Security Agreement (New York)

SECURITY AGREEMENT (NEW YORK)

Granting a security interest under N.Y. Uniform Commercial Code Article 9, with perfection by filing a UCC-1 financing statement with the New York State Department of State, Division of Corporations, State Records and Uniform Commercial Code, in Albany.

NEW YORK DRAFTING NOTES

1. N.Y. UCC § 9-501 filing office. For a debtor that is a registered organization (a corporation, LLC, LP, etc.) organized under New York law, the filing office is the New York State Department of State, Division of Corporations, State Records and Uniform Commercial Code, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. For as-extracted collateral, timber to be cut, and fixtures affecting real property, filings are made with the local county clerk's office.
2. Registered organization name requirement. N.Y. UCC § 9-503(a)(1) requires the financing statement to provide the exact name of the registered organization as shown on the "public organic record" filed with the state of formation (in NY, the certificate of incorporation, articles of organization, or certificate of limited partnership on file with NY DOS). Minor discrepancies (inadvertent changes) may render the filing "seriously misleading" and therefore ineffective (§ 9-506).
3. Location of debtor (§ 9-301 / § 9-307). The law of the state of the debtor's location governs perfection, priority, and the effect of perfection. A registered organization is located in its state of organization. A debtor's chief executive office governs perfection for non-registered-organization debtors.
4. Usury limits. New York has aggressive usury laws. Under GOL § 5-501 and Banking Law § 14-a, the civil usury limit is 16% per annum for most loans; Penal Law § 190.40 makes 25% or more criminal usury. Loans to corporate borrowers of $2.5 million or more are exempt from civil usury (GOL § 5-501(6)), but even corporate borrowers are subject to the criminal usury ceiling. A usurious loan is void in NY (Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021)).
5. Fair market treatment and commercial reasonableness. NY UCC §§ 9-610 to 9-617 impose on the secured party a duty to conduct any disposition of collateral in a "commercially reasonable" manner. NY courts interpret this strictly; failure to comply may result in loss of deficiency or liability for actual damages.
6. No self-help breach of peace. UCC § 9-609(b)(2) permits self-help repossession without judicial process only if it may be accomplished "without breach of the peace." NY courts construe this narrowly; replevin under CPLR Art. 71 is the safer remedy.

1. PARTIES AND RECITALS

THIS SECURITY AGREEMENT (this "Agreement") is made as of [__/__/____] (the "Effective Date") by and between:

[DEBTOR LEGAL NAME], a [State of organization] [entity type] (the "Debtor") with its chief executive office and mailing address at [________________________________]; and

[SECURED PARTY NAME], a [State of organization] [entity type] (the "Secured Party") with its principal office at [________________________________].

Recitals

A. Debtor is indebted to Secured Party pursuant to [loan agreement / promissory note / credit facility] dated [__/__/____] (the "Loan Agreement"), under which Secured Party has extended or agreed to extend credit in an aggregate principal amount of up to $[____________];

B. Debtor is granting Secured Party a security interest in the Collateral (defined below) to secure the Obligations (defined below), subject to perfection by filing a UCC-1 financing statement with the New York State Department of State; and

C. The parties intend that this Agreement be a "security agreement" within the meaning of N.Y. UCC § 9-102(a)(73) and that attachment and enforceability shall occur upon satisfaction of the conditions in N.Y. UCC § 9-203(b).

NOW, THEREFORE, the parties agree as follows.

2. DEFINITIONS

Except as otherwise defined herein, capitalized terms have the meanings given in the N.Y. UCC (including Articles 1, 8, and 9).

"Collateral" means all of Debtor's right, title, and interest in all of the following now-owned or hereafter-acquired property, wherever located, and all products and proceeds thereof: (a) Accounts; (b) Chattel Paper; (c) Commercial Tort Claims (only those specifically identified on Schedule A); (d) Deposit Accounts; (e) Documents; (f) Equipment; (g) Fixtures (subject to fixture filing under § 9-502(b)); (h) General Intangibles (including Payment Intangibles and Software); (i) Goods; (j) Instruments (including Promissory Notes); (k) Inventory; (l) Investment Property; (m) Letter-of-Credit Rights; (n) Supporting Obligations; (o) all books, records, and data relating to the foregoing; and (p) all Proceeds, accessions, additions, replacements, substitutions, rents, issues, profits, income, and products of any of the foregoing.

"Event of Default" has the meaning in Section 9.

