Security Agreement Template

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SECURITY AGREEMENT
This Agreement dated as of the _____ day of _________________, 20____, is made by and between:
Secured Party:
Secured Party’s Principal Address:
(hereinafter "Secured Party"), and
Debtor’s Legal Name:
Debtor’s Principal Address:
Debtor’s State of Incorporation or
Registration:
Debtor’s Federal Identification
Number or Social Security Number
(hereinafter “Debtor”).
Debtor desires to purchase tires and related accessories from Secured Party and Secured Party desires to sell tires and related
accessories to Debtor. As an inducement to Secured Party, Debtor desires to grant Secured Party a security interest in certain
assets of Secured Party. The security interest created hereunder shall include a purchase money security interest.
1) Security Interest.
a) Purchase Money Security Interest. For value received, Debtor grants to Secured Party a purchase money security interest in
all of the following property of Debtor that is purchased from Secured Party, wherever located, whether now owned or
hereafter acquired and all identifiable proceeds of any of the following property: each item of Debtor’s inventory, supplies,
equipment, and other goods purchased from Secured Party (the “Purchase Money Collateral”).
i)
The foregoing security interest in each item of Purchase Money Collateral shall secure the purchase price of that item
and also secure any other obligations of Debtor to Secured Party related to the purchase price of that item to the extent
that such other obligations may, under applicable law, be secured by a purchase money security interest in that item (the
“Purchase Money Obligations”).
b) Non-Purchase Money Security Interest. In addition to the purchase money security interest granted above, Debtor hereby
grants to Secured Party and a continuing security interest in the following property, wherever located, whether now owned
or hereafter acquired, and all additions and accessions to and all proceeds and products of any of the following property (the
“Non-Purchase Money Collateral”), to secure full performance by Debtor of the duties and obligations set forth in this
Agreement:
i)
all of Debtor's interest in each item of Purchase Money Collateral to the extent the Purchase Money Obligations for such
item of Purchase Money Collateral have been paid;
ii) all of Debtor's personal property including inventory, supplies, equipment, and all proceeds and products thereof; and
iii) all of Debtor’s accounts, receivables, general intangibles, contract rights, chattel paper and instruments, and all returned
or repossessed goods for the sale of which gave rise to the foregoing.
The foregoing security interest in Non-Purchase Money Collateral shall secure all of the Debtor's present and future debts,
obligations and liabilities to Secured Party, however arising, whether matured or unmatured, direct or contingent, voluntary
or involuntary, and including any extensions of renewals thereof, plus all costs, expenses, advances and liabilities that may be
made or incurred by Secured Party in the administration and collection of such obligations and in the protections,
maintenance and liquidation of the Purchase Money Collateral or the Non-Purchase Money Collateral (collectively, the
“Collateral”), with interest on all the aforesaid at the rate of 18% per annum or, if lower, the highest rate permitted by
applicable law (all such debts, obligations and liabilities, including without limitation the Purchase Money Obligations, shall
hereinafter be collectively referred to as the “Liabilities”).
2) Representations and Warranties of Debtor. Debtor represents, covenants and warrants to Secured Party the following:
a) Debtor is a _____________________ (type of company) in good standing with the State of ________________________
with the exact legal name first listed above. All previous legal names of the Debtor and all past and present assumed names
or trade names of Debtor are as follows:
_________________________________________________________________________________________________
_________________________________________________________________________________________________
b) Debtor is engaged in the business of selling tires and related accessories.
c) Debtor’s principal office address and taxpayer identification number are set forth in the preamble to this Agreement. Debtor
has not at any time within the past year maintained its principal office at any other location. Additional locations of Debtor
are as follows:
_________________________________________________________________________________________________
SECURITY AGREEMENT
This Agreement dated as of the _____ day of _________________, 20____, is made by and between:
Secured Party:
Secured Party’s Principal Address:
(hereinafter "Secured Party"), and
Debtor’s Legal Name:
Debtor’s Principal Address:
Debtor’s State of Incorporation or
Registration:
Debtor’s Federal Identification
Number or Social Security Number
(hereinafter “Debtor”).
Debtor desires to purchase tires and related accessories from Secured Party and Secured Party desires to sell tires and related
accessories to Debtor. As an inducement to Secured Party, Debtor desires to grant Secured Party a security interest in certain
assets of Secured Party. The security interest created hereunder shall include a purchase money security interest.
