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Commercial Security Agreement

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Commercial Security Agreement Powered By Docstoc
					This is an agreement whereby one party (the "Debtor") uses personal property, not real
property, as security or collateral for a loan. The Debtor pledges to the lender (the
"Secured Party") a security interest in the personal property until the loan is paid in full.
This particular agreement uses a fidelity bond as the security interest, but it can be
tailored to fit the specific needs of the drafting parties. This agreement should be used
by small businesses that want to use a bond or other personal property as collateral for
a loan.
COMMERCIAL SECURITY AGREEMENT
                 Non-Negotiable - Private Between two Parties

This Security Agreement is made and entered into this _____ [Instruction: Insert date.] day of _____
[Instruction: Insert month.], 20__ [Instruction: Insert year.], by and between _____ [Instruction:
Insert Debtor’s name.], having an address at _____ [Instruction: Insert Debtor’s address.], and
Social Security Account #_____ [Instruction: Insert Debtor’s Social Security Number.] (the
“Debtor”), and _____ [Instruction: Secured Party’s name.], a duly registered ____ [Instruction:
Insert state where registered and type of corporation.] with a principal business address located at
____ [Instruction: Insert Secured Party’s principal business address.] (the “Secured Party”),
Employer Identification #_____ [Instruction: Insert date.]. The herein Security Agreement
supersedes and replaces, nunc pro tunc, any presumed, implied, assumed or real co-business
partnership, attorney-in-fact, trustee, fiduciary, or accommodation party arrangements that may have
existed between Debtor, Secured Party, and any other parties. The herein Security Agreement
specifically supersedes any and all other Commercial Security Agreements heretofore entered into and
recorded of the ______ [Instruction: Insert name of state office in which any other security
agreements were filed or recorded, as the case may be. Otherwise, delete this reference.]

The Parties, (the “Parties”), are identified as follows:

 DEBTOR
                                                                          Secured Party
______ [Instruction: Insert Debtor’s full
legal name.]                                                              ______ [Instruction: Insert legal name of
[Comment: Insert all of Debtor’s derivatives                              principal in fact.]
or Aliases.]                                                                Principal in Fact
_____ [Instruction: Insert Debtor’s address.]                             ______ [Instruction: Insert Secured Party’s
                                                                          contact address.]



NOW, THEREFORE, Parties aforementioned agree as follows:

                                                            AGREEMENT

IN CONSIDERATION for Secured Party providing certain accommodations to Debtor, including but
not limited to:

1. Constituting the source, origin, substance, and being, i.e. basis of “pre-existing claim,” from which
   existence of debtor was derived, and on the basis upon which Debtor is able to function as
   transmitting utility or vessel, i.e. serve as conduit for transmission of goods and services in
   commercial activity, and interact, contract and exchange goods, services, obligations and liabilities
   in commerce with other debtors, corporations or other artificial persons and entities or to conduct
   commercial activity as a conduit for the transmission of goods and services to Secured Party, and
   to interact, contract, and exchange goods, services to Secured Party and/or other Debtors,
   corporations, and artificial persons in Commerce and the laws pertaining thereto or derived
   therefrom.
2. Signing by accommodation for Debtor in all cases, whatsoever, wherein any signature of Debtor is
   required;
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3. Issuing binding commitment to extend credit or for the extension of immediately available credit,
   whether or not, drawn upon and, whether or not, chargeback is provided for in the event of
   difficulties in collection;
4. Providing the security for payment of all sums due or owing, or to become due or owing, by
   Debtor;
5. Constituting the source of assets, via sentient existence, exercise of faculties and labor of Secured
   Party, that provide valuable consideration sufficient to support any contract, which Debtor may
   execute or to which Debtor may be regarded as bound by any person, whatsoever; and
6. Debtor hereby confirms voluntary entry of Debtor into the Commercial Registry and transfers and
   assigns to Secured Party a security interest in the Collateral described herein below.

ALL REFERENCES in this document of or about: The Security Agreement, herein Security
Agreement, the agreement, herein Commercial Security Agreement, the Commercial Security
Agreement and any other derivatives of the term “agreement” means: this security agreement as first
dated above unless specifically stated otherwise.

