HOUSE BILL No. 5228 January 19, 2000, Introduced by Rep. Richner and referred to the Committee on Family and Civil Law. A bill to amend 1962 PA 174, entitled "Uniform commercial code," by amending sections 1105, 1201, 2103, 2210, 2326, 2502, 2716, 2A103, 2A303, 2A307, 2A309, 4210, 7503, 8103, 8106, 8110, 8301, 8302, 8510, 9102, 9103, 9104, 9105, 9106, 9107, 9108, 9109, 9110, 9201, 9202, 9203, 9204, 9205, 9206, 9207, 9208, 9301, 9302, 9303, 9304, 9305, 9306, 9307, 9308, 9309, 9310, 9311, 9312, 9313, 9314, 9315, 9316, 9317, 9318, 9401, 9402, 9403, 9404, 9405, 9406, 9407, 9408, 9409, 9501, 9502, 9503, 9504, 9505, 9506, and 9507 (MCL 440.1105, 440.1201, 440.2103, 440.2210, 440.2326, 440.2502, 440.2716, 440.2803, 440.2903, 440.2907, 440.2909, 440.4210, 440.7503, 440.8103, 440.8106, 440.8110, 440.8301, 440.8302, 440.8510, 440.9102, 440.9103, 440.9104, 440.9105, 440.9106, 440.9107, 440.9108, 440.9109, 440.9110, 440.9201, 440.9202, 440.9203, 440.9204, 440.9205, 440.9206, 440.9207, 440.9208, 02120'99 DAM 2 440.9301, 440.9302, 440.9303, 440.9304, 440.9305, 440.9306, 440.9307, 440.9308, 440.9309, 440.9310, 440.9311, 440.9312, 440.9313, 440.9314, 440.9315, 440.9316, 440.9317, 440.9318, 440.9401, 440.9402, 440.9403, 440.9404, 440.9405, 440.9406, 440.9407, 440.9408, 440.9409, 440.9501, 440.9502, 440.9503, 440.9504, 440.9505, 440.9506, and 440.9507), sections 1105, 9203, and 9402 as amended by 1998 PA 489, section 1201 as amended and sections 2A103, 2A303, 2A307, and 2A309 as added by 1992 PA 101, section 2326 as amended by 1982 PA 397, section 4210 as amended by 1993 PA 130, sections 8103, 8106, 8301, 8302, 9301, 9302, 9303, 9306, 9309, and 9312 as amended and sections 8110 and 8510 as added by 1998 PA 278, sections 9103, 9104, 9105, 9106, 9304, and 9305 as amended by 1998 PA 488, section 9307 as amended by 1985 PA 199, section 9313 as amended by 1980 PA 53, section 9401 as amended by 1990 PA 288, sections 9403 and 9404 as amended by 1992 PA 186, sections 9405 and 9407 as amended by 1988 PA 130, and section 9406 as amended by 1989 PA 216, and by adding sec- tions 5118, 9103a, 9209, 9210, 9319, 9320, 9321, 9322, 9323, 9324, 9324a, 9325, 9326, 9327, 9328, 9329, 9330, 9331, 9332, 9333, 9334, 9335, 9336, 9337, 9338, 9339, 9340, 9341, 9342, 9508, 9509, 9510, 9511, 9512, 9513, 9514, 9515, 9516, 9517, 9518, 9519, 9520, 9521, 9522, 9523, 9524, 9525, 9526, 9527, 9601, 9602, 9603, 9604, 9605, 9606, 9607, 9608, 9609, 9610, 9611, 9612, 9613, 9614, 9615, 9616, 9617, 9618, 9619, 9620, 9621, 9622, 9623, 9624, 9625, 9626, 9627, 9628, 9701, 9702, 9703, 9704, 9705, 9706, 9707, and 9708; and to repeal acts and parts of acts. 02120'99 3 THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1105. (1) Except as provided in this section, if a 2 transaction bears a reasonable relation to this state and also to 3 another state or nation the parties may agree that the law either 4 of this state or of the other state or nation shall govern their 5 rights and duties. Failing agreement this act applies to trans- 6 actions bearing an appropriate relation to this state. 7 (2) If 1 of the following provisions of this act specifies 8 the applicable law, that provision governs and a contrary agree- 9 ment is effective only to the extent permitted by the law 10 (including the conflict of laws rules) specified: 11 Rights of creditors against sold 12 goods. Section 2402. 13 APPLICABILITY OF THE ARTICLE ON 14 LEASES. SECTIONS 2A105 AND 2A106. 15 Applicability of the article on 16 bank deposits and collections. Section 4102. 17 Governing law in the article on 18 funds transfers. Section4A5024A507. 19 Letters of credit. Section51565116. 20 Applicability of the article on 21 investment securities. Section 8110. 22Applicability of the article on23leases. Sections 2A105 and 2A106.24Perfection provisions of the25article on secured transactions. Section 9103.02120'99 4 1 LAW GOVERNING PERFECTION, THE 2 EFFECT OF PERFECTION OR NONPER- 3 FECTION, AND THE PRIORITY OF 4 SECURITY INTERESTS AND AGRICUL- 5 TURAL LIENS. SECTIONS 9301 THROUGH 6 9307. 7 Sec. 1201. Subject to additional definitions contained in 8 the subsequent articles of this act which are applicable to spe- 9 cific articles or parts of this act, and unless the context oth- 10 erwise requires, in this act: 11 (1) "Action" in the sense of a judicial proceeding includes 12 recoupment, counterclaim, setoff, suit in equity, and any other 13 proceedings in which rights are determined. 14 (2) "Aggrieved party" means a party entitled to resort to a 15 remedy. 16 (3) "Agreement" means the bargain of the parties in fact as 17 found in their language or by implication from other circum- 18 stances including course of dealing or usage of trade or course 19 of performance as provided in this act (sections 1205 and 2208). 20 Whether an agreement has legal consequences is determined by the 21 provisions of this act, if applicable; otherwise by the law of 22 contracts (section 1103). (Compare "Contract".) 23 (4) "Bank" means any person engaged in the business of 24 banking. 25 (5) "Bearer" means the person in possession of an instru- 26 ment, document of title, or certificated security payable to 27 bearer or indorsed in blank. 02120'99 5 1 (6) "Bill of lading" means a document evidencing the receipt 2 of goods for shipment issued by a person engaged in the business 3 of transporting or forwarding goods, and includes an airbill. 4 "Airbill" means a document serving for air transportation as a 5 bill of lading does for marine or rail transportation, and 6 includes an air consignment note or air waybill. 7 (7) "Branch" includes a separately incorporated foreign 8 branch of a bank. 9 (8) "Burden of establishing a fact" means the burden of per- 10 suading the triers of fact that the existence of the fact is more 11 probable than its nonexistence. 12 (9) "Buyer in ordinary course of business" means a person 13who in good faith and without knowledge that the sale to him or14her is in violation of the ownership rights or security interest15of a third party in the goods buys in ordinary course from a16person in the business of selling goods of that kind but does not17include a pawnbroker. All persons who sell minerals or the like,18including oil and gas, at wellhead or minehead shall be deemed to19be persons in the business of selling goods of that kind.20"Buying" may be for cash or by exchange of other property or on21secured or unsecured credit and includes receiving goods or docu-22ments of title under a preexisting contract for sale but does not23include a transfer in bulk or as security for or in total or par-24tial satisfaction of a money debt.THAT BUYS GOODS IN GOOD 25 FAITH, WITHOUT KNOWLEDGE THAT THE SALE VIOLATES THE RIGHTS OF 26 ANOTHER PERSON IN THE GOOD, AND IN THE ORDINARY COURSE FROM A 27 PERSON, OTHER THAN A PAWNBROKER, IN THE BUSINESS OF SELLING GOODS 02120'99 6 1 OF THAT KIND. A PERSON BUYS GOODS IN THE ORDINARY COURSE IF THE 2 SALE TO THE PERSON COMPORTS WITH THE USUAL OR CUSTOMARY PRACTICES 3 IN THE KIND OF BUSINESS IN WHICH THE SELLER IS ENGAGED OR WITH 4 THE SELLER'S OWN USUAL OR CUSTOMARY PRACTICES. A PERSON THAT 5 SELLS OIL, GAS, OR OTHER MINERALS AT THE WELLHEAD OR MINEHEAD IS 6 A PERSON IN THE BUSINESS OF SELLING GOODS OF THAT KIND. A BUYER 7 IN ORDINARY COURSE OF BUSINESS MAY BUY FOR CASH, BY EXCHANGE OF 8 OTHER PROPERTY, OR ON SECURED OR UNSECURED CREDIT, AND MAY 9 ACQUIRE GOODS OR DOCUMENTS OF TITLE UNDER A PREEXISTING CONTRACT 10 FOR SALE. ONLY A BUYER THAT TAKES POSSESSION OF THE GOODS OR HAS 11 A RIGHT TO RECOVER THE GOODS FROM THE SELLER UNDER ARTICLE 2 MAY 12 BE A BUYER IN ORDINARY COURSE OF BUSINESS. A PERSON THAT 13 ACQUIRES GOODS IN A TRANSFER IN BULK OR AS SECURITY FOR OR IN 14 TOTAL OR PARTIAL SATISFACTION OF A MONEY DEBT IS NOT A BUYER IN 15 ORDINARY COURSE OF BUSINESS. 16 (10) "Conspicuous": A term or clause is conspicuous when it 17 is so written that a reasonable person against whom it is to 18 operate ought to have noticed it. A printed heading in capitals 19 (as: non-negotiable bill of lading) is conspicuous. Language in 20 the body of a form is "conspicuous" if it is in larger or other 21 contrasting type or color. But in a telegram any stated term is 22 "conspicuous". Whether a term or clause is "conspicuous" or not 23 is for decision by the court. 24 (11) "Contract" means the total legal obligation which 25 results from the parties' agreement as affected by this act and 26 any other applicable rules of law. (Compare "Agreement".) 02120'99 7 1 (12) "Creditor" includes a general creditor, a secured 2 creditor, a lien creditor and any representative of creditors, 3 including an assignee for the benefit of creditors, a trustee in 4 bankruptcy, a receiver in equity, and an executor or administra- 5 tor of an insolvent debtor's or assignor's estate. 6 (13) "Defendant" includes a person in the position of 7 defendant in a cross action or counterclaim. 8 (14) "Delivery" with respect to instruments, documents of 9 title, chattel paper, or certificated securities means voluntary 10 transfer of possession. 11 (15) "Document of title" includes bill of lading, dock war- 12 rant, dock receipt, warehouse receipt, or order for the delivery 13 of goods, and also any other document which in the regular course 14 of business or financing is treated as adequately evidencing that 15 the person in possession of it is entitled to receive, hold, and 16 dispose of the document and the goods it covers. To be a docu- 17 ment of title a document must purport to be issued by or 18 addressed to a bailee and purport to cover goods in the bailee's 19 possession which are either identified or are fungible portions 20 of an identified mass. 21 (16) "Fault" means wrongful act, omission, or breach. 22 (17) "Fungible" with respect to goods or securities means 23 goods or securities of which any unit is, by nature or usage of 24 trade, the equivalent of any other like unit. Goods which are 25 not fungible shall be deemed fungible for the purposes of this 26 act to the extent that under a particular agreement or document 27 unlike units are treated as equivalents. 02120'99 8 1 (18) "Genuine" means free of forgery or counterfeiting. 2 (19) "Good faith" means honesty in fact in the conduct or 3 transaction concerned. 4 (20) "Holder", with respect to a negotiable instrument, 5 means the person in possession if the instrument is payable to 6 bearer or, in the case of an instrument payable to an identified 7 person, if the identified person is in possession. Holder, with 8 respect to a document of title, means the person in possession if 9 the goods are deliverable to bearer or to the order of the person 10 in possession. 11 (21) To "honor" is to pay or to accept and pay, or where a 12 credit so engages to purchase or discount a draft complying with 13 the terms of the credit. 14 (22) "Insolvency proceedings" includes any assignment for 15 the benefit of creditors or other proceedings intended to liqui- 16 date or rehabilitate the estate of the person involved. 17 (23) A person is "insolvent" who either has ceased to pay 18 his or her debts in the ordinary course of business or cannot pay 19 his or her debts as they become due or is insolvent within the 20 meaning of the federal bankruptcy law. 21 (24) "Money" means a medium of exchange authorized or 22 adopted by a domestic or foreign government and includes a mone- 23 tary unit of account established by an intergovernmental organi- 24 zation or by agreement between 2 or more nations. 25 (25) A person has "notice" of a fact when: (a) HeHE or 26 she has actual knowledge of it;or (b) HeHE or she has 27 received a notice or notification of it; or(c) FromFROM all 02120'99 9 1 the facts and circumstances known to him or her at the time in 2 question he or she has reason to know that it exists. A person 3 "knows" or has "knowledge" of a fact when he or she has actual 4 knowledge of it. "Discover" or "learn" or a word or phrase of 5 similar import refers to knowledge rather than to reason to 6 know. The time and circumstances under which a notice or notifi- 7 cation may cease to be effective are not determined by this act. 8 (26) A person "notifies" or "gives" a notice or notification 9 to another by taking such steps as may be reasonably required to 10 inform the other in ordinary course whether or not such other 11 actually comes to know of it. A person "receives" a notice or 12 notification when 1 OF THE FOLLOWING OCCURS: 13 (a) It comes to his or her attention.; or14 (b) It is duly delivered at the place of business through 15 which the contract was made or at any other place held out by him 16 or her as the place for receipt of such communications. 17 (27) Notice, knowledge, or a notice or notification received 18 by an organization is effective for a particular transaction from 19 the time when it is brought to the attention of the individual 20 conducting that transaction, and in any event from the time when 21 it would have been brought to the individual's attention if the 22 organization had exercised due diligence. An organization exer- 23 cises due diligence if it maintains reasonable routines for com- 24 municating significant information to the person conducting the 25 transaction and there is reasonable compliance with the 26 routines. Due diligence does not require an individual acting 27 for the organization to communicate information unless such 02120'99 10 1 communication is part of his or her regular duties or unless he 2 or she has reason to know of the transaction and that the trans- 3 action would be materially affected by the information. 4 (28) "Organization" includes a corporation, government, or 5 governmental subdivision or agency, business trust, estate, 6 trust, partnership or association, 2 or more persons having a 7 joint or common interest, or any other legal or commercial 8 entity. 9 (29) "Party", as distinct from "third party", means a person 10 who has engaged in a transaction or made an agreement within this 11 act. 12 (30) "Person" includes an individual or an organization (see 13 section 1102). 14 (31) "Presumption" or "presumed" means that the trier of 15 fact must find the existence of the fact presumed unless and 16 until evidence is introduced which would support a finding of its 17 nonexistence. 18 (32) "Purchase" includes taking by sale, discount, negotia- 19 tion, mortgage, pledge, lien, SECURITY INTEREST, issue or reis- 20 sue, gift, or any other voluntary transaction creating an inter- 21 est in property. 22 (33) "Purchaser" means a person who takes by purchase. 23 (34) "Remedy" means any remedial right to which an aggrieved 24 party is entitled with or without resort to a tribunal. 25 (35) "Representative" includes an agent, an officer of a 26 corporation or association, and a trustee, executor, or 02120'99 11 1 administrator of an estate, or any other person empowered to act 2 for another. 3 (36) "Rights" includes remedies. 4 (37) "Security interest" means an interest in personal prop- 5 erty or fixtures which secures payment or performance of an 6 obligation.The retention or reservation of title by a seller7of goods notwithstanding shipment or delivery to the buyer8(section 2401) is limited in effect to a reservation of a9"security interest".The term also includes any interest of a 10 CONSIGNOR AND A buyer ofaccounts orAN ACCOUNT, chattel paper, 11whichA PAYMENT INTANGIBLE, OR A PROMISSORY NOTE IN A TRANSAC- 12 TION THAT is subject to article 9. The special property interest 13 of a buyer of goods on identification of those goods to a con- 14 tract for sale under section 2401 is not a "security interest", 15 but a buyer may also acquire a "security interest" by complying 16 with article 9.Unless a consignment is intended as security,17reservation of title thereunder is not a "security interest", but18a consignment in any event is subject to the provisions on con-19signment sales (section 2326).EXCEPT AS OTHERWISE PROVIDED IN 20 SECTION 2505, THE RIGHT OF A SELLER OR LESSOR OF GOODS UNDER 21 ARTICLE 2 OR 2A TO RETAIN OR ACQUIRE POSSESSION OF THE GOODS IS 22 NOT A "SECURITY INTEREST", BUT A SELLER OR LESSOR MAY ALSO 23 ACQUIRE A "SECURITY INTEREST" BY COMPLYING WITH ARTICLE 9. THE 24 RETENTION OR RESERVATION OF TITLE BY A SELLER OF GOODS NOTWITH- 25 STANDING SHIPMENT OR DELIVERY TO THE BUYER (SECTION 2401) IS 26 LIMITED IN EFFECT TO A RESERVATION OF A "SECURITY INTEREST". 27 Whether a transaction creates a lease or security interest is 02120'99 12 1 determined by the facts of each case; however, a transaction 2 creates a security interest if the consideration the lessee is to 3 pay the lessor for the right to possession and use of the goods 4 is an obligation for the term of the lease not subject to termi- 5 nation by the lessee, and any of the following: 6 (a) The original term of the lease is equal to or greater 7 than the remaining economic life of the goods. 8 (b) The lessee is bound to renew the lease for the remaining 9 economic life of the goods or is bound to become the owner of the 10 goods. 11 (c) The lessee has an option to renew the lease for the 12 remaining economic life of the goods for no additional considera- 13 tion or nominal additional consideration upon compliance with the 14 lease agreement. 15 (d) The lessee has an option to become the owner of the 16 goods for no additional consideration or nominal additional con- 17 sideration upon compliance with the lease agreement. 18 A transaction does not create a security interest merely 19 because it provides any of the following: 20 (a) The present value of the consideration the lessee is 21 obligated to pay the lessor for the right to possession and use 22 of the goods is substantially equal to or is greater than the 23 fair market value of the goods at the time the lease is entered 24 into. 25 (b) The lessee assumes risk of loss of the goods, or agrees 26 to pay taxes, insurance, filing, recording, or registration fees, 27 or service or maintenance costs with respect to the goods. 02120'99 13 1 (c) The lessee has an option to renew the lease or to become 2 the owner of the goods. 3 (d) The lessee has an option to renew the lease for a fixed 4 rent that is equal to or greater than the reasonably predictable 5 fair market rent for the use of the goods for the term of the 6 renewal at the time the option is to be performed. 7 (e) The lessee has an option to become the owner of the 8 goods for a fixed price that is equal to or greater than the rea- 9 sonably predictable fair market value of the goods at the time 10 the option is to be performed. 11 As used in this subsection: 12 (a) Additional consideration is not nominal if when the 13 option to renew the lease is granted to the lessee the rent is 14 stated to be the fair market rent for the use of the goods for 15 the term of the renewal determined at the time the option is to 16 be performed, or when the option to become the owner of the goods 17 is granted to the lessee, the price is stated to be the fair 18 market value of the goods determined at the time the option is to 19 be performed. Additional consideration is nominal if it is less 20 than the lessee's reasonably predictable cost of performing under 21 the lease agreement if the option is not exercised. 22 (b) "Present value" means the amount as of a date certain of 23 1 or more sums payable in the future, discounted to the date 24 certain. The discount is determined by the interest rate speci- 25 fied by the parties if the rate is not manifestly unreasonable at 26 the time the transaction is entered into; otherwise, the discount 27 is determined by a commercially reasonable rate that takes into 02120'99 14 1 account the facts and circumstances of each case at the time the 2 transaction was entered into. 3 (c) "Reasonably predictable" and "remaining economic life of 4 the goods" are to be determined with reference to the facts and 5 circumstances at the time the transaction is entered into. 6 (38) "Send" in connection with any writing or notice means 7 to deposit in the mail or deliver for transmission by any other 8 usual means of communication with postage or cost of transmission 9 provided for and properly addressed and in the case of an instru- 10 ment to an address specified thereon or otherwise agreed, or if 11 there be none to any address reasonable under the circumstances. 