1) Security Interest.
a) Purchase Money Security Interest. For value received, Debtor grants to Secured Party a purchase money security interest in
all of the following property of Debtor that is purchased from Secured Party, wherever located, whether now owned or
hereafter acquired and all identifiable proceeds of any of the following property: each item of Debtor’s inventory, supplies,
equipment, and other goods purchased from Secured Party (the “Purchase Money Collateral”).
i)
The foregoing security interest in each item of Purchase Money Collateral shall secure the purchase price of that item
and also secure any other obligations of Debtor to Secured Party related to the purchase price of that item to the extent
that such other obligations may, under applicable law, be secured by a purchase money security interest in that item (the
“Purchase Money Obligations”).
b) Non-Purchase Money Security Interest. In addition to the purchase money security interest granted above, Debtor hereby
grants to Secured Party and a continuing security interest in the following property, wherever located, whether now owned
or hereafter acquired, and all additions and accessions to and all proceeds and products of any of the following property (the
“Non-Purchase Money Collateral”), to secure full performance by Debtor of the duties and obligations set forth in this
Agreement:
i)
all of Debtor's interest in each item of Purchase Money Collateral to the extent the Purchase Money Obligations for such
item of Purchase Money Collateral have been paid;
ii) all of Debtor's personal property including inventory, supplies, equipment, and all proceeds and products thereof; and
iii) all of Debtor’s accounts, receivables, general intangibles, contract rights, chattel paper and instruments, and all returned
or repossessed goods for the sale of which gave rise to the foregoing.
The foregoing security interest in Non-Purchase Money Collateral shall secure all of the Debtor's present and future debts,
obligations and liabilities to Secured Party, however arising, whether matured or unmatured, direct or contingent, voluntary
or involuntary, and including any extensions of renewals thereof, plus all costs, expenses, advances and liabilities that may be
made or incurred by Secured Party in the administration and collection of such obligations and in the protections,
maintenance and liquidation of the Purchase Money Collateral or the Non-Purchase Money Collateral (collectively, the
“Collateral”), with interest on all the aforesaid at the rate of 18% per annum or, if lower, the highest rate permitted by
applicable law (all such debts, obligations and liabilities, including without limitation the Purchase Money Obligations, shall
hereinafter be collectively referred to as the “Liabilities”).
2) Representations and Warranties of Debtor. Debtor represents, covenants and warrants to Secured Party the following:
a) Debtor is a _____________________ (type of company) in good standing with the State of ________________________
with the exact legal name first listed above. All previous legal names of the Debtor and all past and present assumed names
or trade names of Debtor are as follows:
_________________________________________________________________________________________________
_________________________________________________________________________________________________
b) Debtor is engaged in the business of selling tires and related accessories.
c) Debtor’s principal office address and taxpayer identification number are set forth in the preamble to this Agreement. Debtor
has not at any time within the past year maintained its principal office at any other location. Additional locations of Debtor
are as follows:
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
d) All inventory and equipment of Debtor is located at the locations listed in this Section above, and Debtor does not keep
inventory and equipment and has not kept inventory and equipment at any other location in the past year immediately
preceding the date of this Agreement except as follows:
_________________________________________________________________________________________________
_________________________________________________________________________________________________
e) Debtor owns the Collateral free from all liens, security interests or encumbrances, except as given to Secured Party
hereunder and as follows:
_________________________________________________________________________________________________
f)
No financing statement covering the Collateral or any part of it or any proceeds of it other than those disclosed above is on
file in any public office.
