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Assignment Of Accounts Receivable As Security For Loan
01. Introduction--Description of Assignor's Indebtedness to Assignee. [Name] (Assignor) is indebted to [name] (Assignee) upon a Promissory Note of [date], signed by Assignor, payable to Assignee on [date], in the principal sum of ........ dollars ($.........), with interest at ........ percent (........%) per annum.
02. Introduction--Description of Accounts Receivable Assigned by This Instrument. Assignor owns rights to the payment of money presently due or to become due from third parties in the aggregate sum of ........ dollars ($.........), as detailed on Schedule A attached to this Instrument and made a part of it. The rights are collectively referred to as Accounts Receivable.
03. Assignment of Accounts Receivable. For a valuable consideration, Assignor assigns, transfers, and delivers to Assignee the Accounts Receivable and all amounts due to Assignor by virtue of the Accounts Receivable.
04. Assignment Secures Present and Future Indebtedness. This Assignment secures: (a) the Promissory Note described in Paragraph 1; (b) all loans and advances that Assignee may make to Assignor on or after the date of this Instrument; (c) all other indebtedness of Assignor to Assignee, whether now existing or arising after the date of this Instrument, whether the indebtedness is direct or indirect, primary or secondary, or fixed or contingent and whether it is evidenced by a
note, check, or draft; and (d) all renewals or extensions of the indebtedness described in subparagraphs (a), (b), and (c) of this Paragraph 4. The indebtedness and obligations described in this
Paragraph 4 are collectively referred to as the Secured Indebtedness.
05. Borrower's Covenants and Warranties. Borrower covenants and warrants that:
a. Good Title. Borrower is the owner of the Accounts Receivable detailed in Schedule A and has the right to assign them to Assignee.
b. Amounts of Receivables Are Accurate. The amount of each Account Receivable set out in Schedule A is true and accurate.
c. Amounts of Receivables Are Final. None of the Accounts Receivable relate to or are based upon consigned merchandise nor are any of them subject to an agreement for the purchase of merchandise except
as expressly set out in Schedule A.
d. Accounts Receivable Not Subject to Offsets or Credits. None of the Accounts Receivable are or will become subject to any offsets or credits except by reason of payment in full or in part of the
e. Assignor Not to Impair Value of Accounts Receivable. If Assignor is required to perform any act or discharge any obligation with regard to any Account Receivable prior to its maturity, Assignor will
perform the required act or discharge the required obligation, so that the full amount of the Account Receivable as set out in Schedule A actually becomes payable. Assignee does not assume and has no liability
for the performance of any obligations of Assignor under any transaction, agreement, or contract out of which the Accounts Receivable arise.
06. Segregation of Accounts Receivable and Their Payments by Assignor. Assignee, at Assignee's option, may notify any party who is obligated to pay any of the Accounts Receivable to make payment directly
to Assignee. However, until Assignee gives such notice, Assignor will do the following:
a. Segregate Accounts Receivable. Segregate each of the Accounts Receivable from other accounts owing to Assignor by marking on the record of each Account Receivable, "Assigned to [name]."
Assignor's failure to comply with this covenant will never impair Assignee's rights in the Accounts Receivable.
b. Segregate Payments. Segregate all payments received by Assignor upon the Accounts Receivable from Assignor's other funds and hold them in trust for Assignee, whether the payments are made in cash,
by check, or in some other form. Each payment shall be impressed with Assignee's lien on the Account Receivable to which it relates immediately upon its receipt by Assignor.
c. Deliver Payments to Assignee. Immediately deliver any payment received upon the Accounts Receivable properly indorsed to Assignee so that Assignee can collect and apply the proceeds in
accordance with the terms of this Instrument. Assignor shall have no dominion or control over any payment upon the Accounts Receivable received by Assignor.
07. Authorization to Assignee to Indorse Assignor's Name and Issue Receipts for Payment. Assignee's receipt to any person, firm, or corporation obligated to pay any Account Receivable shall be a full and
complete release, discharge, and acquittance to such person, firm, or corporation to the extent of any amount paid to Assignee. Assignee is authorized and empowered on Assignor's behalf to indorse Assignor's name
upon any check, draft, or other instrument payable to Assignor evidencing payment upon the Accounts Receivables coming into Assignee's possession and to receive and apply the proceeds from them in accordance
with the terms of this Agreement.
