Form 9-2

Security Agreement

[Accounts, Chattel Paper, General Intangibles, Commercial Tort Claims]

Basic Information

Date:

Debtor:

Debtor’s Mailing Address:

Secured Party:

Secured Party’s Mailing Address:

Classification of Collateral: [select one or more of the following: [Accounts/Chattel paper/General intangibles/Commercial tort claim]]

Collateral:

All of Debtor’s interest in the following personal property and all supporting obliga­tions and proceeds of such property [describe the specific collateral or select one or more of the following: accounts; chattel paper; general intangibles; commercial tort claims arising out of Debtor’s claim against [name] and other persons; and all rights to payment arising out of a judgment or settlement of such commercial tort claim, includ­ing under any instrument, chattel paper, or settlement agreement] [include if applicable: and all after-acquired collateral of the same classification].

Obligation

Note

Date:

Original principal amount:

Borrower (Obligor):

Other debt/Future advances: The security interest also secures all other present and future debts and liabilities of Debtor and/or Obligor to Secured Party, including future advances.

Other obligation[s]:

A.Debtor’s Representations Concerning Debtor and Locations

A.1.The chattel paper collateral is located solely at [address, city, state].

A.2.[Debtor’s place of business/Debtor’s chief executive office] is located at [address, city, state].

A.3.Debtor’s residence is located at [address, city, state].

A.3.Debtor’s state of organization is [Texas/[state]], and Debtor’s name, as shown in its public organic record, as amended, is exactly as set forth above.

A.4.Debtor’s records concerning the Collateral are located at [address, city, state].

B. Granting Clause

Debtor grants to Secured Party a security interest in the Collateral and all its proceeds to secure the Obligation and all renewals, modifications, and extensions of the Obligation. Debtor authorizes Secured Party to file a financing statement describing the Collateral.

C.Debtor Represents the Following:

C.1.No financing statement covering the Collateral is filed in any public office [include if the secured party has prefiled a financing statement or otherwise has a financing statement on file: except any financing statement in favor of Secured Party].

C.2.Debtor owns the Collateral and has the authority to grant this security interest, free from any setoff, claim, restriction, security interest, or encumbrance except liens for taxes not yet due.

C.3.All information about Debtor’s financial condition is or will be accurate when provided to Secured Party.

C.4.Each account and chattel paper in the Collateral is and will be the valid, legally enforceable obligation of a third-party account debtor or obligor.

C.5.If any Collateral or proceeds include obligations of third parties to Debtor, the transactions creating those obligations conform and will conform in all respects to applicable state and federal consumer credit law.

C.6.The chattel paper Collateral is in tangible, not electronic, form and has only one original counterpart. No person, other than Debtor or Secured Party, has actual or constructive possession of any chattel paper Collateral.

D.Debtor Agrees to—

D.1.Defend the Collateral against all claims adverse to Secured Party’s interest; pay all taxes imposed on the Collateral; keep the Collateral free from liens, except for liens in favor of Secured Party or for taxes not yet due; and keep the Collateral in Debtor’s possession and ownership except as otherwise provided in this agreement.

D.2.Pay all Secured Party’s expenses, including reasonable attorney’s fees and legal expenses [include for a loan transaction subject to Texas Finance Code section 342.502:   assessed by a court], incurred to (a) obtain, preserve, perfect, defend, or enforce this agree­ment; (b) retake, hold, prepare for disposition, dispose, collect, or enforce the Collateral; or (c) collect or enforce the Obligation. These expenses will bear interest from the date of advance at the rate stated in the Note for matured, unpaid amounts and are payable on demand at the place where the Obligation is payable. These expenses and interest are part of the Obligation and are secured by this agreement.

D.3.Sign and deliver to Secured Party any documents or instruments that Secured Party considers necessary to obtain, maintain, and perfect this security interest in the Collat­eral.

D.4.Notify Secured Party immediately of any event of default and of any material change (a) in the Collateral, (b) in Debtor’s Mailing Address, (c) in the location of any Collat­eral, (d) in any other representation or warranty in this agreement, or (e) that may affect this security interest, or of any change (f) in Debtor’s name or (g) of any location set forth above to another state.