3) Debtor’s Obligations
a) Sale, Lease, or Disposition of Collateral, Continuing Interest. Debtor shall not transfer, sell, pledge or assign Debtor’s
interest in the Collateral, nor permit any other security interest to be created thereon, without Secured Party’s prior written
approval; provided, however, that Debtor may sell inventory in the ordinary course of business on terms and at prices
customary therein, and may collect proceeds of collateral until advised otherwise by Secured Party or until an Event of
Default hereunder. The security interest created hereunder shall continue in the Collateral notwithstanding its sale, exchange
or other disposition where such disposition is to a person or entity (i) affiliated in any way with Debtor (including, but not
limited to, by complete or partial common ownership), or (ii) to whom Secured Party has delivered collateral directly on
behalf of Debtor.
b) Conduct of Business. Debtor shall not conduct business under any other name than Debtor’s legal name first listed above,
or change or reorganize the type of business entity under which it does business, except with prior written approval of the
Secured Party. If such approval is obtained, Debtor guarantees that all documents, instruments and agreements demanded
by Secured Party shall be prepared and filed at Debtor’s expense before such change of name or business entity occurs.
c) Risk of Loss and Insurance. The risk of loss of Collateral shall be on Debtor at all times. The Debtor will insure the
Collateral with companies acceptable to Secured Party against destruction and theft, in such amounts and with such
companies as Secured Party may demand, all policies thereon to contain a loss payable clause naming Secured Party and
satisfactory to Secured Party. Debtor hereby irrevocably assigns to Secured Party any proceeds of such policies and all
unearned premiums thereon, and authorizes and empowers Secured Party to collect such sums and to execute and endorse in
Debtor’s name all proofs of loss, drafts, checks, and any other documents necessary to accomplish such collections. Such
policy or policies of insurance shall provide that Secured Party shall receive at least ten (10) days' prior written notice of
cancellation. Debtor shall provide Secured Party with certificates of insurance for all such policy or policies required under
this Agreement.
d) Protection of Collateral.
i)
The Debtor will not store the Collateral in violation of any statute or ordinance. Debtor grants to Secured Party or its
designated agent the right to examine and inspect the Collateral at any reasonable time, during business hours with full
access to Debtor's premises, inventory, and books of account as they pertain to Debtor's indebtedness to Secured Party.
ii) Debtor shall defend Collateral against any claims and demands of all persons at any time claiming the Collateral or any
interest therein.
e) Taxes. The Debtor will pay promptly when due all taxes and assessments on the Collateral.
f)
Financial Statements on Request. Debtor agrees to deliver to Secured Party within ten (10) days after written request by
Secured Party, current financial and operating statements and such other data as Secured Party may request, plus a list of
all collateral on hand. Secured Party may at any time demand supporting documentation for such statements. Failure to
provide Secured Party with the requested information shall be an Event of Default under this agreement.
g) Change of Location or Entity.
i)
Location of Collateral. The Debtor will keep the Collateral at the address shown above and will not remove the
Collateral from that address without Secured Party's written consent.
ii) Change of Place of Business. The Debtor will promptly notify Secured Party of any change of the Debtor's place of
business or place of conduct of business, or where books and records concerning the Collateral are kept or of any
changes in Debtor's trade name.
iii) Change of Name or Entity. The Debtor shall not change its name, merge, consolidate or acquire all or substantially all
of the stock, business or assets of any other person, corporation or business organization without written notification to
Secured Party.
h) Security Interests and Liens. Debtor agrees to keep the collateral free from all unpaid charges, liens and security interest,
other than the security interests granted to Secured Party and those disclosed in this agreement.
i)
Decrease in Value of Collateral. The Debtor shall, if in Secured Party's judgment the Collateral has materially decreased in
value, or if Secured Party shall at any time deem that the Debtor is financially unstable, within five (5) days, either provide
enough additional Collateral to satisfy Secured Party or reduce the total indebtedness by an amount sufficient to satisfy
Secured Party.
j)
Debtor Litigation. Debtor shall notify Secured Party within five (5) days if Debtor becomes involved in any litigation, or
other legal proceedings before the court, tribunal or governmental body, or received notice of intent to hold a claim against
Debtor, from any entity, in which any potential recovery against Debtor may exceed Two Thousand Dollars ($2,000.00).
4) Reimbursement of Expenses. At the option of Secured Party, Secured Party may discharge taxes, liens, and interest, or perform
or cause to be performed for and on behalf of the Debtor any actions and conditions, obligations, or covenants that the Debtor
has failed or refused to perform, and may pay for the repair, maintenance, and preservation, of the Collateral. All sums to be
expended, including but not limited to attorney's fees, court costs, agent's fees, or commissions, or any other costs or expenses,
shall bear interest from the date of payment at the rate of eighteen percent (18%) per annum or, if lower, the highest rate permitted
by applicable law, and shall be payable at the place designated at the Secured Party’s address designated below and shall be
secured by this Agreement.
