Xxxxxxxx, After Acquired Property and Future Advances Sample Clauses

Xxxxxxxx, After Acquired Property and Future Advances. When a secured creditor takes a security interest in collateral, the secured creditor, by extension, takes a derivative interest in the collateral flowing from the original collateral. See, UCC §9-315(a)(2). Proceeds (anything that can be traced to the original collateral) include: (a) whatever is acquired upon the sale, lease, license, exchange or other disposition of collateral, (b) whatever is collected on or distributed on account of the collateral, (c) any rights arising out of the collateral, to the extent of the value of the collateral, (d) claims arising out of the loss, nonconformity or interference with the use of, defects or infringement of rights in, or damage to, the collateral, or to the extent of the value of the collateral and to the extent payable to the debtor or the secured party, (e) insurance payables by reason of the loss or nonconformity of, defects or (f) infringement of rights in, or damage to the collateral.16 Cash proceeds include money, checks and Deposit Accounts. Non-cash proceeds include everything else generated by the sale of the collateral, such as accounts, Chattel Paper, instruments, goods, 16 See, UCC §9-102(a)(64). documents, and general intangibles.17 Importantly, a practitioner is well advised to include a proceeds provision in the Security Agreement and ultimately in any Financing Statement. A Security Agreement and any Accessions (goods that are physically united with other goods in such a manner that the identity of the original goods is not lost, e.g. a tractor and its engine can be Accessions of one another, see infra part C herein) may also create rights in a secured creditor of after-acquired property pursuant to UCC §9-204 with only two minor exceptions: consumer goods acquired by the consumer more than ten (10) days after the secured party gives value, except that the clause does apply to Accessions and after acquired commercial tort claims. 18 An after acquired property clause in a Security Agreement, pursuant to UCC §9-204 creates an additional security interest for the secured creditor. “A security interest in after acquired property is not merely an ‘equitable’ interest; no further action by the secured party, such as a supplemental agreement covering the new collateral is required.”19 Also important is that a Security Agreement may provide that collateral secures future advances. Future advances cover later 17 See, UCC §9-315. 18 See, UCC §9-102.