(a). Debtor has no place of business located outside of the county above stated, except: _________ Street, _________ City, _________ County, _________ State.

(b). Debtor will promptly advise bank in writing of the opening or closing of any place of business.

2. Definitions. As used in this agreement:

(a) "Liabilities" includes the above-described indebtedness of debtor to bank, and all other indebtedness of debtor to bank of every kind and description, direct or indirect, absolute or contingent, due or to become due, now existing or in the future arising and however evidenced;

(b) "Collateral" means the various items of inventory described below or on invoices or schedules attached to and made a part of this agreement, and all replacements of and accessions to that inventory, all of which have been or will be paid for, in whole or in part, by debtor or by bank with the proceeds of loans or advances made by bank to or for the account of debtor.

Quantity

Description

Serial No.

Motor No.

Amount

 

......................................	......................................	......................................	......................................	.....................................
......................................	......................................	......................................	......................................	.....................................
......................................	......................................	......................................	......................................	.....................................
				Total amount*
				$....................................

 

*Must agree with amount of above indebtedness.

3. Security for liabilities. As security for all liabilities, bank is here granted and shall have a security interest in the following:

(a) The collateral;

(b) All goods, instruments, documents of title, policies and certificates of insurance, chattel paper, deposits, money or other property now or in the future owned by debtor or in which debtor now has or in the future acquires an interest and which is now or in the future in possession of bank or as to which bank now or in the future controls possession by documents of title or otherwise, whether or not representing, evidencing or relating to the collateral;

(c) The proceeds and products of all the above items described in (a) and (b) of this section 3, including all accounts arising from the sale or lease of all or any part of the collateral.

4. Disbursement authorization.

(a). Bank is authorized to disburse the loan proceeds as follows: _________.

(b). Debtor agrees to deliver to bank (or to an agent or trustee acting for bank) and bank is authorized to receive and hold the manufacturer's statement of origin or the certificate of title to any motor vehicle which comprises a part of the collateral.

5. Debtor agrees to hold the collateral in trust for bank with liberty to sell and, with prior written consent of bank, to lease the collateral.

6. Debtor will not permit any security interest to attach to the collateral or the proceeds of it except that which is evidenced by this agreement.

7. Debtor will protect and care for the collateral and will, upon request, deliver same to bank. Bank shall have the right at all times to enter the premises where the collateral is located for the purpose of examining, counting and protecting same. Debtor agrees to keep bank informed at all times concerning the location of the collateral.

8. Each document which secures the liabilities will be delivered or returned to bank upon request and in any event, with or without request, not later than 21 days after the date of the document if debtor has not prior to that time obtained possession of the goods represented by that document.

9. Debtor will keep the collateral insured in such companies, in such amounts, and against such risks as shall be acceptable to bank, with satisfactory loss payable clauses in favor of bank. Debtor will deposit the policies with bank. Debtor here assigns to bank any return or unearned premium due upon cancellation of any such insurance and directs insurer to pay to bank all amounts so due. All amounts received by bank in payment of insurance losses or return or unearned premium may, at bank's option, be applied on any of the liabilities, or all or any part of those amounts may be used for the purpose of repairing, replacing or restoring the collateral. If debtor fails to maintain satisfactory insurance, bank shall have the option so to do and debtor agrees to repay with interest all amounts so expended by bank.

10. Bank is here appointed debtor's attorney in fact to make adjustments of all insurance losses, to sign all applications, receipts, releases and other papers necessary for the collection of any such loss and any return or unearned premium, to execute proofs of loss, to make settlements, and to indorse and collect any check or other item payable to debtor issued in connection with such loss.

11. Debtor agrees to deliver to bank when requested, and in any event not less frequently than once each year, a balance sheet, profit and loss statement and reconcilement of surplus of debtor and if requested by bank such financial statements shall be prepared and certified by an independent public accountant acceptable to bank. Debtor also agrees to permit any employee or representative of bank to examine all of debtor's books and records at any time during normal business hours. Debtor represents and warrants to bank that all financial statements and credit applications furnished to bank have and will accurately reflect the financial condition and operations of debtor at the times and for the periods stated in those documents.

12. If any part of the collateral is sold, debtor agrees to keep the proceeds of each such sale duly earmarked and separate from debtor's funds and to remit such proceeds to bank promptly in the form received by debtor. Debtor agrees not to lease any of the collateral without prior written consent of bank and bank is here granted a security interest in each such lease and in all amounts due and to become due under it, which lease and amounts debtor agrees to assign to bank by separate instrument at bank's request. If debtor collects any amount due under any such lease, such amounts shall be duly earmarked and kept separate from debtor's funds and shall be remitted by debtor to bank promptly in the form received by debtor.

13. Debtor agrees to pay to bank on demand all expenses, including reasonable attorney fees, incurred by bank in protecting or enforcing its rights in the collateral. After deducting all of those expenses, the residue of any proceeds arising from the collateral shall be applied on the liabilities in such order of preference as bank shall determine. Any excess, to the extent permitted by law, shall be paid to debtor, who shall be liable for any deficiency.

14. Bank shall not be deemed to have waived any of its rights in any collateral unless such waiver be in writing and no delay or omission by bank in exercising any right shall operate as a waiver of that right or of any other right. Bank shall have, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code as enacted in _________[state].

15. The occurrence of any of the following events shall constitute a default under this agreement:

(a) Failure by debtor to pay any of the liabilities when due by acceleration or otherwise;

(b) Failure by debtor to observe or perform any of the provisions of this agreement or of any instrument or agreement pertaining to the collateral or to any liability;

(c) The making or furnishing by debtor to bank of any representation, warranty, financial statement or other information which is materially false;

(d) Death of debtor if an individual, dissolution of debtor if a partnership, or the beginning of any action or proceeding to dissolve debtor if a partnership or a corporation;

(e) The commencement of any action or proceeding by or against debtor under the Bankruptcy Act or under any other present or future state or federal law for the relief of debtors, or the appointment of a receiver or trustee for debtor or any substantial part of debtor's assets, or the issuance of an attachment or the entry of a judgment against debtor, the effect of which is not stayed within 10 days;

(f) Bank shall deem itself insecure, in good faith believing that the prospect of payment of any of the liabilities or performance of this agreement is impaired;

(g) Sale or other disposition by debtor of the collateral or of any substantial portion of debtor's assets or property, except for full value in the ordinary course of business.

Upon occurrence of any event of default, bank is authorized in its discretion to declare any or all of the liabilities to be immediately due and payable without demand or notice to debtor and may exercise any one or more of the rights and remedies granted pursuant to this agreement or given to a secured party under the Uniform Commercial Code as enacted in _________[state], including without limitation the right upon default to take possession and sell, lease or otherwise dispose of the collateral and any proceeds of the collateral.

16. This agreement shall be governed by the laws of the State of _________ in every respect, shall inure to the benefit of bank, its successors and assigns and to any other holder who derives from bank title to or an interest in any liabilities, and shall be binding upon debtor and the heirs, executors, administrators, successors and assigns of debtor. Bank is authorized to fill in any blank spaces in this agreement to correct patent errors in this agreement, to complete or correct the description of the collateral and to date this agreement. All notices to debtor shall be deemed sufficiently given if mailed to debtor at the address first above stated. If there be more than one debtor, their obligations under this agreement shall be joint and several.

17. This agreement and the security interest in the collateral created by this agreement shall terminate when the liabilities have been paid in full. Prior to such termination, this shall be a continuing agreement.

_________, Debtor

By _________