5) Events of Default.
The Debtor shall be in default under this Agreement on the occurrence of any of the following events or
conditions (each an “Event of Default”):
a) Default in the payment or performance of any note, obligation, covenant, or liability secured by this Agreement.
b) Any warranty, representation, or statement made or furnished to Secured Party by or on behalf of the Debtor proves to have
been false in any material respect when made or furnished.
c) Failure to perform any of Debtor’s obligations under this Agreement;
d) Any event that results in the acceleration of the maturity of the indebtedness of the Debtor to others under any indenture,
agreement, or undertaking.
e) Loss, theft, substantial damage, destruction, sale, or encumbrance to or of any of the Collateral, or the making of a levy,
seizure, or attachment of or on the Collateral.
f)
Secured Party’s reasonable belief that the prospect of payment of any indebtedness secured by this Agreement or the
performance of this Agreement is impaired.
g) The termination of the Debtor's existence, whether by means of dissolution, merger, consolidation or otherwise, the Debtor's
insolvency or business failure, the appointment of a receiver for any part of the Collateral, any assignment for the benefit of
creditors, or the commencement of any proceeding under any bankruptcy or insolvency law by or against the Debtor or any
guarantor or surety for the Debtor.
6) Remedies.
a) On Debtor's default, Secured Party, at its option and without demand on or notice to Debtor, may do any one or more of the
following:
i)
Declare all Liabilities immediately due and payable, and interest shall accrue on the Liabilities at the rate of eighteen
percent (18%) per annum, or if lower, the highest rate permitted by applicable law.
ii) Remove the Collateral from the premises of the Debtor, wherever it may be found, and for purposes of removal and
possession, Secured Party or its representatives and agents, may enter into any premises of the Debtor, without legal
process, and Debtor hereby waives and releases Secured Party, its representatives and agents, of and from any and all
claims in connection with or arising from such entry and repossession.
iii) Demand, and Debtor shall deliver, possession and control of the Collateral together with all products and proceeds
thereof and records pertaining thereto, and, if requested, Debtor shall:
(1) Assemble the Collateral and make it available to Secured Party at any convenient place designated by Secured
Party;
(2) Make and deliver any and all endorsements or assignments necessary to enabled Secured Party to make collection
thereon; and
(3) Deposit daily all cash received in a bank account designated for that purpose by and under sole control of Secured
Party.
It is agreed that Secured Party will not have adequate remedy at law if Debtor does not assemble and make the
Collateral available to Secured Party as aforesaid, and, accordingly, that Debtor’s obligation to do so shall be
specifically enforceable.
iv) Notify all account Debtors of the Debtor to make payment of such accounts directly to Secured Party, and Secured
Party may endorse the name of Debtor on any checks, notes or other documents received in payment of an account.
Secured Party further has the right to sue for, take judgment or compromise such accounts, and to sell the same at
public sale.
v) Dispose of Collateral in such manner pursuant to such code as Secured Party may determine, whether or not Collateral
is present at the time and place of such disposition, at any place specified in the applicable Uniform Commercial Code as
Secured Party may determine. Reasonable prior notice of the disposition of Collateral shall be ten (10) days, and
Secured Party shall apply proceeds therefrom to the Liabilities in such order as Secured Party in its discretion may
determine and in accordance with the Code. Debtor further agrees to pay Secured Party any deficiency if proceeds
from the disposition of Collateral are not sufficient to satisfy the Liabilities.
b) Debtor shall pay all expenses and reimburse Secured Party for any expenditures, including but not limited to costs of
collecting the Liabilities, reasonable attorneys’ fees and legal expenses, in connection with any exercise by Secured Party of
its rights and remedies hereunder. Such cost and expenses shall be Liabilities secured by this Agreement.
c) All rights and remedies conferred upon Secured Party hereby are in addition to and cumulative with those granted to it in
any other agreement or by the Uniform Commercial Code or any other law. Failure or repeated failure to enforce any rights
hereunder shall not constitute an estoppel or waiver of Secured Party’s rights to exercise such rights accruing prior to or
subsequent thereof. Secured Party shall not be liable for any loss to Collateral in its possession nor shall such loss diminish
the Liabilities, even if the loss is caused or contributed to by Secured Party’s negligence.