12 The receipt of any writing or notice within the time at which it 13 would have arrived, if properly sent, has the effect of a proper 14 sending. 15 (39) "Signed" includes any symbol executed or adopted by a 16 party with present intention to authenticate a writing, including 17 a carbon copy of his or her signature. 18 (40) "Surety" includes guarantor. 19 (41) "Telegram" includes a message transmitted by radio, 20 teletype, cable, any mechanical method of transmission, or the 21 like. 22 (42) "Term" means that portion of an agreement which relates 23 to a particular matter. 24 (43) "Unauthorized" signature means one made without actual, 25 implied or apparent authority and includes a forgery. 26 (44) "Value". Except as otherwise provided with respect to 27 negotiable instruments and bank collections (sections 3303, 4208, 02120'99 15 1 and 4209) a person gives "value" for rights if the person 2 acquires them: 3 (a) In return for a binding commitment to extend credit or 4 for the extension of immediately available credit whether or not 5 drawn upon and whether or not a charge-back is provided for in 6 the event of difficulties in collection; or 7 (b) As security for or in total or partial satisfaction of a 8 preexisting claim; or 9 (c) By accepting delivery pursuant to a preexisting contract 10 for purchase; or 11 (d) Generally, in return for any consideration sufficient to 12 support a simple contract. 13 (45) "Warehouse receipt" means a receipt issued by a person 14 engaged in the business of storing goods for hire. 15 (46) "Written" or "writing" includes printing, typewriting, 16 or any other intentional reduction to tangible form. 17 Sec. 2103. (1) In this article unless the context otherwise 18 requires: 19 (a) "Buyer" means a person who buys or contracts to buy 20 goods. 21 (b) "Good faith" in the case of a merchant means honesty in 22 fact and the observance of reasonable commercial standards of 23 fair dealing in the trade. 24 (c) "Receipt" of goods means taking physical possession of 25 them. 26 (d) "Seller" means a person who sells or contracts to sell 27 goods. 02120'99 16 1 (2) Other definitions applying to this article or to 2 specified parts thereof, and the sections in which they appear 3 are: 4 5 "Acceptance". Section 2606. 6 "Banker's credit". Section 2325. 7 "Between merchants". Section 2104. 8 "Cancellation". Section 2106(4). 9 "Commercial unit". Section 2105. 10 "Confirmed credit". Section 2325. 11 "Conforming to contract". Section 2106. 12 "Contract for sale". Section 2106. 13 "Cover". Section 2712. 14 "Entrusting". Section 2403. 15 "Financing agency". Section 2104. 16 "Future goods". Section 2105. 17 "Goods". Section 2105. 18 "Identification". Section 2501. 19 "Installment contract". Section 2612. 20 "Letter of credit". Section 2325. 21 "Lot". Section 2105. 22 "Merchant". Section 2104. 23 "Overseas". Section 2323. 24 "Person in position of seller". Section 2707. 25 "Present sale". Section 2106. 26 "Sale". Section 2106. 02120'99 17 1 "Sale on approval". Section 2326. 2 "Sale or return". Section 2326. 3 "Termination". Section 2106. 4 (3) The following definitions in other articles apply to 5 this article: 6 7 "Check". Section 3104. 8 "Consignee". Section 7102. 9 "Consignor". Section 7102. 10 "Consumer goods". Section910911 9102. 12 "Dishonor". Section350713 3502. 14 "Draft". Section 3104. 15 (4) In addition article 1 contains general definitions and 16 principles of construction and interpretation applicable through- 17 out this article. 18 Sec. 2210. (1) A party may performhisTHAT PARTY'S duty 19 through a delegate unless otherwise agreed or unless the other 20 party has a substantial interest in havinghisTHAT OTHER 21 PARTY'S original promisor perform or control the acts required by 22 the contract. No delegation of performance relieves the party 23 delegating of any duty to perform or any liability for breach. 24 (2) Unless otherwise agreed all rights of either seller or 25 buyer can be assigned except where the assignment would materi- 26 ally change the duty of the other party, or increase materially 27 the burden or risk imposed onhimTHE OTHER PARTY byhisTHAT 02120'99 18 1 OTHER PARTY'S contract, or impair materiallyhisTHE OTHER 2 PARTY'S chance of obtaining return performance. A right to dam- 3 ages for breach of the whole contract or a right arising out of 4 the assignor's due performance of his OR HER entire obligation 5 can be assigned despite agreement otherwise. 6 (3) THE CREATION, ATTACHMENT, PERFECTION, OR ENFORCEMENT OF 7 A SECURITY INTEREST IN THE SELLER'S INTEREST UNDER A CONTRACT IS 8 NOT A TRANSFER THAT MATERIALLY CHANGES THE DUTY OF OR INCREASES 9 MATERIALLY THE BURDEN OR RISK IMPOSED ON THE BUYER OR IMPAIRS 10 MATERIALLY THE BUYER'S CHANCE OF OBTAINING RETURN PERFORMANCE 11 WITHIN THE PURVIEW OF SUBSECTION (2) UNLESS, AND THEN ONLY TO THE 12 EXTENT THAT, ENFORCEMENT ACTUALLY RESULTS IN A DELEGATION OF 13 MATERIAL PERFORMANCE OF THE SELLER. EVEN IN THAT EVENT, THE CRE- 14 ATION, ATTACHMENT, PERFECTION, AND ENFORCEMENT OF THE SECURITY 15 INTEREST REMAIN EFFECTIVE, BUT (i) THE SELLER IS LIABLE TO THE 16 BUYER FOR DAMAGES CAUSED BY THE DELEGATION TO THE EXTENT THAT THE 17 DAMAGES COULD NOT REASONABLY BE PREVENTED BY THE BUYER, AND (ii) 18 A COURT HAVING JURISDICTION MAY GRANT OTHER APPROPRIATE RELIEF, 19 INCLUDING CANCELLATION OF THE CONTRACT FOR SALE OR AN INJUNCTION 20 AGAINST ENFORCEMENT OF THE SECURITY INTEREST OR CONSUMMATION OF 21 THE ENFORCEMENT. 22 (4)(3)Unless the circumstances indicate the contrary a 23 prohibition of assignment of "the contract" is to be construed as 24 barring only the delegation to the assignee of the assignor's 25 performance. 26 (5)(4)An assignment of "the contract" or of "all my 27 rights under the contract" or an assignment in similar general 02120'99 19 1 terms is an assignment of rights and unless the language or the 2 circumstances (as in an assignment for security) indicate the 3 contrary, it is a delegation of performance of the duties of the 4 assignor and its acceptance by the assignee constitutes a promise 5 byhimTHE ASSIGNEE to perform those duties. This promise is 6 enforceable by either the assignor or the other party to the 7 original contract. 8 (6)(5)The other party may treat any assignment which 9 delegates performance as creating reasonable grounds for insecur- 10 ity and may without prejudice tohisTHAT OTHER PARTY'S rights 11 against the assignor demand assurances from the assignee (section 12 2609). 13 Sec. 2326. (1) Unless otherwise agreed, if delivered goods 14 may be returned by the buyer even though they conform to the con- 15 tract, the transaction is 16 (a) A "sale on approval" if the goods are delivered primar- 17 ily for use, and 18 (b) A "sale or return" if the goods are delivered primarily 19 for resale. 20 (2)Except as provided in subsection (3), goodsGOODS held 21 on approval are not subject to the claims of the buyer's credi- 22 tors until acceptance; goods held on sale or return are subject 23 to such claims while in the buyer's possession. 24(3) Where goods are delivered to a person for sale and such25person maintains a place of business at which he deals in goods26of the kind involved, under a name other than the name of the27person making delivery, then with respect to claims of creditors02120'99 20 1of the person conducting the business the goods are deemed to be2on sale or return. The provisions of this subsection are appli-3cable even though an agreement purports to reserve title to the4person making delivery until payment or resale or uses such words5as "on consignment" or "on memorandum". However, this subsection6is not applicable if the person making delivery7(a) Complies with an applicable law providing for a8consignor's interest or the like to be evidenced by a sign; or9(b) Establishes that the person conducting the business is10generally known by his creditors to be substantially engaged in11selling the goods of others; or12(c) Complies with the filing provisions of the article on13secured transactions (article 9).14 (3)(4)Any "or return" term of a contract for sale is to 15 be treated as a separate contract for sale within the statute of 16 frauds section of this article (section 2201) and as contradict- 17 ing the sale aspect of the contract within the provisions of this 18 article on parol or extrinsic evidence (section 2202). 19 (4)(5)Whenever a person delivers or causes to be deliv- 20 ered a work of fine art to an art dealer for the purpose of sale, 21 or exhibition and sale, to the public on a commission, the work 22 of fine art is not subject to the claims of the art dealer's 23 creditors. For the purposes of this subsection, the terms "art 24 dealer", "commission", and "fine art" have the meanings ascribed 25 to them in section 1 ofAct No. 90 of the Public Acts of 1979,26being section 442.311 of the Michigan Compiled Laws1979 PA 90, 27 MCL 442.311. 02120'99 21 1 Sec. 2502. (1) Subject tosubsectionSUBSECTIONS (2) AND 2 (3) and even though the goods have not been shipped a buyer who 3 has paid a part or all of the price of goods in which he OR SHE 4 has a special property under the provisions of the immediately 5 preceding section may on making and keeping good a tender of any 6 unpaid portion of their price recover them from the seller if 7the seller becomes insolvent within 10 days after receipt of the8first installment on their price.1 OF THE FOLLOWING OCCURS: 9 (A) IN THE CASE OF GOODS BOUGHT FOR PERSONAL, FAMILY, OR 10 HOUSEHOLD PURPOSES, THE SELLER REPUDIATES OR FAILS TO DELIVER AS 11 REQUIRED BY THE CONTRACT. 12 (B) IN ALL CASES, THE SELLER BECOMES INSOLVENT WITHIN 10 13 DAYS AFTER RECEIPT OF THE FIRST INSTALLMENT ON THEIR PRICE. 14 (2) THE BUYER'S RIGHT TO RECOVER THE GOODS UNDER SUBSECTION 15 (1)(A) VESTS UPON ACQUISITION OF A SPECIAL PROPERTY, EVEN IF THE 16 SELLER HAD NOT THEN REPUDIATED OR FAILED TO DELIVER. 17 (3)(2)If the identification creating his OR HER special 18 property has been made by the buyer he OR SHE acquires the right 19 to recover the goods only if they conform to the contract for 20 sale. 21 Sec. 2716. (1) Specific performance may be decreed where 22 the goods are unique or in other proper circumstances. 23 (2) The decree for specific performance may include such 24 terms and conditions as to payment of the price, damages, or 25 other relief as the court may deem just. 26 (3) The buyer has a right of replevin or recovery in a claim 27 and delivery proceeding for goods identified to the contract if 02120'99 22 1 after reasonable effort he OR SHE is unable to effect cover for 2 such goods or the circumstances reasonably indicate that such 3 effort will be unavailing or if the goods have been shipped under 4 reservation and satisfaction of the security interest in them has 5 been made or tendered. IN THE CASE OF GOODS BOUGHT FOR PERSONAL, 6 FAMILY, OR HOUSEHOLD PURPOSES, THE BUYER'S RIGHT OF REPLEVIN 7 VESTS UPON ACQUISITION OF A SPECIAL PROPERTY, EVEN IF THE SELLER 8 HAD NOT THEN REPUDIATED OR FAILED TO DELIVER. 9 Sec. 2A103. (1) In this article unless the context other- 10 wise requires: 11 (a) "Buyer in ordinary course of business" means a person 12 who in good faith and without knowledge that the sale to him or 13 her is in violation of the ownership rights or security interest 14 or leasehold interest of a third party in the goods buys in ordi- 15 nary course from a person in the business of selling goods of 16 that kind but does not include a pawnbroker. "Buying" may be for 17 cash or by exchange of other property or on secured or unsecured 18 credit and includes receiving goods or documents of title under a 19 pre-existing contract for sale but does not include a transfer in 20 bulk or as security for or in total or partial satisfaction of a 21 money debt. 22 (b) "Cancellation" occurs when either party puts an end to 23 the lease contract for default by the other party. 24 (c) "Commercial unit" means such a unit of goods as by com- 25 mercial usage is a single whole for purposes of lease and divi- 26 sion of which materially impairs its character or value on the 27 market or in use. A commercial unit may be a single article, as 02120'99 23 1 a machine, or a set of articles, as a suite of furniture or a 2 line of machinery, or a quantity, as a gross or carload, or any 3 other unit treated in use or in the relevant market as a single 4 whole. 5 (d) "Conforming" means goods or performance under a lease 6 contract that are in accordance with the obligations under the 7 lease contract. 8 (e) "Consumer lease" means a lease that a lessor regularly 9 engaged in the business of leasing or selling makes to a lessee 10 who is an individual and who takes under the lease primarily for 11 a personal, family, or household purpose, if the total payments 12 to be made under the lease contract, excluding payments for 13 options to renew or buy, do not exceed $25,000.00. 14 (f) "Fault" means wrongful act, omission, breach, or 15 default. 16 (g) "Finance lease" means a lease with respect to which all 17 of the following apply: 18 (i) The lessor does not select, manufacture, or supply the 19 goods. 20 (ii) The lessor acquires the goods or the right to posses- 21 sion and use of the goods in connection with the lease. 22 (iii) One of the following occurs: 23 (A) The lessee receives a copy of the contract by which the 24 lessor acquired the goods or the right to possession and use of 25 the goods before signing the lease contract. 02120'99 24 1 (B) The lessee's approval of the contract by which the 2 lessor acquired the goods or the right to possession and use of 3 the goods is a condition to effectiveness of the lease contract. 4 (C) The lessee, before signing the lease contract, receives 5 an accurate and complete statement designating the promises and 6 warranties, and any disclaimers of warranties, limitations or 7 modifications of remedies, or liquidated damages, including those 8 of a third party, such as the manufacturer of the goods, provided 9 to the lessor by the person supplying the goods in connection 10 with or as part of the contract by which the lessor acquired the 11 goods or the right to possession and use of the goods. 12 (D) If the lease is not a consumer lease, the lessor, before 13 the lessee signs the lease contract, informs the lessee in writ- 14 ing of the following: 15 (I) The identity of the person supplying the goods to the 16 lessor, unless the lessee has selected that person and directed 17 the lessor to acquire the goods or the right to possession and 18 use of the goods from that person. 19 (II) The lessee is entitled under this article to the prom- 20 ises and warranties, including those of any third party, provided 21 to the lessor by the person supplying the goods in connection 22 with or as part of the contract by which the lessor acquired the 23 goods or the right to possession and use of the goods. 24 (III) The lessee may communicate with the person supplying 25 the goods to the lessor and receive an accurate and complete 26 statement of those promises and warranties, including any 27 disclaimers and limitations of them or of remedies. 02120'99 25 1 (h) "Goods" means all things that are movable at the time of 2 identification to the lease contract, or are fixtures (section 3 2A309), but the term does not include money, documents, instru- 4 ments, accounts, chattel paper, general intangibles, or minerals 5 or the like, including oil and gas, before extraction. The term 6 also includes the unborn young of animals. 7 (i) "Installment lease contract" means a lease contract that 8 authorizes or requires the delivery of goods in separate lots to 9 be separately accepted, even though the lease contract contains a 10 clause "each delivery is a separate lease" or its equivalent. 11 (j) "Lease" means a transfer of the right to possession and 12 use of goods for a term in return for consideration, but a sale, 13 including a sale on approval or a sale or return, or retention or 14 creation of a security interest is not a lease. Unless the con- 15 text clearly indicates otherwise, the term includes a sublease. 16 (k) "Lease agreement" means the bargain, with respect to the 17 lease, of the lessor and the lessee in fact as found in their 18 language or by implication from other circumstances including 19 course of dealing or usage of trade or course of performance as 20 provided in this article. Unless the context clearly indicates 21 otherwise, the term includes a sublease agreement. 22 (l) "Lease contract" means the total legal obligation that 23 results from the lease agreement as affected by this article and 24 any other applicable rules of law. Unless the context clearly 25 indicates otherwise, the term includes a sublease contract. 26 (m) "Leasehold interest" means the interest of the lessor or 27 the lessee under a lease contract. 02120'99 26 1 (n) "Lessee" means a person who acquires the right to 2 possession and use of goods under a lease. Unless the context 3 clearly indicates otherwise, the term includes a sublessee. 4 (o) "Lessee in ordinary course of business" means a person 5 who in good faith and without knowledge that the lease to him or 6 her is in violation of the ownership rights or security interest 7 or leasehold interest of a third party in the goods leases in 8 ordinary course from a person in the business of selling or leas- 9 ing goods of that kind but does not include a pawnbroker. 10 "Leasing" may be for cash or by exchange of other property or on 11 secured or unsecured credit and includes receiving goods or docu- 12 ments of title under a pre-existing lease contract but does not 13 include a transfer in bulk or as security for or in total or par- 14 tial satisfaction of a money debt. 15 (p) "Lessor" means a person who transfers the right to pos- 16 session and use of goods under a lease. Unless the context 17 clearly indicates otherwise, the term includes a sublessor. 18 (q) "Lessor's residual interest" means the lessor's interest 19 in the goods after expiration, termination, or cancellation of 20 the lease contract. 21 (r) "Lien" means a charge against or interest in goods to 22 secure payment of a debt or performance of an obligation, but the 23 term does not include a security interest. 24 (s) "Lot" means a parcel or a single article that is the 25 subject matter of a separate lease or delivery, whether or not it 26 is sufficient to perform the lease contract. 02120'99 27 1 (t) "Merchant lessee" means a lessee that is a merchant with 2 respect to goods of the kind subject to the lease. 3 (u) "Present value" means the amount as of a date certain of 4 1 or more sums payable in the future, discounted to the date 5 certain. The discount is determined by the interest rate speci- 6 fied by the parties if the rate was not manifestly unreasonable 7 at the time the transaction was entered into; otherwise, the dis- 8 count is determined by a commercially reasonable rate that takes 9 into account the facts and circumstances of each case at the time 10 the transaction was entered into. 11 (v) "Purchase" includes taking by sale, lease, mortgage, 12 security interest, pledge, gift, or any other voluntary transac- 13 tion creating an interest in goods. 14 (w) "Sublease" means a lease of goods the right to posses- 15 sion and use of which was acquired by the lessor as a lessee 16 under an existing lease. 17 (x) "Supplier" means a person from whom a lessor buys or 18 leases goods to be leased under a finance lease. 