What is a 'Security Agreement'

A Security Agreement is a consensual agreement whereby a debtor transfers a security interest in

collateral in exchange for valuable consideration, and is defined as “an agreement that creates or
provides for a security interest” (UCC 9-102(a)(73)). A security interest is an interest in property
that secures payment/performance of an obligation (UCC 1-102(37) and is the UCC-equivalent
of a statutory lien; i.e. a security interest is pre-judicial and non-judicial.

Whereas the Private Agreement lays out the terms of the commercial agreement between the two
parties and is “authenticated”—meaning signed, see UCC 1-102(39)—by each, the Security
Agreement concerns only the debtor’s pledge of property (the collateral) and, accordingly, need
only be authenticated by the debtor (there is nothing preventing the secured party from signing as
well, as is recommended herein).

Following execution of the Security Agreement the creditor is known as the “secured party,”
because he has the benefit of a security interest in the property of the debtor; i.e. he is secured, in
the event the debtor does not make payment/perform as agreed. A secured party is a party in
whose favor a security interest is created/provided for under a Security Agreement (UCC 9-
102(a)(72)).

When the Security Interest is Said to “Attach”

Generally, the security interest “attaches” and becomes enforceable against the collateral the
moment the following three requirements are satisfied:

(1) there is an adequate Security Agreement between the parties describing the collateral;

(2) the secured party (creditor) gives value of some kind; and

(3) the debtor has rights (ownership) in the collateral/power to transfer rights in the collateral
(see UCC 9-203(b)).

There are, however, certain types of property for which attachment of the security interest can
occur only in a certain way, other than filing—meaning that mere description of the collateral in
the Security Agreement is not adequate.

Who are what is the Depository Trust Corporation?

The Depository Trust Company (DTC) is one of the world's largest securities depositories. The
DTC, which was founded in 1973 and is based in New York City, is organized as a limited
purpose trust company and provides safekeeping through electronic recordkeeping of securities

What is a 'Security Agreement'

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balances. It also acts like a clearinghouse to process and settle trades in corporate and municipal
securities. The Birth Certificate allegedly goes from vital statistics, to the department of
commerce, to the treasury department, to the Depository Trust Company, and finally to holding
company called Cede corporation. Cede and Company, also known as "Cede and Co." or "Cede
& Co.", is an organization founded in 1996[1] that was formed for the purpose of efficiently
processing transfers of stock certificates on behalf of Depository Trust Company,[2] the central
securities depositary used by the United States National Market System, which includes the New
York Stock Exchange, Nasdaq, and other exchanges together with associated clearinghouses
such as NSCC, FICC, DTCC, and others. Cede technically owns substantially all of the publicly
issued stock in the United States.[3] Thus, investors do not themselves hold direct property rights
in stock, but rather have contractual rights that are part of a chain of contractual rights involving
Cede.

COMMERCIAL SECURITY AGREEMENT NUMBER (Initials-DOB--SA)

NON-NEGOTIABLE-NON-TRANSFERABLE
FILED FOR RECORD

Parties

DEBTOR, U.S. ADMINISTRATIVE VESSEL HELD IN TRUST IN THE DEPOSITORY

TRUST COMPANY (DTC)
JOHN H. DOE (and all derivatives thereof)
55 WATER STREET NEW YORK, NY 10041

Secured Party, Executor / Administrator John H. Doe, Executor / Administrator

c\o 1234 Main St.
City, State [zip]
(Without Prejudice)

AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”), dated as of this _______ day of

_______________, is made by and between JOHN HENRY DOE, an ENS LEGIS corporate
created entity operating as a TRANSMITTING UTILITY/ADMINISTRATIVE VESSEL
within the jurisdiction of the UNITED STATES and a FRANCHISE of the same herein referred
to as the (the “Debtor”) with an address at 55 WATER STREET NEW YORK, NY 10041 and
John Henry Doe (the “Secured Party”), with an address at c\o 1234 Main St. City, State
[zip] (Without Prejudice).

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Grant of Security Interest. To secure the Obligations, the Debtor, as debtor, hereby assigns
and grants to the Secured Party, as secured party, a continuing lien on and security interest in the
Collateral.

