INVENTORY
LOAN AND SECURITY AGREEMENT
Date ----------------, 19--
Agreement between ----------------------------- (hereinafter called the debtor),
whose address is ---------------------------------------------------------------
and ------------------------------------ (hereinafter called the secured party),
whose address is --------------------------------------------------------------;
Section I. Debtor's Place of Business.
The chief place of business of debtor is ---------------------------------------
and, if other than at the above address, the place where debtor keeps his
records concerning accounts receivable is --------------------------------------
-------------------------------------------------------------------------------.
Neither the said place nor the collateral shall be removed from Oregon without
the written consent of the secured party.
Section 2. Loan Agreement.
2.1 Amount of Loan. The secured party from time to time will lend the
debtor at debtor's request, such sums as the secured partly in his discretion
believes are adequately secured by this agreement.
2.2 Borrowing Percentage. The aggregate amount of the loans shall not
exceed -----% of the net value of the qualified inventory as hereinafter
defined, plus 100% of the collected balance in debtor's cash collateral account.
Should the aggregate amount of said loans at any time exceed said percentage,
the entire loan, including the excess, is secured hereby.
2.3 Debtor's Notes. All loans shall be evidenced by debtor's promissory
note or notes payable either on demand or on such maturity as the secured party
may fix; all notes shall bear interest at such rates and interest shall be
payable at such intervals as the parties hereto shall agree upon at the time
each loan is made.
2.4 Other Charges. In addition to the principal and interest of the
notes the debtor shall pay to the secured party upon his demand, all expenses
incurred by the secured party to audit and service debtor's account and to
preserve, collect, protect his interest in or realize on the collateral,
including counsel fees and legal expenses, taxes and insurance premiums. All
such expenses shall be part of the obligation secured by the collateral and
shall bear interest at -----% per annum from the date advanced by the secured
party until paid.
2.5 Terms of Payment.
(a) Deposit of Proceeds in Cash Collateral Account. Debtor,
forthwith upon receipt of all checks, drafts, cash and other
remittances (herein called proceeds) in part or full payment
for any of the collateral, will deposit the proceeds in a cash
collateral account maintained with the -----------------------
Branch of The ------------------------------------------------
--------------------------------- Bank, over which the secured
party alone shall have power of withdrawal. Pending such
deposit the debtor shall not commingle any proceeds with any
other funds or property of the debtor, but shall hold the
proceeds separate and apart therefrom and upon an express
trust for the secured party until deposited in the cash
collateral account. Credit for proceeds deposited in the cash
collateral account shall be conditional upon final payment of
the deposited item. Once each week the secured party will
apply the whole or any part of the collected funds on deposit
in the cash collateral account against the principal or
interest of the notes and the other charges specified in
Section 2.4, the order and method of such application to be in
the discretion of the secured party. Any part of the cash
collateral account which the secured party elects not to so
apply may be paid over by the secured party to the debtor.
(b) Alternative Method of Payment. The secured party, by written
notice to the debtor (subject to revocation at any time), in
lieu of requiring deposit of proceeds in the cash collateral
account, may permit debtor to make payments weekly or at other
intervals, of an amount equal to ------% of the proceeds of
the collateral received by debtor during the interval.
(c) Goods Represented by Documents. If the collateral is
represented or covered by documents of title, whether or not
negotiable, in the possession of the secured party, the
secured party, upon payment of the amount secured thereby, may
release all or part of the documents or goods to the debtor.
2.6 Statement of Account and Additional Collateral. Once each month the
secured party may render a statement of account to the debtor showing the
current status of the loans, service charges and the cash collateral account. If
the statement or any interim statement indicates the loans outstanding exceed
the borrowing percentage, the debtor either shall furnish additional collateral
or pay the difference in cash.
Section 3. Collateral.
To secure the payment and performance of all obligations of the debtor
set forth on this agreement, the note or notes and any other obligations of the
debtor to the secured party, the debtor grants to the secured party a security
interest in the following collateral:
3.1 Inventory. All inventory now owned or hereafter acquired by the
debtor.
3.2 Accounts Receivable. All accounts of the debtor now existing or
hereafter arising, which are proceeds of the inventory.
3.3 Contract Rights. All contract rights of the debtor now existing or
hereafter arising, relating to the inventory.
3.4 Proceeds and Products. Proceeds and products of all the above.
Section 4. Qualified Inventory.
4.1 Definition. Qualified inventory must be readily marketable and meet
all of the following specifications on the date of the loan and while any note
or notes are outstanding:
(a) No Encumbrances. All the goods are owned by the debtor free
from any lien, security interest or other encumbrance of any
person.
(b) Other Financing. No financing statement covering any of the
inventory or its proceeds or the debtor's accounts is on file
in any public office and the secured party has not received
any notice of any proposed acquisition of an inventory
security interest from any person.
(c) Documents. If any of the goods is represented or covered by
documents of title, instruments or chattel paper, the debtor
is the owner of the documents, instruments and paper and none
of it has been sold or transferred nor has any security
interest in any of it been granted to any person.