NOW, THEREFORE, it is hereby agreed as follows: for valuable consideration, for certain collateral
being agreed upon by the Secured Party and certain accommodations for the Debtor, as described
herein, the receipt and sufficiency of which are hereby acknowledged, including, but not limited by,
allowing the Debtor to act as an agent; utilized for the purpose of conducting commercial activity for
the benefit of Secured Party; and as security for payment of all sums due or which may become due or
owing by Debtor to or for Secured Party, Debtor hereby grants Secured Party a security interest in the
collateral securing the indebtedness and agrees that Secured Party shall have the rights stated in the
herein Security Agreement regarding the collateral, including all other rights which Secured Party may
have including any and all rights as beneficiary of any and all trusts. The security interest granted
herein secures any and all indebtedness and liabilities, whatsoever, owed by Debtor to or for Secured
Party, whether direct or indirect, absolute or contingent, due or may becoming due, now existing or
hereafter arising, and how so-ever evidenced. The herein security interest is also given for securing
any other debts, which may be owed by Debtor to or for Secured Party for any and all times as stated
herein below.


                                                          FIDELITY BOND

KNOW ALL MEN by these presents, that Debtor, establishes this bond in favor of Secured Party, in
the sum of present Collateral Values up to the penal sum of _____ ($_____.00 Dollars) [Instruction:
Insert written amount of bond, followed by numerical representation of same in parentheses.] , for payment of
which bond, well and truly made, Debtor binds Debtor and Debtor’s heirs, executors, administrators
and third-party assigns, jointly and severally, by these presents.

The condition of above Bond is: Secured Party covenants to do certain things on behalf of Debtor, as
set forth above in this Agreement, and Debtor, with regard to conveying goods and services in
commercial activity to secured party, covenants to serve as transmitting utility therefore, and as
assurance of fidelity, grants to Secured Party, Security Interest in, herein, below described collateral.

The bond shall be in effect as of the date hereon and shall remain in full force and effect until the
surety
is released by written order of the Secured Party. [Comment: If other parties must be in agreement
for release of bond, describe same here.]
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                                                      INDEMNITY CLAUSE

Debtor, without benefit of discussion or division, hereby, does agree, covenant and undertake to
indemnify, defend and hold Secured Party harmless from and against any and all claims, losses,
liabilities, damages, levies, judgments, costs, interests and expenses, absolute or contingent, now due
or which may become due, now existing or hereinafter arising and howsoever evidenced, “Claims” or
“Claim”, which Claims include, without restriction, all legal costs, attorneys fees, interests, penalties
and fines suffered or incurred by Secured Party of whatever kind or nature, in accordance with Secured
Party’s personal guarantee with respect to any loan or indebtedness of Debtor, including any amount
Debtor might be deemed to owe to any creditor for any reason, whatsoever. Debtor shall make no
attempt by accord and satisfaction to discharge this debt in part or whole.

The conditions of the obligation are such that if Secured Party suffers any loss of vested rights in the
said collateral property or monetary losses due for debts claimed against the aforesaid collateral
property, or the Debtor/person, who binds itself by the obligation for making advance payments from
Debtor’S U. S. Treasury Accounts, established under IMF, BMF, IRAF, EPMF (temporary, permanent
and current) accounts for any and all who make debt claims against any of the collateral or vested
Rights in said collateral of Secured Party. The obligation shall bind the Debtor in all respects, for fully
and faithfully complying with all applicable provisions.

Secured Party shall promptly provide Debtor with written notice containing full details of any
Claim, including copy of any document, correspondence, suit, or action received by or served upon
Secured Party. Secured Party shall fully co-operate with DEBTOR in any discussion, negotiation, or
other proceeding relating to any such Claim.



                                                   OBLIGATIONS SECURED

Security Interest granted, herein, secures any and all indebtedness and liability, whatsoever, of Debtor
to Secured Party, whether direct or indirect, absolute or contingent, due or to become due, now existing
or hereinafter arising, and however evidenced.

