General Form of Security Agreement in Inventory
Security Agreement made on the (date), between (Name of Debtor) of (street
address, city, state, zip code), referred to herein as Debtor, and (Name of Secured
Party), a corporation organized and existing under the laws of the state of (name of
state), with its principal office located at (street address, city, state, zip code),
hereinafter called Secured Party.
1. Grant of Security Interest
For valuable consideration, receipt of which is acknowledged, Debtor grants to
Secured Party a security interest in the Inventory described in Exhibit A attached
hereto and made a part hereof, and all and any additions, and accessions to the same,
hereinafter sometimes called the Collateral, to secure payment of the total debt set forth
in the Promissory Note of even date with this Agreement and any and all other liabilities
of Debtor to Secured Party under this Agreement, all of which are in this Agreement
referred to herein as the Obligation.
2. Obligation Secured
A. The debt of Debtor to Secured Party is evidenced by the following: the
Promissory Note executed by Debtor in favor of Secured Party, in the principal
sum of $____________, together with interest thereon from date at the rate of
____% per annum on the unpaid balance until paid, payable at (street address,
city, state, zip code), or at such other place as the holder hereof may designate
in writing, in (number) consecutive monthly installments of $____________, with
the first of said installments being due and payable on the (date), and each
subsequent monthly installment shall be due and payable on the first day of each
succeeding month thereafter until the entire indebtedness evidenced by this Note
is fully paid, except any remaining indebtedness, if not sooner paid, shall be due
and payable on (date);
B. Debtor warrants that Collateral is bought or used primarily for business
3. Receipt of Inventory
Debtor acknowledges receipt from Secured Party of the Inventory described in
Exhibit A subject to and on the terms of this Security Agreement.
4. Other Indebtedness
If Debtor is now or shall later be indebted to Secured Party on any indebtedness
other than that described in Section 1 of this security Agreement, the security interest
now acknowledged in and granted to Secured Party shall also secure the payment of all
such other indebtedness.
5. Sale of Inventory; Surrender of Proceeds
Debtor may sell Inventory at any time in the ordinary course of the business of
Debtor. Immediately on sale, Debtor shall deliver to Secured Party:
A. All proceeds of sale in the form in which received; or
B. Such sum as Secured Party shall accept in satisfaction of its security
interest in such proceeds.
6. Assembling Inventory and Proceeds
At any time, Secured Party may require Debtor to assemble Inventory and the
proceeds of the same at a designated place reasonably convenient to both parties.
7. Repossession; Inspection
Secured Party may, at any time and without regard to whether Debtor is in
default, take possession of Inventory and the proceeds of the same remaining in the
possession of Debtor or in the possession of any person other than a buyer from Debtor
in the ordinary course of business. Secured Party may enter any premises without legal
process for such purpose or for the purpose of examining Inventory or the proceeds of
the same, and Secured Party may examine the accounting and other records of Debtor
relating to the same. Debtor shall provide access to the premises and records of Debtor
for such purposes whenever requested by Secured Party.
8. Protection of Inventory
A. While Debtor remains in possession of any of Inventory or the proceeds of
the same, Debtor shall not, except to the extent necessary for transportation to
the place of business of Debtor, use, operate or demonstrate Inventory without
the written consent of Secured Party.
B. Debtor shall not rent, hire or lend any of Inventory or its proceeds or cause
or permit any lien or security interest in the Inventory, other than the security
interest of Secured Party.
C. If goods of the type described in Section 1 and Exhibit A have been
described by type in any security agreement or financing statement previously
executed by Debtor, Debtor shall procure and file such instruments as may be
required to establish the absence of any adverse claim of interest in Inventory.
D. Debtor shall keep Inventory properly housed and protected against loss or
damage by the elements or