A security interest is said to attach at the time it becomes enforceable. There are three prerequisites to the attachment of a security interest: • There must a security agreement; • Value must be given; and • The debtor must have rights in the collateral (for example, he must own it or be leasing the collateral). A security interest is not enforceable unless: • The collateral is in the possession of the secured party; or • The debtor has signed a security agreement that contains a description of the collateral, value has been given, and the debtor has rights in the collateral. The agreement of the creditor and the debtor that the creditor shall have a security interest in the goods must be evidenced by a written security agreement unless the creditor retains what is known as a possessory security interest by taking possession of the collateral. A written security agreement must be signed by the debtor and reasonably describe the collateral.
Security agreement in Equipment used for a Business Purpose Securing a Promissory Note SECURITY AGREEMENT Security agreement made [date of agreement], between [name of debtor], of [address of debtor] ("debtor"), and [name of secured party], a corporation organized and existing under the laws of [state], with its principal office located at [address of secured party] ("secured party"). SECTION ONE. SECURITY INTEREST Debtor, for valuable consideration, grants to secured party a security interest in the following property and all property of similar kind acquired in the future by debtor, together with all additions, replacements, accessions, and substitutions (the "collateral"): [description of collateral], to secure the payment of $[dollar amount of note] as provided in the promissory note or notes of debtor having the same date as this security agreement (the "obligation"). Debtor warrants and covenants as provided below. SECTION TWO. TITLE TO COLLATERAL Except for the security interest granted in this security agreement, debtor is, or to the extent that this agreement states that the collateral is to be acquired, will be the owner of the collateral free from lien, security interest or encumbrance. Debtor will defend the collateral against all claims and demands of all persons at any time claiming it or any interest in it. SECTION THREE. BUSINESS PURPOSE The collateral is now used or will be used when acquired primarily for business purposes and the collateral is used or will be used primarily in the business of [type of business]. [OPTIONAL: The collateral is being acquired with the proceeds of the promissory note or notes, which secured party may disburse directly to the seller of the collateral.] SECTION FOUR. LOCATION OF COLLATERAL The collateral will be kept at [address of collateral]. Debtor will promptly notify secured party of any change in the location of the collateral. Debtor will not remove the collateral from [state] without the written consent of secured party. SECTION FIVE. DEBTOR'S RESIDENCE If the collateral is or will be used primarily in farming operations, the debtor's residence is: [address of residence of debtor], and debtor will immediately notify secured party in writing of any change in debtor's place of residence. SECTION SIX. COLLATERAL AS FIXTURE Debtor will not permit the collateral to be attached to real estate in such manner as to cause it to become a fixture. SECTION SEVEN. PRINCIPAL OFFICE If the collateral is of a type normally used in more than one State (such as motor vehicles, trailers, rolling stock, airplanes, shipping containers, road building and construction machinery, commercial harvesting machinery, and the like) and debtor has a place of business in more than one State, the principal office of debtor is located at [address of principal office of debtor]. Debtor will immediately notify secured party in writing of a change in debtor's principal office. SECTION EIGHT. FINANCING STATEMENTS No financing statement covering the collateral is on file in any public office. At the request of secured party, debtor will join with secured party in executing one or more financing statements pursuant to the Uniform Commercial Code in form satisfactory to secured party and will pay the cost of filing wherever secured party considers filing to be necessary. If certificates of title are issued or outstanding with respect to any of the collateral, debtor will have the interest of secured party properly noted. SECTION NINE. TRANSFER OF COLLATERAL Debtor will not sell or offer to sell or otherwise transfer the collateral or any interest in it without the written consent of secured party. SECTION TEN. INSURANCE Debtor will have and maintain insurance with respect to all collateral against risks of fire (including extended coverage), theft, and other risks as secured party requires and, in the case of motor vehicles, collision insurance. The insurance shall contain such terms and be in suc
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