7) Notice. Any notice or other communication to be given to either party shall be in writing and delivered personally to or by
certified mail and addressed to:
DEBTOR:
SECURED PARTY:
_______________________________________
_______________________________________
_______________________________________
Notice shall be deemed given upon personal delivery or forty-eight (48) hours after deposit in the United States Mail.
8) General Provisions.
a) Filing Requirements. Debtor shall join with Secured Party in executing one or more financing statements pursuant to the
Uniform Commercial Code and any other documents or instruments necessary to perfect, extend, modify, or terminate the
security interest created hereunder, as demanded by Secured Party; however, if the applicable Uniform Commercial Code so
allows, Debtor hereby appoints Secured Party, as its attorney-in-fact to execute and file in those public offices deemed
advisable or necessary by the Secured Party, all necessary Financing Statements and any other such documents or
instruments to perfect the security interest created herein, in form satisfactory to Secured Party without first obtaining
Debtor's signature; and Debtor shall pay the costs of filing and recording such documents.
b) Waiver. No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a
future occasion. No revision or amendment of this Agreement shall be valid unless in writing and signed by the parties.
c) Binding Effect of Agreement. This Agreement shall be binding upon, insure to the benefit of and be enforceable by the
successors, heirs and assigns of the parties; but Debtor shall not assign any interest in this Agreement without prior written
consent of Secured Party.
d) Applicable Law. This Agreement and all transactions described herein, contemplated hereby or resulting herefrom shall be
(Secured Party’s situs state) and the
governed and construed by and in accordance with the laws of the State of
Uniform Commercial Code. Debtor irrevocably agrees that, subject to Secured Party’s sole and absolute election, all
actions or proceedings, in any way, manner or respect, arising out of or from or related to this Agreement or the Collateral
shall be litigated only in courts having situs within the city of
and State of
, and Debtor hereby consents
and submits to the jurisdiction of any local, state or federal court located within said State. Debtor hereby waives any right it
may have to transfer or change the venue of any litigation brought against Debtor by Secured Party in accordance with this
paragraph.
e) Severability. If any clause or portion of a clause of this Agreement shall be held to be invalid, such clause or portion of a
clause shall be invalidated only to the extent required by such law and all remaining clauses or portions of a clause contained
herein shall continue to be in full force and effect to the maximum extent not prohibited by applicable law.
f)
Waiver of Jury Trial. Debtor and the Secured Party, by acceptance hereof, knowingly, voluntarily and intentionally waive
any right either of them may have to a trial by jury in any litigation based upon or arising out of this Agreement or any other
document contemplated by this Agreement, or any course of conduct, dealing, statements (whether oral or written), or actions
of either of them. Neither the Debtor nor the Secured Party shall seek to consolidate, by counterclaim or otherwise, any
action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived.
g) Entire Contract. All prior understanding and agreement respecting the transactions here contemplated are merged in this
Agreement. There are no representations, warranties or agreements between the parties as to such transactions except as set
forth herein, and this Agreement fully and completely expresses the agreement of the parties as to such transaction.
h) To the extent permitted by the applicable state law, Debtor waives all claims, damages and demands against Secured Party
arising out of the repossession, retention or sale of Collateral.
DEBTOR
Company Name:
_____________________________________________________
Signature of Officer:
_____________________________________________________
Printed Name of Officer:
_____________________________________________________
SECURED PARTY
Company Name:
Signature of Officer:
Printed Name of Officer:
GUARANTY
We, the undersigned Guarantors, jointly and severally unconditionally guarantee to the Secured Party the payments and performance
of any and all obligations of Debtor under this Security Agreement. Presentment, demand, protest, and notice of protest and dishonor
and diligence in collecting under this Agreement are each and all waived.
Secured Party may, at its option, proceed in the first
instance against the undersigned, jointly and severally, to collect and\or seek performance of any obligations covered by this Guaranty
without first proceedings against the Debtor, or any other entity.
Dated: ____________________
___________________________________
___________________________________
“Guarantors”
I have received a copy of the financing statement.
______________________________________
DEBTOR NAME PRINTED
By: ___________________________________
Debtor Signature

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