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Accounts, Contract Rights And Inventory
ACCOUNTS, CONTRACT RIGHTS AND INVENTORY
SECURITY AGREEMENT
Agreement made on [Date of agreement] between [Name of Borrower], of [Address of Borrower], referred to as borrower, and [Name of secured party], of [Address of secured party], referred to as secured party.
In consideration of the mutual covenants and promises contained in this agreement, borrower and secured party agree as follows:
SECTION ONE: Security Interest; Collateral
To secure and provide for payment of Dollars as provided in the note or notes of borrower and all other of borrowers obligations and liabilities to secured party hereunder or thereunder and also any and all other obligations of borrower to secured party of every kind or description, direct or indirect, absolute or contingent, due or to become due, now existing or subsequently arising, collectively called liabilities, borrower hereby grants to secured party a secured interest in the following described or specified property, collectively called collateral:
(1) All inventory of borrower, whether now owned or subsequently acquired called inventory;
(2) All accounts of borrower, now existing or subsequently arising, herein called accounts, together with all interest of borrower, now existing or subsequently arising, in goods, the sale of which gave rise to accounts and all chattel paper, documents and instruments relating to accounts;
(3) All contract rights of borrower, now existing or subsequently arising, in this agreement called contract rights;
(4) All general intangibles of borrower, including, but not limited to, all draw proceeds and retainages that are currently or subsequently become payable to borrower and all amounts that are currently or subsequently become owing to borrower with respect to the sale or sales of [Limited partnership interest] by borrower, together with the proceeds, products and accessions of and to any and all of the foregoing collateral.
Borrower will promptly deliver to secured party, duly endorsed when necessary, all collateral consisting of chattel paper, documents and instruments and related guarantees, now on hand or subsequently received by borrower.
SECTION TWO: Warranties
Borrower represents and warrants to secured party as follows:
(1) Title. Except for the security interests granted hereby, borrower is and, as to collateral to be acquired after the date of this agreement, will be, the owner of the collateral free from any adverse lien, security interest or encumbrances; and borrower agrees that it will defend the collateral against all claims and demands of all persons at any time claiming the same or any interest in it.
(2) Location of Inventory. All inventory at present owned by borrower is kept at the following location: [Location of Inventory].
(3) Places of Business. In addition to that shown at the beginning of this agreement, borrower has places of business only at the following locations: [Places of Business].
(4) Inventory Used in More Than One State. If any inventory is leased or held for lease to customers of borrower and is of a type normally used in more than one state [such as: automotive equipment, rolling stock, airplanes, road-building equipment, commercial harvesting equipment, construction machines and the like] and borrower has a place of business in more than one state, borrowers chief place of business is [Principal Place of Business].
(5) Location of Records. If borrower has an office in more than one state, the office where borrower keeps records concerning accounts and contract rights is [Location of Records].
(6) Accuracy of Information. Subject to any limitations stated therein or in connection therewith, all information furnished to secured party concerning collateral, or otherwise, for the purpose of obtaining credit or an extension of credit, is, or will be at the time the same is furnished, correct in all material respects and complete insofar as completeness may be necessary to give secured party accurate knowledge of the subject matter.
SECTION THREE: Payment
Borrower hereby authorizes secured party to require that all payments made to borrower with respect to any of the above described collateral be made directly to secured party or in form payable jointly to secured party and borrower. Payment made in such manner as secured party shall direct shall be full satisfaction of any obligation owing borrower with respect to such collateral.
SECTION FOUR: Delivery Of Proceeds
If any proceeds to borrower shall include, or any of the accounts shall be evidenced by, notes, trade acceptances, instruments or documents, or if any inventory is covered by documents of title or chattel paper, whether or not negotiable, borrower, if requested by secured party, shall immediately deliver the same to secured party, and, to evidence secured partys rights hereunder, borrower will assign or endorse the same to secured party as secured party may request. Secured party shall have full power to collect, compromise, endorse, sell or otherwise deal with the same in its own name or that of borrower.
With respect to proceeds and collateral in the form of accounts, secured party may at any time notify account debtors that the accounts have been assigned to secured party and shall be paid to secured party. Upon request of secured party at any time, borrower will so notify account debtors and will indicate on all invoices of such account debtors that the accounts are payable to secured party.
Regardless of the form of endorsement, borrower waives protest, notice of nonpayment and all other notices and demands.