                                    DEBTOR’S OBLIGATIONS
Debtor covenants and warrants to Secured Party as follows:
1. Debtor is a corporation, business trust, trust or constructive trust which is duly organized validly
   existing, and in good standing under the laws of the United States;
2. The execution, delivery, and performance of the Agreement by Debtor has been duly authorized
   by all necessary action by (a) organization, or bylaws, or any agreement or other instrument
   binding upon Debtor (b) any law, governmental regulation, court decree, or order applicable for or
   on the Debtor;
3. Debtor agrees to execute such financing statements and to take whatever other reasonable actions
   are requested by Secured Party for perfecting and continuing Secured Party’s security interest in
   the Collateral. Debtor hereby appoints Secured Party as its irrevocable attorney-in-fact for the
   purpose of executing any documents necessary for perfecting or for continuing the security interest
   granted in the herein Commercial security agreement. Secured Party may at any time, and without
   further authorization from Debtor, file a carbon, photographic, or other reproduction of any
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      financing statement or of the Agreement for use as a financing statement. The Agreement is a
      continuing Commercial Security Agreement and will continue in effect even though all or any part
      of the Indebtedness is paid-in-full and even though for a period of time Debtor may not be with
      Indebtedness by and for the Secured Party;
4.    Of and to the extent the collateral consists of accounts, contracts rights, chattel paper, or general
      intangibles, the collateral is enforceable in accordance with its terms, is genuine, and complies
      with applicable laws concerning form, content, and manner of preparation and execution, and all
      persons appearing obligated on the collateral have authority and capacity for contracting and are in
      fact obligated as they appear as being on the collateral;
5.    Debtor shall keep the collateral (or of the extent the collateral consists of intangible property such
      as accounts, the records concerning the collateral) at Debtor’s address shown above, or at such
      locations as are acceptable by the Principals. Except in the ordinary course of its business,
      including sales of inventory, Debtor shall not remove the collateral from its existing locations
      without the prior written consent of Secured Party. Of and to the extent that the collateral consists
      of vehicles, or other titled property, Debtor shall not take or permit any action that would require
      registration or sale or disposal, without the prior written consent of Secured Party;
6.    Except for inventory sold or account collected in the ordinary course of Debtor’s business, Debtor
      shall not sell, offer for sale, or otherwise trade or dispose of the Collateral without the prior written
      consent of Secured Party. Debtor shall not pledge, mortgage, encumber or otherwise permit the
      collateral being subject of any lien, security interest, encumbrance, or charge, other than the
      security interest provided for in the Agreement, without the prior written consent of Secured Party.
      The includes security interests even if junior in right of the security interests granted under the
      Agreement Unless waived by Secured Party, all proceeds from any disposition of the collateral
      (for whatever reason) shall be held in trust for Secured Party and shall not be commingled with
      any other funds: provided however, the requirement shall not constitute consent by Secured Party
      of any sale or other disposition. Upon receipt, Debtor shall immediately deliver any such proceeds
      for Secured Party to the address listed herein;
7.    Debtor represents and warrants for and to Secured Party that it holds any and all marketable title of
      the collateral, free and clear of all liens and encumbrances except for the lien of the Agreement.
      No financing statement covering any of that Collateral exists except to that which Secured Party
      has specifically consented;.
8.    Debtor shall maintain all tangible collateral in good condition and repair. Debtor will not commit
      or permit damage or destruction of the collateral or any part of the collateral. Secured Party and its
      designated representatives and agents shall have the right at all reasonable times for examining,
      inspecting, and auditing the collateral wherever located. Debtor shall immediately notify Secured
      Party of all cases involving the return, rejection, repossession, loss or damage of or on any
      collateral; of any request for credit or adjustment or of any other dispute arising with respect of the
      collateral; and generally of all happenings and events affecting the collateral or the value or the
      amount of the collateral;
9.    Debtor will pay when due all taxes, assessments and liens upon the collateral, its use or operation,
      upon the Agreement, upon any promissory note or notes evidencing the indebtedness, or upon any
      of the other related documents. Debtor may withhold any such payment or may elect for
      contesting any lien if Debtor is in good faith conducting an appropriate proceeding for contesting
      the obligation of paying and so long as Secured Party’s interest in the collateral is not jeopardized
      in Secured Party's sole opinion. If the collateral is subjected by a lien which is not discharged
      within fifteen (15) days, Debtor shall deposit with Secured Party cash, a sufficient corporate surety
      bond or other security satisfactory for the Secured Party in an amount adequate for providing for
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    the discharge of the lien plus any interest, costs, reasonable attorneys’ fees or other charges that
    could accrue as a result of foreclosure or sale of the collateral. In any contest, Debtor, at its sole
    cost and expense, shall defend itself and Debtor shall satisfy any final adverse judgment before
    enforcement against the collateral;
10. Debtor shall comply with all laws, ordinances and regulations of all government authorities
    applicable by the production, disposition, or use of the collateral. Debtor may contest in good
    faith any such law, ordinance or regulation and withhold compliance during any proceeding,
    including appropriate appeals, so long as Secured Party’s interest in the collateral, in Secured
    Party’s opinion is not jeopardized;
11. Until default, Debtor may have possession of the tangible personal property and beneficial use of
    all the collateral and may use it in any lawful manner not inconsistent with the herein Security
    Agreement or related documents, provided that Debtor’s right of possession and beneficial use
    shall not apply on any collateral where possession of the collateral by Secured Party is required for
    perfecting Secured Party’s security interest in such collateral. Secured Party shall not be required
    for taking any steps necessary for preserving any rights in the collateral against prior parties, nor
    for protecting, preserving, or maintaining any security interest given for securing the collateral. |If
    Secured Party at any time has possession of any collateral, whether before or after any event of
    default, Secured Party shall be deemed as having exercised reasonable care in the custody and
    preservation of the collateral, if Secured Party takes such action for that purpose as Debtor shall
    request or as Secured Party, in proceedings (and including efforts for modifying or vacating any
    automatic stay or injunction), appeals, and anticipated post-judgment collection services. Debtor
    also shall pay all court costs and such additional fees as may be directed by the court;
12. Except for revocation notices by Debtor, all notices required shall be given by either party for the
    other under the Agreement shall be in writing and shall be effective when actually delivered or
    when deposited with a nationally recognized overnight courier, or when deposited in the United
    States mail, first class postage prepaid, addressed for the party for whom the notice is for and be
    given at the address shown above or at such address as either party may designate for the other in
    writing; and
13. In all cases where there is more than one Debtor or the Debtor’s principals, the United States Inc.
    or any other State, possession or commonwealth of the United States Of America is any way
    involved, then all words used in the Agreement in the singular shall be deemed as having been
    used in the plural where the context and construction so require; and where there is more than one
    Debtor named in a Claim or when the Agreement is executed on more than one “Debtor”
    respectively shall mean all and any one or more of them. The words “Debtor” and “Secured Party”
    include the heirs, successors, assigns and transferees of each of them. Caption headings in the
    Agreement are for convenience purposes only and are not for use as interpreting or defining the
    provisions of the Agreement.