19 (y) "Supply contract" means a contract under which a lessor 20 buys or leases goods to be leased. 21 (z) "Termination" occurs when either party pursuant to a 22 power created by agreement or law puts an end to the lease con- 23 tract otherwise than for default. 24 (2) Other definitions applying to this article and the sec- 25 tions in which they appear are: 26 "Accessions". Section 2A310(1). 02120'99 28 1 "Construction mortgage". Section 2A309(1)(d). 2 "Encumbrance". Section 2A309(1)(e). 3 "Fixtures". Section 2A309(1)(a). 4 "Fixture filing". Section 2A309(1)(b). 5 "Purchase money lease". Section 2A309(1)(c). 6 (3) The following definitions in other articles apply to 7 this article: 8 "Account". Section91069102(1)(B). 9 "Between merchants". Section 2104(3). 10 "Buyer". Section 2103(1)(a). 11 "Chattel paper". Section9105(1)(b)9102(1)(K). 12 "Consumer goods". Section9109(1)9102(1)(W). 13 "Document". Section9105(1)(f)9102(1)(DD). 14 "Entrusting". Section 2403(3). 15 "GeneralintangiblesINTANGIBLE". Section91069102(1)(PP). 16 "Good faith". Section 2103(1)(b). 17 "Instrument". Section9105(1)(i)9102(1)(UU). 18 "Merchant". Section 2104(1). 19 "Mortgage". Section9105(1)(j)9102(1)(CCC). 20 "Pursuant to commitment". Section9105(1)(k)9102(1)(SSS). 21 "Receipt". Section 2103(1)(c). 22 "Sale". Section 2106(1). 23 "Sale on approval". Section2326(1)(a)2326. 24 "Sale or return". Section2326(1)(b)2326. 25 "Seller". Section 2103(1)(d). 02120'99 29 1 (4) In addition article 1 contains general definitions and 2 principles of construction and interpretation applicable 3 throughout this article. 4 Sec. 2A303. (1) As used in this section, "creation of a 5 security interest" includes the sale of a lease contract that is 6 subject to article 9, secured transactions, by reason of section 79102(1)(b)9109(1)(C). 8 (2) Except as provided insubsectionsSUBSECTION (3) and 9(4)SECTION 9407, a provision in a lease agreement (i) which 10 prohibits the voluntary or involuntary transfer, including a 11 transfer by sale, sublease, creation, or enforcement of a secur- 12 ity interest, or attachment, levy, or other judicial process, of 13 an interest of a party under the lease contract or of the 14 lessor's residual interest in the goods, or (ii) makes such a 15 transfer an event of default, gives rise to the rights and reme- 16 dies provided in subsection(5)(4), but a transfer that is 17 prohibited or is an event of default under the lease agreement is 18 otherwise effective. 19(3) A provision in a lease agreement which prohibits the20creation or enforcement of a security interest in an interest of21a party under the lease contract or in the lessor's residual22interest in the goods, or makes such a transfer an event of23default, is not enforceable unless, and then only to the extent24that, there is an actual transfer by the lessee of the lessee's25right of possession or use of the goods in violation of the pro-26vision or an actual delegation of a material performance of27either party to the lease contract in violation of the02120'99 30 1provision. Neither the granting nor the enforcement of a2security interest in (i) the lessor's interest under the lease3contract or (ii) the lessor's residual interest in the goods is a4transfer that materially impairs the prospect of obtaining return5performance by, materially changes the duty of, or materially6increases the burden or risk imposed on, the lessee within the7purview of subsection (5) unless, and then only to the extent8that, there is an actual delegation of a material performance of9the lessor.10 (3)(4)A provision in a lease agreement which (i) prohib- 11 its a transfer of a right to damages for default with respect to 12 the whole lease contract or of a right to payment arising out of 13 the transferor's due performance of the transferor's entire obli- 14 gation, or (ii) makes such a transfer an event of default, is not 15 enforceable, and such a transfer is not a transfer that materi- 16 ally impairs the prospect of obtaining return performance by, 17 materially changes the duty of, or materially increases the 18 burden or risk imposed on, the other party to the lease contract 19 within the purview of subsection(5)(4). 20 (4)(5)Subject tosubsectionsSUBSECTION (3) and(4)21 SECTION 9407, the following rules apply: 22 (a) If a transfer is made which is made an event of default 23 under a lease agreement, the party to the lease contract not 24 making the transfer, unless that party waives the default or oth- 25 erwise agrees, has the rights and remedies described in section 26 2A501(2). 02120'99 31 1 (b) If subdivision (a) is not applicable and if a transfer 2 is made that (i) is prohibited under a lease agreement or (ii) 3 materially impairs the prospect of obtaining return performance 4 by, materially changes the duty of, or materially increases the 5 burden or risk imposed on, the other party to the lease contract, 6 unless the party not making the transfer agrees at any time to 7 the transfer in the lease contract or otherwise, then, except as 8 limited by contract, the transferor is liable to the party not 9 making the transfer for damages caused by the transfer to the 10 extent that the damages could not reasonably be prevented by the 11 party not making the transfer and a court having jurisdiction may 12 grant other appropriate relief, including cancellation of the 13 lease contract or an injunction against the transfer. 14 (5)(6)A transfer of "the lease" or of "all my rights 15 under the lease" or a transfer in similar general terms is a 16 transfer of rights and, unless the language or the circumstances, 17 as in a transfer for security, indicate the contrary, the trans- 18 fer is a delegation of duties by the transferor to the 19 transferee. Acceptance by the transferee constitutes a promise 20 by the transferee to perform those duties. The promise is 21 enforceable by either the transferor or the other party to the 22 lease contract. 23 (6)(7)Unless otherwise agreed by the lessor and the 24 lessee, a delegation of performance does not relieve the trans- 25 feror as against the other party of any duty to perform or of any 26 liability for default. 02120'99 32 1 (7)(8)In a consumer lease, to prohibit the transfer of 2 an interest of a party under the lease contract or to make a 3 transfer an event of default, the language must be specific, by a 4 writing, and conspicuous. 5 Sec. 2A307. (1) Except as otherwise provided in section 6 2A306, a creditor of a lessee takes subject to the lease 7 contract. 8 (2) Except as otherwise provided insubsectionsSUBSECTION 9 (3)and (4)and in sections 2A306 and 2A308, a creditor of a 10 lessor takes subject to the lease contractexcept as follows:11(a) TheUNLESS THE creditor holds a lien that attached to the 12 goods before the lease contract became enforceable. 13(b) The creditor holds a security interest in the goods and14the lessee did not give value and receive delivery of the goods15without knowledge of the security interest.16(c) The creditor holds a security interest in the goods17which was perfected (section 9303) before the lease contract18became enforceable.19 (3)A lessee in the ordinary course of business takes the20leasehold interest free of a security interest in the goods cre-21ated by the lessor even though the security interest is perfected22(section 9303) and the lessee knows of its existence.EXCEPT AS 23 OTHERWISE PROVIDED IN SECTIONS 9317, 9321, AND 9323, A LESSEE 24 TAKES A LEASEHOLD INTEREST SUBJECT TO A SECURITY INTEREST HELD BY 25 A CREDITOR OF THE LESSOR. 26(4) A lessee other than a lessee in the ordinary course of27business takes the leasehold interest free of a security interest02120'99 33 1to the extent that it secures future advances made after the2secured party acquires knowledge of the lease or more than 453days after the lease contract becomes enforceable, whichever4first occurs, unless the future advances are made pursuant to a5commitment entered into without knowledge of the lease and before6the expiration of the 45-day period.7 Sec. 2A309. (1) As used in this section: 8 (a) "Goods" are "fixtures" when they become so related to 9 particular real estate that an interest in them arises under real 10 estate law. 11 (b) A "fixture filing" is the filing, in the office where a 12 RECORD OF A mortgage on the real estate would be filed or 13 recorded,orof a financing statement covering goods that are 14 or are to become fixtures and conforming to the requirements of 15 section9402(5)9502(1) AND (2). 16 (c) A "lease" is a "purchase money lease" unless the lessee 17 has possession or use of the goods or the right to possession or 18 use of the goods before the lease agreement is enforceable. 19 (d) A "mortgage" is a "construction mortgage" to the extent 20 it secures an obligation incurred for the construction of an 21 improvement on land including the acquisition cost of the land, 22 if the recorded writing so indicates. 23 (e) "Encumbrance" includes real estate mortgages and other 24 liens on real estate and all other rights in real estate that are 25 not ownership interests. 26 (2) Under this article a lease may be of goods that are 27 fixtures or may continue in goods that become fixtures, but no 02120'99 34 1 lease exists under this article of ordinary building materials 2 incorporated into an improvement on land. 3 (3) This article does not prevent creation of a lease of 4 fixtures pursuant to real estate law. 5 (4) The perfected interest of a lessor of fixtures has pri- 6 ority over a conflicting interest of an encumbrancer or owner of 7 the real estate if either of the following applies: 8 (a) The lease is a purchase money lease, the conflicting 9 interest of the encumbrancer or owner arises before the goods 10 become fixtures, the interest of the lessor is perfected by a 11 fixture filing before the goods become fixtures or within 10 days 12 thereafter, and the lessee has an interest of record in the real 13 estate or is in possession of the real estate. 14 (b) The interest of the lessor is perfected by a fixture 15 filing before the interest of the encumbrancer or owner is of 16 record, the lessor's interest has priority over any conflicting 17 interest of a predecessor in title of the encumbrancer or owner, 18 and the lessee has an interest of record in the real estate or is 19 in possession of the real estate. 20 (5) The interest of a lessor of fixtures, whether or not 21 perfected, has priority over the conflicting interest of an 22 encumbrancer or owner of the real estate if any of the following 23 apply: 24 (a) The fixtures are readily removable factory or office 25 machines, readily removable equipment that is not primarily used 26 or leased for use in the operation of the real estate, or readily 27 removable replacements of domestic appliances that are goods 02120'99 35 1 subject to a consumer lease, and before the goods become 2 fixtures, the lease contract is enforceable. 3 (b) The conflicting interest is a lien on the real estate 4 obtained by legal or equitable proceedings after the lease con- 5 tract is enforceable. 6 (c) The encumbrancer or owner has consented in writing to 7 the lease or has disclaimed an interest in the goods as 8 fixtures. 9 (d) The lessee has a right to remove the goods as against 10 the encumbrancer or owner. If the lessee's right to remove ter- 11 minates, the priority of the interest of the lessor continues for 12 a reasonable time. 13 (6) Notwithstanding subsection (4)(a) but otherwise subject 14 to subsections (4) and (5), the interest of a lessor of fixtures, 15 including the lessor's residual interest, is subordinate to the 16 conflicting interest of an encumbrancer of the real estate under 17 a construction mortgage recorded before the goods become fixtures 18 if the goods become fixtures before the completion of the 19 construction. To the extent given to refinance a construction 20 mortgage, the conflicting interest of an encumbrancer of the real 21 estate under a mortgage has this priority to the same extent as 22 the encumbrancer of the real estate under the construction 23 mortgage. 24 (7) In cases not within the preceding subsections, priority 25 between the interest of a lessor of fixtures, including the 26 lessor's residual interest, and the conflicting interest of an 27 encumbrancer or owner of the real estate who is not the lessee is 02120'99 36 1 determined by the priority rules governing conflicting interests 2 in real estate. 3 (8) If the interest of a lessor of fixtures, including the 4 lessor's residual interest, has priority over all conflicting 5 interests of all owners and encumbrancers of the real estate, the 6 lessor or the lessee may (i) on default, expiration, termination, 7 or cancellation of the lease agreement but subject to the lease 8 agreement and this article, or (ii) if necessary to enforce other 9 rights and remedies of the lessor or lessee under this article, 10 remove the goods from the real estate, free and clear of all con- 11 flicting interests of all owners and encumbrancers of the real 12 estate, but the lessor or lessee must reimburse any encumbrancer 13 or owner of the real estate who is not the lessee and who has not 14 otherwise agreed for the cost of repair of any physical injury, 15 but not for any diminution in value of the real estate caused by 16 the absence of the goods removed or by any necessity of replacing 17 them. A person entitled to reimbursement may refuse permission 18 to remove until the party seeking removal gives adequate security 19 for the performance of this obligation. 20 (9) Even though the lease agreement does not create a secur- 21 ity interest, the interest of a lessor of fixtures, including the 22 lessor's residual interest, is perfected by filing a financing 23 statement as a fixture filing for leased goods that are or are to 24 become fixtures in accordance with the relevant provisions of 25 article 9. 02120'99 37 1 Sec. 4210. (1) A collecting bank has a security interest in 2 an item and any accompanying documents or the proceeds of any of 3 the following: 4 (a) In case of an item deposited in an account to the extent 5 to which credit given for the item has been withdrawn or 6 applied. 7 (b) In case of an item for which it has given credit avail- 8 able for withdrawal as of right, to the extent of the credit 9 given whether or not the credit is drawn upon and whether or not 10 there is a right of charge-back. 11 (c) If it makes an advance on or against the item. 12 (2) If credit given for several items received at one time 13 or pursuant to a single agreement is withdrawn or applied in part 14 the security interest remains upon all the items, any accompany- 15 ing documents or the proceeds of either. For the purpose of this 16 section, credits first given are first withdrawn. 17 (3) Receipt by a collecting bank of a final settlement for 18 an item is a realization on its security interest in the item, 19 accompanying documents and proceeds. So long as the bank does 20 not receive final settlement for the item or give up possession 21 of the item or accompanying documents for purposes other than 22 collection, the security interest continues to that extent and is 23 subject to article 9 except for the following: 24 (a) No security agreement is necessary to make the security 25 interest enforceable(subsection (1)(b) of(section920326 9203(2)(C)(i)). 02120'99 38 1 (b) No filing is required to perfect the security interest. 2 (c) The security interest has priority over conflicting 3 perfected security interests in the item, accompanying documents 4 or proceeds. 5 SEC. 5118. (1) AN ISSUER OR NOMINATED PERSON HAS A SECURITY 6 INTEREST IN A DOCUMENT PRESENTED UNDER A LETTER OF CREDIT TO THE 7 EXTENT THAT THE ISSUER OR NOMINATED PERSON HONORS OR GIVES VALUE 8 FOR THE PRESENTATION. 9 (2) SO LONG AS AND TO THE EXTENT THAT AN ISSUER OR NOMINATED 10 PERSON HAS NOT BEEN REIMBURSED OR HAS NOT OTHERWISE RECOVERED THE 11 VALUE GIVEN WITH RESPECT TO A SECURITY INTEREST IN A DOCUMENT 12 UNDER SUBSECTION (1), THE SECURITY INTEREST CONTINUES AND IS 13 SUBJECT TO ARTICLE 9, BUT ALL OF THE FOLLOWING APPLY: 14 (A) A SECURITY AGREEMENT IS NOT NECESSARY TO MAKE THE SECUR- 15 ITY INTEREST ENFORCEABLE UNDER SECTION 9203(2)(C). 16 (B) IF THE DOCUMENT IS PRESENTED IN A MEDIUM OTHER THAN A 17 WRITTEN OR OTHER TANGIBLE MEDIUM, THE SECURITY INTEREST IS 18 PERFECTED. 19 (C) IF THE DOCUMENT IS PRESENTED IN A WRITTEN OR OTHER TAN- 20 GIBLE MEDIUM AND IS NOT A CERTIFICATED SECURITY, CHATTEL PAPER, A 21 DOCUMENT OF TITLE, AN INSTRUMENT, OR A LETTER OF CREDIT, THE 22 SECURITY INTEREST IS PERFECTED AND HAS PRIORITY OVER A CONFLICT- 23 ING SECURITY INTEREST IN THE DOCUMENT SO LONG AS THE DEBTOR DOES 24 NOT HAVE POSSESSION OF THE DOCUMENT. 25 Sec. 7503. (1) A document of title confers no right in 26 goods against a person who before issuance of the document had a 02120'99 39 1 legal interest or a perfected security interest in them and who 2 DID neither OF THE FOLLOWING: 3 (a)deliveredDELIVERED or entrusted them or any document 4 of title covering them to the bailor or his OR HER nominee with 5 actual or apparent authority to ship, store or sell or with power 6 to obtain delivery under this article (section 7403) or with 7 power of disposition under this act (sections 2403 and93078 9320) or other statute or rule of law.; nor9 (b)acquiescedACQUIESCED in the procurement by the bailor 10 or his OR HER nominee of any document of title. 11 (2) Title to goods based upon an unaccepted delivery order 12 is subject to the rights of anyone to whom a negotiable warehouse 13 receipt or bill of lading covering the goods has been duly 14 negotiated. Such a title may be defeated under the next section 15 to the same extent as the rights of the issuer or a transferee 16 from the issuer. 17 (3) Title to goods based upon a bill of lading issued to a 18 freight forwarder is subject to the rights of anyone to whom a 19 bill issued by the freight forwarder is duly negotiated; but 20 delivery by the carrier in accordance with part 4 of this article 21 pursuant to its own bill of lading discharges the carrier's obli- 22 gation to deliver. 23 Sec. 8103. (1) A share or similar equity interest issued by 24 a corporation, business trust, joint stock company, or similar 25 entity is a security. 26 (2) An investment company security is a security. 27 "Investment company security" means a share or similar equity 02120'99 40 1 interest issued by an entity that is registered as an investment 2 company under the federal investment company laws, an interest in 3 a unit investment trust that is so registered, or a face-amount 4 certificate issued by a face-amount certificate company that is 5 so registered. Investment company security does not include an 6 insurance policy or endowment policy or annuity contract issued 7 by an insurance company. 8 (3) An interest in a partnership or limited liability com- 9 pany is not a security unless it is dealt in or traded on securi- 10 ties exchanges or in securities markets, its terms expressly pro- 11 vide that it is a security governed by this article, or it is an 12 investment company security. However, an interest in a partner- 13 ship or limited liability company is a financial asset if it is 14 held in a securities account. 15 (4) A writing that is a security certificate is governed by 16 this article and not by article 3, even though it also meets the 17 requirements of that article. However, a negotiable instrument 18 governed by article 3 is a financial asset if it is held in a 19 securities account. 20 (5) An option or similar obligation issued by a clearing 21 corporation to its participants is not a security, but is a 22 financial asset. 23 (6) A commodity contract, AS DEFINED IN SECTION 9102(1)(O), 24 is not a security or a financial asset. 25 Sec. 8106. (1) A purchaser has "control" of a certificated 26 security in bearer form if the certificated security is delivered 27 to the purchaser. 