Security Agreement Template

SECURITY AGREEMENT

This Security Agreement (the "Agreement") is made as of Effective Date: by and between Secured Party Name: , a organized under the laws of , with principal place of business at (the "Secured Party"), and Debtor Name: , a organized under the laws of , with principal place of business at (the "Debtor").

RECITALS

WHEREAS, the Debtor is indebted to the Secured Party under that certain obligation described as Obligations: in the principal amount of ; and

WHEREAS, as security for the prompt payment and performance of the Obligations, the Debtor has agreed to grant the Secured Party a security interest in certain property of the Debtor as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 "Collateral" means all tangible and intangible property and interests of Debtor described in Section 2 and Schedule A, whether now existing or hereafter acquired, including but not limited to inventory, equipment, accounts, chattel paper, instruments, instruments, general intangibles, payment intangibles, proceeds, and insurance proceeds.

1.2 "Obligations" means all present and future indebtedness, liabilities, and obligations of the Debtor to the Secured Party, whether direct or indirect, absolute or contingent, including principal, interest, fees, expenses and any renewals, extensions or modifications thereof.

2. GRANT OF SECURITY INTEREST

2.1 Grant. To secure the prompt payment and performance of the Obligations, the Debtor hereby grants to the Secured Party a continuing lien and security interest in all of the Debtor's right, title and interest in, to and under the Collateral, whether now owned or hereafter acquired.

2.2 Scope. The security interest granted hereby is a first priority, continuing security interest unless otherwise agreed in writing. The security interest attaches to the Collateral upon the Debtor's signing of this Agreement and the Secured Party's taking of value.

3. DESCRIPTION OF COLLATERAL

3.1 After-Acquired Property. The Collateral includes after-acquired property described as follows: . Check to include inventory and proceeds: Inventory and proceeds included.

4. PERFECTION; FILING; POSSESSION; CONTROL

4.1 Filing. The Debtor authorizes the Secured Party to file one or more financing statements and continuation statements in any public office (including any filing office) as the Secured Party deems necessary to perfect and maintain the security interest granted herein. The Debtor agrees to execute such documents and take such actions as the Secured Party may reasonably request to effect perfection and priority of the security interest.

4.2 Possession and Control. In addition to filing, the Secured Party may at any time take possession of or control over any Collateral when permitted by law, and possession or control shall be deemed adequate to perfect or maintain perfection to the extent permitted by applicable law.

5. COVENANTS OF THE DEBTOR

The Debtor covenants and agrees that, until the Obligations are indefeasibly paid in full: (a) the Debtor will defend the Collateral against claims and will not create or permit any lien or security interest in the Collateral other than the security interest granted herein without the Secured Party's prior written consent; (b) the Debtor will maintain insurance on the Collateral against loss or damage in form and amounts satisfactory to the Secured Party; and (c) the Debtor will keep proper books and records with respect to the Collateral and afford the Secured Party reasonable access thereto.

6. REPRESENTATIONS AND WARRANTIES

The Debtor represents and warrants that: (a) it is the sole owner of the Collateral free and clear of any other security interest, lien or encumbrance except those disclosed to the Secured Party in writing; (b) this Agreement constitutes valid and binding obligations of the Debtor enforceable against the Debtor in accordance with its terms; and (c) no authorization, consent or approval of any third party or governmental authority is required to make this Agreement effective, except as disclosed in writing.

7. EVENTS OF DEFAULT; REMEDIES

7.1 Events of Default. The occurrence of any of the following shall constitute an Event of Default: (a) failure to pay any Obligation when due and after any applicable grace period; (b) breach of any covenant, representation or warranty contained in this Agreement; (c) insolvency, bankruptcy, assignment for the benefit of creditors, or appointment of a receiver for the Debtor; or (d) any material adverse change in the Collateral or the Debtor's financial condition.

7.2 Remedies. Upon the occurrence and during the continuance of an Event of Default, the Secured Party may, to the extent permitted by law, declare the Obligations immediately due and payable and exercise all rights and remedies of a secured party under applicable law, including without limitation entering upon the Debtor's premises, taking possession of the Collateral, selling, leasing, or otherwise disposing of the Collateral, collecting accounts and chattel paper, and applying proceeds to the Obligations. The Secured Party shall give such notices of disposition as required by law; provided, however, that the Debtor hereby waives to the maximum extent permitted by law any right to require the Secured Party to exhaust any remedies against any collateral prior to enforcement against other collateral.

8. APPLICATION OF PROCEEDS; DEFICIENCY

Proceeds of any disposition of Collateral shall be applied by the Secured Party in the following order: (a) reasonable and documented expenses of retaking, holding, preparing for sale, processing, and selling the Collateral; (b) satisfaction of amounts due under the Obligations; and (c) any remaining balance to the Debtor or as otherwise required by law. The Debtor shall remain liable for any deficiency.

9. INDEMNITY; ATTORNEYS' FEES

The Debtor shall indemnify and hold harmless the Secured Party from and against any and all liabilities, losses, costs and expenses (including reasonable attorneys' fees) arising from any breach of this Agreement or from the Secured Party's actions in enforcing its rights hereunder, except to the extent caused by Secured Party's gross negligence or willful misconduct.

10. NOTICES

All notices, requests, consents and other communications hereunder shall be in writing and delivered to the addresses set forth above or such other address as either party may specify by notice to the other in accordance with this Section. Notices are effective upon receipt.

11. AMENDMENTS; WAIVER; COUNTERPARTS

This Agreement may not be amended or modified except by an instrument in writing signed by the party against whom enforcement of such amendment or modification is sought. No delay or failure to exercise any right or remedy hereunder shall operate as a waiver. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

12. GOVERNING LAW; SEVERABILITY; ENTIRE AGREEMENT

12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to conflicts of laws principles.

12.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.

12.3 Entire Agreement. This Agreement, together with any financing statements, security agreements and other documents executed in connection herewith, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, relating thereto.

13. MISCELLANEOUS PROVISIONS

The parties agree that the Secured Party may assign its rights under this Agreement. The Debtor may not assign its rights or delegate its obligations without the prior written consent of the Secured Party. The Debtor waives any right to a jury trial to the extent permitted by law.

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