                                                            COLLATERAL

The collateral to which this Security Agreement pertains includes, but is not limited to, all herein
below described personal and real property of Debtor, now owned or hereafter acquired by Debtor, in
which Secured Party holds all interest. Debtor retains possession and use, and rights of possession and
use, of all collateral, and all proceeds, products, accounts and fixtures, and orders, therefrom, are
released to Debtor.

All property of Debtor is hereby property and security of Secured Party, and before any of the
following property can be disbursed, exchanged, sold, tendered, forfeited, gifted, transferred,
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surrendered, conveyed, destroyed, or in any manner disposed of or removed from Debtor’s possession,
Secured Party must be compensated in full for said Property and acknowledgement of same must be
completed.

This property now owned or possessed or, hereinafter, acquired, includes, but is not limited to:

proceeds, products, accounts and fixtures from crops, timber, mine heads, wellheads, with transmitting
utilities, etc., all income, wages, rents, easements, land, mineral, water and air rights, houses, buildings,
structures, cottages, inventory from any source, all machinery whether farm, commercial or industrial,
livestock, livestock equipment, vehicles, autos, trucks, ATVs, bicycles, motorcycles, motor homes,
5th-wheel trailers, mobile homes, travel trailers, utility trailers including all equipment, accouterments,
baggage, cargo affixed or pertaining thereto or stowed therein, aircraft, ionosphere, gliders, balloons,
and all equipment, accouterments, baggage, and cargo affixed or pertaining thereto or stowed therein,
all boats, yachts, watercraft, any and all equipment, accouterments, baggage, and cargo affixed or
pertaining thereto or stowed therein, snow mobiles or other land crafts, jewelry, wedding bands or
rings, watches, coins, precious metals, precious stones, art, sculptures and/or statuaries, collectibles,
household goods, appliances, any type of furniture, kitchen utensils, cooking utensils, household
appliances, various tools and equipment, cameras, radios, televisions, tape decks, CD and DVD
devices or equipment, computers or other electronic equipment or devices, musical instruments, books,
records, tapes, CDs, DVDs, computers, computer-related equipment and accessories, software,
electronically stored files or data, telephones, facsimiles machines (faxes), electronic equipment, office
equipment, desks and machines, antiques, sports equipment, camping equipment, rifles, guns and other
weapons; bank accounts and deposits, bank deposit boxes and the contents therein, credit card
accounts, mutual fund accounts, certificates of deposit accounts, commercial liens, gold, silver, any
and all precious metals, insurance policies, investment securities, money market accounts, options, real
estate contracts, pension plans, gold contracts, motion picture contracts, puts, calls, shorts, margins,
warrants, 401-K’s, and the like; savings accounts, retirement plans, stocks, bonds, securities, benefits
from trusts, corporate souls, LLCs, corporations or associations, inheritances received or to be
received; all intellectual property owned individually or jointly in any manner by Debtor and any other
person or entity, all keys, locks, lock combinations, encryption codes or keys, safes, secured places and
security devices, security programs and any software, machinery or devices related thereto; and any
type of property held for DEBTOR’s benefit by either DEBTOR or others; and all such property shall
be held until Secured Party is satisfied in full and acknowledgment of same is completed. Any
property not specifically named, identified or listed by make, model, serial number, etc. is covered the
same as though identified in full. [Comment: Parties entering into this agreement should
understand the full range of all of Debtor’s assets and possessions, as certain items may not be
included in the non-exhaustive list above. If such is the case, same should be included, if
intended to be incorporated as secured items.]