02120'99 41 1 (2) A purchaser has "control" of a certificated security in 2 registered form if the certificated security is delivered to the 3 purchaser and if either of the following applies: 4 (a) The certificate is indorsed to the purchaser or in blank 5 by an effective indorsement. 6 (b) The certificate is registered in the name of the pur- 7 chaser, upon original issue or registration of transfer by the 8 issuer. 9 (3) A purchaser has "control" of an uncertificated security 10 if either of the following applies: 11 (a) The uncertificated security is delivered to the 12 purchaser. 13 (b) The issuer has agreed that it will comply with instruc- 14 tions originated by the purchaser without further consent by the 15 registered owner. 16 (4) A purchaser has "control" of a security entitlement if 17either1 of the following applies: 18 (a) The purchaser becomes the entitlement holder. 19 (b) The securities intermediary has agreed that it will 20 comply with entitlement orders originated by the purchaser with- 21 out further consent by the entitlement holder. 22 (C) ANOTHER PERSON HAS CONTROL OF THE SECURITY ENTITLEMENT 23 ON BEHALF OF THE PURCHASER OR, HAVING PREVIOUSLY ACQUIRED CONTROL 24 OF THE SECURITY ENTITLEMENT, ACKNOWLEDGES THAT IT HAS CONTROL ON 25 BEHALF OF THE PURCHASER. 02120'99 42 1 (5) If an interest in a security entitlement is granted by 2 the entitlement holder to the entitlement holder's own securities 3 intermediary, the securities intermediary has control. 4 (6) A purchaser who has satisfied the requirements of sub- 5 section (3)(b) or (4)(b) has control even if the registered owner 6 in the case of subsection (3)(b) or the entitlement holder in the 7 case of subsection (4)(b) retains the right to make substitutions 8 for the uncertificated security or security entitlement, to orig- 9 inate instructions or entitlement orders to the issuer or securi- 10 ties intermediary, or otherwise to deal with the uncertificated 11 security or security entitlement. 12 (7) An issuer or a securities intermediary may not enter 13 into an agreement of the kind described in subsection (3)(b) or 14 (4)(b) without the consent of the registered owner or entitlement 15 holder, but an issuer or a securities intermediary is not 16 required to enter into such an agreement even though the regis- 17 tered owner or entitlement holder so directs. An issuer or 18 securities intermediary that has entered into such an agreement 19 is not required to confirm the existence of the agreement to 20 another party unless requested to do so by the registered owner 21 or entitlement holder. 22 Sec. 8110. (1) The law of the issuer's jurisdiction, as 23 specified in subsection (4), governs all of the following: 24 (a) The validity of a security. 25 (b) The rights and duties of the issuer with respect to reg- 26 istration of transfer. 02120'99 43 1 (c) The effectiveness of registration of transfer by the 2 issuer. 3 (d) Whether the issuer owes any duties to an adverse claim- 4 ant to a security. 5 (e) Whether an adverse claim can be asserted against a 6 person to whom transfer of a certificated or uncertificated 7 security is registered or a person who obtains control of an 8 uncertificated security. 9 (2) The law of the securities intermediary's jurisdiction, 10 as specified in subsection (5), governs all of the following: 11 (a) Acquisition of a security entitlement from the securi- 12 ties intermediary. 13 (b) The rights and duties of the securities intermediary and 14 entitlement holder arising out of a security entitlement. 15 (c) Whether the securities intermediary owes any duties to 16 an adverse claimant to a security entitlement. 17 (d) Whether an adverse claim can be asserted against a 18 person who acquires a security entitlement from the securities 19 intermediary or a person who purchases a security entitlement or 20 interest therein from an entitlement holder. 21 (3) The law of the jurisdiction in which a security certifi- 22 cate is located at the time of delivery governs whether an 23 adverse claim can be asserted against a person to whom the secur- 24 ity certificate is delivered. 25 (4) "Issuer's jurisdiction" means the jurisdiction under 26 which the issuer of the security is organized or, if permitted by 27 the law of that jurisdiction, the law of another jurisdiction 02120'99 44 1 specified by the issuer. An issuer organized under the law of 2 this state may specify the law of another jurisdiction as the law 3 governing the matters specified in subsection (1)(b) through 4 (e). 5 (5) The following rules determine a "securities 6 intermediary's jurisdiction" for the purposes of this section: 7 (a) If an agreement between the securities intermediary and 8 its entitlement holderspecifies that it is governed by the law9of a particular jurisdictionGOVERNING THE SECURITIES ACCOUNT 10 EXPRESSLY PROVIDES THAT A PARTICULAR JURISDICTION IS THE SECURI- 11 TIES INTERMEDIARY'S JURISDICTION FOR PURPOSES OF THIS PART, THIS 12 ARTICLE, OR THIS AMENDATORY ACT, that jurisdiction is the securi- 13 ties intermediary's jurisdiction. 14 (B) IF SUBDIVISION (A) DOES NOT APPLY AND AN AGREEMENT 15 BETWEEN THE SECURITIES INTERMEDIARY AND ITS ENTITLEMENT HOLDER 16 GOVERNING THE SECURITIES ACCOUNT EXPRESSLY PROVIDES THAT THE 17 AGREEMENT IS GOVERNED BY THE LAW OF A PARTICULAR JURISDICTION, 18 THAT JURISDICTION IS THE SECURITIES INTERMEDIARY'S JURISDICTION. 19 (C)(b)If NEITHER SUBDIVISION (A) NOR SUBDIVISION (B) 20 APPLIES AND an agreement between the securities intermediary and 21 its entitlement holderdoes not specify the governing law as22provided in subdivision (a), butGOVERNING THE SECURITIES 23 ACCOUNT expresslyspecifiesPROVIDES that the securities 24 account is maintained at an office in a particular jurisdiction, 25 that jurisdiction is the securities intermediary's jurisdiction. 26 (D)(c)Ifan agreement between the securities27intermediary and its entitlement holder does not specify a02120'99 45 1jurisdiction as provided in subdivision (a) or (b)NONE OF THE 2 PRECEDING SUBDIVISIONS APPLY, the securities intermediary's 3 jurisdiction is the jurisdiction in whichis locatedthe office 4 identified in an account statement as the office serving the 5 entitlement holder's account IS LOCATED. 6 (E)(d)Ifan agreement between the securities intermedi-7ary and its entitlement holder does not specify a jurisdiction as8provided in subdivision (a) or (b) and an account statement does9not identify an office serving the entitlement holder's account10as provided in subdivision (c)NONE OF THE PRECEDING SUBDIVI- 11 SIONS APPLY, the securities intermediary's jurisdiction is the 12 jurisdiction in whichis locatedthe chief executive office of 13 the securities intermediary IS LOCATED. 14 (6) A securities intermediary's jurisdiction is not deter- 15 mined by the physical location of certificates representing 16 financial assets, or by the jurisdiction in which is organized 17 the issuer of the financial asset with respect to which an enti- 18 tlement holder has a security entitlement, or by the location of 19 facilities for data processing or other record-keeping concerning 20 the account. 21 Sec. 8301. (1) Delivery of a certificated security to a 22 purchaser occurs when 1 of the following occurs: 23 (a) The purchaser acquires possession of the security 24 certificate. 25 (b) Another person, other than a securities intermediary, 26 either acquires possession of the security certificate on behalf 02120'99 46 1 of the purchaser or, having previously acquired possession of the 2 certificate, acknowledges that it holds for the purchaser. 3 (c) A securities intermediary acting on behalf of the pur- 4 chaser acquires possession of the security certificate, only if 5 the certificate is in registered form andhas beenIS (i) REG- 6 ISTERED IN THE NAME OF THE PURCHASER, (ii) PAYABLE TO THE ORDER 7 OF THE PURCHASER, OR (iii) specially indorsed to the purchaser by 8 an effective indorsement AND HAS NOT BEEN ENDORSED TO THE SECURI- 9 TIES INTERMEDIARY OR IN BLANK. 10 (2) Delivery of an uncertificated security to a purchaser 11 occurs when either of the following occurs: 12 (a) The issuer registers the purchaser as the registered 13 owner, upon original issue or registration of transfer. 14 (b) Another person, other than a securities intermediary, 15 either becomes the registered owner of the uncertificated secur- 16 ity on behalf of the purchaser or, having previously become the 17 registered owner, acknowledges that it holds for the purchaser. 18 Sec. 8302. (1) Except as otherwise provided in subsections 19 (2) and (3),upon deliveryA PURCHASER of a certificated or 20 uncertificated securityto a purchaser, the purchaseracquires 21 all rights in the security that the transferor had or had power 22 to transfer. 23 (2) A purchaser of a limited interest acquires rights only 24 to the extent of the interest purchased. 25 (3) A purchaser of a certificated security who as a previous 26 holder had notice of an adverse claim does not improve its 27 position by taking from a protected purchaser. 02120'99 47 1 Sec. 8510. (1)AnIN A CASE NOT COVERED BY THE PRIORITY 2 RULES IN ARTICLE 9 OR THE RULES STATED IN SUBSECTION (3), AN 3 action based on an adverse claim to a financial asset or security 4 entitlement, whether framed in conversion, replevin, constructive 5 trust, equitable lien, or other theory, may not be asserted 6 against a person who purchases a security entitlement, or an 7 interest in a security entitlement, from an entitlement holder if 8 the purchaser gives value, does not have notice of the adverse 9 claim, and obtains control. 10 (2) If an adverse claim could not have been asserted against 11 an entitlement holder under section 8502, the adverse claim 12 cannot be asserted against a person who purchases a security 13 entitlement, or an interest in a security entitlement, from the 14 entitlement holder. 15 (3) In a case not covered by the priority rules in 16 article 9, a purchaser for value of a security entitlement, or an 17 interest in a security entitlement, who obtains control has pri- 18 ority over a purchaser of a security entitlement, or an interest 19 in a security entitlement, who does not obtain control. 20PurchasersEXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), 21 PURCHASERS who have control rankequally, except that a22 ACCORDING TO PRIORITY IN TIME OF 1 OF THE FOLLOWING: 23 (A) THE PURCHASER'S BECOMING THE PERSON FOR WHOM THE SECURI- 24 TIES ACCOUNT, IN WHICH THE SECURITY ENTITLEMENT IS CARRIED, IS 25 MAINTAINED, IF THE PURCHASER OBTAINED CONTROL UNDER SECTION 26 8106(4)(A). 02120'99 48 1 (B) THE SECURITIES INTERMEDIARY'S AGREEMENT TO COMPLY WITH 2 THE PURCHASER'S ENTITLEMENT ORDERS WITH RESPECT TO SECURITY 3 ENTITLEMENTS CARRIED OR TO BE CARRIED IN THE SECURITIES ACCOUNT 4 IN WHICH THE SECURITY ENTITLEMENT IS CARRIED, IF THE PURCHASER 5 OBTAINED CONTROL UNDER SECTION 8106(4)(B). 6 (C) IF THE PURCHASER OBTAINED CONTROL THROUGH ANOTHER PERSON 7 UNDER SECTION 8106(4)(C), THE TIME ON WHICH PRIORITY WOULD BE 8 BASED UNDER THIS SUBSECTION IF THE OTHER PERSON WERE THE SECURED 9 PARTY. 10 (4) A securities intermediary as purchaser has priority over 11 a conflicting purchaser who has control unless otherwise agreed 12 by the securities intermediary. 13 ARTICLE 9 14 SECURED TRANSACTIONS; SALES OF ACCOUNTS, AND CHATTEL PAPER15 PART 1 16SHORT TITLE, APPLICABILITY, AND DEFINITIONSGENERAL PROVISIONS 17 SUBPART 1. SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS 18 Sec. 9102.(1) Except as otherwise provided in section199104 on excluded transactions, this article applies;20(a) To any transaction (regardless of its form) which is21intended to create a security interest in personal property or22fixtures including goods, documents, instruments, general intan-23gibles, chattle paper or accounts; and also24(b) To any sale of accounts or chattel paper.25(2) This article applies to security interests created by26contract including pledge, assignment, chattel mortgage, chattel27trust, trust deed, factor's lien, equipment trust, conditional02120'99 49 1sale, trust receipt, other lien or title retention contract, and2lease or consignment intended as security. This article does not3apply to statutory liens except as provided in section 9310.4(3) The application of this article to a security interest5in a secured obligation is not affected by the fact that the6obligation is itself secured by a transaction or interest to7which this article does not apply.8 (1) AS USED IN THIS ARTICLE: 9 (A) "ACCESSION" MEANS GOODS THAT ARE PHYSICALLY UNITED WITH 10 OTHER GOODS IN SUCH A MANNER THAT THE IDENTITY OF THE ORIGINAL 11 GOODS IS NOT LOST. 12 (B) "ACCOUNT", EXCEPT AS USED IN "ACCOUNT FOR", MEANS A 13 RIGHT TO PAYMENT OF A MONETARY OBLIGATION, WHETHER OR NOT EARNED 14 BY PERFORMANCE, FOR PROPERTY THAT HAS BEEN OR IS TO BE SOLD, 15 LEASED, LICENSED, ASSIGNED, OR OTHERWISE DISPOSED OF, FOR SERV- 16 ICES RENDERED OR TO BE RENDERED, FOR A POLICY OF INSURANCE ISSUED 17 OR TO BE ISSUED, FOR A SECONDARY OBLIGATION INCURRED OR TO BE 18 INCURRED, FOR ENERGY PROVIDED OR TO BE PROVIDED, FOR THE USE OR 19 HIRE OF A VESSEL UNDER A CHARTER OR OTHER CONTRACT, ARISING OUT 20 OF THE USE OF A CREDIT OR CHARGE CARD OR INFORMATION CONTAINED ON 21 OR FOR USE WITH THE CARD, OR AS WINNINGS IN A LOTTERY OR OTHER 22 GAME OF CHANCE OPERATED OR SPONSORED BY A STATE, GOVERNMENTAL 23 UNIT OF A STATE, OR PERSON LICENSED OR AUTHORIZED TO OPERATE THE 24 GAME BY A STATE OR GOVERNMENTAL UNIT OF A STATE. THE TERM 25 INCLUDES HEALTH-CARE-INSURANCE RECEIVABLES. THE TERM DOES NOT 26 INCLUDE RIGHTS TO PAYMENT EVIDENCED BY CHATTEL PAPER OR AN 27 INSTRUMENT, COMMERCIAL TORT CLAIMS, DEPOSIT ACCOUNTS, INVESTMENT 02120'99 50 1 PROPERTY, LETTER-OF-CREDIT RIGHTS OR LETTERS OF CREDIT, OR RIGHTS 2 TO PAYMENT FOR MONEY OR FUNDS ADVANCED OR SOLD, OTHER THAN RIGHTS 3 ARISING OUT OF THE USE OF A CREDIT OR CHARGE CARD OR INFORMATION 4 CONTAINED ON OR FOR USE WITH THE CARD. 5 (C) "ACCOUNT DEBTOR" MEANS A PERSON OBLIGATED ON AN ACCOUNT, 6 CHATTEL PAPER, OR GENERAL INTANGIBLE. THE TERM DOES NOT INCLUDE 7 PERSONS OBLIGATED TO PAY A NEGOTIABLE INSTRUMENT, EVEN IF THE 8 INSTRUMENT CONSTITUTES PART OF CHATTEL PAPER. 9 (D) "ACCOUNTING", EXCEPT AS USED IN "ACCOUNTING FOR", MEANS 10 A RECORD THAT MEETS ALL OF THE FOLLOWING REQUIREMENTS: 11 (i) AUTHENTICATED BY A SECURED PARTY. 12 (ii) INDICATING THE AGGREGATE UNPAID SECURED OBLIGATIONS AS 13 OF A DATE NOT MORE THAN 35 DAYS EARLIER OR 35 DAYS LATER THAN THE 14 DATE OF THE RECORD. 15 (iii) IDENTIFYING THE COMPONENTS OF THE OBLIGATIONS IN REA- 16 SONABLE DETAIL. 17 (E) "AGRICULTURAL LIEN" MEANS AN INTEREST, OTHER THAN A 18 SECURITY INTEREST, IN FARM PRODUCTS THAT MEETS ALL OF THE FOLLOW- 19 ING REQUIREMENTS: 20 (i) THE INTEREST SECURES PAYMENT OR PERFORMANCE OF AN OBLI- 21 GATION FOR 1 OR MORE OF THE FOLLOWING: 22 (A) GOODS OR SERVICES FURNISHED IN CONNECTION WITH A 23 DEBTOR'S FARMING OPERATION. 24 (B) RENT ON REAL PROPERTY LEASED BY A DEBTOR IN CONNECTION 25 WITH ITS FARMING OPERATION. 26 (ii) THE INTEREST IS CREATED BY STATUTE IN FAVOR OF A PERSON 27 THAT DID 1 OR MORE OF THE FOLLOWING: 02120'99 51 1 (A) IN THE ORDINARY COURSE OF ITS BUSINESS FURNISHED GOODS 2 OR SERVICES TO A DEBTOR IN CONNECTION WITH A DEBTOR'S FARMING 3 OPERATION. 4 (B) LEASED REAL PROPERTY TO A DEBTOR IN CONNECTION WITH THE 5 DEBTOR'S FARMING OPERATION. 6 (iii) THE EFFECTIVENESS OF THE INTEREST DOES NOT DEPEND ON 7 THE PERSON'S POSSESSION OF THE PERSONAL PROPERTY. 8 (F) "AS-EXTRACTED COLLATERAL" MEANS 1 OR MORE OF THE 9 FOLLOWING: 10 (i) OIL, GAS, OR OTHER MINERALS THAT ARE SUBJECT TO A SECUR- 11 ITY INTEREST THAT IS CREATED BY A DEBTOR HAVING AN INTEREST IN 12 THE MINERALS BEFORE EXTRACTION AND ATTACHES TO THE MINERALS AS 13 EXTRACTED. 14 (ii) ACCOUNTS ARISING OUT OF THE SALE AT THE WELLHEAD OR 15 MINEHEAD OF OIL, GAS, OR OTHER MINERALS IN WHICH THE DEBTOR HAD 16 AN INTEREST BEFORE EXTRACTION. 17 (G) "AUTHENTICATE" MEANS 1 OF THE FOLLOWING: 18 (i) TO SIGN. 19 (ii) TO EXECUTE OR OTHERWISE ADOPT A SYMBOL, OR ENCRYPT OR 20 SIMILARLY PROCESS A RECORD IN WHOLE OR IN PART, WITH THE PRESENT 21 INTENT OF THE AUTHENTICATING PERSON TO IDENTIFY THE PERSON AND 22 ADOPT OR ACCEPT A RECORD. 23 (H) "BANK" MEANS AN ORGANIZATION THAT IS ENGAGED IN THE 24 BUSINESS OF BANKING. THE TERM INCLUDES SAVINGS BANKS, SAVINGS 25 AND LOAN ASSOCIATIONS, CREDIT UNIONS, AND TRUST COMPANIES. 26 (I) "CASH PROCEEDS" MEANS PROCEEDS THAT ARE MONEY, CHECKS, 27 DEPOSIT ACCOUNTS, OR THE LIKE. 02120'99 52 1 (J) "CERTIFICATE OF TITLE" MEANS A CERTIFICATE OF TITLE WITH 2 RESPECT TO WHICH A STATUTE PROVIDES FOR THE SECURITY INTEREST IN 3 QUESTION TO BE INDICATED ON THE CERTIFICATE AS A CONDITION OR 4 RESULT OF THE SECURITY INTEREST'S OBTAINING PRIORITY OVER THE 5 RIGHTS OF A LIEN CREDITOR WITH RESPECT TO THE COLLATERAL. 6 (K) "CHATTEL PAPER" MEANS A RECORD OR RECORDS THAT EVIDENCE 7 BOTH A MONETARY OBLIGATION AND A SECURITY INTEREST IN SPECIFIC 8 GOODS, A SECURITY INTEREST IN SPECIFIC GOODS AND SOFTWARE USED IN 9 THE GOODS, A SECURITY INTEREST IN SPECIFIC GOODS AND LICENSE OF 10 SOFTWARE USED IN THE GOODS, A LEASE OF SPECIFIC GOODS, OR A LEASE 11 OF SPECIFIC GOODS AND LICENSE OF SOFTWARE USED IN THE GOODS. AS 12 USED IN THIS SUBDIVISION, "MONETARY OBLIGATION" MEANS A MONETARY 13 OBLIGATION SECURED BY THE GOODS OR OWED UNDER A LEASE OF THE 14 GOODS AND INCLUDES A MONETARY OBLIGATION WITH RESPECT TO SOFTWARE 15 USED IN THE GOODS. THE TERM DOES NOT INCLUDE CHARTERS OR OTHER 16 CONTRACTS INVOLVING THE USE OR HIRE OF A VESSEL. IF A TRANSAC- 17 TION IS EVIDENCED BY RECORDS THAT INCLUDE AN INSTRUMENT OR SERIES 18 OF INSTRUMENTS, THE GROUP OF RECORDS TAKEN TOGETHER CONSTITUTES 19 CHATTEL PAPER. 20 (l) "COLLATERAL" MEANS THE PROPERTY SUBJECT TO A SECURITY 21 INTEREST OR AGRICULTURAL LIEN. THE TERM INCLUDES 1 OR MORE OF 22 THE FOLLOWING: 23 (i) PROCEEDS TO WHICH A SECURITY INTEREST ATTACHES. 24 (ii) ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, AND PROM- 25 ISSORY NOTES THAT HAVE BEEN SOLD. 26 (iii) GOODS THAT ARE THE SUBJECT OF A CONSIGNMENT. 02120'99 53 1 (M) "COMMERCIAL TORT CLAIM" MEANS A CLAIM ARISING IN TORT 2 WITH RESPECT TO WHICH 1 OF THE FOLLOWING APPLIES: 3 (i) THE CLAIMANT IS AN ORGANIZATION. 4 (ii) THE CLAIMANT IS AN INDIVIDUAL AND THE CLAIM AROSE IN 5 THE COURSE OF THE CLAIMANT'S BUSINESS OR PROFESSION AND DOES NOT 6 INCLUDE DAMAGES ARISING OUT OF PERSONAL INJURY TO OR THE DEATH OF 7 AN INDIVIDUAL. 8 (N) "COMMODITY ACCOUNT" MEANS AN ACCOUNT MAINTAINED BY A 9 COMMODITY INTERMEDIARY IN WHICH A COMMODITY CONTRACT IS CARRIED 10 FOR A COMMODITY CUSTOMER. 11 (O) "COMMODITY CONTRACT" MEANS A COMMODITY FUTURES CONTRACT, 12 AN OPTION ON A COMMODITY FUTURES CONTRACT, A COMMODITY OPTION, OR 13 ANOTHER CONTRACT IF THE CONTRACT OR OPTION IS 1 OF THE 14 FOLLOWING: 15 (i) TRADED ON OR SUBJECT TO THE RULES OF A BOARD OF TRADE 16 THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET FOR SUCH A CONTRACT 17 PURSUANT TO FEDERAL COMMODITIES LAWS. 18 (ii) TRADED ON A FOREIGN COMMODITY BOARD OF TRADE, EXCHANGE, 19 OR MARKET, AND IS CARRIED ON THE BOOKS OF A COMMODITY INTERMEDI- 20 ARY FOR A COMMODITY CUSTOMER. 21 (P) "COMMODITY CUSTOMER" MEANS A PERSON FOR WHICH A COMMOD- 22 ITY INTERMEDIARY CARRIES A COMMODITY CONTRACT ON ITS BOOKS. 23 (Q) "COMMODITY INTERMEDIARY" MEANS 1 OF THE FOLLOWING: 24 (i) A PERSON THAT IS REGISTERED AS A FUTURES COMMISSION MER- 25 CHANT UNDER FEDERAL COMMODITIES LAW. 26 (ii) A PERSON THAT IN THE ORDINARY COURSE OF ITS BUSINESS 27 PROVIDES CLEARANCE OR SETTLEMENT SERVICES FOR A BOARD OF TRADE 02120'99 54 1 THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET PURSUANT TO FEDERAL 2 COMMODITIES LAW. 3 (R) "COMMUNICATE" MEANS 1 OR MORE OF THE FOLLOWING: 4 (i) TO SEND A WRITTEN OR OTHER TANGIBLE RECORD. 5 (ii) TO TRANSMIT A RECORD BY ANY MEANS AGREED UPON BY THE 6 PERSONS SENDING AND RECEIVING THE RECORD. 