Security Agreement Farm Products and Farm Equipment
1. Parties and Grant of a Security Interest. [Name], residing at [address] (Debtor), grants a security interest in the Collateral described in Paragraph 2 to [name], residing at [address] (Secured Party).
a. Crops. All crops grown or growing, or planted within one year from the date of this Agreement, on the lands commonly known as [form of address, including county], more fully described in Exhibit A [omitted] (Farm).
b. Livestock. All livestock owned by Debtor, and their issue or offspring.
c. Farm Supplies. All farm supplies owned by Debtor, existing on the date of this Agreement or after-acquired.
d. Farm Equipment. All farm equipment owned by Debtor, existing on the date of this Agreement or after-acquired, including the farm equipment described in Exhibit B [omitted], as well as all accessories, parts, and equipment attached to or used in connection with the equipment. btor warrants in connection with the above Collateral that: (a) The Collateral is or will be in Debtor's possession and (b) Debtor is engaged in raising, fattening, grazing, or other farm operations.
3. Debtor's Obligation. The Collateral secures the payment of principal and interest on all loans made by Secured Party to Debtor, as well as any other obligations of Debtor to Secured Party, absolute or contingent, however they may have arisen (collectively, the liabilities).
4. Possession of Collateral. Debtor can keep possession of the Collateral and use it in any lawful manner, consistent with this Agreement and with all insurance policies on the Collateral, until default (as defined in Paragraph 5).
5. Default. A default under this Agreement occurs if:
a. Failure to Make Payments. Debtor fails to pay any amount due on the liabilities or fails to perform or comply with any agreement made by Debtor contained in this Agreement.
b. False Warranty or Misrepresentation. Debtor, or a third party on behalf of Debtor, makes any statement, warranty, or representation to Secured Party, in connection with this Agreement, or to induce Secured Party to make any loan to Debtor, that is false in any material respect when made.
c. Loss, Theft, Etc., of Collateral. The Collateral is lost, stolen, destroyed, or substantially damaged.
d. Attachment, Levy, Etc. Any levy, pledge, seizure, or attachment is made against the Collateral.
e. Death, Insolvency, Etc. Debtor, or Debtor's guarantor, endorser, or surety, suffers death, dissolution, termination of existence, insolvency, failure to pay debts as they mature, business failure, appointment of a receiver, assignment for the benefit of creditors; or a proceeding under any bankruptcy or insolvency law is commenced either by or against Debtor or Debtor's guarantor, endorser, or surety.
f. Insecurity of Secured Party. Secured Party, for any reason, feels insecure.
6. Remedies on Default. Upon default by Debtor, all liabilities, without demand or notice, become immediately due and payable, at the option of Secured Party. If Secured Party has made commitments to Debtor for further loans, they will be terminated. In addition, Secured Party may exercise any rights and remedies available to Secured Party under the law. Debtor, at Secured Party's request, will assemble the Collateral, at Debtor's own expense, in a convenient place designated by Secured Party.
7. Secured Party's Expenses. Any expenses incurred by Secured Party in the collection of the liabilities and the retaking, preparing for sale, and sale of the Collateral, including reasonable attorney fees and legal expenses, or the repair of any realty or property to which the Collateral may be attached, will be paid by Debtor.
8. Notice to Debtor. Any notice of sale of the Collateral by Secured Party will be deemed reasonable and properly given if mailed to Debtor at least [number] days before the disposition of the Collateral. The notice must be addressed to Debtor at the address noted in this Agreement, or at such other address designated in writing by Debtor.
9. Proceeds From Sale of Collateral. Secured Party may apply the proceeds from the sale of the Collateral to the payment of Debtor's liabilities in such order as Secured Party chooses.
10. Exercise of Rights. Delay in the exercise of a right or remedy by Secured Party will not act as a waiver of that right. A partial exercise, by Secured Party, of a right or remedy will not preclude further exercise of other rights or remedies by Secured Party.
11. Debtor's Warranties. Debtor warrants that Debtor:
a. Title. Holds full title to the Collateral free from any encumbrance or lien other than this Agreement.
b. Defense of Claims, Etc. Will defend the Collateral against the claims and demands of persons other than Secured Party.
c. Sale of Collateral. Will not sell, transfer, lease, or dispose of the Collateral, or any interest in the Collateral, or do anything to impair the value of the Collateral as security, without the prior written consent of Secured Party; provided, however, Debtor may sell [list] in the ordinary course of business until notified to the contrary by Secured Party.
