SECURED
PARTY
POSSESSION
OF COLLATERAL (NEW)
SECURITY AGREEMENT
_____________________________________________________
(Name of debtor), of
_____________________________________________________________ (address), and
___________________________________________ (name
of secured party), of ___________________________________________ (address), secured party, agree as
follows:
SECTION
ONE: Creation of Security Interest
In
consideration of any financial accommodation given, to be given, or continued
to debtor by secured party, and to secure the payment of all debts,
obligations, or liabilities now or subsequently existing, absolute or
contingent, of debtor to secured party, debtor pledges and grants to secured party
a security interest in the following described property, referred to in this
agreement as “collateral”: __________ (set
forth full and adequate description of the property subject to the security
interest); which debtor has this day delivered to and deposited with
secured party; and all property subsequently deposited with secured party in
substitution for any of the property described above; and all stock rights,
voting rights and rights to subscribe, dividends of any nature, new securities
or other property which debtor may be or become entitled to receive on account
of any securities or other property subject to this agreement; and all proceeds
of any of the above-described collateral.
SECTION
TWO: Representations of Debtor
Debtor
represents and warrants as follows:
A.
Debtor is the absolute owner of the above-described collateral and has
authority to pledge, transfer, and deliver any interest in the collateral. All
collateral is free of any encumbrance or claim except the security interest granted
to secured party. Debtor, at __________ (his
or her or its) own expense, will keep the collateral free of any
other encumbrance or claim, and defend it against all claims and demands of any
person at any time claiming any interest in it adverse to secured party. All
collateral is genuine, free from default, prepayment, or defenses, and complies
with all applicable laws concerning form, content, and manner of preparation
and issuance. All persons appearing to be obligated on the collateral have
authority and capacity to contract and are bound as they appear from the face
of the collateral.
B.
On demand, debtor will execute and deliver to secured party any financing
statements and other papers, and do all acts, as in the judgment of secured
party may be necessary or appropriate to establish and maintain a valid and
prior security interest in the collateral. On debtor’s failure to do so,
secured party may sign any financing statement or other document on behalf of
debtor. Debtor will pay all costs of any filings of financial statements or
other papers.
C.
On request, and at __________ (his or her or
its) own expense, debtor will supply any financial information to
secured party, including audits by independent public accountants. All
information supplied and statements made by or on behalf of debtor in any
financial, credit, or accounting statement or application for credit prior to,
contemporaneous with, or subsequent to the execution of this agreement are, and
shall be, true, correct, complete, valid, and genuine. Debtor will also provide
secured party with such information concerning the collateral as secured party
may request.
D.
Secured party may retain possession and custody of the collateral until all
obligations are fully paid. Secured party will not be responsible for
depreciation in value of the collateral or have any duty to take steps to
preserve rights against prior parties or to enforce collection of collateral by
legal proceedings or otherwise, secured party‘s sole duty being to use reasonable
care in the custody and physical preservation of the collateral in secured
party’s possession. Debtor will deliver to secured party in the exact form
received, and without commingling with other property, any payments, dividends,
interest, profits, rights, options, or proceeds that may be received by or paid
or delivered to debtor whether as an addition to, in discharge of, in
substitution of, or in exchange for the collateral. At any time secured party
may exercise any right of debtor with respect to the collateral. At any time,
at debtor‘s expense and without notice, secured party may notify any obligor or
account debtor on any installment, chattel payment, or other evidence of
indebtedness held as collateral to pay secured party directly and may collect,
sue, compromise on terms __________ (he or
she or it) considers proper, indorse, or otherwise deal with the
collateral either in __________ (his or her
or its) own name or that of debtor. Whenever secured party
determines that sale of any of the collateral is necessary to preserve its
value, secured party may sell such collateral in the manner specified below in
this agreement, whether or not a default exists, and after deducting all costs
and expenses of sale, including any reasonable attorney’s fees, secured party
may apply the net proceeds to payment of one or more of the obligations,
whether due or not, in such order as secured party may elect.
E.
