Delaware Security Agreement regarding borrowing of funds and granting of security interest in assets

• Category: Corporations - Public - Security
• State: Multi-State
• Control #: US-EG-9502
• Format: Word; Rich Text

Description

Security Agreement between Caldera Systems, Inc. and The Canopy Group, Inc. regarding borrowing of funds and granting of security interest in assets dated September 1, 1998. 4 pages. The Delaware Security Agreement is a legally binding document that establishes the terms and conditions for borrowing funds and granting a security interest in assets. It ensures that both the borrower and the lender are protected and have a clear understanding of their rights and obligations. This agreement follows the Uniform Commercial Code (UCC) Article 9, which governs secured transactions in Delaware. The primary purpose of a Delaware Security Agreement is to provide collateral for the borrowed funds. By granting a security interest in certain assets, the borrower pledges these assets as security for the repayment of the loan. In the event of default, the lender has the right to seize and sell the secured assets to recover the outstanding debt. The main components of a Delaware Security Agreement include: 1. Parties involved: The agreement identifies the borrower (debtor), the lender (secured party), and any other relevant parties involved in the transaction. 2. Description of collateral: It specifies the assets that are being offered as security, providing a detailed description to ensure clarity and avoid any confusion. 3. Obligations and representations: The borrower makes various representations and warranties regarding their ownership rights and the condition of the collateral. They also affirm that there are no other conflicting security interests on the assets being pledged. 4. Security interest: The agreement outlines the property interest being granted to the lender as security for the borrowed funds. The lender may have a security interest in specific assets (such as inventory, accounts receivable, equipment, or real estate) or may have a blanket security interest in all the borrower's assets. 5. Perfection of the security interest: To protect the lender's rights, the agreement provides instructions on how to perfect the security interest. Common methods include filing a UCC Financing Statement with the Delaware Secretary of State or taking possession of the collateral. 6. Events of default: The agreement defines various actions or circumstances that would constitute default, such as non-payment, bankruptcy, or breach of other terms. It specifies the remedies available to the lender upon default, which may include the right to accelerate the loan, repossess the collateral, or pursue legal action. Types of Delaware Security Agreements include: 1. Real Estate Security Agreement: This type of agreement focuses on using real estate property as collateral. It outlines the specific real estate assets to be pledged and the irrevocable right of the lender to foreclose and sell the property if the borrower defaults. 2. Chattel Mortgage Security Agreement: Chattel refers to movable assets such as inventory, equipment, or vehicles. This agreement grants a security interest in these assets, allowing the lender to seize and sell them in case of default. 3. Fixture Filing Security Agreement: A fixture is a movable item that becomes permanently attached to real estate, such as machinery or fixtures installed in a building. This agreement creates a security interest in fixtures, ensuring that the lender has a claim on them even if the property changes ownership. 4. Floating Lien Security Agreement: Unlike specific collateral security agreements, a floating lien agreement allows the borrower to use assets acquired after the agreement is signed as security. This type of agreement is commonly used when businesses require ongoing borrowing arrangements. In summary, a Delaware Security Agreement is a comprehensive legal document that outlines the terms and conditions for borrowing funds and granting a security interest in assets. By understanding its provisions and different types, borrowers and lenders can engage in secure and well-defined financial transactions.

The Delaware Security Agreement is a legally binding document that establishes the terms and conditions for borrowing funds and granting a security interest in assets. It ensures that both the borrower and the lender are protected and have a clear understanding of their rights and obligations. This agreement follows the Uniform Commercial Code (UCC) Article 9, which governs secured transactions in Delaware. The primary purpose of a Delaware Security Agreement is to provide collateral for the borrowed funds. By granting a security interest in certain assets, the borrower pledges these assets as security for the repayment of the loan. In the event of default, the lender has the right to seize and sell the secured assets to recover the outstanding debt. The main components of a Delaware Security Agreement include: 1. Parties involved: The agreement identifies the borrower (debtor), the lender (secured party), and any other relevant parties involved in the transaction. 2. Description of collateral: It specifies the assets that are being offered as security, providing a detailed description to ensure clarity and avoid any confusion. 3. Obligations and representations: The borrower makes various representations and warranties regarding their ownership rights and the condition of the collateral. They also affirm that there are no other conflicting security interests on the assets being pledged. 4. Security interest: The agreement outlines the property interest being granted to the lender as security for the borrowed funds. The lender may have a security interest in specific assets (such as inventory, accounts receivable, equipment, or real estate) or may have a blanket security interest in all the borrower's assets. 5. Perfection of the security interest: To protect the lender's rights, the agreement provides instructions on how to perfect the security interest. Common methods include filing a UCC Financing Statement with the Delaware Secretary of State or taking possession of the collateral. 6. Events of default: The agreement defines various actions or circumstances that would constitute default, such as non-payment, bankruptcy, or breach of other terms. It specifies the remedies available to the lender upon default, which may include the right to accelerate the loan, repossess the collateral, or pursue legal action. Types of Delaware Security Agreements include: 1. Real Estate Security Agreement: This type of agreement focuses on using real estate property as collateral. It outlines the specific real estate assets to be pledged and the irrevocable right of the lender to foreclose and sell the property if the borrower defaults. 2. Chattel Mortgage Security Agreement: Chattel refers to movable assets such as inventory, equipment, or vehicles. This agreement grants a security interest in these assets, allowing the lender to seize and sell them in case of default. 3. Fixture Filing Security Agreement: A fixture is a movable item that becomes permanently attached to real estate, such as machinery or fixtures installed in a building. This agreement creates a security interest in fixtures, ensuring that the lender has a claim on them even if the property changes ownership. 4. Floating Lien Security Agreement: Unlike specific collateral security agreements, a floating lien agreement allows the borrower to use assets acquired after the agreement is signed as security. This type of agreement is commonly used when businesses require ongoing borrowing arrangements. In summary, a Delaware Security Agreement is a comprehensive legal document that outlines the terms and conditions for borrowing funds and granting a security interest in assets. By understanding its provisions and different types, borrowers and lenders can engage in secure and well-defined financial transactions.