12. Transfer of Proceeds. Debtor will, at the request of Secured Party, transfer any proceeds of the Collateral, upon receipt, to Secured Party. Until transferred to Secured Party, Debtor will hold all proceeds separate and apart from Debtor's own funds, and upon express trust for Secured Party. Secured Party may (a) apply such proceeds to Debtor's liabilities in such order as Secured Party chooses and (b) release all or any part of these proceeds to Debtor.
13. Purchase of Collateral by Debtor. If Debtor intends to use the funds from Debtor's loans from Secured Party to buy any of the Collateral, Debtor will so notify Secured Party. In this event, Debtor or Secured Party will transfer these funds directly to the seller of such Collateral.
14. Use of Collateral. The Collateral is to be raised or used by Debtor exclusively in the course of Debtor's farming operations.
15. Record Owner of Land. Debtor is the record owner of the land on which the crops described in Paragraph 2 are growing or are to be planted.
15. Record Owner of Land. The record owner of the land on which the crops described in Paragraph 2 are growing or are to be planted is [name], whose address is [address] (Record Owner). Debtor warrants Debtor's right to use the crops as Collateral and guarantees that Record Owner has either (a) consented in writing to Secured Party's security interest, which interest shall be superior to any interest in the crops of Record Owner, or (b) has disclaimed any interest in the crops subject to Secured Party's security interest.
16. Location of Collateral. The Collateral, other than growing crops, will be kept at Debtor's address stated in this Agreement, or at [other place or location]. Debtor will not remove the Collateral from this location unless Secured Party consents in writing.
17. Financing Statements. There is no financing statement covering the Collateral on file with any public office except any filed or to be filed by Secured Party. At the request of Secured Party, Debtor will from time to time (a) execute financing statements and pay the cost of filing them and (b) do such other acts (e.g., deposit with Secured Party certificates of title to the Collateral) as Secured Party may request to establish and maintain a valid security interest in the Collateral, free of other liens and claims.
18. Maintenance of Collateral and Taxes. Debtor will (a) do whatever is necessary for the proper maintenance of the Collateral consisting of crops and livestock in accordance with proper husbandry and acceptable farming standards; (b) keep all other Collateral in good condition and repair; (c) promptly pay all taxes and assessments on the Collateral, or its use or operation, as they come due; and (d) permit inspection of the Collateral, at reasonable times, by Secured Party.
a. Form of Policies. Debtor will insure the Collateral for its full insurable value, at Debtor's own expense, against risks of fire, theft, and such other risks, and in such form and with such companies as are satisfactory to Secured Party. All policies must provide that losses are payable to Secured Party and Debtor according to their respective interests in the Collateral.
b. Possession of Policies. At Secured Party's request, Debtor will deliver to Secured Party all insurance policies or certificates.
c. Secured Party as Attorney-in-Fact. Secured Party is authorized to act as an attorney-in-fact for Debtor to obtain, cancel, or adjust any insurance policy, and indorse checks or drafts drawn by the insurers.
d. Proceeds. Debtor will transfer any insurance proceeds to Secured Party. Secured Party may apply these proceeds toward Debtor's liabilities, in such order as Secured Party chooses.
20. Performance of Debtor's Obligations by Secured Party. If Debtor fails to perform any act required by this Security Agreement, Secured Party may do so on Debtor's behalf. Secured Party may also take any other action Secured Party deems necessary for the maintenance and preservation of the Collateral and Secured Party's interest in it. In this event, Debtor will reimburse Secured Party for all of Secured Party's expenses plus interest, at the rate of ...... percent (......%) per year, from the date the expense was incurred until the date Debtor makes reimbursement.
a. Definitions. The term "Debtor" refers to all debtors signing this Agreement. Each of them is jointly and severally obligated under this Agreement.
b. Successors and Assigns. The rights and privileges of Secured Party will inure to the benefit of Secured Party's successors and assigns. The warranties and agreements of Debtor will bind Debtor's successors and assigns.
c. Further Information. Debtor will furnish Secured Party with such further information concerning Debtor of the Collateral as Secured Party may request from time to time.
d. Applicable Law. This Agreement is governed by the laws of [state].
e. Severability. The provisions of this Agreement are to be interpreted in such a manner as to be effective and valid under the applicable law. However, if any provision is deemed to be invalid or prohibited by law, that provision will be ineffective to the extent of the invalidity or prohibition, without invalidating the remainder of this Agreement.