"Filing Office" means the New York State Department of State, Division of Corporations, State Records and Uniform Commercial Code, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231 (for UCC-1 filings concerning a registered-organization Debtor organized under NY law) or, where required by N.Y. UCC § 9-501(a)(1)(A) (fixtures, as-extracted collateral, timber), the applicable county clerk's office in the county where the affected real property is located.

"NY UCC" means the New York Uniform Commercial Code, N.Y. Cons. Laws UCC.

"Obligations" means all present and future indebtedness, liabilities, and obligations of Debtor to Secured Party under the Loan Agreement, this Agreement, and any related documents, whether direct or indirect, absolute or contingent, matured or unmatured, and including interest, fees, costs, and expenses.

"Permitted Liens" means the liens listed on Schedule B.

"Proceeds" has the meaning in N.Y. UCC § 9-102(a)(64).

3. GRANT OF SECURITY INTEREST

3.1 Grant

Debtor hereby grants Secured Party a continuing security interest in the Collateral (the "Security Interest") to secure the full and punctual payment and performance of the Obligations. This Agreement is a "security agreement" within the meaning of N.Y. UCC § 9-102(a)(73) and satisfies the requirements of N.Y. UCC § 9-203(b)(3)(A).

3.2 Attachment

The Security Interest attaches upon the later of (a) the Effective Date and (b) the time Debtor has rights in the Collateral or the power to transfer rights, consistent with N.Y. UCC § 9-203.

3.3 Continuing Security Interest

The Security Interest is a continuing interest that secures all present and future Obligations (future advances), consistent with N.Y. UCC § 9-204, and shall not be extinguished by payment of any particular obligation unless all Obligations are indefeasibly paid in full.

3.4 Cross-Collateralization

The Collateral secures all Obligations and all advances, and the liability of Debtor is joint with any co-debtors.

3.5 NY Usury Compliance

The parties acknowledge that (a) the interest rate charged under the Loan Agreement complies with N.Y. General Obligations Law § 5-501 (16% civil usury limit, as applicable) and N.Y. Penal Law § 190.40 (25% criminal usury limit), and (b) if Debtor is a corporation and the loan principal is at least $2.5 million, civil usury is inapplicable under GOL § 5-501(6)(b), although criminal usury under Penal Law § 190.40 still applies. The parties acknowledge that a usurious loan is void under New York law (Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021)), and any interest or fees charged in excess of the applicable ceiling shall be automatically reduced to the maximum lawful rate.

4. PERFECTION AND FILING

4.1 Authorization to File

Debtor authorizes Secured Party to file UCC-1 financing statements and amendments describing the Collateral as "all assets" or "all personal property" (or a more specific description) with the Filing Office, consistent with N.Y. UCC § 9-509(b). Debtor ratifies any such filing made before the Effective Date.

4.2 Debtor's Name and Location (§§ 9-503, 9-307)

(a) Exact Name. The Debtor's exact legal name as shown on its public organic record filed with [State] is "[Debtor exact legal name]" (the "Registered Name"). Debtor shall not change its Registered Name without giving Secured Party at least 30 days' prior written notice.

(b) Jurisdiction of Organization. Debtor is organized under the laws of [State] and is located in [State] for purposes of N.Y. UCC § 9-307(e). Debtor shall not change its jurisdiction of organization without Secured Party's prior written consent.

(c) Chief Executive Office. For non-registered-organization debtors, the chief executive office is the address stated in the preamble.

4.3 Filing Office

Secured Party shall file one or more UCC-1 financing statements with the Filing Office. For fixtures, timber to be cut, or as-extracted collateral, Secured Party shall file a fixture filing or as-extracted financing statement with the county clerk of the county in which the affected real property is located, in accordance with N.Y. UCC § 9-501(a)(1)(A) and § 9-502(b). Where the real property is in New York City, fixture filings are made in the applicable borough.

4.4 Control Agreements

For Deposit Accounts, Investment Property, and Letter-of-Credit Rights, Debtor shall execute tri-party Control Agreements satisfying N.Y. UCC §§ 9-104 (deposit accounts), 9-106 (investment property), and 9-107 (letter-of-credit rights) within [____] days after request.

4.5 Possession

For Instruments, Certificated Securities, and Negotiable Documents, Debtor shall deliver such collateral to Secured Party duly endorsed and/or with appropriate transfer powers, to perfect by possession under N.Y. UCC § 9-313.