If borrower fails to assign or to endorse any instrument or document secured party is authorized to assign or to endorse it on borrowers behalf.
SECTION FIVE: Inspection
Borrower shall at all times and from time to time allow secured party by or through any of its officers, agents, attorneys or accountants to examine or inspect the inventory wherever located and to examine, inspect and make abstracts from borrowers books and records with respect to collateral.
SECTION SIX: Records and Reports
Borrower shall at all times keep accurate and complete records of the collateral and its status. Borrower shall, if requested by secured party, submit to secured party such periodical statements, certified by an authorized representative of borrower, regarding its financial status and reports showing all sales from, additions to, changes in value of, payments for and adjustments to inventory. Borrower shall immediately notify secured party of any event causing loss or depreciation in the value of inventory.
SECTION SEVEN: Insurance
Borrower shall have and maintain insurance at all times with respect to all inventory against risks of fire [including extended coverage], theft, and against such other risks as such coverage is usually carried by owners of similar businesses and properties or as secured party may require and, in the case of motor vehicles, collision, containing such terms, in such form, for such periods and written by such companies as may be satisfactory to secured party, such insurance to be payable to secured party and borrower as their respective interests may appear.
All policies of insurance shall be delivered to and held by secured party at secured partys request. Secured party may act as attorney for borrower in obtaining, adjusting, settling and canceling such insurance and endorsing any drafts.
In the event of failure to provide insurance as provided in this agreement, secured party may, at secured partys option, provide such insurance and borrower shall pay to secured party, on demand, the cost of it.
SECTION EIGHT: Change of Place of Business or Location of Inventory
Borrower will promptly notify secured party in writing of any addition to, change in or discontinuance of its place or places of business as shown at the beginning of this agreement and in SECTION TWO Paragraph (3), the place at which inventory is located as shown in SECTION TWO Paragraph (2), the location of its chief place of business as set forth in SECTION TWO Paragraph (4) and the location of the office at which it keeps its records as set forth in SECTION TWO Paragraph (5).
SECTION NINE: Liens and Taxes
Borrower will keep all collateral free from any adverse lien, security interest or encumbrance and in good condition and will not waste or destroy any of it.
Without the written consent of secured party, borrower will not allow any financing statement covering any of the collateral to be on file in any public office, other than a financing statement filed pursuant to SECTION TEN of this agreement. Borrower will not use the inventory in violation of any statute or ordinance and will promptly pay when due all taxes and assessments on the collateral for its use or operation, on the proceeds of it, on this agreement or any of borrowers obligations under it.
At its option, secured party may discharge taxes, liens, security interests or other encumbrances at any time levied or placed on the collateral and may pay for the maintenance and preservation of the collateral. Borrower agrees to reimburse secured party, on demand, for any payment made, or for any expense incurred by secured party pursuant to the foregoing sentence.
SECTION TEN: Financing Statement
At request of secured party, borrower will join with secured party in executing one or more financing statements pursuant to the Uniform Commercial Code as enacted in [State of Jurisdiction] in form satisfactory to the secured party and will pay the cost of filing the same in all public offices wherever filing is deemed by secured party to be necessary or desirable. Without limiting the foregoing, borrower agrees that whenever the Uniform Commercial Code as enacted in [State of Jurisdiction] requires borrower to sign a financing statement for filing purposes, borrower hereby appoints secured party or any of secured partys representatives as borrowers attorney and agent, with full power of substitution, to sign or endorse borrowers name on any such financing statement or other documents and authorizes secured party to file such a financing statement in all places where necessary to perfect secured partys security interest in the collateral.
Borrower hereby ratifies all acts of attorney and substitute and agrees to hold secured party and attorney harmless from any acts of commission or omission or any error of judgment or mistake of fact or law pertaining thereto.
SECTION ELEVEN: Certificates of Title
If certificates of title are issued or outstanding with respect to any of the inventory, borrower will cause the interest of secured party to be properly noted in this instrument or on the certificates hereon at borrowers expense.
SECTION TWELVE: Further Assurances
Borrower will do, make, execute and deliver all such additional and further acts, things, deeds, assurances and instruments as secured party may require, to more completely vest in and assure to secured party its rights hereunder and in or to the collateral.