7 (iii) IN THE CASE OF TRANSMISSION OF A RECORD TO OR BY A 8 FILING OFFICE, TO TRANSMIT A RECORD BY ANY MEANS PRESCRIBED BY 9 FILING-OFFICE RULE. 10 (S) "CONSIGNEE" MEANS A MERCHANT TO WHICH GOODS ARE DELIV- 11 ERED IN A CONSIGNMENT. 12 (T) "CONSIGNMENT" MEANS A TRANSACTION, REGARDLESS OF ITS 13 FORM, IN WHICH A PERSON DELIVERS GOODS TO A MERCHANT FOR THE PUR- 14 POSE OF SALE AND THAT MEETS ALL OF THE FOLLOWING: 15 (i) THE MERCHANT DEALS IN GOODS OF THAT KIND UNDER A NAME 16 OTHER THAN THE NAME OF THE PERSON MAKING DELIVERY, IS NOT AN AUC- 17 TIONEER, AND IS NOT GENERALLY KNOWN BY ITS CREDITORS TO BE SUB- 18 STANTIALLY ENGAGED IN SELLING THE GOODS OF OTHERS. 19 (ii) WITH RESPECT TO EACH DELIVERY, THE AGGREGATE VALUE OF 20 THE GOODS IS $1,000.00 OR MORE AT THE TIME OF DELIVERY. 21 (iii) THE GOODS ARE NOT CONSUMER GOODS IMMEDIATELY BEFORE 22 DELIVERY. 23 (iv) THE TRANSACTION DOES NOT CREATE A SECURITY INTEREST 24 THAT SECURES AN OBLIGATION. 25 (U) "CONSIGNOR" MEANS A PERSON THAT DELIVERS GOODS TO A CON- 26 SIGNEE IN A CONSIGNMENT. 02120'99 55 1 (V) "CONSUMER DEBTOR" MEANS A DEBTOR IN A CONSUMER 2 TRANSACTION. 3 (W) "CONSUMER GOODS" MEANS GOODS THAT ARE USED OR BOUGHT FOR 4 USE PRIMARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES. 5 (X) "CONSUMER-GOODS TRANSACTION" MEANS A CONSUMER TRANSAC- 6 TION IN WHICH AN INDIVIDUAL INCURS AN OBLIGATION PRIMARILY FOR 7 PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES AND A SECURITY INTEREST 8 IN CONSUMER GOODS SECURES THE OBLIGATION. 9 (Y) "CONSUMER OBLIGOR" MEANS AN OBLIGOR WHO IS AN INDIVIDUAL 10 AND WHO INCURRED THE OBLIGATION AS PART OF A TRANSACTION ENTERED 11 INTO PRIMARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES. 12 (Z) "CONSUMER TRANSACTION" MEANS A TRANSACTION IN WHICH AN 13 INDIVIDUAL INCURS AN OBLIGATION PRIMARILY FOR PERSONAL, FAMILY, 14 OR HOUSEHOLD PURPOSES, A SECURITY INTEREST SECURES THE OBLIGA- 15 TION, AND THE COLLATERAL IS HELD OR ACQUIRED PRIMARILY FOR PER- 16 SONAL, FAMILY, OR HOUSEHOLD PURPOSES. THE TERM INCLUDES 17 CONSUMER-GOODS TRANSACTIONS. 18 (AA) "CONTINUATION STATEMENT" MEANS AN AMENDMENT OF A 19 FINANCING STATEMENT WHICH IDENTIFIES, BY ITS FILE NUMBER, THE 20 INITIAL FINANCING STATEMENT TO WHICH IT RELATES AND INDICATES 21 THAT IT IS A CONTINUATION STATEMENT FOR, OR THAT IT IS FILED TO 22 CONTINUE THE EFFECTIVENESS OF, THE IDENTIFIED FINANCING 23 STATEMENT. 24 (BB) "DEBTOR" MEANS 1 OF THE FOLLOWING: 25 (i) A PERSON HAVING AN INTEREST, OTHER THAN A SECURITY 26 INTEREST OR OTHER LIEN, IN THE COLLATERAL, WHETHER OR NOT THE 27 PERSON IS AN OBLIGOR. 02120'99 56 1 (ii) A SELLER OF ACCOUNTS, CHATTEL PAPER, PAYMENT 2 INTANGIBLES, OR PROMISSORY NOTES. 3 (iii) A CONSIGNEE. 4 (CC) "DEPOSIT ACCOUNT" MEANS A DEMAND, TIME, SAVINGS, PASS- 5 BOOK, OR SIMILAR ACCOUNT MAINTAINED WITH A BANK. THE TERM DOES 6 NOT INCLUDE INVESTMENT PROPERTY OR ACCOUNTS EVIDENCED BY AN 7 INSTRUMENT. 8 (DD) "DOCUMENT" MEANS A DOCUMENT OF TITLE OR A RECEIPT OF 9 THE TYPE DESCRIBED IN SECTION 7201(2). 10 (EE) "ELECTRONIC CHATTEL PAPER" MEANS CHATTEL PAPER EVI- 11 DENCED BY A RECORD OR RECORDS CONSISTING OF INFORMATION STORED IN 12 AN ELECTRONIC MEDIUM. 13 (FF) "ENCUMBRANCE" MEANS A RIGHT, OTHER THAN AN OWNERSHIP 14 INTEREST, IN REAL PROPERTY. THE TERM INCLUDES MORTGAGES AND 15 OTHER LIENS ON REAL PROPERTY. 16 (GG) "EQUIPMENT" MEANS GOODS OTHER THAN INVENTORY, FARM PRO- 17 DUCTS, OR CONSUMER GOODS. 18 (HH) "FARM PRODUCTS" MEANS GOODS, OTHER THAN STANDING 19 TIMBER, WITH RESPECT TO WHICH THE DEBTOR IS ENGAGED IN A FARMING 20 OPERATION AND WHICH ARE 1 OF THE FOLLOWING: 21 (i) CROPS GROWN, GROWING, OR TO BE GROWN, INCLUDING CROPS 22 PRODUCED ON TREES, VINES, AND BUSHES, AND AQUATIC GOODS PRODUCED 23 IN AQUACULTURAL OPERATIONS. 24 (ii) LIVESTOCK, BORN OR UNBORN, INCLUDING AQUATIC GOODS 25 PRODUCED IN AQUACULTURAL OPERATIONS. 26 (iii) SUPPLIES USED OR PRODUCED IN A FARMING OPERATION. 02120'99 57 1 (iv) PRODUCTS OF CROPS OR LIVESTOCK IN THEIR UNMANUFACTURED 2 STATES. 3 (II) "FARMING OPERATION" MEANS RAISING, CULTIVATING, PROPA- 4 GATING, FATTENING, GRAZING, OR ANY OTHER FARMING, LIVESTOCK, OR 5 AQUACULTURAL OPERATION. 6 (JJ) "FILE NUMBER" MEANS THE NUMBER ASSIGNED TO AN INITIAL 7 FINANCING STATEMENT PURSUANT TO SECTION 9519(1). 8 (KK) "FILING OFFICE" MEANS AN OFFICE DESIGNATED IN SECTION 9 9501 AS THE PLACE TO FILE A FINANCING STATEMENT. 10 (ll) "FILING-OFFICE RULE" MEANS A RULE ADOPTED PURSUANT TO 11 SECTION 9526. 12 (MM) "FINANCING STATEMENT" MEANS A RECORD OR RECORDS COM- 13 POSED OF AN INITIAL FINANCING STATEMENT AND ANY FILED RECORD 14 RELATING TO THE INITIAL FINANCING STATEMENT. 15 (NN) "FIXTURE FILING" MEANS THE FILING OF A FINANCING STATE- 16 MENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES AND SATIS- 17 FYING SECTION 9502(1) AND (2). THE TERM INCLUDES THE FILING OF A 18 FINANCING STATEMENT COVERING GOODS OF A TRANSMITTING UTILITY 19 WHICH ARE OR ARE TO BECOME FIXTURES. 20 (OO) "FIXTURES" MEANS GOODS THAT HAVE BECOME SO RELATED TO 21 PARTICULAR REAL PROPERTY THAT AN INTEREST IN THEM ARISES UNDER 22 REAL PROPERTY LAW. 23 (PP) "GENERAL INTANGIBLE" MEANS ANY PERSONAL PROPERTY, 24 INCLUDING THINGS IN ACTION, OTHER THAN ACCOUNTS, CHATTEL PAPER, 25 COMMERCIAL TORT CLAIMS, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS, 26 INSTRUMENTS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, 02120'99 58 1 LETTERS OF CREDIT, MONEY, AND OIL, GAS, OR OTHER MINERALS BEFORE 2 EXTRACTION. THE TERM INCLUDES PAYMENT INTANGIBLES AND SOFTWARE. 3 (QQ) "GOOD FAITH" MEANS HONESTY IN FACT AND THE OBSERVANCE 4 OF REASONABLE COMMERCIAL STANDARDS OF FAIR DEALING. 5 (RR) "GOODS" MEANS ALL THINGS THAT ARE MOVABLE WHEN A SECUR- 6 ITY INTEREST ATTACHES. THE TERM INCLUDES FIXTURES, STANDING 7 TIMBER THAT IS TO BE CUT AND REMOVED UNDER A CONVEYANCE OR CON- 8 TRACT FOR SALE, THE UNBORN YOUNG OF ANIMALS, CROPS GROWN, GROW- 9 ING, OR TO BE GROWN, EVEN IF THE CROPS ARE PRODUCED ON TREES, 10 VINES, OR BUSHES, AND MANUFACTURED HOMES. THE TERM ALSO INCLUDES 11 A COMPUTER PROGRAM EMBEDDED IN GOODS AND ANY SUPPORTING INFORMA- 12 TION PROVIDED IN CONNECTION WITH A TRANSACTION RELATING TO THE 13 PROGRAM IF THE PROGRAM IS ASSOCIATED WITH THE GOODS IN SUCH A 14 MANNER THAT IT CUSTOMARILY IS CONSIDERED PART OF THE GOODS, OR BY 15 BECOMING THE OWNER OF THE GOODS, A PERSON ACQUIRES A RIGHT TO USE 16 THE PROGRAM IN CONNECTION WITH THE GOODS. THE TERM DOES NOT 17 INCLUDE A COMPUTER PROGRAM EMBEDDED IN GOODS THAT CONSIST SOLELY 18 OF THE MEDIUM IN WHICH THE PROGRAM IS EMBEDDED. THE TERM ALSO 19 DOES NOT INCLUDE ACCOUNTS, CHATTEL PAPER, COMMERCIAL TORT CLAIMS, 20 DEPOSIT ACCOUNTS, DOCUMENTS, GENERAL INTANGIBLES, INSTRUMENTS, 21 INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, LETTERS OF CREDIT, 22 MONEY, OR OIL, GAS, OR OTHER MINERALS BEFORE EXTRACTION. 23 (SS) "GOVERNMENTAL UNIT" MEANS A SUBDIVISION, AGENCY, 24 DEPARTMENT, COUNTY, PARISH, MUNICIPALITY, OR OTHER UNIT OF THE 25 GOVERNMENT OF THE UNITED STATES, A STATE, OR A FOREIGN COUNTRY. 26 THE TERM INCLUDES AN ORGANIZATION HAVING A SEPARATE CORPORATE 27 EXISTENCE IF THE ORGANIZATION IS ELIGIBLE TO ISSUE DEBT ON WHICH 02120'99 59 1 INTEREST IS EXEMPT FROM INCOME TAXATION UNDER THE LAWS OF THE 2 UNITED STATES. 3 (TT) "HEALTH-CARE-INSURANCE RECEIVABLE" MEANS AN INTEREST IN 4 OR CLAIM UNDER A POLICY OF INSURANCE WHICH IS A RIGHT TO PAYMENT 5 OF A MONETARY OBLIGATION FOR HEALTH-CARE GOODS OR SERVICES 6 PROVIDED. 7 (UU) "INSTRUMENT" MEANS A NEGOTIABLE INSTRUMENT OR ANY OTHER 8 WRITING THAT EVIDENCES A RIGHT TO THE PAYMENT OF A MONETARY OBLI- 9 GATION, IS NOT ITSELF A SECURITY AGREEMENT OR LEASE, AND IS OF A 10 TYPE THAT IN ORDINARY COURSE OF BUSINESS IS TRANSFERRED BY DELIV- 11 ERY WITH ANY NECESSARY INDORSEMENT OR ASSIGNMENT. THE TERM DOES 12 NOT INCLUDE INVESTMENT PROPERTY, LETTERS OF CREDIT, OR WRITINGS 13 THAT EVIDENCE A RIGHT TO PAYMENT ARISING OUT OF THE USE OF A 14 CREDIT OR CHARGE CARD OR INFORMATION CONTAINED ON OR FOR USE WITH 15 THE CARD. 16 (VV) "INVENTORY" MEANS GOODS, OTHER THAN FARM PRODUCTS, THAT 17 MEET 1 OF THE FOLLOWING: 18 (i) ARE LEASED BY A PERSON AS LESSOR. 19 (ii) ARE HELD BY A PERSON FOR SALE OR LEASE OR TO BE FUR- 20 NISHED UNDER A CONTRACT OF SERVICE. 21 (iii) ARE FURNISHED BY A PERSON UNDER A CONTRACT OF 22 SERVICE. 23 (iv) CONSIST OF RAW MATERIALS, WORK IN PROCESS, OR MATERIALS 24 USED OR CONSUMED IN A BUSINESS. 25 (WW) "INVESTMENT PROPERTY" MEANS A SECURITY, WHETHER CERTIF- 26 ICATED OR UNCERTIFICATED, SECURITY ENTITLEMENT, SECURITIES 27 ACCOUNT, COMMODITY CONTRACT, OR COMMODITY ACCOUNT. 02120'99 60 1 (XX) "JURISDICTION OF ORGANIZATION", WITH RESPECT TO A 2 REGISTERED ORGANIZATION, MEANS THE JURISDICTION UNDER WHOSE LAW 3 THE ORGANIZATION IS ORGANIZED. 4 (YY) "LETTER-OF-CREDIT RIGHT" MEANS A RIGHT TO PAYMENT OR 5 PERFORMANCE UNDER A LETTER OF CREDIT, WHETHER OR NOT THE BENEFI- 6 CIARY HAS DEMANDED OR IS AT THE TIME ENTITLED TO DEMAND PAYMENT 7 OR PERFORMANCE. THE TERM DOES NOT INCLUDE THE RIGHT OF A BENEFI- 8 CIARY TO DEMAND PAYMENT OR PERFORMANCE UNDER A LETTER OF CREDIT. 9 (ZZ) "LIEN CREDITOR" MEANS 1 OR MORE OF THE FOLLOWING: 10 (i) A CREDITOR THAT HAS ACQUIRED A LIEN ON THE PROPERTY 11 INVOLVED BY ATTACHMENT, LEVY, OR THE LIKE. 12 (ii) AN ASSIGNEE FOR BENEFIT OF CREDITORS FROM THE TIME OF 13 ASSIGNMENT. 14 (iii) A TRUSTEE IN BANKRUPTCY FROM THE DATE OF THE FILING OF 15 THE PETITION. 16 (iv) A RECEIVER IN EQUITY FROM THE TIME OF APPOINTMENT. 17 (AAA) "MANUFACTURED HOME" MEANS A STRUCTURE, TRANSPORTABLE 18 IN 1 OR MORE SECTIONS, WHICH, IN THE TRAVELING MODE, IS 8 BODY 19 FEET OR MORE IN WIDTH OR 40 BODY FEET OR MORE IN LENGTH, OR WHEN 20 ERECTED ON SITE, IS 320 OR MORE SQUARE FEET, AND WHICH IS BUILT 21 ON A PERMANENT CHASSIS AND DESIGNED TO BE USED AS A DWELLING WITH 22 OR WITHOUT A PERMANENT FOUNDATION WHEN CONNECTED TO THE REQUIRED 23 UTILITIES, AND INCLUDES THE PLUMBING, HEATING, AIR-CONDITIONING, 24 AND ELECTRICAL SYSTEMS CONTAINED THEREIN. THE TERM INCLUDES ANY 25 STRUCTURE THAT MEETS ALL OF THE REQUIREMENTS OF THIS PARAGRAPH 26 EXCEPT THE SIZE REQUIREMENTS AND WITH RESPECT TO WHICH THE 27 MANUFACTURER VOLUNTARILY FILES A CERTIFICATION REQUIRED BY THE 02120'99 61 1 SECRETARY OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND 2 COMPLIES WITH THE STANDARDS ESTABLISHED UNDER TITLE 42 OF THE 3 UNITED STATES CODE. 4 (BBB) "MANUFACTURED-HOME TRANSACTION" MEANS A SECURED TRANS- 5 ACTION THAT CREATES A PURCHASE-MONEY SECURITY INTEREST IN A MANU- 6 FACTURED HOME, OTHER THAN A MANUFACTURED HOME HELD AS INVENTORY, 7 OR IN WHICH A MANUFACTURED HOME, OTHER THAN A MANUFACTURED HOME 8 HELD AS INVENTORY, IS THE PRIMARY COLLATERAL. 9 (CCC) "MORTGAGE" MEANS A CONSENSUAL INTEREST IN REAL PROPER- 10 TY, INCLUDING FIXTURES, WHICH SECURES PAYMENT OR PERFORMANCE OF 11 AN OBLIGATION. 12 (DDD) "NEW DEBTOR" MEANS A PERSON THAT BECOMES BOUND AS 13 DEBTOR UNDER SECTION 9203(4) BY A SECURITY AGREEMENT PREVIOUSLY 14 ENTERED INTO BY ANOTHER PERSON. 15 (EEE) "NEW VALUE" MEANS MONEY, MONEY'S WORTH IN PROPERTY, 16 SERVICES, OR NEW CREDIT, OR RELEASE BY A TRANSFEREE OF AN INTER- 17 EST IN PROPERTY PREVIOUSLY TRANSFERRED TO THE TRANSFEREE. THE 18 TERM DOES NOT INCLUDE AN OBLIGATION SUBSTITUTED FOR ANOTHER 19 OBLIGATION. 20 (FFF) "NONCASH PROCEEDS" MEANS PROCEEDS OTHER THAN CASH 21 PROCEEDS. 22 (GGG) "OBLIGOR" MEANS A PERSON THAT, WITH RESPECT TO AN 23 OBLIGATION SECURED BY A SECURITY INTEREST IN OR AN AGRICULTURAL 24 LIEN ON THE COLLATERAL, OWES PAYMENT OR OTHER PERFORMANCE OF THE 25 OBLIGATION, HAS PROVIDED PROPERTY OTHER THAN THE COLLATERAL TO 26 SECURE PAYMENT OR OTHER PERFORMANCE OF THE OBLIGATION, OR IS 27 OTHERWISE ACCOUNTABLE IN WHOLE OR IN PART FOR PAYMENT OR OTHER 02120'99 62 1 PERFORMANCE OF THE OBLIGATION. THE TERM DOES NOT INCLUDE ISSUERS 2 OR NOMINATED PERSONS UNDER A LETTER OF CREDIT. 3 (HHH) "ORIGINAL DEBTOR" MEANS A PERSON THAT, AS DEBTOR, 4 ENTERED INTO A SECURITY AGREEMENT TO WHICH A NEW DEBTOR HAS 5 BECOME BOUND UNDER SECTION 9203(4). 6 (III) "PAYMENT INTANGIBLE" MEANS A GENERAL INTANGIBLE UNDER 7 WHICH THE ACCOUNT DEBTOR'S PRINCIPAL OBLIGATION IS A MONETARY 8 OBLIGATION. 9 (JJJ) "PERSON RELATED TO", WITH RESPECT TO AN INDIVIDUAL, 10 MEANS 1 OR MORE OF THE FOLLOWING: 11 (i) THE SPOUSE OF THE INDIVIDUAL. 12 (ii) A BROTHER, BROTHER-IN-LAW, SISTER, OR SISTER-IN-LAW OF 13 THE INDIVIDUAL. 14 (iii) AN ANCESTOR OR LINEAL DESCENDANT OF THE INDIVIDUAL OR 15 THE INDIVIDUAL'S SPOUSE. 16 (iv) ANY OTHER RELATIVE, BY BLOOD OR MARRIAGE, OF THE INDI- 17 VIDUAL OR THE INDIVIDUAL'S SPOUSE WHO SHARES THE SAME HOME WITH 18 THE INDIVIDUAL. 19 (KKK) "PERSON RELATED TO", WITH RESPECT TO AN ORGANIZATION, 20 MEANS 1 OR MORE OF THE FOLLOWING: 21 (i) A PERSON DIRECTLY OR INDIRECTLY CONTROLLING, CONTROLLED 22 BY, OR UNDER COMMON CONTROL WITH THE ORGANIZATION. 23 (ii) AN OFFICER OR DIRECTOR OF, OR A PERSON PERFORMING SIMI- 24 LAR FUNCTIONS WITH RESPECT TO, THE ORGANIZATION. 25 (iii) AN OFFICER OR DIRECTOR OF, OR A PERSON PERFORMING SIM- 26 ILAR FUNCTIONS WITH RESPECT TO, A PERSON DESCRIBED IN 27 SUBPARAGRAPH (i). 02120'99 63 1 (iv) THE SPOUSE OF AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH 2 (i), (ii), OR (iii). 3 (v) AN INDIVIDUAL WHO IS RELATED BY BLOOD OR MARRIAGE TO AN 4 INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (i), (ii), (iii), OR (iv) 5 AND SHARES THE SAME HOME WITH THE INDIVIDUAL. 6 (lll) "PROCEEDS" MEANS 1 OR MORE OF THE FOLLOWING PROPERTY: 7 (i) WHATEVER IS ACQUIRED UPON THE SALE, LEASE, LICENSE, 8 EXCHANGE, OR OTHER DISPOSITION OF COLLATERAL. 9 (ii) WHATEVER IS COLLECTED ON, OR DISTRIBUTED ON ACCOUNT OF, 10 COLLATERAL. 11 (iii) RIGHTS ARISING OUT OF COLLATERAL. 12 (iv) TO THE EXTENT OF THE VALUE OF COLLATERAL, CLAIMS ARIS- 13 ING OUT OF THE LOSS, NONCONFORMITY, OR INTERFERENCE WITH THE USE 14 OF, DEFECTS OR INFRINGEMENT OF RIGHTS IN, OR DAMAGE TO, THE 15 COLLATERAL. 16 (v) TO THE EXTENT OF THE VALUE OF COLLATERAL AND TO THE 17 EXTENT PAYABLE TO THE DEBTOR OR THE SECURED PARTY, INSURANCE PAY- 18 ABLE BY REASON OF THE LOSS OR NONCONFORMITY OF, DEFECTS OR 19 INFRINGEMENT OF RIGHTS IN, OR DAMAGE TO, THE COLLATERAL. 20 (MMM) "PRODUCTION-MONEY CROPS" MEANS CROPS THAT SECURE A 21 PRODUCTION-MONEY OBLIGATION INCURRED WITH RESPECT TO THE PRODUC- 22 TION OF THOSE CROPS. 23 (NNN) "PRODUCTION-MONEY OBLIGATION" MEANS AN OBLIGATION OF 24 AN OBLIGOR INCURRED FOR NEW VALUE GIVEN TO ENABLE THE DEBTOR TO 25 PRODUCE CROPS IF THE VALUE IS IN FACT USED FOR THE PRODUCTION OF 26 THE CROPS. 02120'99 64 1 (OOO) "PRODUCTION OF CROPS" INCLUDES TILLING AND OTHERWISE 2 PREPARING LAND FOR GROWING, PLANTING, CULTIVATING, FERTILIZING, 3 IRRIGATING, HARVESTING, AND GATHERING CROPS, AND PROTECTING THEM 4 FROM DAMAGE OR DISEASE. 5 (PPP) "PROMISSORY NOTE" MEANS AN INSTRUMENT THAT EVIDENCES A 6 PROMISE TO PAY A MONETARY OBLIGATION, DOES NOT EVIDENCE AN ORDER 7 TO PAY, AND DOES NOT CONTAIN AN ACKNOWLEDGMENT BY A BANK THAT THE 8 BANK HAS RECEIVED FOR DEPOSIT A SUM OF MONEY OR FUNDS. 9 (QQQ) "PROPOSAL" MEANS A RECORD AUTHENTICATED BY A SECURED 10 PARTY WHICH INCLUDES THE TERMS ON WHICH THE SECURED PARTY IS 11 WILLING TO ACCEPT COLLATERAL IN FULL OR PARTIAL SATISFACTION OF 12 THE OBLIGATION IT SECURES PURSUANT TO SECTIONS 9620, 9621, AND 13 9622. 14 (RRR) "PUBLIC-FINANCE TRANSACTION" MEANS A SECURED TRANSAC- 15 TION IN CONNECTION WITH WHICH ALL OF THE FOLLOWING ARE MET: 16 (i) DEBT SECURITIES ARE ISSUED. 17 (ii) ALL OR A PORTION OF THE SECURITIES ISSUED HAVE AN INI- 18 TIAL STATED MATURITY OF AT LEAST 20 YEARS. 19 (iii) THE DEBTOR, OBLIGOR, SECURED PARTY, ACCOUNT DEBTOR OR 20 OTHER PERSON OBLIGATED ON COLLATERAL, ASSIGNOR OR ASSIGNEE OF A 21 SECURED OBLIGATION, OR ASSIGNOR OR ASSIGNEE OF A SECURITY INTER- 22 EST IS A STATE OR A GOVERNMENTAL UNIT OF A STATE. 23 (SSS) "PURSUANT TO COMMITMENT", WITH RESPECT TO AN ADVANCE 24 MADE OR OTHER VALUE GIVEN BY A SECURED PARTY, MEANS PURSUANT TO 25 THE SECURED PARTY'S OBLIGATION, WHETHER OR NOT A SUBSEQUENT EVENT 26 OF DEFAULT OR OTHER EVENT NOT WITHIN THE SECURED PARTY'S CONTROL 02120'99 65 1 HAS RELIEVED OR MAY RELIEVE THE SECURED PARTY FROM ITS 2 OBLIGATION. 3 (TTT) "RECORD", EXCEPT AS USED IN "FOR RECORD", "OF RECORD", 4 "RECORD OR LEGAL TITLE", AND "RECORD OWNER", MEANS INFORMATION 5 THAT IS INSCRIBED ON A TANGIBLE MEDIUM OR WHICH IS STORED IN AN 6 ELECTRONIC OR OTHER MEDIUM AND IS RETRIEVABLE IN PERCEIVABLE 7 FORM. 8 (UUU) "REGISTERED ORGANIZATION" MEANS AN ORGANIZATION ORGA- 9 NIZED SOLELY UNDER THE LAW OF A SINGLE STATE OR THE UNITED STATES 10 AND AS TO WHICH THE STATE OR THE UNITED STATES MUST MAINTAIN A 11 PUBLIC RECORD SHOWING THE ORGANIZATION TO HAVE BEEN ORGANIZED. 12 (VVV) "SECONDARY OBLIGOR" MEANS AN OBLIGOR TO THE EXTENT 13 THAT THE OBLIGOR'S OBLIGATION IS SECONDARY OR THE OBLIGOR HAS A 14 RIGHT OF RECOURSE WITH RESPECT TO AN OBLIGATION SECURED BY COL- 15 LATERAL AGAINST THE DEBTOR, ANOTHER OBLIGOR, OR PROPERTY OF 16 EITHER. 17 (WWW) "SECURED PARTY" MEANS 1 OR MORE OF THE FOLLOWING: 18 (i) A PERSON IN WHOSE FAVOR A SECURITY INTEREST IS CREATED 19 OR PROVIDED FOR UNDER A SECURITY AGREEMENT, WHETHER OR NOT ANY 20 OBLIGATION TO BE SECURED IS OUTSTANDING. 21 (ii) A PERSON THAT HOLDS AN AGRICULTURAL LIEN. 22 (iii) A CONSIGNOR. 23 (iv) A PERSON TO WHICH ACCOUNTS, CHATTEL PAPER, PAYMENT 24 INTANGIBLES, OR PROMISSORY NOTES HAVE BEEN SOLD. 25 (v) A TRUSTEE, INDENTURE TRUSTEE, AGENT, COLLATERAL AGENT, 26 OR OTHER REPRESENTATIVE IN WHOSE FAVOR A SECURITY INTEREST OR 27 AGRICULTURAL LIEN IS CREATED OR PROVIDED FOR. 02120'99 66 1 (vi) A PERSON THAT HOLDS A SECURITY INTEREST ARISING UNDER 2 SECTION 2401, 2505, 2711(3), 2A508(5), 4210, OR 5118. 3 (XXX) "SECURITY AGREEMENT" MEANS AN AGREEMENT THAT CREATES 4 OR PROVIDES FOR A SECURITY INTEREST. 5 (YYY) "SEND", IN CONNECTION WITH A RECORD OR NOTIFICATION, 6 MEANS 1 OF THE FOLLOWING: 7 (i) TO DEPOSIT IN THE MAIL, DELIVER FOR TRANSMISSION, OR 8 TRANSMIT BY ANY OTHER USUAL MEANS OF COMMUNICATION, WITH POSTAGE 9 OR COST OF TRANSMISSION PROVIDED FOR, ADDRESSED TO ANY ADDRESS 10 REASONABLE UNDER THE CIRCUMSTANCES. 11 (ii) TO CAUSE THE RECORD OR NOTIFICATION TO BE RECEIVED 12 WITHIN THE TIME THAT IT WOULD HAVE BEEN RECEIVED IF PROPERLY SENT 13 UNDER SUBPARAGRAPH (i). 14 (ZZZ) "SOFTWARE" MEANS A COMPUTER PROGRAM AND ANY SUPPORTING 15 INFORMATION PROVIDED IN CONNECTION WITH A TRANSACTION RELATING TO 16 THE PROGRAM. THE TERM DOES NOT INCLUDE A COMPUTER PROGRAM THAT 17 IS INCLUDED IN THE DEFINITION OF GOODS. 18 (AAAA) "STATE" MEANS A STATE OF THE UNITED STATES, THE 19 DISTRICT OF COLUMBIA, PUERTO RICO, THE UNITED STATES VIRGIN 20 ISLANDS, OR ANY TERRITORY OR INSULAR POSSESSION SUBJECT TO THE 21 JURISDICTION OF THE UNITED STATES. 22 (BBBB) "SUPPORTING OBLIGATION" MEANS A LETTER-OF-CREDIT 23 RIGHT OR SECONDARY OBLIGATION THAT SUPPORTS THE PAYMENT OR PER- 24 FORMANCE OF AN ACCOUNT, CHATTEL PAPER, A DOCUMENT, A GENERAL 25 INTANGIBLE, AN INSTRUMENT, OR INVESTMENT PROPERTY. 02120'99 67 1 (CCCC) "TANGIBLE CHATTEL PAPER" MEANS CHATTEL PAPER 2 EVIDENCED BY A RECORD OR RECORDS CONSISTING OF INFORMATION THAT 3 IS INSCRIBED ON A TANGIBLE MEDIUM. 4 (DDDD) "TERMINATION STATEMENT" MEANS AN AMENDMENT OF A 5 FINANCING STATEMENT THAT IDENTIFIES, BY ITS FILE NUMBER, THE INI- 6 TIAL FINANCING STATEMENT TO WHICH IT RELATES AND INDICATES EITHER 7 THAT IT IS A TERMINATION STATEMENT OR THAT THE IDENTIFIED FINANC- 8 ING STATEMENT IS NO LONGER EFFECTIVE. 9 (EEEE) "TRANSMITTING UTILITY" MEANS A PERSON PRIMARILY 10 ENGAGED IN THE BUSINESS OF 1 OF THE FOLLOWING: 11 (i) OPERATING A RAILROAD, SUBWAY, STREET RAILWAY, OR TROLLEY 12 BUS. 13 (ii) TRANSMITTING COMMUNICATIONS ELECTRICALLY, ELECTROMAG- 14 NETICALLY, OR BY LIGHT. 15 (iii) TRANSMITTING GOODS BY PIPELINE OR SEWER. 16 (iv) TRANSMITTING OR PRODUCING AND TRANSMITTING ELECTRICITY, 17 STEAM, GAS, OR WATER. 