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Thursday, 08 April 2010 07:19

Security Agreement Sale of Collateral

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To Debtor by Secured Party

1. Introduction. Agreement made [date] between [name], residing at [address] (Debtor), and [name], with offices at [address] (Secured Party).

2. Creation of Security Interest. Debtor grants to Secured Party a security interest in the property described in Paragraph 3 to secure payment of Debtor's obligation to Secured Party, described in Paragraph 4.

3. Description of Property. The property (Collateral) in which the security interest has been granted is a [type of property], more particularly described as follows: [description].

4. Debtor's Obligation. Debtor's obligation arises out of a sale of the Collateral by Secured Party to Debtor made this day for ........ dollars ($........). Debtor will pay to Secured Party the sum of ........ dollars ($........) with interest at the rate of ...... percent (......%) per annum, in [number] monthly installments of ........ dollars ($........) each, the first of which is to be paid on [date]. Each succeeding installment is to be made on the [number] day of each month until the entire principal sum with interest has been paid. Debtor will execute a promissory note payable to Secured Party's order, as evidence of Debtor's obligation.

[Alternative Paragraph]

4. Debtor's Obligation. Debtor will pay to Secured Party the sum of ........ dollars ($........) together with interest of ...... percent (......%) per annum, in accordance with the terms of an installment note executed by Debtor to Secured Party's order, simultaneously with the execution of this Agreement.

5. Acceleration on Default in Payment of Any Installment of Obligation. If Debtor does not pay any monthly installment of the obligation in full on the [number] day of the month in which it is due, and Debtor's default continues for more than [number] days after that, the entire unpaid balance of Debtor's obligation shall become immediately due and payable at Secured Party's option.

6. Acceleration Upon Occurrence of Specified Events. Debtor's obligation shall become due and payable immediately upon the occurrence of any of the following events:

a. Misrepresentation. The making of any misrepresentation by Debtor to Secured Party for the purpose of obtaining credit or an extension of credit;

b. Creditor's Meeting. The calling of a meeting of Debtor's creditors;

c. Committee of Creditors. The appointment of a committee of Debtor's creditors;

d. Assignment for the Benefit of Creditors. The making of an assignment for the benefit of Debtor's creditors;

e. Receivership. The filing of a voluntary or involuntary petition for or the appointment of a receiver of Debtor's property;

f. Bankruptcy. The filing of a voluntary petition by or an involuntary petition against Debtor under any provision of the federal Bankruptcy Act;

g. Attachment. The issuance of a warrant of attachment or for distraint against any of Debtor's property;

h. Tax Lien. The issuance of a notice of tax lien against Debtor or Debtor's property;

i. Judgments. The entry of a judgment against Debtor or Debtor's property;

j. Nonpayment of Taxes. Debtor's failure to pay, withhold, collect, or remit any tax or tax deficiency when assessed or due;

k. Death. Debtor's death.

l. Dissolution of Business. The dissolution of Debtor's business;

m. Bulk Sale. The making of a bulk sale by Debtor or the giving of notice of intent to do so;

n. Encumbering Accounts Receivable or Property. The mortgage, pledge, or assignment of Debtor's accounts receivable or other property;

o. Suspension or Liquidation of Business. The suspension or liquidation of Debtor's usual business;

p. Failure to Furnish Financial Information. Debtor's failure, after demand by Secured Party, to furnish financial information to Secured Party or permit Secured Party to examine any of Debtor's books of account or records;

q. Default in Performance of Other Obligations. Debtor's failure to pay any other note or obligation held by Secured Party when due; or

r. Impairment of Financial Responsibility. Whenever, in Secured Party's sole opinion, Debtor's financial responsibility becomes impaired or unsatisfactory.

7. Debtor's Obligations With Respect to Use, Care, and Maintenance of Collateral. Debtor agrees to the following with respect to the Collateral during the term of this agreement:

a. Use of Collateral. Debtor will use the Collateral only for [purpose]. No other use will be made of the Collateral without Secured Party's prior written consent.

b. Maintenance and Repair of Collateral. Debtor will maintain the Collateral and keep it in good repair.

c. Place Collateral Will Be Kept. Debtor will keep the Collateral at [address]. Debtor will not remove the Collateral to another location without first obtaining Secured Party's written consent.

d. No Sale of Collateral by Debtor. Debtor will not sell or transfer the Collateral to a third party or permit it to be done by another, without first obtaining Secured Party's written consent.

e. Insurance. Debtor will insure the Collateral against all normal risks. The policies shall designate Debtor and Secured Party as beneficiaries, as their interests shall appear. Debtor shall deliver duplicate policies to Secured Party together with proof of timely payment of all premiums when due.

8. Financing Statement. Debtor, at Secured Party's request, will sign any Financing Statement or other instrument that Secured Party requires to protect the security interest created by this Agreement against the rights or interests of third parties.

9. Rights of Secured Party Upon Debtor's Default. Upon Debtor's default in the performance of any of Debtor's obligations, Secured Party may exercise its rights of enforcement under the Uniform Commercial Code in force in [state] at the date of this Agreement. In furtherance of the exercise of those rights or in addition to or substitution for those rights, Secured Party may do the following:

a. Enter Debtor's Premises. Enter Debtor's premises to take possession of the Collateral; and

b. Require Debtor to Make Collateral Available. Require Debtor to make the Collateral available to Secured Party at a place designated by Secured Party, provided the place is convenient for Debtor, so that Secured Party may take possession of the Collateral.

10. Effect of Waiver of Default. If Secured Party waives any default by Debtor or if Secured Party remedies any of Debtor's defaults, such action shall not operate as a waiver of the default remedied or of any earlier or later defaults.

IN WITNESS WHEREOF, the parties have signed this Agreement the day and year first above written.




Secured Party

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