4.2 Net Value. The net value of the qualified inventory shall be
determined at cost or market, whichever is lower, exclusive of any
transportation, processing or handling charges. The determination of "net value"
shall be made by the secured party. The debtor shall notify the secured party
immediately of any event causing a loss to or depreciation in value of the
inventory and the amount of such loss or depreciation.
Section 5. Authority to Sell or Process Collateral.
So long as debtor is not in default on the note or notes or in breach
of any of the terms of this agreement, the debtor shall have the right to sell
or process the inventory in the regular course of debtor's business.
Section 6. Other Agreements of Debtor.
6.1 Certificates and Statements of Inventory Position. At the time of
each loan and at such intervals and in such form as the secured party may
request, but at least monthly, the debtor shall submit to the secured party a
certified statement of debtor's inventory position showing inventory on hand,
inventory represented or covered by warehouse receipts or bills of lading,
qualified inventory on hand, inventory in possession of bailees, including the
names and addresses of such bailees, and a statement of debtor's current
accounts.
6.2 Endorsements. If any process to debtor shall include or any of the
accounts shall be evidenced by, notes, trade acceptances or instruments or
documents, or if any inventory is covered by documents of title or chattel
paper, whether or not negotiable, debtor, if requested by the secured party,
immediately shall deliver them to the secured party, appropriately endorsed.
Regardless of the form of the endorsement, the debtor waives protest. If debtor
fails to endorse any instrument or document, the secured party is authorized to
endorse it on debtor's behalf.
* ORS 79.1090(4) "Goods are . . . `inventory' if they are held by a person who
holds them for sale or lease or to be furnished under contracts of service or if
he has so furnished them, or if they are raw materials, work in process or
materials used or consumed in a business. Inventory of a person is not to be
classified as his equipment."
---------
If any loan above mentioned is a consumer loan as defined by the
Truth-in-Lending Act and Regulation Z, disclosures are required to be made by
the secured party to the debtor prior to consummation of that loan; for this
purpose use Xxxxxxx-Xxxx Form No. 1320, or equivalent. If compliance with Act
not required, disregard this notice.
S-N Form No. 1206--UCC Series (SN)
Security Agreement--Inventory
Xxxxxxx-Xxxx Law Publishing Co.
Xxxxxxxx, Xxxxxx 00000
S-N Form No. 1206 - Page 2
Section 6. (continued)
6.3 Maintenance of Records. The debtor at all times shall keep accurate
and complete records of the collateral and its status.
6.4 Right of Secured Party to Inspect. The secured party and any of his
agents shall have the right to call at the debtor's place or places of business
or any other place where the collateral may be located, at intervals to be
determined by the secured party, to inspect the collateral and inspect, audit
and copy any books and records of the debtor relating to the collateral or other
transactions with the secured party.
6.5 Reports. The debtor, if requested by the secured party, shall
submit to the secured party
(a) Periodical Certified Statement. Within forty-five days after
the end of each calendar quarter of each fiscal year of the
debtor, his financial statement as of the close of such
quarter, certified by an authorized person; within ninety days
after the end of each fiscal year, his financial statements as
of the close of the year, certified by independent accountants
and from time to time, such additional information and reports
regarding his financial status as the secured party may
require.
(b) Reconciliation Report. At least once in each thirty-day
period, a report in form satisfactory to the secured party
showing the sales from, additions to, changes in value of,
payment for and adjustments to inventory made since the
preceding reconciliation report, together with such other
information as the secured party may require.
6.6 Financing Statements. At the request of the secured party, debtor
shall join with the secured party in executing one or more financing statements
pursuant to the Uniform Commercial Code in form satisfactory to the secured
party, and will pay for filing the statement in the proper public office or
offices.
6.7 Other Borrowing. Without the written consent of the secured party,
the debtor will not engage in any other inventory or accounts receivable
financing or create any indebtedness for money borrowed except loans made
hereunder.
6.8 Further documentation. Debtor, at any time upon request of the
secured party, will do, make, execute and deliver all such additional and
further acts, instruments or papers as the secured party may require to assure
the secured party of the latter's rights hereunder and to the collateral and its
proceeds. If debtor is a corporation, it will promptly furnish the secured party
with certified copies of resolutions of its board of directors authorizing the
execution and delivery of this contract.
6.9 Insurance. Debtor will keep the inventory fully insured against
loss or damage by fire, theft (and collision, if applicable) and such other
hazards as secured party from time
to time requires, with such deductible provisions, upon such terms, including
loss payable and other endorsements, and in such company or companies as the
secured party may approve; debtor immediately will deliver all policies to the
secured party, to be retained by the latter in pledge to secure debtor's
obligations hereunder, with irrevocable authority to submit any proofs, to
adjust any loss, receive and receipt for any sum payable, surrender any policy,
discharge and release any insurer, endorse in debtor's name any loss or refund
check or draft and, in general, exercise in the name of the debtor or otherwise,
any and all rights of the debtor in respect thereto or in respect to the
proceeds thereof. All proceeds of insurance shall be deposited in debtor's cash
collateral account.
6.10 Taxes. Debtor shall pay, when due, all taxes and assessments on or
relating to the collateral or its use or on the proceeds.