18 (2) THE FOLLOWING DEFINITIONS IN OTHER ARTICLES APPLY TO 19 THIS ARTICLE: 20 "APPLICANT" SECTION 5102 21 "BENEFICIARY" SECTION 5102 22 "BROKER" SECTION 8102 23 "CERTIFICATED SECURITY" SECTION 8102 24 "CHECK" SECTION 3104 25 "CLEARING CORPORATION" SECTION 8102 26 "CONTRACT FOR SALE" SECTION 2106 02120'99 68 1 "CUSTOMER" SECTION 4104 2 "ENTITLEMENT HOLDER" SECTION 8102 3 "FINANCIAL ASSET" SECTION 8102 4 "HOLDER IN DUE COURSE" SECTION 3302 5 "ISSUER" (WITH RESPECT TO A LETTER 6 OF CREDIT OR LETTER-OF-CREDIT RIGHT) SECTION 5102 7 "ISSUER" (WITH RESPECT TO A 8 SECURITY) SECTION 8201 9 "LEASE" SECTION 2A103 10 "LEASE AGREEMENT" SECTION 2A103 11 "LEASE CONTRACT" SECTION 2A103 12 "LEASEHOLD INTEREST" SECTION 2A103 13 "LESSEE" SECTION 2A103 14 "LESSEE IN ORDINARY COURSE OF 15 BUSINESS" SECTION 2A103 16 "LESSOR" SECTION 2A103 17 "LESSOR'S RESIDUAL INTEREST" SECTION 2A103 18 "LETTER OF CREDIT" SECTION 5102 19 "MERCHANT" SECTION 2104 20 "NEGOTIABLE INSTRUMENT" SECTION 3104 21 "NOMINATED PERSON" SECTION 5102 22 "NOTE" SECTION 3104 23 "PROCEEDS OF A LETTER OF CREDIT" SECTION 5114 24 "PROVE" SECTION 3103 25 "SALE" SECTION 2106 26 "SECURITIES ACCOUNT" SECTION 8501 02120'99 69 1 "SECURITIES INTERMEDIARY" SECTION 8102 2 "SECURITY" SECTION 8102 3 "SECURITY CERTIFICATE" SECTION 8102 4 "SECURITY ENTITLEMENT" SECTION 8102 5 "UNCERTIFICATED SECURITY" SECTION 8102. 6 (3) ARTICLE 1 CONTAINS GENERAL DEFINITIONS AND PRINCIPLES OF 7 CONSTRUCTION AND INTERPRETATION APPLICABLE THROUGHOUT THIS 8 ARTICLE. 9 Sec. 9103.(1) Documents, instruments, and ordinary10goods.11(a) This subsection applies to documents, instruments,12rights to proceeds of written letters of credit, and goods other13than those covered by a certificate of title described in subsec-14tion (2), mobile goods described in subsection (3), and minerals15described in subsection (5).16(b) Except as otherwise provided in this subsection, perfec-17tion and the effect of perfection or nonperfection of a security18interest in collateral are governed by the law of the jurisdic-19tion where the collateral is when the last event occurs on which20is based the assertion that the security interest is perfected or21unperfected.22(c) If the parties to a transaction creating a purchase23money security interest in goods in 1 jurisdiction understand at24the time that the security interest attaches that the goods will25be kept in another jurisdiction, then the law of the other juris-26diction governs the perfection and the effect of perfection or27nonperfection of the security interest from the time it attaches02120'99 70 1until 30 days after the debtor receives possession of the goods2and thereafter if the goods are taken to the other jurisdiction3before the end of the 30-day period.4(d) When collateral is brought into and kept in this state5while subject to a security interest perfected under the law of6the jurisdiction from which the collateral was removed, the7security interest remains perfected, but if action is required by8part 3 of this article to perfect the security interest:9(i) If the action is not taken before the expiration of the10period of perfection in the other jurisdiction or the end of 411months after the collateral is brought into this state, whichever12period first expires, the security interest becomes unperfected13at the end of that period and is thereafter deemed to have been14unperfected as against a person who became a purchaser after15removal.16(ii) If the action is taken before the expiration of the17period specified in subparagraph (i), the security interest con-18tinues perfected thereafter.19(iii) For the purpose of priority over a buyer of consumer20goods, (section 9307(14)), the period of the effectiveness of a21filing in the jurisdiction from which the collateral is removed22is governed by the rules relating to perfection in subparagraphs23(i) and (ii).24(2) Certificate of title.25(a) This subsection applies to goods covered by a certifi-26cate of title issued under a statute of this state or of another27jurisdiction under the law of which indication of a security02120'99 71 1interest on the certificate is required as a condition of2perfection.3(b) Except as otherwise provided in this subsection, perfec-4tion and the effect of perfection or nonperfection of the secur-5ity interest are governed by the law (including the conflict of6laws rules) of the jurisdiction issuing the certificate until 47months after the goods are removed from that jurisdiction and8thereafter until the goods are registered in another jurisdic-9tion, but in any event not beyond surrender of the certificate.10After the expiration of that period, the goods are not covered by11the certificate of title within the meaning of this section.12(c) Except with respect to the rights of a buyer described13in the next paragraph, a security interest, perfected in another14jurisdiction otherwise than by notation on a certificate of15title, in goods brought into this state and thereafter covered by16a certificate of title issued by this state, is subject to the17rules stated in paragraph (d) of subsection (1).18(d) If goods are brought into this state while a security19interest therein is perfected in any manner under the law of the20jurisdiction from which the goods are removed and a certificate21of title is issued by the state and the certificate does not show22that the goods are subject to the security interest or that they23may be subject to security interests not shown on the certifi-24cate, the security interest is subordinate to the rights of a25buyer of the goods who is not in the business of selling goods of26that kind to the extent that he or she gives value and receives02120'99 72 1delivery of the goods after issuance of the certificate and2without knowledge of the security interest.3(3) Accounts, general intangibles, and mobile goods.4(a) This subsection applies to accounts (other than an5account described in subsection (5) on minerals) and general6intangibles (other than uncertificated securities), and to goods7which are mobile and which are of a type normally used in more8than 1 jurisdiction, such as motor vehicles, trailers, rolling9stock, airplanes, shipping containers, road building and con-10struction machinery, and commercial harvesting machinery and the11like, if the goods are equipment or are inventory leased or held12for lease by the debtor to others, and are not covered by a cer-13tificate of title described in subsection (2).14(b) The law (including the conflict of laws rules) of the15jurisdiction in which the debtor is located governs the perfec-16tion and the effect of perfection or nonperfection of the secur-17ity interest.18(c) If, however, the debtor is located in a jurisdiction19which is not a part of the United States, and which does not pro-20vide for perfection of the security interest by filing or record-21ing in that jurisdiction, the law of the jurisdiction in the22United States in which the debtor has its major executive office23in the United States governs the perfection and the effect of24perfection or nonperfection of the security interest through25filing. In the alternative, if the debtor is located in a juris-26diction which is not a part of the United States or Canada and27the collateral is accounts or general intangibles for money due02120'99 73 1or to become due, the security interest may be perfected by2notification to the account debtor. As used in this paragraph,3"United States" includes its territories and possessions and the4commonwealth of Puerto Rico.5(d) A debtor shall be deemed located at his or her place of6business if he or she has one, at his or her chief executive7office if he or she has more than 1 place of business, otherwise8at his or her residence. If, however, the debtor is a foreign9air carrier under the federal aviation act of 1958, 4910U.S.C. 1301, it shall be deemed located at the designated office11of the agent upon whom service of process may be made on behalf12of the foreign air carrier.13(e) A security interest perfected under the law of the14jurisdiction of the location of the debtor is perfected until the15expiration of 4 months after a change of the debtor's location to16another jurisdiction, or until perfection would have ceased by17the law of the first jurisdiction, whichever period first18expires. Unless perfected in the new jurisdiction before the end19of that period, it becomes unperfected thereafter and is deemed20to have been unperfected as against a person who became a pur-21chaser after the change.22(4) Chattel paper.23The rules stated for goods in subsection (1) apply to a pos-24sessory security interest in chattel paper. The rules stated for25accounts in subsection (3) apply to a nonpossessory security26interest in chattel paper, but the security interest may not be27perfected by notification to the account debtor.02120'99 74 1(5) Minerals.2Perfection and the effect of perfection or nonperfection of3a security interest which is created by a debtor who has an4interest in minerals or the like (including oil and gas) before5extraction and which attaches thereto as extracted, or which6attaches to an account resulting from the sale thereof at the7wellhead or minehead are governed by the law (including the con-8flict of laws rules) of the jurisdiction where the wellhead or9minehead is located.10(6) Investment property.11(a) This subsection applies to investment property.12(b) Except as otherwise provided in paragraph (f), during13the time that a security certificate is located in a jurisdic-14tion, perfection of a security interest, the effect of perfection15or nonperfection, and the priority of a security interest in the16certificated security represented thereby are governed by the17local law of that jurisdiction.18(c) Except as otherwise provided in paragraph (f), perfec-19tion of a security interest, the effect of perfection or nonper-20fection, and the priority of a security interest in an uncertifi-21cated security are governed by the local law of the issuer's22jurisdiction as specified in section 8110(4).23(d) Except as otherwise provided in paragraph (f), perfec-24tion of a security interest, the effect of perfection or nonper-25fection, and the priority of a security interest in a security26entitlement or securities account are governed by the local law02120'99 75 1of the securities intermediary's jurisdiction as specified in2section 8110(5).3(e) Except as otherwise provided in paragraph (f), perfec-4tion of a security interest, the effect of perfection or nonper-5fection, and the priority of a security interest in a commodity6contract or commodity account are governed by the local law of7the commodity intermediary's jurisdiction. The following rules8determine a "commodity intermediary's jurisdiction" for purposes9of this paragraph:10(i) If an agreement between the commodity intermediary and11commodity customer specifies that it is governed by the law of a12particular jurisdiction, that jurisdiction is the commodity13intermediary's jurisdiction.14(ii) If an agreement between the commodity intermediary and15commodity customer does not specify the governing law as provided16in subparagraph (i), but expressly specifies that the commodity17account is maintained at an office in a particular jurisdiction,18that jurisdiction is the commodity intermediary's jurisdiction.19(iii) If an agreement between the commodity intermediary and20commodity customer does not specify a jurisdiction as provided in21subparagraph (i) or (ii), the commodity intermediary's jurisdic-22tion is the jurisdiction in which is located the office identi-23fied in an account statement as the office serving the commodity24customer's account.25(iv) If an agreement between the commodity intermediary and26commodity customer does not specify a jurisdiction as provided in27subparagraph (i) or (ii) and an account statement does not02120'99 76 1identify an office serving the commodity customer's account as2provided in subparagraph (iii), the commodity intermediary's3jurisdiction is the jurisdiction in which is located the chief4executive office of the commodity intermediary.5(f) Perfection of a security interest by filing, automatic6perfection of a security interest in investment property granted7by a broker or securities intermediary, and automatic perfection8of a security interest in a commodity contract or commodity9account granted by a commodity intermediary are governed by the10local law of the jurisdiction in which the debtor is located.11 (1) AS USED IN THIS SECTION: 12 (A) "PURCHASE-MONEY COLLATERAL" MEANS GOODS OR SOFTWARE THAT 13 SECURES A PURCHASE-MONEY OBLIGATION INCURRED WITH RESPECT TO THAT 14 COLLATERAL. 15 (B) "PURCHASE-MONEY OBLIGATION" MEANS AN OBLIGATION OF AN 16 OBLIGOR INCURRED AS ALL OR PART OF THE PRICE OF THE COLLATERAL OR 17 FOR VALUE GIVEN TO ENABLE THE DEBTOR TO ACQUIRE RIGHTS IN OR THE 18 USE OF THE COLLATERAL IF THE VALUE IS IN FACT SO USED. 19 (2) A SECURITY INTEREST IN GOODS IS A PURCHASE-MONEY SECUR- 20 ITY INTEREST TO THE FOLLOWING EXTENT, AS APPLICABLE: 21 (A) TO THE EXTENT THAT THE GOODS ARE PURCHASE-MONEY COLLAT- 22 ERAL WITH RESPECT TO THAT SECURITY INTEREST. 23 (B) IF THE SECURITY INTEREST IS IN INVENTORY THAT IS OR WAS 24 PURCHASE-MONEY COLLATERAL, ALSO TO THE EXTENT THAT THE SECURITY 25 INTEREST SECURES A PURCHASE-MONEY OBLIGATION INCURRED WITH 26 RESPECT TO OTHER INVENTORY IN WHICH THE SECURED PARTY HOLDS OR 27 HELD A PURCHASE-MONEY SECURITY INTEREST. 02120'99 77 1 (C) ALSO TO THE EXTENT THAT THE SECURITY INTEREST SECURES A 2 PURCHASE-MONEY OBLIGATION INCURRED WITH RESPECT TO SOFTWARE IN 3 WHICH THE SECURED PARTY HOLDS OR HELD A PURCHASE-MONEY SECURITY 4 INTEREST. 5 (3) A SECURITY INTEREST IN SOFTWARE IS A PURCHASE-MONEY 6 SECURITY INTEREST TO THE EXTENT THAT THE SECURITY INTEREST ALSO 7 SECURES A PURCHASE-MONEY OBLIGATION INCURRED WITH RESPECT TO 8 GOODS IN WHICH THE SECURED PARTY HOLDS OR HELD A PURCHASE-MONEY 9 SECURITY INTEREST IF THE DEBTOR ACQUIRED ITS INTEREST IN THE 10 SOFTWARE IN AN INTEGRATED TRANSACTION IN WHICH IT ACQUIRED AN 11 INTEREST IN THE GOODS, AND THE DEBTOR ACQUIRED ITS INTEREST IN 12 THE SOFTWARE FOR THE PRINCIPAL PURPOSE OF USING THE SOFTWARE IN 13 THE GOODS. 14 (4) THE SECURITY INTEREST OF A CONSIGNOR IN GOODS THAT ARE 15 THE SUBJECT OF A CONSIGNMENT IS A PURCHASE-MONEY SECURITY INTER- 16 EST IN INVENTORY. 17 (5) IN A TRANSACTION OTHER THAN A CONSUMER-GOODS TRANSAC- 18 TION, IF THE EXTENT TO WHICH A SECURITY INTEREST IS A 19 PURCHASE-MONEY SECURITY INTEREST DEPENDS ON THE APPLICATION OF A 20 PAYMENT TO A PARTICULAR OBLIGATION, THE PAYMENT MUST BE APPLIED 21 IN 1 OF THE FOLLOWING, AS APPLICABLE: 22 (A) IN ACCORDANCE WITH ANY REASONABLE METHOD OF APPLICATION 23 TO WHICH THE PARTIES AGREE. 24 (B) IN THE ABSENCE OF THE PARTIES' AGREEMENT TO A REASONABLE 25 METHOD, IN ACCORDANCE WITH ANY INTENTION OF THE OBLIGOR MANI- 26 FESTED AT OR BEFORE THE TIME OF PAYMENT. 02120'99 78 1 (C) IN THE ABSENCE OF AN AGREEMENT TO A REASONABLE METHOD 2 AND A TIMELY MANIFESTATION OF THE OBLIGOR'S INTENTION, IN THE 3 FOLLOWING ORDER: 4 (i) TO OBLIGATIONS THAT ARE NOT SECURED. 5 (ii) IF MORE THAN 1 OBLIGATION IS SECURED, TO OBLIGATIONS 6 SECURED BY PURCHASE-MONEY SECURITY INTERESTS IN THE ORDER IN 7 WHICH THOSE OBLIGATIONS WERE INCURRED. 8 (6) IN A TRANSACTION OTHER THAN A CONSUMER-GOODS TRANSAC- 9 TION, A PURCHASE-MONEY SECURITY INTEREST DOES NOT LOSE ITS STATUS 10 AS SUCH, EVEN IF THE PURCHASE-MONEY COLLATERAL ALSO SECURES AN 11 OBLIGATION THAT IS NOT A PURCHASE-MONEY OBLIGATION, COLLATERAL 12 THAT IS NOT PURCHASE-MONEY COLLATERAL ALSO SECURES THE 13 PURCHASE-MONEY OBLIGATION, OR THE PURCHASE-MONEY OBLIGATION HAS 14 BEEN RENEWED, REFINANCED, CONSOLIDATED, OR RESTRUCTURED. 15 (7) IN A TRANSACTION OTHER THAN A CONSUMER-GOODS TRANSAC- 16 TION, A SECURED PARTY CLAIMING A PURCHASE-MONEY SECURITY INTEREST 17 HAS THE BURDEN OF ESTABLISHING THE EXTENT TO WHICH THE SECURITY 18 INTEREST IS A PURCHASE-MONEY SECURITY INTEREST. 19 (8) THE LIMITATION OF THE RULES IN SUBSECTIONS (5), (6), AND 20 (7) TO TRANSACTIONS OTHER THAN CONSUMER-GOODS TRANSACTIONS IS 21 INTENDED TO LEAVE TO THE COURT THE DETERMINATION OF THE PROPER 22 RULES IN CONSUMER-GOODS TRANSACTIONS. THE COURT MAY NOT INFER 23 FROM THAT LIMITATION THE NATURE OF THE PROPER RULE IN 24 CONSUMER-GOODS TRANSACTIONS AND MAY CONTINUE TO APPLY ESTABLISHED 25 APPROACHES. 02120'99 79 1 SEC. 9103A. (1) A SECURITY INTEREST IN CROPS IS A 2 PRODUCTION-MONEY SECURITY INTEREST TO THE EXTENT THAT THE CROPS 3 ARE PRODUCTION-MONEY CROPS. 4 (2) IF THE EXTENT TO WHICH A SECURITY INTEREST IS A 5 PRODUCTION-MONEY SECURITY INTEREST DEPENDS ON THE APPLICATION OF 6 A PAYMENT TO A PARTICULAR OBLIGATION, THE PAYMENT MUST BE APPLIED 7 IN 1 OF THE FOLLOWING, AS APPLICABLE: 8 (A) IN ACCORDANCE WITH ANY REASONABLE METHOD OF APPLICATION 9 TO WHICH THE PARTIES AGREE. 10 (B) IN THE ABSENCE OF THE PARTIES' AGREEMENT TO A REASONABLE 11 METHOD, IN ACCORDANCE WITH ANY INTENTION OF THE OBLIGOR MANI- 12 FESTED AT OR BEFORE THE TIME OF PAYMENT. 13 (C) IN THE ABSENCE OF AN AGREEMENT TO A REASONABLE METHOD 14 AND A TIMELY MANIFESTATION OF THE OBLIGOR'S INTENTION, IN THE 15 FOLLOWING ORDER: 16 (i) TO OBLIGATIONS THAT ARE NOT SECURED. 17 (ii) IF MORE THAN 1 OBLIGATION IS SECURED, TO OBLIGATIONS 18 SECURED BY PRODUCTION-MONEY SECURITY INTERESTS IN THE ORDER IN 19 WHICH THOSE OBLIGATIONS WERE INCURRED. 20 (3) A PRODUCTION-MONEY SECURITY INTEREST DOES NOT LOSE ITS 21 STATUS AS SUCH, EVEN IF 1 OR MORE OF THE FOLLOWING APPLY: 22 (A) THE PRODUCTION-MONEY CROPS ALSO SECURE AN OBLIGATION 23 THAT IS NOT A PRODUCTION-MONEY OBLIGATION. 24 (B) COLLATERAL THAT IS NOT PRODUCTION-MONEY CROPS ALSO 25 SECURES THE PRODUCTION-MONEY OBLIGATION. 26 (C) THE PRODUCTION-MONEY OBLIGATION HAS BEEN RENEWED, 27 REFINANCED, OR RESTRUCTURED. 02120'99 80 1 (4) A SECURED PARTY CLAIMING A PRODUCTION-MONEY SECURITY 2 INTEREST HAS THE BURDEN OF ESTABLISHING THE EXTENT TO WHICH THE 3 SECURITY INTEREST IS A PRODUCTION-MONEY SECURITY INTEREST. 4 Sec. 9104.This article does not apply:5(a) To a security interest subject to any statute of the6United States to the extent that such statute governs the rights7of parties to and third parties affected by transactions in par-8ticular types of property; or9(b) To a landlord's lien; or10(c) To a lien given by a statute or other rule of law for11services or materials except as provided in section 9310 on pri-12ority of such liens; or13(d) To a transfer of a claim for wages, salary, or other14compensation of an employee; or15(e) To a transfer by a government or governmental subdivi-16sion or agency; or17(f) To a sale of accounts or chattel paper as part of a sale18of the business out of which they arose, or an assignment of19accounts or chattel paper which is for the purpose of collection20only, or a transfer of a right to payment under a contract to an21assignee who is also to do the performance under the contract or22a transfer of a single account to an assignee in whole or partial23satisfaction of a preexisting indebtedness; or24(g) To a transfer of an interest or claim in or under any25policy of insurance except as provided with respect to proceeds26(section 9306) and priorities in proceeds (section 9312); or02120'99 81 1(h) To a right represented by a judgment, (other than a2judgment taken on a right to payment which was collateral); or3(i) To any right of setoff; or4(j) Except to the extent that provision is made for fixtures5in section 9313, to the creation or transfer of an interest in or6lien on real estate, including a lease or rents thereunder; or7(k) To a transfer in whole or in part of any claim arising8out of tort; or9(l) To a transfer of an interest in any deposit account10(section 9105(1)), except as provided with respect to proceeds11(section 9306) and priorities in proceeds (section 9312).12(m) To a transfer of an interest in a letter of credit other13than the rights to proceeds of a written letter of credit.14 (1) A SECURED PARTY HAS CONTROL OF A DEPOSIT ACCOUNT IF 1 OR 15 MORE OF THE FOLLOWING APPLY: 16 (A) THE SECURED PARTY IS THE BANK WITH WHICH THE DEPOSIT 17 ACCOUNT IS MAINTAINED. 18 (B) THE DEBTOR, SECURED PARTY, AND BANK HAVE AGREED IN AN 19 AUTHENTICATED RECORD THAT THE BANK WILL COMPLY WITH INSTRUCTIONS 20 ORIGINATED BY THE SECURED PARTY DIRECTING DISPOSITION OF THE 21 FUNDS IN THE ACCOUNT WITHOUT FURTHER CONSENT BY THE DEBTOR. 