D.5.Use the Collateral primarily according to the stated classification.

D.6.Maintain accurate records of the Collateral at the address set forth above; fur­nish Secured Party any requested information related to the Collateral; and permit Secured Party to inspect and copy all records relating to the Collateral.

D.7.Preserve the liability of all obligors on the Collateral and preserve the priority of all security for the Collateral.

D.8.On Secured Party’s demand, hold payments, including instruments, items, and money received as proceeds of the Collateral, separate and in an express trust for Secured Party and deposit all such payments received as proceeds of the Collateral in a special bank account designated by Secured Party, who alone will have power of withdrawal.

D.9.Inform Secured Party immediately of the rejection of property, a delay in deliv­ery or performance, or a claim made in regard to any Collateral.

D.10.As trustee for Secured Party, keep returned property segregated from Debtor’s other property until Secured Party has been paid the amount loaned against the related account and deliver the property on demand to Secured Party.

D.11.Pay Secured Party the unpaid amount of an account in the Collateral under any of the following conditions: if the account is not paid when due; if a purchaser rejects the property or services covered by the account; or if Secured Party rejects the account as unsatis­factory. Secured Party may retain the account in the Collateral and may charge any deposit account of Debtor with the unpaid amount.

D.12.Cause each chattel paper in the Collateral to have only one original counterpart and, at the request of Secured Party, (a) immediately deliver to Secured Party all current and after-acquired chattel paper Collateral in Debtor’s possession and either endorse it to Secured Party’s order or give Secured Party appropriate executed powers, (b) obtain the acknowledg­ment of any other person in possession of chattel paper Collateral of Secured Party’s security interest in the Collateral, or (c) mark each chattel paper in the Collateral with a legend indicat­ing that it is subject to a security interest under this agreement.

E.Debtor Agrees Not to—

E.1.Sell, transfer, or encumber any of the Collateral, except in the ordinary course of Debtor’s business.

E.2.Change its name or jurisdiction of organization, merge or consolidate with any person, or convert to a different entity without notifying Secured Party in advance and taking action to continue the perfected status of the security interest in the Collateral.

E.2.Change the state in which Debtor’s place of business (or chief executive office if Debtor has more than one place of business) is located, change its name, or convert to a dif­ferent entity without notifying Secured Party in advance and taking action to continue the per­fected status of the security interest in the Collateral.

E.2.Change Debtor’s name or state of residence without notifying Secured Party in advance and taking action to continue the perfected status of the security interest in the Collat­eral.

E.3.Modify any agreement related to the Collateral.

E.4.Commingle the Collateral or any proceeds with any of Debtor’s other funds or property.

F.Insurance and Risk of Loss

F.1.Debtor will insure the Collateral in accordance with Secured Party’s reasonable requirements regarding choice of carrier, risks insured against, and amount of coverage. Poli­cies must be written in favor of Debtor, be endorsed to name Secured Party as an additional insured or as otherwise directed in writing by Secured Party, and provide that Secured Party will receive at least ten days’ notice before cancellation. Debtor must provide copies of the policies or evidence of insurance to Secured Party.

F.2.COLLATERAL PROTECTION INSURANCE NOTICE

In accordance with the provisions of section 307.052(a) of the Texas Finance Code, the Secured Party hereby notifies the Debtor as follows:

(A)the Debtor is required to:

(i)keep the collateral insured against damage in the amount the Secured Party specifies;

(ii)purchase the insurance from an insurer that is authorized to do business in the state of Texas or an eligible surplus lines insurer; and

(iii)name the Secured Party as the person to be paid under the policy in the event of a loss;

(B)the Debtor must, if required by the Secured Party, deliver to the Secured Party a copy of the policy and proof of the payment of premiums; and

(C)if the Debtor fails to meet any requirement listed in Paragraph (A) or (B), the Secured Party may obtain collateral protection insurance on behalf of the Debtor at the Debtor’s expense.