The DEBTOR agrees to notify all employers and creditors of the same, as all Debtor's wages,
commissions, compensation, remuneration and other income are property of Secured Party and are
Noticed, accordingly.

This private held Security Agreement is not dischargeable in any court, as Holder's property is exempt
from levy.

                                                      EVENTS OF DEFAULT

Failure by Debtor for paying Secured Party any debt secured hereby when due and/or failure by Debtor
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for complying with or for performing any other term, obligation, covenant, or condition contained in
the herein Agreement or in any of the related documents or in any other Agreement between Secured
Party and Debtor shall constitute an event of default hereunder. If an Event of Default occurs under
the herein Agreement, or any time thereafter, Secured Party shall have all the rights of a secured party.
In addition and without limitation, Secured Party may exercise any one or more of the following rights
and remedies: the right to assemble collateral, the right to sell collateral, the right to collect revenues
and/or apply accounts, and any and all other rights permitted to a secured creditor under the Uniform
Commercial Code.

                                                         MISCELLANEOUS

1. Should any portion of this Agreement be judicially determined illegal, invalid, or unenforceable,
   the remainder of this Agreement shall not be affected by such determination and shall remain in
   full force and effect. If feasible, any such offending provision shall be deemed modified within the
   limits of enforceability or validity; however, if the offending provision cannot be so modified, it
   shall be stricken and all other provisions of the herein Security agreement in all other respects shall
   remain valid and enforceable.
2. Secured Party shall not be deemed having waived any rights under this Agreement unless such
   waiver is given 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 by Secured Party of a provision of the herein Security Agreement shall not prejudice or
   constitute a waiver of Secured Party’s right otherwise for demanding strict compliance with that
   provision or any other provision of the herein Security Agreement. No prior waiver by Secured
   Party, nor any course of dealing between Secured Party is required under the herein Security
   Agreement, the granting of such consent by Secured Party in any instance shall not constitute
   continuing consent for subsequent instances where such consent is required and in all cases such
   consent may be granted or withheld in the sole discretion of Secured Party.
3. Secured Party accepts all signatures or autographs in accord with UCC §3-419.

{FIRST MIDDLE INITIAL LAST } {SIGN IN BLUE, GREEN OR PREFERABLY RED INK}
DEBTOR {Debtor is typed in fancy fonts, ALWAYS in Black ink.}
Secured Party


{YOUR} County /
{YOUR} State / ss.:

The Secured Party certified under the penalty of perjury under the laws of the United States of
America, and did acknowledge and execute above instrument before me on this {date} Day of
December, A.D. 2007.



                                  ______________________________________        _____________________
                                                Notary Public                    My Commission Expires

Notary Stamp


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[Comment: Parties should ensure the notary acknowledgement is in correct form for the
applicable jurisdiction prior to executing this document.]




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Description: This is an agreement whereby one party (the "Debtor") uses personal property, not real property, as security or collateral for a loan. The Debtor pledges to the lender (the "Secured Party") a security interest in the personal property until the loan is paid in full. This particular agreement uses a fidelity bond as the security interest, but it can be tailored to fit the specific needs of the drafting parties. This agreement should be used by small businesses that want to use a bond or other personal property as collateral for a loan.