At any time, at debtor‘s expense and without notice to debtor, secured party
may register in __________ (his or her or
its) own name or that of __________ (his
or her or its) nominee any securities held as collateral. Secured
party or __________ (his or her or its)
nominee may exercise all voting or corporate rights, including without
limitation all rights of conversion, exchange, subscription, or any other
rights, privileges, or options pertaining to the securities and, in connection
with these rights, may deposit and deliver any and all securities to any
committee, depository, transfer agent, registrar, or other designated agency on
such terms and conditions as __________ (he
or she or it) may determine, all without liability except to account
for property secured party actually receives.
F.
If, at any time in the opinion of secured party, the financial condition of
debtor becomes impaired or the existing collateral is, or has become,
insufficient, debtor will, within __________ (number
of hours or days) after demand, deliver to secured party additional
collateral satisfactory to secured party. The additional collateral shall be
held by secured party in the same manner as specified in this security
agreement and subject to the terms of this agreement.
G.
Debtor will pay when due all taxes and assessments and will discharge any liens
on the collateral or its use. If debtor fails so to do, secured party may at
__________ (his or her or its)
option pay or discharge the liens and debtor will reimburse secured party on
demand for any such payment, with interest at the rate of __________ percent
per annum from date of payment.
H.
Debtor waives demand, notice, protest, and all demands and notices of any
action taken by secured party under this agreement or in connection with any of
the collateral, except as otherwise required by this security agreement, and
debtor consents to any indulgence granted by secured party to others, and to
any substitution for, exchange of, addition to, or release of the collateral,
in whole or in part, or release of any party liable on the collateral. Debtor
releases secured party from any and all claims for depreciation, loss, or
damage caused by any act or omission (except willful misconduct) on the part of
secured party, __________ (his or her or
its) officers, agents, and employees, including, but not limited to,
failure to exercise, or delay in exercising, any right, privilege, or option,
to present for payment, to protest, to sue on, to collect or realize on any of
the collateral or any moneys due or to become due.
I.
__________ (If debtor is a corporation,
insert: Debtor is organized and existing under the laws of the State of
__________ and is qualified and in good standing in all states in which it is
doing business. The execution, delivery, and performance of this agreement are
within debtor’s corporate powers, have been authorized, are not in
contravention of law or the terms of debtor‘s charter, bylaws, or other
incorporation papers, or any indenture, agreement, or undertaking to which
debtor is a party or by which it is bound).
SECTION
THREE: Events of Default
Debtor
will be in default on the happening of any of the following events or
conditions (referred to below as an “event of default”):
A.
Failure to make payment when due of any of the obligations, or failure to
perform any of the agreements or provisions contained or referred to in this
security agreement, in any other agreement executed with reference to this
security agreement, or in any instrument evidencing any of debtor’s obligations
to secured party.
B.
Discovery of falsity in any material respect when made or furnished of any
warranty, representation, or statements contained in this agreement or made or
furnished to secured party by or on behalf of debtor in connection with this
agreement or to induce secured party to extend credit to debtor.
C.
Suit is filed in connection with any levy, seizure, or attachment of or on the
collateral.
D.
At any time, in the opinion of secured party, the financial condition of debtor
becomes impaired or the collateral becomes insufficient or unsafe.
E.
Debtor‘s death, dissolution, or other termination of existence, merger or
consolidation with another, insolvency, forfeiture of right to do business,
business failure; appointment of a receiver of any part of the property of
debtor; the calling of any meetings of or the assignment for the benefit of
creditors by debtor, or the commencement of any proceedings under any
bankruptcy or insolvency laws by or against debtor or any guarantor or surety
for debtor.
F.
Default by any guarantor, surety, or indorser for debtor with respect to any
obligation or liability to secured party.
SECTION
FOUR: Remedies on Default
On
occurrence of an event of default, secured party shall have the following
remedies:
A.
Secured party may, at any time after default, without notice to debtor, declare
all or any of the obligations immediately due and payable. Secured party will
have, in addition to all other rights and remedies, the rights and remedies of
a secured party under the _______________ (State)
Uniform Commercial Code, including, without limitation, the right to sell,
lease, or otherwise dispose of any or all of the collateral.
B.