NOW, THEREFORE, it is hereby agreed as follows: In consideration for the Secured Party
agreeing to provide certain Collateral and goods, identified herein below, and certain
accommodations to the Debtor including, but not limited to, allowing the DEBTOR to act as an
agent, utilized for the purpose of transmitting commercial activity for the benefit of the Secured
Party to the extent that context otherwise required, for the purpose of conducting traffic in
commercial activity, as a pipeline for the transmission of goods and chattel property and paper,
and as security for payment of all sums due, or to become due or owing by Debtor to Secured
Party, Debtor hereby grants to Secure Party for valuable consideration a security interest in the
Collateral described herein below and agrees to provide to Secured Party indemnification Bond
also contained herein below. Securing the indebtedness and agrees that the Secured Party shall
have the rights stated in this Agreement with respect to the collateral in addition to all other
rights which Secured Party may have by law.

Definitions:

Agricultural lien" means an interest, other than a security interest, in farm products:

(A) which secures payment or performance of an obligation for:

(i) goods or services furnished in connection with a debtor's farming operation; or

(ii) rent on real property leased by a debtor in connection with its farming operation;

(B) which is created by statute in favor of a person that:

(i) in the ordinary course of its business furnished goods or services to a debtor in connection
with a debtor's farming operation; or

(ii) leased real property to a debtor in connection with the debtor's farming operation; and

(C) whose effectiveness does not depend on the person's possession of the personal property.

Chattel paper : a record that evidences both a monetary obligation and a security interest in
specific goods, a security interest in specific goods and software used in the goods, a security
interest in specific goods and license of software used in the goods, a lease of specific goods, or a
lease of specific goods ...

ENS LEGIS: L Lat. A creature of the law; an artificial being, as contrasted with a natural
person. Applied to corporations, considered as deriving their existence entirely from the law.

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Executor: An individual appointed to administrate the estate of a deceased person.
The executor's main duty is to carry out the instructions and wishes of the deceased.

Franchise: 1. A relationship wherein a business organization, called a franchiser, in exchange

for a fee and with the franchisor's guidance, allows another business, called the franchisee, to
operate under the franchiser's trade name and offer the franchiser's products or services.

2. A right conferred by the government to operate as a legal business entity or provide some
service of a public nature in a certain geographic region.

Payment intangible. A general intangible in which an account debtor's main obligation is

to pay money. Loosely, a non-physical asset that is not easily assessed but manifests itself as an
income stream for a given commercial entity. See UCC § 9-102(a)(61).

Safe keeping: is the act or process of preserving in safety or the state of being preserved in
safety. Safekeeping can arise in bailment, where property is placed in the custody and control of
another, usually by agreement in which the holder (bailee) is responsible for the safekeeping and
return of the property.

Transmitting utility.—The term “transmitting utility” means an entity (including an entity

described in section 824(f) of this title) that owns, operates, or controls facilities used for the
transmission of electric energy— (16 U.S. Code § 796 - Definitions)

(A) in interstate commerce;

(B) for the sale of electric energy at wholesale.

Transmitting utility" (UCC 9-102 (81)) means a person primarily engaged in the business of:

(A) operating a railroad, subway, street railway, or trolley bus;

(B) transmitting communications electrically, electromagnetically, or by light;

(C) transmitting goods by pipeline or sewer; or

(D) transmitting or producing and transmitting electricity, steam, gas, or water.

Valuable consideration: A benefit conferred or a detriment incurred by a party in exchange for

another's promise. Valuable consideration may be non-monetary as long as it is of some value to
one or both parties. Also called good and valuable consideration and legal consideration.

28 USC 3002(15)“United States” means—

(A) a Federal corporation;

(B) an agency, department, commission, board, or other entity of the United States; or
(C) an instrumentality of the United States.

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UCC 9-102(h) Location of Debtor

(h) [Location of United States.]

The United States is located in the District of Columbia.

Without Prejudice: refers to the privilege that attaches to written or verbal statements made by
a party to a dispute in a genuine attempt to settle that dispute. This means that the statements will
generally not be admissible in Court as evidence against the person who made the statement.

Without Recourse: a formula used to disclaim responsibility for future nonpayment, especially
of a negotiable financial instrument. Without recourse is a phrase that has several meanings. In a
general sense, without recourse pertains to when the buyer of a promissory note or other
negotiable instrument assumes the risk of default. Without recourse can also refer to a financing
arrangement where the dealer's maximum possible liability is limited to warranties pertaining to
the quality of an installment contract.

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