22 (C) THE SECURED PARTY BECOMES THE BANK'S CUSTOMER WITH 23 RESPECT TO THE DEPOSIT ACCOUNT. 24 (2) A SECURED PARTY THAT HAS SATISFIED SUBSECTION (1) HAS 25 CONTROL, EVEN IF THE DEBTOR RETAINS THE RIGHT TO DIRECT THE DIS- 26 POSITION OF FUNDS FROM THE DEPOSIT ACCOUNT. 02120'99 82 1 Sec. 9105.(1) As used in this article unless the context2otherwise requires:3(a) "Account debtor" means the person who is obligated on an4account, chattel paper, or general intangible.5(b) "Chattel paper" means a writing or writings which evi-6dence both a monetary obligation and a security interest in or a7lease of specific goods, but a charter or other contract involv-8ing the use or hire of a vessel is not chattel paper. When a9transaction is evidenced both by such a security agreement or a10lease and by an instrument or a series of instruments, the group11of writings taken together constitutes chattel paper.12(c) "Collateral" means the property subject to a security13interest, and includes accounts and chattel paper which have been14sold.15(d) "Debtor" means the person who owes payment or other per-16formance of the obligation secured, whether or not he or she owns17or has rights in the collateral, and includes the seller of18accounts or chattel paper. Where the debtor and the owner of the19collateral are not the same person, the term "debtor" means the20owner of the collateral in any provision of the article dealing21with the collateral, the obligor in any provision dealing with22the obligation, and may include both where the context so23requires.24(e) "Deposit account" means a demand, time, savings, pass-25book, or like account maintained with a bank, savings and loan26association, credit union, or like organization, other than an27account evidenced by a certificate of deposit.02120'99 83 1(f) "Document" means document of title as defined in the2general definitions of article 1, section 1201 and a receipt of3the kind described in section 7201(2).4(g) "Encumbrance" includes real estate mortgages and other5liens on real estate and all other rights in real estate that are6not ownership interests.7(h) "Goods" includes all things which are movable at the8time the security interest attaches or which are fixtures as9described in section 9313, but does not include money, documents,10instruments, investment property, accounts, chattel paper, gen-11eral intangibles, or minerals or the like including, but not12limited to, oil and gas before extraction. Goods also include13standing timber which is to be cut and removed under a conveyance14or contract for sale, the unborn young of animals, and growing15crops.16(i) "Instrument" means a negotiable instrument as defined in17section 3104 or any other writing which evidences a right to the18payment of money and is not itself a security agreement or lease19and is of a type which is in ordinary course of business trans-20ferred by delivery with any necessary indorsement or assignment.21The term does not include investment property.22(j) "Mortgage" means a consensual interest created by a real23estate mortgage, a trust deed on real estate, or the like.24(k) An advance is made "pursuant to commitment" if the25secured party has bound himself or herself to make it, whether or26not a subsequent event of default or other event not within his02120'99 84 1or her control has relieved or may relieve him or her from his or2her obligation.3(l) "Security agreement" means an agreement which creates or4provides for a security interest.5(m) "Secured party" means a lender, seller, or other person6in whose favor there is a security interest, including a person7to whom accounts or chattel paper have been sold. When the hold-8ers of obligations issued under an indenture of trust, equipment9trust agreement, or the like are represented by a trustee or10other person, the representative is the secured party.11(n) "Tax identification number" means a social security12number or federal employer tax identification number.13(o) "Transmitting utility" means any person primarily14engaged in the railroad, street railway, or trolley bus business,15the electric or electronics communications transmission business,16the transmission of goods by pipeline, or the transmission or the17production and transmission of electricity, steam, gas or water,18or the provision of sewer service.19(2) Other definitions applying to this article and the sec-20tions in which they appear are:21"Account". Section 9106.22"Attach". Section 9203.23"Commodity contract". Section 9115.24"Commodity customer". Section 9115.25"Commodity intermediary". Section 9115.02120'99 85 1"Construction mortgage". Section 9313(1).2"Consumer goods". Section 9109(1).3"Control". Section 9115.4"Equipment". Section 9109(2).5"Farm products". Section 9109(3).6"Fixture". Section 9313.7"Fixture filing". Section 9313.8"General intangibles". Section 9106.9"Inventory". Section 9109(4).10"Investment property". Section 9115.11"Lien creditor". Section 9301(3).12"Proceeds". Section 9306(1).13"Purchase money security interest". Section 9107.14"United States". Section 9103.15(3) The following definitions in other articles apply to16this article:17"Broker". Section 8102.18"Certificated security". Section 8102.19"Check". Section 3104.20"Clearing corporation". Section 8102.21"Contract for sale". Section 2106.22"Control". Section 8102.23"Delivery". Section 8102.24"Entitlement holder". Section 8102.25"Financial asset". Section 8102.02120'99 86 1"Holder in due course". Section 3302.2"Letter of credit". Section 5102.3"Note". Section 3104.4"Proceeds of a letter of credit". Section 5114.5"Sale". Section 2106.6"Security intermediary". Section 8102.7"Security". Section 8102.8"Security certificate". Section 8102.9"Security entitlement". Section 8102.10"Uncertificated security". Section 8102.11(4) In addition article 1 contains general definitions and12principles of construction and interpretation applicable through-13out this article.A SECURED PARTY HAS CONTROL OF ELECTRONIC 14 CHATTEL PAPER IF THE RECORD OR RECORDS COMPRISING THE CHATTEL 15 PAPER ARE CREATED, STORED, AND ASSIGNED IN SUCH A MANNER THAT ALL 16 OF THE FOLLOWING APPLY: 17 (A) A SINGLE AUTHORITATIVE COPY OF THE RECORD OR RECORDS 18 EXISTS WHICH IS UNIQUE, IDENTIFIABLE, AND, EXCEPT AS OTHERWISE 19 PROVIDED IN SUBDIVISIONS (D), (E), AND (F), UNALTERABLE. 20 (B) THE AUTHORITATIVE COPY IDENTIFIES THE SECURED PARTY AS 21 THE ASSIGNEE OF THE RECORD OR RECORDS. 22 (C) THE AUTHORITATIVE COPY IS COMMUNICATED TO AND MAINTAINED 23 BY THE SECURED PARTY OR ITS DESIGNATED CUSTODIAN. 24 (D) COPIES OR REVISIONS THAT ADD OR CHANGE AN IDENTIFIED 25 ASSIGNEE OF THE AUTHORITATIVE COPY CAN BE MADE ONLY WITH THE PAR- 26 TICIPATION OF THE SECURED PARTY. 02120'99 87 1 (E) EACH COPY OF THE AUTHORITATIVE COPY AND ANY COPY OF A 2 COPY IS READILY IDENTIFIABLE AS A COPY THAT IS NOT THE 3 AUTHORITATIVE COPY. 4 (F) ANY REVISION OF THE AUTHORITATIVE COPY IS READILY IDEN- 5 TIFIABLE AS AN AUTHORIZED OR UNAUTHORIZED REVISION. 6 Sec. 9106."Account" means any right to payment for goods7sold or leased or for services rendered which is not evidenced by8an instrument or chattel paper whether or not it has been earned9by performance. "General intangibles" means any personal prop-10erty (including things in action) other than goods, accounts,11chattel paper, documents, instruments, investment property,12rights to proceeds of written letters of credit, and money. All13rights to payment earned or unearned under a charter or other14contract involving the use or hire of a vessel and all rights15incident to the charter or contract are accounts.16 (1) A PERSON HAS CONTROL OF A CERTIFICATED SECURITY, UNCER- 17 TIFICATED SECURITY, OR SECURITY ENTITLEMENT AS PROVIDED IN SEC- 18 TION 8106. 19 (2) A SECURED PARTY HAS CONTROL OF A COMMODITY CONTRACT IF 20 EITHER OF THE FOLLOWING IS MET: 21 (A) THE SECURED PARTY IS THE COMMODITY INTERMEDIARY WITH 22 WHICH THE COMMODITY CONTRACT IS CARRIED. 23 (B) THE COMMODITY CUSTOMER, SECURED PARTY, AND COMMODITY 24 INTERMEDIARY HAVE AGREED THAT THE COMMODITY INTERMEDIARY WILL 25 APPLY ANY VALUE DISTRIBUTED ON ACCOUNT OF THE COMMODITY CONTRACT 26 AS DIRECTED BY THE SECURED PARTY WITHOUT FURTHER CONSENT BY THE 27 COMMODITY CUSTOMER. 02120'99 88 1 (3) A SECURED PARTY HAVING CONTROL OF ALL SECURITY 2 ENTITLEMENTS OR COMMODITY CONTRACTS CARRIED IN A SECURITIES 3 ACCOUNT OR COMMODITY ACCOUNT HAS CONTROL OVER THE SECURITIES 4 ACCOUNT OR COMMODITY ACCOUNT. 5 Sec. 9107.A security interest is a "purchase money secur-6ity interest" to the extent that it is7(a) taken or retained by the seller of the collateral to8secure all or part of its price; or9(b) taken by a person who by making advances or incurring an10obligation gives value to enable the debtor to acquire rights in11or the use of collateral if such value is in fact so used.A 12 SECURED PARTY HAS CONTROL OF A LETTER-OF-CREDIT RIGHT TO THE 13 EXTENT OF ANY RIGHT TO PAYMENT OR PERFORMANCE BY THE ISSUER OR 14 ANY NOMINATED PERSON IF THE ISSUER OR NOMINATED PERSON HAS CON- 15 SENTED TO AN ASSIGNMENT OF PROCEEDS OF THE LETTER OF CREDIT UNDER 16 SECTION 5114(3) OR OTHERWISE APPLICABLE LAW OR PRACTICE. 17 Sec. 9108.Where a secured party makes an advance, incurs18an obligation, releases a perfected security interest, or other-19wise gives new value which is to be secured in whole or in part20by after-acquired property his security interest in the21after-acquired collateral shall be deemed to be taken for a new22value and not as security for an antecedent debt if the debtor23acquires his rights in such collateral either in the ordinary24course of his business or under a contract of purchase made pur-25suant to the security agreement within a reasonable time after26new value is given.02120'99 89 1 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS (3), (4), 2 AND (5), A DESCRIPTION OF PERSONAL OR REAL PROPERTY IS 3 SUFFICIENT, WHETHER OR NOT IT IS SPECIFIC, IF IT REASONABLY IDEN- 4 TIFIES WHAT IS DESCRIBED. 5 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), A 6 DESCRIPTION OF COLLATERAL REASONABLY IDENTIFIES THE COLLATERAL IF 7 IT IDENTIFIES THE COLLATERAL BY 1 OR MORE OF THE FOLLOWING: 8 (A) SPECIFIC LISTING. 9 (B) CATEGORY. 10 (C) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A TYPE 11 OF COLLATERAL DEFINED IN THE UNIFORM COMMERCIAL CODE. 12 (D) QUANTITY. 13 (E) COMPUTATIONAL OR ALLOCATIONAL FORMULA OR PROCEDURE. 14 (F) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), ANY 15 OTHER METHOD, IF THE IDENTITY OF THE COLLATERAL IS OBJECTIVELY 16 DETERMINABLE. 17 (3) A DESCRIPTION OF COLLATERAL AS "ALL THE DEBTOR'S ASSETS" 18 OR "ALL THE DEBTOR'S PERSONAL PROPERTY" OR USING WORDS OF SIMILAR 19 IMPORT DOES NOT REASONABLY IDENTIFY THE COLLATERAL. 20 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A 21 DESCRIPTION OF A SECURITY ENTITLEMENT, SECURITIES ACCOUNT, OR 22 COMMODITY ACCOUNT IS SUFFICIENT IF IT DESCRIBES 1 OR MORE OF THE 23 FOLLOWING: 24 (A) THE COLLATERAL BY THE TERM SECURITY ENTITLEMENT, SECURI- 25 TIES ACCOUNT, OR COMMODITY ACCOUNT, OR AS INVESTMENT PROPERTY. 26 (B) THE UNDERLYING FINANCIAL ASSET OR COMMODITY CONTRACT. 02120'99 90 1 (5) A DESCRIPTION ONLY BY TYPE OF COLLATERAL DEFINED IN THE 2 UNIFORM COMMERCIAL CODE IS AN INSUFFICIENT DESCRIPTION OF EITHER 3 OF THE FOLLOWING: 4 (A) A COMMERCIAL TORT CLAIM. 5 (B) IN A CONSUMER TRANSACTION, CONSUMER GOODS, A SECURITY 6 ENTITLEMENT, A SECURITIES ACCOUNT, OR A COMMODITY ACCOUNT. 7 SUBPART 2. APPLICABILITY OF ARTICLE 8 Sec. 9109.Goods are9(1) "consumer goods" if they are used or bought for use pri-10marily for personal, family or household purposes;11(2) "equipment" if they are used or bought for use primarily12in business (including farming or a profession) or by a debtor13who is a nonprofit organization or a governmental subdivision or14agency or if the goods are not included in the definitions of15inventory, farm products or consumer goods;16(3) "farm products" if they are crops or livestock or sup-17plies used or produced in farming operations or if they are pro-18ducts of crops or livestock in their unmanufactured states (such19as ginned cotton, wool-clip, maple syrup, milk and eggs), and if20they are in the possession of a debtor engaged in raising, fat-21tening, grazing or other farming operations. If goods are farm22products they are neither equipment nor inventory;23(4) "inventory" if they are held by a person who holds them24for sale or lease or to be furnished under contracts of service25or if he has so furnished them, or if they are raw materials,26work in process or materials used or consumed in a business.27Inventory of a person is not to be classified as his equipment.02120'99 91 1 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS (3) AND (4), 2 THIS ARTICLE APPLIES TO ALL OF THE FOLLOWING: 3 (A) A TRANSACTION, REGARDLESS OF ITS FORM, THAT CREATES A 4 SECURITY INTEREST IN PERSONAL PROPERTY OR FIXTURES BY CONTRACT. 5 (B) AN AGRICULTURAL LIEN. 6 (C) A SALE OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, 7 OR PROMISSORY NOTES. 8 (D) A CONSIGNMENT. 9 (E) A SECURITY INTEREST ARISING UNDER SECTION 2401, 2505, 10 2711(3), OR 2A508(5), AS PROVIDED IN SECTION 9110. 11 (F) A SECURITY INTEREST ARISING UNDER SECTION 4210 OR 5118. 12 (2) THE APPLICATION OF THIS ARTICLE TO A SECURITY INTEREST 13 IN A SECURED OBLIGATION IS NOT AFFECTED BY THE FACT THAT THE 14 OBLIGATION IS ITSELF SECURED BY A TRANSACTION OR INTEREST TO 15 WHICH THIS ARTICLE DOES NOT APPLY. 16 (3) THIS ARTICLE DOES NOT APPLY TO THE EXTENT THAT 1 OR MORE 17 OF THE FOLLOWING APPLY: 18 (A) A STATUTE, REGULATION, OR TREATY OF THE UNITED STATES 19 PREEMPTS THIS ARTICLE. 20 (B) ANOTHER STATUTE OF THIS STATE EXPRESSLY GOVERNS THE CRE- 21 ATION, PERFECTION, PRIORITY, OR ENFORCEMENT OF A SECURITY INTER- 22 EST CREATED BY THIS STATE OR A GOVERNMENTAL UNIT OF THIS STATE. 23 (C) A STATUTE OF ANOTHER STATE, A FOREIGN COUNTRY, OR A GOV- 24 ERNMENTAL UNIT OF ANOTHER STATE OR FOREIGN COUNTRY, OTHER THAN A 25 STATUTE GENERALLY APPLICABLE TO SECURITY INTERESTS, EXPRESSLY 26 GOVERNS CREATION, PERFECTION, PRIORITY, OR ENFORCEMENT OF A 02120'99 92 1 SECURITY INTEREST CREATED BY THAT STATE, COUNTRY, OR GOVERNMENTAL 2 UNIT. 3 (D) THE RIGHTS OF A TRANSFEREE BENEFICIARY OR NOMINATED 4 PERSON UNDER A LETTER OF CREDIT ARE INDEPENDENT AND SUPERIOR 5 UNDER SECTION 5114. 6 (4) THIS ARTICLE DOES NOT APPLY TO ANY OF THE FOLLOWING: 7 (A) A LANDLORD'S LIEN, OTHER THAN AN AGRICULTURAL LIEN. 8 (B) A LIEN, OTHER THAN AN AGRICULTURAL LIEN, GIVEN BY STAT- 9 UTE OR OTHER RULE OF LAW FOR SERVICES OR MATERIALS, BUT SECTION 10 9333 APPLIES WITH RESPECT TO PRIORITY OF THE LIEN. 11 (C) AN ASSIGNMENT OF A CLAIM FOR WAGES, SALARY, OR OTHER 12 COMPENSATION OF AN EMPLOYEE. 13 (D) A SALE OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, 14 OR PROMISSORY NOTES AS PART OF A SALE OF THE BUSINESS OUT OF 15 WHICH THEY AROSE. 16 (E) AN ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTAN- 17 GIBLES, OR PROMISSORY NOTES THAT IS FOR THE PURPOSE OF COLLECTION 18 ONLY. 19 (F) AN ASSIGNMENT OF A RIGHT TO PAYMENT UNDER A CONTRACT TO 20 AN ASSIGNEE THAT IS ALSO OBLIGATED TO PERFORM UNDER THE 21 CONTRACT. 22 (G) AN ASSIGNMENT OF A SINGLE ACCOUNT, PAYMENT INTANGIBLE, 23 OR PROMISSORY NOTE TO AN ASSIGNEE IN FULL OR PARTIAL SATISFACTION 24 OF A PREEXISTING INDEBTEDNESS. 25 (H) A TRANSFER OF AN INTEREST IN OR AN ASSIGNMENT OF A CLAIM 26 UNDER A POLICY OF INSURANCE, OTHER THAN AN ASSIGNMENT BY OR TO A 27 HEALTH-CARE PROVIDER OF A HEALTH-CARE-INSURANCE RECEIVABLE AND 02120'99 93 1 ANY SUBSEQUENT ASSIGNMENT OF THE RIGHT TO PAYMENT, BUT SECTIONS 2 9315 AND 9322 APPLY WITH RESPECT TO PROCEEDS AND PRIORITIES IN 3 PROCEEDS. 4 (I) AN ASSIGNMENT OF A RIGHT REPRESENTED BY A JUDGMENT, 5 OTHER THAN A JUDGMENT TAKEN ON A RIGHT TO PAYMENT THAT WAS 6 COLLATERAL. 7 (J) A RIGHT OF RECOUPMENT OF SET-OFF, BUT SECTION 9340 8 APPLIES WITH RESPECT TO THE EFFECTIVENESS OF RIGHTS OF RECOUPMENT 9 OR SET-OFF AGAINST DEPOSIT ACCOUNTS AND SECTION 9404 APPLIES WITH 10 RESPECT TO DEFENSES OR CLAIMS OF AN ACCOUNT DEBTOR. 11 (K) THE CREATION OR TRANSFER OF AN INTEREST IN OR LIEN ON 12 REAL PROPERTY, INCLUDING A LEASE OR RENTS THEREUNDER, EXCEPT TO 13 THE EXTENT THAT PROVISION IS MADE FOR 1 OR MORE OF THE 14 FOLLOWING: 15 (i) LIENS ON REAL PROPERTY IN SECTIONS 9203 AND 9308. 16 (ii) FIXTURES IN SECTION 9334. 17 (iii) FIXTURE FILINGS IN SECTIONS 9501, 9502, 9512, 9516, 18 AND 9519. 19 (iv) SECURITY AGREEMENTS COVERING PERSONAL AND REAL PROPERTY 20 IN SECTION 9604. 21 (l) AN ASSIGNMENT OF A CLAIM ARISING IN TORT, OTHER THAN A 22 COMMERCIAL TORT CLAIM, BUT SECTIONS 9315 AND 9322 APPLY WITH 23 RESPECT TO PROCEEDS AND PRIORITIES IN PROCEEDS. 24 (M) AN ASSIGNMENT OF A DEPOSIT ACCOUNT IN A CONSUMER TRANS- 25 ACTION, BUT SECTIONS 9315 AND 9322 APPLY WITH RESPECT TO PROCEEDS 26 AND PRIORITIES IN PROCEEDS. 02120'99 94 1 Sec. 9110.For the purposes of this article any2description of personal property or real estate is sufficient3whether or not it is specific if it reasonably identifies what is4described.A SECURITY INTEREST ARISING UNDER SECTION 2401, 2505, 5 2711(3), OR 2A508(5) IS SUBJECT TO THIS ARTICLE. HOWEVER, UNTIL 6 THE DEBTOR OBTAINS POSSESSION OF THE GOODS, ALL OF THE FOLLOWING 7 APPLY: 8 (A) THE SECURITY INTEREST IS ENFORCEABLE, EVEN IF SECTION 9 9203(2)(C) HAS NOT BEEN SATISFIED. 10 (B) FILING IS NOT REQUIRED TO PERFECT THE SECURITY 11 INTEREST. 12 (C) THE RIGHTS OF THE SECURED PARTY AFTER DEFAULT BY THE 13 DEBTOR ARE GOVERNED BY ARTICLE 2 OR 2A. 14 (D) THE SECURITY INTEREST HAS PRIORITY OVER A CONFLICTING 15 SECURITY INTEREST CREATED BY THE DEBTOR. 16 PART 2 17VALIDITY OF SECURITY AGREEMENT ANDEFFECTIVENESS OF SECURITY 18 AGREEMENT; ATTACHMENT OF SECURITY INTEREST; 19 RIGHTS OF PARTIESTHERETOTO SECURITY AGREEMENT 20 SUBPART 1. EFFECTIVENESS AND ATTACHMENT 21 Sec. 9201.Except as otherwise provided by this act a22security agreement is effective according to its terms between23the parties, against purchasers of the collateral and against24creditors. Nothing in this article validates any charge or prac-25tice illegal under any statute or regulation thereunder governing26usury, small loans, retail installment sales, or the like, or02120'99 95 1extends the application of any such statute or regulation to any2transaction not otherwise subject thereto.3 (1) EXCEPT AS OTHERWISE PROVIDED IN THIS ACT, A SECURITY 4 AGREEMENT IS EFFECTIVE ACCORDING TO ITS TERMS BETWEEN THE PAR- 5 TIES, AGAINST PURCHASERS OF THE COLLATERAL, AND AGAINST 6 CREDITORS. 7 (2) A TRANSACTION SUBJECT TO THIS ARTICLE IS SUBJECT TO ANY 8 APPLICABLE RULE OF LAW THAT ESTABLISHES A DIFFERENT RULE FOR CON- 9 SUMERS AND TO EACH OF THE FOLLOWING, AS APPLICABLE: 10 (A) THE REGULATORY LOAN ACT OF 1963, 1939 PA 21, MCL 493.1 11 TO 493.26. 12 (B) 1939 PA 305, MCL 566.301 TO 566.302. 13 (C) THE MOTOR VEHICLE SALES FINANCE ACT, 1950 (EX SESS) 14 PA 27, MCL 492.101 TO 492.141. 15 (D) THE MOBILE HOME COMMISSION ACT, 1987 PA 96, MCL 125.2301 16 TO 125.2349. 17 (E) THE MICHIGAN VEHICLE CODE, 1949 PA 300, MCL 257.1 TO 18 257.923. 19 (F) 1978 PA 387, MCL 257.931 TO 257.937. 20 (G) 1986 PA 87, MCL 257.1401 TO 257.1410. 21 (H) THE GRAIN DEALERS ACT, 1939 PA 141, MCL 285.61 TO 22 285.82A. 23 (I) THE MICHIGAN FAMILY FARM DEVELOPMENT ACT, 1982 PA 220, 24 MCL 285.251 TO 285.279. 25 (J) THE NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT, 26 1994 PA 451, MCL 324.101 TO 324.90106. 02120'99 96 1 (K) 1982 PA 459, MCL 325.851 TO 325.858. 2 (l) 1970 PA 90, MCL 442.311 TO 442.315. 3 (M) 1971 PA 227, MCL 445.111 TO 445.117. 4 (N) THE RETAIL INSTALLMENT SALES ACT, 1966 PA 224, 5 MCL 445.851 TO 445.873. 6 (O) THE MICHIGAN CONSUMER PROTECTION ACT, 1976 PA 331, 7 MCL 445.901 TO 445.922. 8 (P) THE HOME IMPROVEMENT FINANCE ACT, 1965 PA 332, 9 MCL 445.1102 TO 445.1431. 10 (Q) 1941 PA 338, MCL 566.1. 11 (R) THE GARAGE KEEPER'S LIEN ACT, 1915 PA 312, MCL 570.301 12 TO 570.309. 