6.11 Notification of Account Debtor or Bailee. With respect to proceeds
in the form of accounts, at any time prior to or after default by the debtor,
the secured party may notify the account debtor on any of the collateral to make
payment directly to the secured party. The debtor, if the secured party so
requires, shall notify the account debtors of the secured party's security
interest in their accounts. Until such time as the secured party by written
notice to the debtor elects to exercise said right of notification, the debtor
is authorized as agent of the secured party, to collect and enforce the
accounts. At any time in the discretion of the secured party, the latter may
notify the bailee of any inventory of secured party's security interest therein.
6.12 Truth-in-Lending Act. When making consumer sales of inventory,
debtor agrees to comply with Regulation Z by making the required disclosures
and, upon request, will furnish secured party with satisfactory evidence of such
compliance.
Section 7. Default.
The debtor shall be in default under this agreement upon the occurrence
of any of the following events:
7.1 Nonpayment of Principal and Interest. Failure to pay when due the
principal of or interest on any note.
7.2 Breach of Debtor's Agreement. Failure by debtor to keep, observe or
perform any provision of this agreement or any other agreement between debtor
and the secured party.
7.3 Misrepresentation. The discovery of any misrepresentation, breach
of warranty or material falsity of any certificate, schedule or statement made
or furnished by debtor to the secured party, whether or not in connection with
this agreement.
7.4 Impairment. Change in the condition or affairs, financial or
otherwise, of the debtor or of any endorser, guarantor or surety for the
liability of debtor to the secured party which in the opinion of the secured
party impairs or decreases secured party's security.
7.5 Loss or destruction of or substantial damage to any of the
collateral.
7.6 Insolvency. Termination of business or commencement of any
insolvency proceedings by or against debtor or if debtor becomes insolvent, or
if debtor dies, or, if debtor is a partnership, the death of any partner.
7.7 The secured party deems or has reasonable cause to deem himself
insecure.
Section 8. Remedies of Secured Party on Default.
Upon the occurrence of any event of default, the secured party may at
his option and without prior notice declare all notes and other obligations of
the debtor secured by this agreement immediately due and payable and shall have
and may exercise each and all of the rights and remedies granted to him by the
said notes, this agreement and the Uniform Commercial Code of Oregon. All
remedies of the secured party shall be cumulative. The secured party may require
the debtor to assemble the collateral and make it available to the secured party
at a place to be designated by the latter which is reasonably convenient to both
parties.
Section 9. General.
9.1 Waivers. The debtor waives demand, presentment, notice of dishonor
and protest of any instrument either of debtor or others which may be included
in the collateral or in the obligations secured hereby.
9.2 Consents. The debtor consents and agrees
(a) To any extension, postponement of time of payment, indulgence
and to any substitution, exchange or release of collateral;
(b) to the addition or release of any party or person primarily or
secondarily liable, or acceptance of partial payments on any
accounts or instruments and the settlement, compromising or
adjustment thereof;
(c) If there be more than one debtor or a guarantor or co-maker of
any note secured by this agreement, the obligation of each and
all shall be primary and joint and several;
(d) Each note which this agreement secures is a separate
instrument and may be negotiated, extended or renewed by the
secured party without releasing the debtor, the collateral or
any guarantor or co-maker.
(e) Should the secured party transfer his interest in said
collateral, debtor will not assert as a defense,
counter-claim, set-off or otherwise against secured party's
assignee any claim, known or unknown, which debtor now has or
claims to have or hereafter acquires against the secured party
and further, in such event, each right herein given to the
secured party shall accrue to and may be exercised by said
assignee.
9.3 Duties with Respect to Collateral. The secured party shall have no
duty
(a) To collect the collateral or any proceeds;
(b) To preserve rights of debtor or others against prior parties;
(c) To realize on the collateral in any particular manner or seek
reimbursement from any particular source;
(d) To preserve, protect, insure or care for the inventory.
9.4 Non-waiver By Secured Party. Secured party shall not be deemed to
have waived any of his rights under this or any other agreement or instrument
signed by the debtor unless the waiver is in writing signed by the secured
party. No delay in exercising secured party's rights shall be a waiver nor shall
a waiver on one occasion operate as a waiver of such right on a future occasion.
9.5 Notices. Each demand, notice or other communication shall be served
or given by mail addressed to the party at his address set forth herein or as
changed by written notice to the other party, or by personal service upon the
party or proper officer. Reasonable notice, when notice is required, shall be
deemed to be five days from date of mailing.
9.6 Law Governing. All the terms herein and the rights, duties and
remedies of the parties shall be governed by the laws of Oregon.
9.7 In construing this agreement, the singular includes the plural and
the masculine pronoun includes the feminine and the neuter.
9.8 This contract shall bind and inure to the benefit of, as the
circumstances may require, not only the immediate parties hereto but their
respective heirs, executors, administrators, successors in interest and assigns.
Section 10. Special Terms and Conditions.
EXECUTED in duplicate.
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(Individual Debtor)
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(Partnership or Corporate Debtor)
By------------------------------------------------------------------------------
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(Individual Secured Party)
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(Partnership or Corporate Secured Party)
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