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