4.6 Real Estate; Coordinated Filings

If the Obligations are also secured by a mortgage on New York real property, Secured Party shall file a fixture filing as described in Section 4.3 and shall coordinate with the applicable county clerk to record the mortgage under N.Y. Real Property Law Art. 8. The parties acknowledge that N.Y. imposes a mortgage recording tax under Tax Law Art. 11 (§§ 250-267).

4.7 Future Assurance

Debtor shall promptly execute and deliver any additional documents reasonably requested to maintain perfection, including amendments upon changes in name, location, or organizational structure.

5. REPRESENTATIONS AND WARRANTIES

Debtor represents and warrants as of the Effective Date and continuing:

(a) Organization; Power. Debtor is duly organized, validly existing, and in good standing in its jurisdiction of organization, and has power to execute this Agreement.

(b) Authorization. This Agreement is duly authorized and constitutes a valid and binding obligation enforceable under N.Y. UCC § 9-203.

(c) Title. Debtor has good title to the Collateral, free of liens other than Permitted Liens.

(d) Accuracy of Name and Location. The Registered Name and jurisdiction information in Section 4.2 are accurate as of the Effective Date.

(e) No Commercial Tort Claims. Except as listed on Schedule A, Debtor has no Commercial Tort Claims that are not described with particularity.

(f) Accounts. Each Account is genuine and enforceable against the account debtor.

(g) Compliance with NY Usury Law. Debtor acknowledges review of the interest rate and confirms that it does not exceed applicable NY usury ceilings.

(h) No NY Judgments or Tax Liens. There are no unsatisfied NY State tax warrants (under Tax Law § 171-q), judgment liens filed in the NY Department of State Judgment Roll, or UCC-1 filings on file other than those listed on Schedule B.

(i) Solvency. Debtor is Solvent, and the grant of the Security Interest is not being made with intent to hinder, delay, or defraud creditors under NY Debtor & Creditor Law Art. 10 (NY's adoption of the Uniform Voidable Transactions Act, § 270 et seq.).

6. COVENANTS OF DEBTOR

6.1 Affirmative Covenants

Debtor shall:

(a) maintain the Collateral in good repair;
(b) pay all taxes and assessments (including NY State real property taxes, sales tax, and corporate franchise tax) before delinquency;
(c) maintain insurance covering the Collateral with Secured Party named as lender loss-payee on form ACORD 28 or equivalent;
(d) allow Secured Party to inspect the Collateral and records upon reasonable notice;
(e) promptly notify Secured Party of any material loss, theft, or damage to the Collateral;
(f) provide Secured Party with annual financial statements within [____] days after year-end, and quarterly statements within [____] days after quarter-end;
(g) comply with all laws applicable to the Collateral and Debtor's business, including NY environmental laws (ECL Art. 27), NY labor laws, and NY sales tax laws;
(h) promptly deliver to Secured Party any instruments, chattel paper, or negotiable documents acquired after the Effective Date;
(i) execute any additional documents reasonably necessary to maintain the Security Interest; and
(j) notify Secured Party at least 30 days before any change in name, jurisdiction, structure, or chief executive office.

6.2 Negative Covenants

Debtor shall not:

(a) sell, lease, license, or otherwise dispose of Collateral, except inventory in the ordinary course of business and obsolete equipment being replaced;
(b) grant, create, or permit any lien on the Collateral other than Permitted Liens;
(c) change its Registered Name, jurisdiction, or type without Secured Party's prior written consent;
(d) commingle Collateral with the property of others;
(e) remove Collateral from the locations listed on Schedule C without prior notice; or
(f) enter into any agreement restricting Secured Party's ability to enforce the Security Interest.

7. COLLECTION RIGHTS (§ 9-607)

Upon notice by Secured Party (which may be given without an Event of Default after consultation if permitted under the Loan Agreement), Debtor directs each account debtor to pay Secured Party directly, consistent with N.Y. UCC § 9-607. Debtor shall not interfere with such directions. Secured Party's exercise of § 9-607 rights does not relieve Debtor of any obligations.

8. INSURANCE AND PROCEEDS

Debtor shall maintain insurance covering all Collateral with limits of at least $[____________], naming Secured Party as loss payee. Insurance proceeds are Proceeds of the Collateral and shall be delivered to Secured Party, to be applied to the Obligations or reinvested, at Secured Party's election.