08. Assignee's Right of Inspection of Assignor's Books of Account. Assignor will keep proper books of record and account in accordance with sound and generally accepted accounting practice. These
books shall at all times be open to inspection by Assignee. Assignee and such accountants or other agents as Assignee may designate shall have the right to visit and inspect Assignor's properties, assets, and
books, and to discuss Assignor's affairs, finances, and accounts with Assignor's officers at such reasonable times as Assignee may designate, and to make and take away copies of Assignor's records. Assignor
covenants to do all things necessary or appropriate to permit Assignee fully to exercise Assignee's rights under this Paragraph 8.
09. Application of Proceeds of Payments of Accounts Receivable. Upon the maturity of any instrument evidencing the Secured Indebtedness, whether the maturity be by terms of the instrument or through the
exercise of any power of acceleration, Assignee is authorized and empowered to apply any funds realized from the Accounts Receivables not previously credited against the Secured Indebtedness, first, toward the
payment of the costs, charges, and expenses, if any, incurred in the collection of the funds assigned to Assignee and then toward the payment in such order as Assignee shall elect of the Secured Indebtedness. Any
balance remaining will be applied as provided in Paragraph 12.
10. Assignee's Option to Deposit Payments in Special Account. All payments received by Assignor or Assignee upon the Accounts Receivable shall, at Assignee's option, be deposited in a special
account in Assignee's name styled "Collateral Account for [name], Assignor." Funds in that account shall be impressed with a lien to secure the Secured Indebtedness and shall be applied by Assignee in
accordance with the provisions of Paragraph 9.
11. Treatment of Merchandise Returns From Assignor's Accounts. If any of the Accounts Receivable arose out of a sale of merchandise and Purchaser refuses the merchandise or returns the merchandise to Assignor
for any reason, Assignee shall, immediately upon such merchandise coming into Assignor's actual or constructive possession, have a valid and subsisting lien on it to secure the Secured Indebtedness. Assignor
covenants and agrees to execute promptly any other instruments that may be necessary or proper in Assignee's opinion to evidence that lien. However, the right and lien of Assignee upon any balance remaining on
any Account Receivable shall not be invalidated even if Assignee consents to or acquiesces in Assignor's acts if merchandise sold is returned to or recovered by Assignor from the person owing the Account
Receivable, and Assignor thereafter deals with it as Assignor's own property. If merchandise to which an account relates is damaged or destroyed while title is still in Assignor, Assignor assigns to Assignee
as additional security for the Secured Indebtedness all of Assignor's claims against third persons arising out of the damage or destruction, and the claims shall be deemed a part of the Accounts Receivables
included in this Assignment.
12. Termination of Assignment. Upon full payment of the Secured Indebtedness, this Assignment shall terminate, and Assignee shall hold subject to Assignor's order all amounts then remaining from
collections on the Accounts Receivables. However, no person, firm, or corporation obligated to make payment upon the Accounts Receivable shall ever be bound to make inquiry as to the termination of this Assignment,
but shall be fully protected in making payment directly to Assignee.
13. Assignee's Rights Cumulative. Assignee's rights, titles, interests, liens, and securities under this Instrument shall be cumulative of all other securities, rights, titles, interests, or liens
that Assignee may now or at any time hold, securing payment of all or part of the Secured Indebtedness.
14. Collection of Delinquent Accounts by Assignee. If any person, firm, or corporation obligated to pay any of the Accounts Receivable fails or refuses to make payment when due, Assignee is
authorized, in Assignee's discretion, either in Assignee's own name or in Assignor's name, to take any action that Assignee deems appropriate for the collection of any Account Receivable with respect to which a
delinquency exists. Regardless of any other provision of this Instrument, Assignee shall not be liable for Assignee's failure to collect, or for Assignee's failure to exercise diligence in the
collection of, any amounts assigned to Assignee, nor shall Assignee be under any obligation to anyone by virtue of this Assignment except to account for the funds that Assignee shall actually receive.
15. Interest Limitation. Regardless of any provision contained in this Instrument or in any note or notes evidencing the Secured Indebtedness, Assignee shall not be entitled to receive,
collect, or apply as interest on the Secured Indebtedness an amount in excess of ........ percent (........%) per annum. To this end, in the event of acceleration of the maturity of the Secured Indebtedness,
proper credit shall be given to Assignee for unearned interest.
16. Assignment Binding. This Assignment is binding upon Assignor, Assignor's successors and assigns, and shall inure to the benefit of Assignee, Assignee's successors and assigns.
Executed this [date].