F.3.Debtor assumes all risk of loss to the Collateral.

F.4.Debtor appoints Secured Party as attorney-in-fact to collect any returned unearned premiums and proceeds of any insurance on the Collateral and to endorse and deliver to Secured Party any payment from such insurance made payable to Debtor. Debtor’s appointment of Secured Party as Debtor’s agent is coupled with an interest and if Debtor is an individual will survive any disability of Debtor.

G.Default and Remedies

G.1.A default exists if—

a.Debtor, Obligor, or any secondary obligor fails to timely pay or perform any obligation or covenant in any written agreement between Secured Party and any of Debtor, Obligor, or secondary obligor;

b.any representation in this agreement or in any other written agreement between Secured Party and any of Debtor, Obligor, or secondary obligor is materially false when made;

c.a receiver is appointed for Debtor, Obligor, any secondary obligor, or any Collateral;

d.any Collateral is assigned for the benefit of creditors;

e.a bankruptcy or insolvency proceeding is commenced by Debtor, a part­nership in which Debtor is a general partner, Obligor, or any secondary obligor;

f.a bankruptcy or insolvency proceeding is commenced against Debtor, a partnership in which Debtor is a general partner, Obligor, or any secondary obligor, and the proceeding continues without dismissal for sixty days, the party against whom the proceeding is commenced admits the material alle­gations of the petition against it, or an order for relief is entered;

g.any of the following parties is terminated, begins to wind up its affairs, is authorized to terminate or wind up its affairs by its governing body or per­sons, or any event occurs or condition exists that permits the termination or winding up of the affairs of any of the following parties: Debtor; a partner­ship of which Debtor is a general partner; Obligor; or any secondary obli­gor; or

h.any Collateral is impaired by loss, theft, damage, levy and execution, issu­ance of an official writ or order of seizure, or destruction, unless it is promptly replaced with collateral of like kind and quality or restored to its former condition.

G.2.If a default exists, Secured Party may—

a.demand, collect, convert, redeem, settle, compromise, receipt for, realize on, sue for, and adjust the Collateral either in Secured Party’s or Debtor’s name, as Secured Party desires, or take control of any proceeds of the Col­lateral and apply the proceeds against the Obligation;

b.take possession of any Collateral not already in Secured Party’s posses­sion, without demand or legal process, and for that purpose Debtor grants Secured Party the right to enter any premises where the Collateral may be located;

c.without taking possession, sell, lease, or otherwise dispose of the Collat­eral at any public or private sale in accordance with law;

d.exercise any rights and remedies granted by law or this agreement;

e.notify obligors on the Collateral to pay Secured Party directly and enforce Debtor’s rights against such obligors; or

f.as Debtor’s agent, make any endorsements in Debtor’s name and on Debtor’s behalf.

G.3.Foreclosure of this security interest by suit does not limit Secured Party’s reme­dies, including the right to sell the Collateral under the terms of this agreement. Secured Party may exercise all remedies at the same or different times, and no remedy is a defense to any other. Secured Party’s rights and remedies include all those granted by law and those specified in this agreement.

G.4.Secured Party’s delay in exercising, partial exercise of, or failure to exercise any of its remedies or rights does not waive Secured Party’s rights to subsequently exercise those remedies or rights. Secured Party’s waiver of any default does not waive any other default by Debtor. Secured Party’s waiver of any right in this agreement or of any default is binding only if it is in writing. Secured Party may remedy any default without waiving it.

G.5.Secured Party has no obligation to clean or otherwise prepare the Collateral for sale.

G.6.At any time Secured Party may contact obligors on the Collateral directly to verify information furnished by Debtor.

G.7.Secured Party has no obligation to collect any of the Collateral and is not liable for failure to collect any of the Collateral, for failure to preserve any rights pertaining to the Collateral, or for any act or omission on the part of Secured Party or Secured Party’s officers, agents, or employees, except willful misconduct.