9. EVENTS OF DEFAULT

Each of the following is an "Event of Default":

(a) any payment default on the Obligations;
(b) any breach of this Agreement not cured within [____] days after notice (or, for breaches not curable within that period, within such longer period not to exceed [____] days as Debtor diligently pursues cure);
(c) any default under the Loan Agreement;
(d) any material representation or warranty proving false when made;
(e) Debtor's insolvency, bankruptcy, assignment for the benefit of creditors, appointment of a receiver, or admission of inability to pay debts;
(f) entry of any judgment against Debtor exceeding $[____________] not stayed or bonded;
(g) loss, damage, or impairment of the Collateral materially and adversely;
(h) any transfer of Collateral in breach of Section 6.2(a);
(i) any failure to maintain insurance required by Section 6.1(c);
(j) imposition of any NY State tax warrant or judgment lien on Collateral; or
(k) cessation of Debtor's business operations.

10. REMEDIES (UCC §§ 9-601 THROUGH 9-628)

10.1 Cumulative Rights

Upon an Event of Default, Secured Party may exercise all rights and remedies under the NY UCC, at law, or in equity, and such rights are cumulative.

10.2 Acceleration

Secured Party may declare all Obligations immediately due and payable, without presentment, demand, protest, or notice (all waived by Debtor to the extent permitted by law).

10.3 Possession and Disposition

Secured Party may take possession of the Collateral and dispose of it at public or private sale, consistent with N.Y. UCC §§ 9-609 through 9-617. Secured Party shall:

(a) conduct any disposition in a commercially reasonable manner (§ 9-610);
(b) provide Debtor with reasonable notification of any disposition as required by § 9-611 (not less than 10 days for commercial transactions, per NY practice);
(c) apply proceeds in the order required by § 9-615; and
(d) be entitled to a deficiency judgment if proceeds are insufficient, subject to compliance with § 9-616.

10.4 Breach of Peace Restriction

In exercising self-help under § 9-609(b)(2), Secured Party shall not breach the peace. If Debtor objects or resistance is encountered, Secured Party shall cease self-help and pursue judicial remedies, including replevin under CPLR Art. 71 or attachment under CPLR Art. 62.

10.5 Judicial Remedies

Secured Party may seek:

(a) Replevin under CPLR Art. 71 (§§ 7101-7112) to recover possession of specific Collateral;
(b) Attachment under CPLR Art. 62 (§§ 6201-6226) as a provisional remedy, subject to showing grounds under § 6201 (nonresident, fraudulent conveyance, etc.);
(c) Preliminary injunction under CPLR Art. 63 (§§ 6301-6330); and
(d) Receivership under CPLR § 6401 for the appointment of a receiver to take possession of the Collateral pending disposition.

10.6 Collection of Accounts

Secured Party may collect Accounts directly under § 9-607, and Debtor irrevocably authorizes Secured Party to endorse checks and other instruments and to apply payments to the Obligations.

10.7 Retention in Satisfaction (§ 9-620)

Subject to the restrictions of § 9-620, Secured Party may propose to retain Collateral in full or partial satisfaction of the Obligations, with notice to Debtor and any secondary obligors.

10.8 Attorneys' Fees

Debtor shall pay Secured Party's reasonable attorneys' fees and costs incurred in enforcing this Agreement, subject to the "unmistakable clarity" standard of Hooper Associates v. AGS Computers, 74 N.Y.2d 487 (1989), which this Section satisfies.

10.9 Commercial Reasonableness

The parties acknowledge that N.Y. UCC § 9-610(b) requires that every aspect of a disposition be commercially reasonable, and that § 9-626 places the burden on Secured Party to prove commercial reasonableness when challenged. Secured Party shall comply with NY standards, which courts interpret strictly.

11. DISPUTE RESOLUTION

11.1 Governing Law

This Agreement shall be governed by the substantive laws of the State of New York, including the NY UCC. The parties invoke N.Y. General Obligations Law § 5-1401, which expressly permits parties to a contract worth at least $250,000 to choose NY law regardless of any lack of NY connection. Perfection, priority, and related matters are governed by the law specified in N.Y. UCC § 9-301.

11.2 Exclusive Forum

All disputes shall be brought exclusively in: (a) the Supreme Court of the State of New York, County of [New York / ____________] (and, where the monetary threshold is met, the Commercial Division under 22 NYCRR § 202.70); or (b) the U.S. District Court for the [Southern / Eastern] District of New York. For transactions of $1,000,000 or more, the parties invoke GOL § 5-1402 to preclude forum non conveniens objections. Debtor consents to personal jurisdiction under CPLR § 301 and § 302.