SECTION THIRTEEN: Events of Default; Acceleration
Any or all liability shall, at the option of secured party and notwithstanding any time or credit allowed by an instrument evidencing any liability, become immediately due and payable without notice or demand on the occurrence of any of the following events of default:
(a) Default in the payment, when due and payable, of any amount due and payable under this agreement or default in the payment or performance of any of the liabilities;
(b) Default in the performance of any obligation or covenant contained or referred to in this agreement;
(c) Any warranty, representation or statement made or furnished to secured party by or on behalf of borrower proved to have been false in any material respect when made or furnished;
(d) Failure of borrower, after request by secured party, to furnish financial information or to permit the inspection of its books and records;
(e) Any event which results in the acceleration of the maturity of the indebtedness of borrower to others under any indenture, agreement or undertaking;
(f) Loss, theft, damage, destruction or encumbrance to or of any of the inventory, or the making of any levy, seizure or attachment of or on the inventory;
(g) Death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under bankruptcy or insolvency laws by or against borrower or any guarantor or surety for borrower;
(h) Any change in the condition or affairs, financial or otherwise, of borrower or of any endorser, guarantor or surety for any of the liabilities which, in the opinion of secured party, impairs secured partys security or increases its risk.
SECTION FOURTEEN: Rights and Remedies on Default
On the occurrence of any such event of default, and at any time following such occurrence, secured party shall have the rights and remedies of a secured party under the Uniform Commercial Code as enacted in [state] in addition to the rights and remedies provided in this agreement or in any other instrument or paper executed by borrower. Secured party may require borrower to assemble the collateral and make it available to secured party at a place to be designated by secured party which is reasonably convenient to both parties.
If any notice to borrower is required by law, such notification, if mailed, shall be deemed reasonable if such notification is mailed, postage prepaid, to the address of borrower shown at the beginning of this agreement, as modified by any notice given pursuant to SECTION EIGHT at least [five] days before the time of the sale or disposition. Borrower shall pay to secured party on demand any and all expenses, including reasonable attorneys fees and legal expenses, incurred or paid by secured party in protecting or enforcing the liabilities and other rights of secured party hereunder, including its right to take possession of the collateral.
SECTION FIFTEEN: Waiver
Secured party shall not be deemed to have waived any of secured partys rights under this agreement or under any other agreement, instrument or paper signed by borrower unless such waiver be in writing and signed by secured party. No delay or omission on the part of secured party in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion.
SECTION SIXTEEN: Cumulative Remedies
All secured partys rights and remedies, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently.
SECTION SEVENTEEN: Demands and Notices
Any demand on or notice to borrower that secured party may elect to give shall be effective when deposited in the mails or delivered to a telegraph transmission company addressed to borrower at the address shown at the beginning of this agreement, as modified by any notice given pursuant to SECTION EIGHT. Demands or notices addressed to borrowers address at which secured party customarily communicates with borrower shall also be effective.
SECTION EIGHTEEN: Transfers
If at any time or times secured party, by assignment or otherwise, transfers any liabilities and inventory or other security therefor, such transfer shall carry with it secured partys powers and rights under this agreement with respect to the liabilities and collateral or other security transferred and the transferee shall become vested with the powers and rights, whether or not they are specifically referred to in the transfer. If and to the extent that secured party retains any other liability or collateral or other security, secured party will continue to have the rights and powers set forth in this agreement with respect to them.
SECTION NINETEEN: Termination
Whenever there are no outstanding liabilities and no commitment on the part of secured party under any agreement which might give rise to any obligation of borrower, borrower may terminate this agreement on written notice to secured party. Prior to such termination this shall be a continuing agreement in every respect.
SECTION TWENTY: Collection or Protection of Collateral
Secured party shall have no duty to collect or protect the collateral, to preserve rights of borrower or others against prior parties, to realize on the collateral in any particular manner or seek reimbursement from any particular source or to preserve, protect, insure or care for the inventory.
SECTION TWENTY-ONE: Miscellaneous
This agreement is intended to take effect when signed by borrower and delivered to secured party.
All rights of secured party under this agreement shall inure to the benefit of the heirs, executors, administrators, successors and assigns of secured party, and all obligations of borrower under this agreement shall bind the heirs, executors, administrators, successors and assigns of borrower.
If there be more than one borrower, their obligations under this agreement shall be joint and several.
In witness whereof, the parties have executed this agreement at [Designated place of execution] the day and year first above written.
Signature Date