Kentucky Security Agreement regarding Member Interests in Limited Liability Company

• Category: Contracts - Security
• State: Multi-State
• Control #: US-1033BG
• Format: Word; Rich Text

Description

A Limited Liability Company ("LLC") is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation. Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement. Most, if not all, major loans involve creating a lien on the property. A lien on real estate would take the form of a mortgage or a deed of trust. A lien on all other property would be covered by a security agreement. In this agreement, the borrower in a loan transaction would give a security interest in personal property in order to secure payment of his loan or credit obligation. Article 9 of the Uniform Commercial Code deals with secured transactions. A creditor who complies with the requirements of Article 9 can create a security interest that protects him against the debtor's default by allowing the creditor to recover by selling the goods covered by the security interest.

Kentucky Security Agreement regarding Member Interests in a Limited Liability Company is a legally binding document that governs the secured transactions involving member interests in an LLC. It outlines the terms and conditions under which a member can pledge their interest as collateral to obtain financing or a loan. Key aspects covered in a Kentucky Security Agreement regarding Member Interests in LCS include: 1. Purpose: This agreement defines the purpose and scope of the security interest, outlining the intent to pledge member interests as collateral for a loan or other obligations. 2. Identification of Parties: It identifies the LLC as the granter and the secured party, typically a lender or creditor who receives the security interest. 3. Description of Member Interests: The agreement states the specific member interests being pledged as collateral. It includes details such as the member's name, percentage interest, capital contributions, and other relevant information. 4. Security Interest Grant: The agreement establishes the grant of a security interest in the member in favor of the secured party. It includes language explicitly granting the secured party a lien on the member's interests. 5. Collateral: The agreement clarifies that the member's interests in the LLC serve as collateral, subject to the security interest. This can include profit shares, voting rights, management rights, and distributions. 6. Perfection: It explains the methods to perfect the security interest, such as UCC filing or other applicable methods, ensuring the priority of the lender's claim against other creditors. 7. Default and Remedies: The agreement defines what constitutes default, such as non-payment or breach of loan agreement terms. It outlines the remedies available to the secured party, such as the right to foreclose or sell the member's interests to recover outstanding debt. 8. Governing Law: This section specifies that the agreement is governed by Kentucky law, ensuring compliance with state-specific regulations for such agreements. Different types of Kentucky Security Agreements regarding Member Interests in LCS may include: 1. Single-Member Security Agreement: Pertains to security agreements where there is only one member in the LLC, pledging their interests as collateral. 2. Multi-Member Security Agreement: Applicable when multiple members pledge their interests as collateral in a multi-member LLC. 3. First Priority Security Agreement: Refers to an agreement that establishes the secured party's priority interest over other creditors or subsequent security agreements. 4. Second or Subordinated Security Agreement: Establishes a security interest in favor of a secured party with a subordinate priority, typically behind a first priority security agreement. 5. Amended and Restated Security Agreement: A revised agreement that supersedes and replaces the original security agreement, incorporating changes and updates. It is essential to consult with legal professionals experienced in Kentucky law to ensure compliance and accuracy while drafting or interpreting a Security Agreement regarding Member Interests in a Kentucky Limited Liability Company.