11.3 Jury Waiver

DEBTOR AND SECURED PARTY KNOWINGLY AND VOLUNTARILY WAIVE JURY TRIAL IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, CONSISTENT WITH CPLR § 4102(c).

11.4 Statute of Limitations

Enforcement actions on the Obligations are subject to the six-year statute of limitations under CPLR § 213(2). Actions for breach of warranty under UCC § 2-725 are subject to the four-year limitation period.

11.5 Post-Judgment Interest

Any judgment shall bear post-judgment interest at 9% per annum under CPLR § 5004 (subject to the reduced 2% rate for consumer debt judgments against natural persons under CPLR § 5004(b)).

12. GENERAL PROVISIONS

12.1 Amendments

Amendments require a writing signed by both parties, consistent with GOL § 15-301.

12.2 Waiver

No waiver by Secured Party shall be effective unless in writing.

12.3 Assignment

Secured Party may assign its rights and transfer its interests. Debtor may not assign.

12.4 Severability

If any provision is held invalid, the remaining provisions shall continue in effect.

12.5 Termination

Upon full and indefeasible payment of the Obligations, Secured Party shall file a UCC-3 termination statement with the Filing Office within the time required by N.Y. UCC § 9-513(c) (20 days after authenticated demand for consumer goods; otherwise reasonable time).

12.6 Notices

Notices shall be delivered to the addresses in the preamble by certified mail, overnight courier, or email with confirmation.

12.7 Electronic Signatures

Execution may occur electronically under N.Y. State Technology Law Art. 3 (the Electronic Signatures and Records Act). New York is the only state that has not adopted UETA; ESRA (STL §§ 301-309) gives electronic signatures the same legal effect as handwritten signatures except for documents excluded under STL § 307. Note that negotiable instruments under UCC Art. 3 are excluded from ESRA but are treated as electronic records under NY UCC § 9-105 (control of electronic chattel paper).

12.8 Counterparts

This Agreement may be executed in counterparts.

12.9 Fixture Filings

If any Collateral is or becomes a fixture, this Agreement serves as a fixture filing under N.Y. UCC § 9-502(b). The real property description is set forth on Schedule D, and the record owner of such real property is [________________________________].

13. EXECUTION

IN WITNESS WHEREOF, the parties have executed this Security Agreement as of the Effective Date.

DEBTOR: [DEBTOR LEGAL NAME]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

SECURED PARTY: [SECURED PARTY NAME]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

NY NOTARY ACKNOWLEDGMENT (Optional; required for fixture filings affecting NY real property)

STATE OF NEW YORK )
) ss.:
COUNTY OF ________ )

On the [____] day of [____________], 20[____], before me, the undersigned, personally appeared [________________________________], personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

[________________________________]
Notary Public, State of New York

SCHEDULE A — COMMERCIAL TORT CLAIMS

[List specific claims with sufficient specificity to satisfy N.Y. UCC § 9-108(e)(1)]

SCHEDULE B — PERMITTED LIENS

[List]

SCHEDULE C — COLLATERAL LOCATIONS

[List addresses where tangible Collateral is located]

SCHEDULE D — REAL PROPERTY DESCRIPTION (for Fixture Filings)

[Metes and bounds, block and lot, SBL number]

SOURCES AND REFERENCES

• N.Y. UCC Article 9 (N.Y. Cons. Laws UCC Art. 9): https://www.nysenate.gov/legislation/laws/UCC/A9
• NY Department of State UCC filing: https://dos.ny.gov/file-ucc-financing-statement
• NY Department of State UCC FAQ: https://dos.ny.gov/ucc-frequently-asked-questions
• N.Y. General Obligations Law § 5-501 (usury): https://www.nysenate.gov/legislation/laws/GOB/5-501
• N.Y. Banking Law § 14-a: https://www.nysenate.gov/legislation/laws/BNK/14-A
• N.Y. Penal Law § 190.40 (criminal usury)
• N.Y. General Obligations Law § 5-1401, § 5-1402
• N.Y. CPLR Art. 62 (Attachment), Art. 63 (Injunction), Art. 71 (Replevin)
• N.Y. Debtor & Creditor Law Art. 10 (UVTA / Voidable Transactions): https://www.nysenate.gov/legislation/laws/DCD
• Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021) — criminal usury voids loan
• Hooper Assocs. v. AGS Computers, 74 N.Y.2d 487 (1989) — fee-shifting clarity