After deducting all costs and expenses of every kind incurred in, or incidental
to, the retaking, holding, advertising, preparing for sale, or the selling,
leasing, or otherwise disposing of the collateral, including, but not limited
to, attorney’s fees, legal expenses, and cost of any repair considered
necessary by secured party, all of which costs and expenses debtor agrees to
pay, secured party may apply the net proceeds of any sale, lease, or other
disposition of the collateral to payment of the obligation or obligations
secured, whether due or not, in such order as secured party may elect. However,
if secured party has transferred any of the obligations to another party, the
net proceeds of any disposition of collateral shall be applied first to payment
of any notes constituting obligations in the order of their dates beginning
with the note of earliest date (a note in extension or renewal being considered
as if of the same date as the original note) and then to payment of any other
obligations, whether due or not, in such order as secured party may elect. In
applying net proceeds to payment of obligations, proper rebate for any unearned
interest or discount will be made. Only after full payment of all obligations,
and any other payments secured party may be required by law to make, need
secured party account to debtor for any surplus. Debtor shall remain liable to
secured party for the payment of any deficiency with interest at the rate of
__________ percent per annum.
C.
Whenever an attorney is employed to collect any obligation or to enforce any
right of secured party against debtor under this security agreement, whether by
suit or other means, debtor agrees to pay an attorney‘s fee of __________
percent of all principal and interest then due, which fee debtor agrees is
reasonable. Debtor also agrees to pay reasonable attorney’s fees for the
enforcing against third parties of any other rights of secured party pertaining
to this agreement, including collection of any collateral and defending against
any claim pertaining to any collateral.
D.
No act, delay, omission, or course of dealing between debtor and secured party
shall be a waiver of any of secured party‘s rights or remedies under this
security agreement, and no waiver, change, modification, or discharge in whole
or in part of this agreement or of any obligation will be effective unless in a
writing signed by secured party. A waiver by secured party of any rights to any
obligation on any occasion will not be a bar to the exercise of any right or
remedy on any subsequent occasion. All rights and remedies of secured party
under this agreement are cumulative and may be exercised singly or
concurrently, and the exercise of any one or more of them will not be a waiver
of any other.
SECTION
FIVE: Notice of Sale
Unless
the collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, secured party shall give debtor
notice of the time and place of public sale of collateral or of the time after
which any private sale or other intended disposition is to be made by sending
notice, as provided below, at least __________ days before the sale or
disposition, which provisions for notice debtor agrees are reasonable.
SECTION
SIX: Manner of Giving Notice
Any
notice to secured party will be effective only on its receipt by secured party.
Any requirement for the giving of notice to debtor will be satisfied by mailing
the notice, postage prepaid, to the debtor whose name appears first below, at
__________ (his or her or its)
last known address appearing on secured party’s records __________ (if appropriate, add: and each of the undersigned
designates the debtor whose name appears first below as agent to receive all such
notice‘s on their behalf).
SECTION
SEVEN: Successors and Assigns
All
rights and remedies of secured party shall inure to the benefit of __________ (his or her or its) successors
and assigns, and debtor may not assert against an assignee any claims or
defenses that __________ (he or she or it)
may have against secured party, except those granted by this security
agreement.
SECTION
EIGHT: Definition of “Debtor”
As
used in this agreement “debtor” means singular or plural according to the number
of persons signing this agreement and includes debtor’s heirs, executors or
administrators, successors, representatives, receivers, and trustees. If this
agreement is signed by more than one person as debtor, it will constitute the
joint and several agreement of all signing.
SECTION
NINE: Severability
If
any provision of this agreement is invalid or unenforceable under any law, such
provision is and will be totally ineffective to that extent, but the remaining
provisions will be unaffected.
SECTION
TEN: Governing Law
This
agreement shall be interpreted in accordance with the laws of the State of
__________ in force at the date of this agreement.
SECTION
ELEVEN: Entire Agreement
This
agreement shall constitute the entire agreement between the parties and any
prior understanding or representation of any kind preceding the date of this
agreement shall not be binding on either party except to the extent
incorporated in this agreement.
SECTION
TWELVE: Paragraph Headings
__________
The titles to the paragraphs of this agreement are solely for the convenience
of the parties and shall not be used to explain, modify, simplify, or aid in
the interpretation of the provisions of this agreement.
SECTION
THIRTEEN: Date
This
agreement will become effective when signed by debtor.
Executed
on ____________________________
______________________________ ____________
Signature Date
______________________________ ____________
Signature Date