G.8.Secured Party has no obligation to satisfy the Obligation by attempting to col­lect the Obligation from any other person liable for it. Secured Party may release, modify, or waive any collateral provided by any other person to secure any of the Obligation. If Secured Party attempts to collect the Obligation from any other person liable for it or releases, modi­fies, or waives any collateral provided by any other person, that will not affect Secured Party’s rights against Debtor. Debtor waives any right Debtor may have to require Secured Party to pursue any third person for any of the Obligation.

G.9.If Secured Party must comply with any applicable state or federal law require­ments in connection with a disposition of the Collateral, such compliance will not be consid­ered to adversely affect the commercial reasonableness of a sale of the Collateral.

G.10.Secured Party may sell the Collateral without giving any warranties as to the Collateral. Secured Party may specifically disclaim any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of a sale of the Collateral.

G.11.If Secured Party sells any of the Collateral on credit, Debtor will be credited only with payments actually made by the purchaser and received by Secured Party for appli­cation to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Debtor will be credited with the proceeds of the sale.

G.12.If Secured Party purchases any of the Collateral being sold, Secured Party may pay for the Collateral by crediting the purchase price against the Obligation.

G.13.Secured Party has no obligation to marshal any assets in favor of Debtor or against or in payment of the Note, any of the Other Obligation[s], or any other obligation owed to Secured Party by Debtor or any other person.

G.14.If the Collateral is sold after default, recitals in the bill of sale or transfer will be prima facie evidence of their truth and all prerequisites to the sale specified by this agreement and by law will be presumed satisfied.

H.General

H.1.Secured Party may at any time—

a.take control of proceeds of insurance on the Collateral and reduce any part of the Obligation accordingly or permit Debtor to use the funds to repair or replace the Collateral and

b.purchase single-interest insurance coverage that will protect only Secured Party if Debtor fails to maintain insurance, and premiums for the insurance will become part of the Obligation.

H.2.Notice is reasonable if it is mailed, postage prepaid, to Debtor at Debtor’s Mail­ing Address at least ten days before any public sale or ten days before the time when the Col­lateral may be otherwise disposed of without further notice to Debtor.

H.3.This security interest will attach to an after-acquired commercial tort claim only to the extent permitted by law.

H.4.This security interest will neither affect nor be affected by any other security for any of the Obligation. Neither extensions of any of the Obligation nor releases of any of the Collateral will affect the priority or validity of this security interest.

H.5.This agreement binds, benefits, and may be enforced by the successors in inter­est of Secured Party and will bind all persons who become bound as debtors to this agreement. Assignment of any part of the Obligation and Secured Party’s delivery of any part of the Col­lateral will fully discharge Secured Party from responsibility for that part of the Collateral. If such an assignment is made, Debtor will render performance under this agreement to the assignee. Debtor waives and will not assert against any assignee any claims, defenses, or setoffs that Debtor could assert against Secured Party except defenses that cannot be waived. All representations and obligations are joint and several as to each Debtor.

H.6.This agreement may be amended only by an instrument in writing signed by Secured Party and Debtor.

H.7.The unenforceability of any provision of this agreement will not affect the enforceability or validity of any other provision.

H.8.This agreement will be construed according to Texas law, without regard to choice-of-law rules of any jurisdiction. This agreement is to be performed in [include if appli­cable in a consumer transaction: , and has been signed by Debtor in,] the county of Secured Party’s Mailing Address.

H.9.Interest on the Obligation secured by this agreement will not exceed the maxi­mum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law. Any interest in excess of that maximum amount will be credited on the principal of the Obligation or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess will be canceled automatically as of the accelera­tion or prepayment or, if already paid, credited on the principal of the Obligation or, if the principal of the Obligation has been paid, refunded. This provision overrides any conflicting provisions in this and all other instruments concerning the Obligation.

H.10.In no event may this agreement secure payment of any debt that may not law­fully be secured by a lien on real estate or create a lien otherwise prohibited by law.

H.11.When the context requires, singular nouns and pronouns include the plural.

H.12.Any term defined in sections 1.101 to 9.709 of the Texas Business and Com­merce Code and not defined in this agreement has the meaning given to the term in the Code.

   
[Name of debtor]