13 (3) IN CASE OF CONFLICT BETWEEN THIS ARTICLE AND A RULE OF 14 LAW, STATUTE, OR REGULATION DESCRIBED IN SUBSECTION (2), THE RULE 15 OF LAW, STATUTE, OR REGULATION CONTROLS. FAILURE TO COMPLY WITH 16 A STATUTE OR REGULATION DESCRIBED IN SUBSECTION (2) HAS ONLY THE 17 EFFECT THE STATUTE OR REGULATION SPECIFIES. 18 (4) THIS ARTICLE DOES NOT VALIDATE ANY RATE, CHARGE, AGREE- 19 MENT, OR PRACTICE THAT VIOLATES A RULE OF LAW, STATUTE, OR REGU- 20 LATION DESCRIBED IN SUBSECTION (2), OR EXTEND THE APPLICATION OF 21 THE RULE OF LAW, STATUTE, OR REGULATION TO A TRANSACTION NOT OTH- 22 ERWISE SUBJECT TO IT. 23 Sec. 9202.Each provision of this article with regard to24rights, obligations and remedies applies whether title to collat-25eral is in the secured party or in the debtor.EXCEPT AS OTHER- 26 WISE PROVIDED WITH RESPECT TO CONSIGNMENTS OR SALES OF ACCOUNTS, 27 CHATTEL PAPER, PAYMENT INTANGIBLES, OR PROMISSORY NOTES, THE 02120'99 97 1 PROVISIONS OF THIS ARTICLE WITH REGARD TO RIGHTS AND OBLIGATIONS 2 APPLY WHETHER TITLE TO COLLATERAL IS IN THE SECURED PARTY OR THE 3 DEBTOR. 4 Sec. 9203.(1) Subject to section 4208 on the security5interest of a collecting bank, sections 9115 and 9116 on security6interests in investment property, and section 9113 on a security7interest arising under the article on sales, a security interest8is not enforceable against the debtor or third parties with9respect to the collateral and does not attach unless all of the10following are true:11(a) The collateral is in the possession of the secured party12pursuant to agreement, the collateral is investment property and13the secured party has control pursuant to agreement, or the14debtor has signed a security agreement that contains a descrip-15tion of the collateral and in addition, when the security inter-16est covers timber to be cut, a description of the land17concerned.18(b) Value has been given.19(c) The debtor has rights in the collateral.20(2) A security interest attaches when it becomes enforceable21against the debtor with respect to the collateral. Attachment22occurs as soon as all of the events specified in subsection (1)23have taken place unless explicit agreement postpones the time of24attaching.25(3) Unless otherwise agreed a security agreement gives the26secured party the rights to proceeds provided by section 9306.02120'99 98 1(4) A transaction, although subject to this article, is also2subject to the regulatory loan act of 1963, 1939 PA 21, MCL 493.13to 493.26, 1939 PA 305, MCL 566.301 to 566.302, and the motor4vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL 492.101 to5492.141. If a conflict arises between this article and another6statute, the other statute controls. Failure to comply with any7applicable statute has only the effect that is specified in that8statute.9 (1) A SECURITY INTEREST ATTACHES TO COLLATERAL WHEN IT 10 BECOMES ENFORCEABLE AGAINST THE DEBTOR WITH RESPECT TO THE COL- 11 LATERAL, UNLESS AN AGREEMENT EXPRESSLY POSTPONES THE TIME OF 12 ATTACHMENT. 13 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS (3) THROUGH 14 (9), A SECURITY INTEREST IS ENFORCEABLE AGAINST THE DEBTOR AND 15 THIRD PARTIES WITH RESPECT TO THE COLLATERAL ONLY IF ALL OF THE 16 FOLLOWING ARE MET: 17 (A) VALUE HAS BEEN GIVEN. 18 (B) THE DEBTOR HAS RIGHTS IN THE COLLATERAL OR THE POWER TO 19 TRANSFER RIGHTS IN THE COLLATERAL TO A SECURED PARTY. 20 (C) ONE OR MORE OF THE FOLLOWING CONDITIONS ARE MET: 21 (i) THE DEBTOR HAS AUTHENTICATED A SECURITY AGREEMENT THAT 22 PROVIDES A DESCRIPTION OF THE COLLATERAL AND, IF THE SECURITY 23 INTEREST COVERS TIMBER TO BE CUT, A DESCRIPTION OF THE LAND 24 CONCERNED. 25 (ii) THE COLLATERAL IS NOT A CERTIFICATED SECURITY AND IS IN 26 THE POSSESSION OF THE SECURED PARTY UNDER SECTION 9313 PURSUANT 27 TO THE DEBTOR'S SECURITY AGREEMENT. 02120'99 99 1 (iii) THE COLLATERAL IS A CERTIFICATED SECURITY IN 2 REGISTERED FORM AND THE SECURITY CERTIFICATE HAS BEEN DELIVERED 3 TO THE SECURED PARTY UNDER SECTION 8301 PURSUANT TO THE DEBTOR'S 4 SECURITY AGREEMENT. 5 (iv) THE COLLATERAL IS DEPOSIT ACCOUNTS, ELECTRONIC CHATTEL 6 PAPER, INVESTMENT PROPERTY, OR LETTER-OF-CREDIT RIGHTS, AND THE 7 SECURED PARTY HAS CONTROL UNDER SECTION 9104, 9105, 9106, OR 9107 8 PURSUANT TO THE DEBTOR'S SECURITY AGREEMENT. 9 (3) SUBSECTION (2) IS SUBJECT TO SECTION 4210 ON THE SECUR- 10 ITY INTEREST OF A COLLECTING BANK, SECTION 5118 ON THE SECURITY 11 INTEREST OF A LETTER-OF-CREDIT ISSUER OR NOMINATED PERSON, SEC- 12 TION 9110 ON A SECURITY INTEREST ARISING UNDER ARTICLE 2 OR 2A, 13 AND SECTION 9206 ON SECURITY INTERESTS IN INVESTMENT PROPERTY. 14 (4) A PERSON BECOMES BOUND AS DEBTOR BY A SECURITY AGREEMENT 15 ENTERED INTO BY ANOTHER PERSON IF, BY OPERATION OF LAW OTHER THAN 16 THIS ARTICLE OR BY CONTRACT, EITHER OF THE FOLLOWING OCCURS: 17 (A) THE SECURITY AGREEMENT BECOMES EFFECTIVE TO CREATE A 18 SECURITY INTEREST IN THE PERSON'S PROPERTY. 19 (B) THE PERSON BECOMES GENERALLY OBLIGATED FOR THE OBLIGA- 20 TIONS OF THE OTHER PERSON, INCLUDING THE OBLIGATION SECURED UNDER 21 THE SECURITY AGREEMENT, AND ACQUIRES OR SUCCEEDS TO ALL OR SUB- 22 STANTIALLY ALL OF THE ASSETS OF THE OTHER PERSON. 23 (5) IF A NEW DEBTOR BECOMES BOUND AS DEBTOR BY A SECURITY 24 AGREEMENT ENTERED INTO BY ANOTHER PERSON, THE AGREEMENT SATISFIES 25 SUBSECTION (2)(C) WITH RESPECT TO EXISTING OR AFTER-ACQUIRED 26 PROPERTY OF THE NEW DEBTOR TO THE EXTENT THE PROPERTY IS 27 DESCRIBED IN THE AGREEMENT, AND ANOTHER AGREEMENT IS NOT 02120'99 100 1 NECESSARY TO MAKE A SECURITY INTEREST IN THE PROPERTY 2 ENFORCEABLE. 3 (6) THE ATTACHMENT OF A SECURITY INTEREST IN COLLATERAL 4 GIVES THE SECURED PARTY THE RIGHTS TO PROCEEDS PROVIDED BY SEC- 5 TION 9315 AND IS ALSO ATTACHMENT OF A SECURITY INTEREST IN A SUP- 6 PORTING OBLIGATION FOR THE COLLATERAL. 7 (7) THE ATTACHMENT OF A SECURITY INTEREST IN A RIGHT TO PAY- 8 MENT OR PERFORMANCE SECURED BY A SECURITY INTEREST OR OTHER LIEN 9 ON PERSONAL OR REAL PROPERTY IS ALSO ATTACHMENT OF A SECURITY 10 INTEREST IN THE SECURITY INTEREST, MORTGAGE, OR OTHER LIEN. 11 (8) THE ATTACHMENT OF A SECURITY INTEREST IN A SECURITIES 12 ACCOUNT IS ALSO ATTACHMENT OF A SECURITY INTEREST IN THE SECURITY 13 ENTITLEMENTS CARRIED IN THE SECURITIES ACCOUNT. 14 (9) THE ATTACHMENT OF A SECURITY INTEREST IN A COMMODITY 15 ACCOUNT IS ALSO ATTACHMENT OF A SECURITY INTEREST IN THE COMMOD- 16 ITY CONTRACTS CARRIED IN THE COMMODITY ACCOUNT. 17 Sec. 9204.(1) Except as provided in subsection (2), a18security agreement may provide that any or all obligations cov-19ered by the security agreement are to be secured by20after-acquired collateral.21(2) No security interest attaches under an after-acquired22property clause to consumer goods other than accessions (section239314) when given as additional security unless the debtor24acquires rights in them within 10 days after the secured party25gives value.02120'99 101 1(3) Obligations covered by a security agreement may include2future advances or other value whether or not the advances or3value are given pursuant to commitment (section 9105(1)).4 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2), A SECUR- 5 ITY AGREEMENT MAY CREATE OR PROVIDE FOR A SECURITY INTEREST IN 6 AFTER-ACQUIRED COLLATERAL. 7 (2) A SECURITY INTEREST DOES NOT ATTACH UNDER A TERM CONSTI- 8 TUTING AN AFTER-ACQUIRED PROPERTY CLAUSE TO EITHER OF THE 9 FOLLOWING: 10 (A) CONSUMER GOODS, OTHER THAN AN ACCESSION WHEN GIVEN AS 11 ADDITIONAL SECURITY, UNLESS THE DEBTOR ACQUIRES RIGHTS IN THEM 12 WITHIN 10 DAYS AFTER THE SECURED PARTY GIVES VALUE. 13 (B) A COMMERCIAL TORT CLAIM. 14 (3) A SECURITY AGREEMENT MAY PROVIDE THAT COLLATERAL 15 SECURES, OR THAT ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, OR 16 PROMISSORY NOTES ARE SOLD IN CONNECTION WITH, FUTURE ADVANCES OR 17 OTHER VALUE, WHETHER OR NOT THE ADVANCES OR VALUE ARE GIVEN PUR- 18 SUANT TO COMMITMENT. 19 Sec. 9205.A security interest is not invalid or fraudu-20lent against creditors by reason of liberty in the debtor to use,21commingle, or dispose of all or part of the collateral,22(including returned or repossessed goods), or to collect or com-23promise accounts or chattel paper, or to accept the return of24goods or make repossessions, or to use, commingle, or dispose of25proceeds, or by reason of the failure of the secured party to26require the debtor to account for proceeds or replace27collateral. This section does not relax the requirements of02120'99 102 1possession where perfection of a security interest depends upon2possession of the collateral by the secured party or by a3bailee.4 (1) A SECURITY INTEREST IS NOT INVALID OR FRAUDULENT AGAINST 5 CREDITORS SOLELY BECAUSE OF EITHER OF THE FOLLOWING: 6 (A) THE DEBTOR HAS THE RIGHT OR ABILITY TO DO 1 OR MORE OF 7 THE FOLLOWING: 8 (i) USE, COMMINGLE, OR DISPOSE OF ALL OR PART OF THE COLLAT- 9 ERAL, INCLUDING RETURNED OR REPOSSESSED GOODS. 10 (ii) COLLECT, COMPROMISE, ENFORCE, OR OTHERWISE DEAL WITH 11 COLLATERAL. 12 (iii) ACCEPT THE RETURN OF COLLATERAL OR MAKE 13 REPOSSESSIONS. 14 (iv) USE, COMMINGLE, OR DISPOSE OF PROCEEDS. 15 (B) THE SECURED PARTY FAILS TO REQUIRE THE DEBTOR TO ACCOUNT 16 FOR PROCEEDS OR REPLACE COLLATERAL. 17 (2) THIS SECTION DOES NOT RELAX THE REQUIREMENTS OF POSSES- 18 SION IF ATTACHMENT, PERFECTION, OR ENFORCEMENT OR A SECURITY 19 INTEREST DEPENDS UPON POSSESSION OF THE COLLATERAL BY THE SECURED 20 PARTY. 21 Sec. 9206.(1) Subject to any statute or decision which22establishes a different rule for buyers or lessees of consumer23goods, an agreement by a buyer or lessee that he will not assert24against an assignee any claim or defense which he may have25against the seller or lessor is enforceable by an assignee who26takes his assignment for value, in good faith and without notice27of a claim or defense, except as to defenses of a type which may02120'99 103 1be asserted against a holder in due course of a negotiable2instrument under the article on commercial paper (article 3). A3buyer who as part of one transaction signs both a negotiable4instrument and a security agreement makes such an agreement.5(2) When a seller retains a purchase money security interest6in goods the article on sales (article 2) governs the sale and7any disclaimer, limitation or modification of the seller's8warranties.9 (1) A SECURITY INTEREST IN FAVOR OF A SECURITIES INTERMEDI- 10 ARY ATTACHES TO A PERSON'S SECURITY ENTITLEMENT IF THE PERSON 11 BUYS A FINANCIAL ASSET THROUGH THE SECURITIES INTERMEDIARY IN A 12 TRANSACTION IN WHICH THE PERSON IS OBLIGATED TO PAY THE PURCHASE 13 PRICE TO THE SECURITIES INTERMEDIARY AT THE TIME OF THE PURCHASE, 14 AND THE SECURITIES INTERMEDIARY CREDITS THE FINANCIAL ASSET TO 15 THE BUYER'S SECURITIES ACCOUNT BEFORE THE BUYER PAYS THE SECURI- 16 TIES INTERMEDIARY. 17 (2) THE SECURITY INTEREST DESCRIBED IN SUBSECTION (1) 18 SECURES THE PERSON'S OBLIGATION TO PAY FOR THE FINANCIAL ASSET. 19 (3) A SECURITY INTEREST IN FAVOR OF A PERSON THAT DELIVERS A 20 CERTIFICATED SECURITY OR OTHER FINANCIAL ASSET REPRESENTED BY A 21 WRITING ATTACHES TO THE SECURITY OR OTHER FINANCIAL ASSET IF BOTH 22 OF THE FOLLOWING ARE MET: 23 (A) THE SECURITY OR OTHER FINANCIAL ASSET IN THE ORDINARY 24 COURSE OF BUSINESS IS TRANSFERRED BY DELIVERY WITH ANY NECESSARY 25 INDORSEMENT OR ASSIGNMENT, AND IS DELIVERED UNDER AN AGREEMENT 26 BETWEEN PERSONS IN THE BUSINESS OF DEALING WITH THE SECURITIES OR 27 FINANCIAL ASSETS. 02120'99 104 1 (B) THE AGREEMENT CALLS FOR DELIVERY AGAINST PAYMENT. 2 (4) THE SECURITY INTEREST DESCRIBED IN SUBSECTION (3) 3 SECURES THE OBLIGATION TO MAKE PAYMENT FOR THE DELIVERY. 4 SUBPART 2. RIGHTS AND DUTIES 5 Sec. 9207.(1) A secured party must use reasonable care in6the custody and preservation of collateral in his possession. In7the case of an instrument or chattel paper reasonable care8includes taking necessary steps to preserve rights against prior9parties unless otherwise agreed.10(2) Unless otherwise agreed, when collateral is in the11secured party's possession12(a) reasonable expenses (including the cost of any insurance13and payment of taxes or other charges) incurred in the custody,14preservation, use or operation of the collateral are chargeable15to the debtor and are secured by the collateral;16(b) the risk of accidental loss or damage is on the debtor17to the extent of any deficiency in any effective insurance cover-18age;19(c) the secured party may hold as additional security any20increase or profits (except money) received from the collateral,21but money so received, unless remitted to the debtor, shall be22applied in reduction of the secured obligation;23(d) the secured party must keep the collateral identifiable24but fungible collateral may be commingled;25(e) the secured party may repledge the collateral upon terms26which do not impair the debtor's right to redeem it.02120'99 105 1(3) A secured party is liable for any loss caused by his2failure to meet any obligation imposed by the preceding3subsections but does not lose his security interest.4(4) A secured party may use or operate the collateral for5the purpose of preserving the collateral or its value or pursuant6to the order of a court of appropriate jurisdiction or, except in7the case of consumer goods, in the manner and to the extent pro-8vided in the security agreement.9 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), A 10 SECURED PARTY SHALL USE REASONABLE CARE IN THE CUSTODY AND PRE- 11 SERVATION OF COLLATERAL IN THE SECURED PARTY'S POSSESSION. IN 12 THE CASE OF CHATTEL PAPER OR AN INSTRUMENT, REASONABLE CARE 13 INCLUDES TAKING NECESSARY STEPS TO PRESERVE RIGHTS AGAINST PRIOR 14 PARTIES UNLESS OTHERWISE AGREED. 15 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), IF A 16 SECURED PARTY HAS POSSESSION OF COLLATERAL ALL OF THE FOLLOWING 17 APPLY: 18 (A) REASONABLE EXPENSES, INCLUDING THE COST OF INSURANCE AND 19 PAYMENT OF TAXES OR OTHER CHARGES, INCURRED IN THE CUSTODY, PRE- 20 SERVATION, USE, OR OPERATION OF THE COLLATERAL ARE CHARGEABLE TO 21 THE DEBTOR AND ARE SECURED BY THE COLLATERAL. 22 (B) THE RISK OF ACCIDENTAL LOSS OR DAMAGE IS ON THE DEBTOR 23 TO THE EXTENT OF A DEFICIENCY IN ANY EFFECTIVE INSURANCE 24 COVERAGE. 25 (C) THE SECURED PARTY SHALL KEEP THE COLLATERAL IDENTI- 26 FIABLE, BUT FUNGIBLE COLLATERAL MAY BE COMMINGLED. 02120'99 106 1 (D) THE SECURED PARTY MAY USE OR OPERATE THE COLLATERAL FOR 2 THE PURPOSE OF PRESERVING THE COLLATERAL OR ITS VALUE; AS 3 PERMITTED BY AN ORDER OF A COURT HAVING COMPETENT JURISDICTION; 4 OR EXCEPT IN THE CASE OF CONSUMER GOODS, IN THE MANNER AND TO THE 5 EXTENT AGREED BY THE DEBTOR. 6 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), A 7 SECURED PARTY HAVING POSSESSION OF COLLATERAL OR CONTROL OF COL- 8 LATERAL UNDER SECTION 9104, 9105, 9106, OR 9107 MAY HOLD AS ADDI- 9 TIONAL SECURITY ANY PROCEEDS, EXCEPT MONEY OR FUNDS, RECEIVED 10 FROM THE COLLATERAL, SHALL APPLY MONEY OR FUNDS RECEIVED FROM THE 11 COLLATERAL TO REDUCE THE SECURED OBLIGATION UNLESS REMITTED TO 12 THE DEBTOR, AND MAY CREATE A SECURITY INTEREST IN THE 13 COLLATERAL. 14 (4) IF THE SECURED PARTY IS A BUYER OF ACCOUNTS, CHATTEL 15 PAPER, PAYMENT INTANGIBLES, OR PROMISSORY NOTES OR A CONSIGNOR, 16 SUBSECTIONS (2) AND (3) DO NOT APPLY, AND SUBSECTION (1) DOES NOT 17 APPLY UNLESS THE SECURED PARTY IS ENTITLED UNDER AN AGREEMENT TO 18 CHARGE BACK UNCOLLECTED COLLATERAL OR OTHERWISE TO FULL OR 19 LIMITED RECOURSE AGAINST THE DEBTOR OR A SECONDARY OBLIGOR BASED 20 ON THE NONPAYMENT OR OTHER DEFAULT OF AN ACCOUNT DEBTOR OR OTHER 21 OBLIGOR ON THE COLLATERAL. 22 Sec. 9208.(1) A debtor may sign a statement indicating23what he believes to be the aggregate amount of unpaid indebted-24ness as of a specified date and may send it to the secured party25with a request that the statement be approved or corrected and26returned to the debtor. When the security agreement or any other27record kept by the secured party identifies the collateral a02120'99 107 1debtor may similarly request the secured party to approve or2correct a list of the collateral.3(2) The secured party must comply with such a request within42 weeks after receipt by sending a written correction or5approval. If the secured party claims a security interest in all6of a particular type of collateral owned by the debtor he may7indicate that fact in his reply and need not approve or correct8an itemized list of such collateral. If the secured party with-9out reasonable excuse fails to comply he is liable for any loss10caused to the debtor thereby; and if the debtor has properly11included in his request a good faith statement of the obligation12or a list of the collateral or both the secured party may claim a13security interest only as shown in the statement against persons14misled by his failure to comply. If he no longer has an interest15in the obligation or collateral at the time the request is16received he must disclose the name and address of any successor17in interest known to him and he is liable for any loss caused to18the debtor as a result of failure to disclose. A successor in19interest is not subject to this section until a request is20received by him.21(3) A debtor is entitled to such a statement once every 622months without charge. The secured party may require payment of23a charge not exceeding $10.00 for each additional statement24furnished.25 (1) THIS SECTION APPLIES TO CASES IN WHICH THERE IS NO OUT- 26 STANDING SECURED OBLIGATION AND THE SECURED PARTY IS NOT 02120'99 108 1 COMMITTED TO MAKE ADVANCES, INCUR OBLIGATIONS, OR OTHERWISE GIVE 2 VALUE. 3 (2) WITHIN 10 DAYS AFTER RECEIVING AN AUTHENTICATED DEMAND 4 BY THE DEBTOR, A SECURED PARTY SHALL DO ALL OF THE FOLLOWING THAT 5 APPLY TO THE SECURED PARTY: 6 (A) A SECURED PARTY HAVING CONTROL OF A DEPOSIT ACCOUNT 7 UNDER SECTION 9104(1)(B) SHALL SEND TO THE BANK WITH WHICH THE 8 DEPOSIT ACCOUNT IS MAINTAINED AN AUTHENTICATED STATEMENT THAT 9 RELEASES THE BANK FROM ANY FURTHER OBLIGATION TO COMPLY WITH 10 INSTRUCTIONS ORIGINATED BY THE SECURED PARTY. 11 (B) A SECURED PARTY HAVING CONTROL OF A DEPOSIT ACCOUNT 12 UNDER SECTION 9104(1)(C) SHALL PAY THE DEBTOR THE BALANCE ON 13 DEPOSIT IN THE DEPOSIT ACCOUNT OR TRANSFER THE BALANCE ON DEPOSIT 14 INTO A DEPOSIT ACCOUNT IN THE DEBTOR'S NAME. 15 (C) A SECURED PARTY, OTHER THAN A BUYER, HAVING CONTROL OF 16 ELECTRONIC CHATTEL PAPER UNDER SECTION 9105 SHALL DO ALL OF THE 17 FOLLOWING: 18 (i) COMMUNICATE THE AUTHORITATIVE COPY OF THE ELECTRONIC 19 CHATTEL PAPER TO THE DEBTOR OR ITS DESIGNATED CUSTODIAN. 20 (ii) IF THE DEBTOR DESIGNATES A CUSTODIAN THAT IS THE DESIG- 21 NATED CUSTODIAN WITH WHICH THE AUTHORITATIVE COPY OF THE ELEC- 22 TRONIC CHATTEL PAPER IS MAINTAINED FOR THE SECURED PARTY, COMMU- 23 NICATE TO THE CUSTODIAN AN AUTHENTICATED RECORD RELEASING THE 24 DESIGNATED CUSTODIAN FROM ANY FURTHER OBLIGATION TO COMPLY WITH 25 INSTRUCTIONS ORIGINATED BY THE SECURED PARTY AND INSTRUCTING THE 26 CUSTODIAN TO COMPLY WITH INSTRUCTIONS ORIGINATED BY THE DEBTOR. 02120'99 109 1 (iii) TAKE APPROPRIATE ACTION TO ENABLE THE DEBTOR OR ITS 2 DESIGNATED CUSTODIAN TO MAKE COPIES OF OR REVISIONS TO THE 3 AUTHORITATIVE COPY THAT ADD OR CHANGE AN IDENTIFIED ASSIGNEE OF 4 THE AUTHORITATIVE COPY WITHOUT THE CONSENT OF THE SECURED PARTY. 5 (D) A SECURED PARTY HAVING CONTROL OF INVESTMENT PROPERTY 6 UNDER SECTION 8106(4)(B) OR SECTION 9106(2) SHALL SEND TO THE 7 SECURITIES INTERMEDIARY OR COMMODITY INTERMEDIARY WITH WHICH THE 8 SECURITY ENTITLEMENT OR COMMODITY CONTRACT IS MAINTAINED AN 9 AUTHENTICATED RECORD THAT RELEASES THE SECURITIES INTERMEDIARY OR 10 COMMODITY INTERMEDIARY FROM ANY FURTHER OBLIGATION TO COMPLY WITH 11 ENTITLEMENT ORDERS OR DIRECTIONS ORIGINATED BY THE SECURED 12 PARTY. 13 (E) A SECURED PARTY HAVING CONTROL OF A LETTER-OF-CREDIT 14 RIGHT UNDER SECTION 9107 SHALL SEND TO EACH PERSON HAVING AN 15 UNFULFILLED OBLIGATION TO PAY OR DELIVER PROCEEDS OF THE LETTER 16 OF CREDIT TO THE SECURED PARTY AN AUTHENTICATED RELEASE FROM ANY 17 FURTHER OBLIGATION TO PAY OR DELIVER PROCEEDS OF THE LETTER OF 18 CREDIT TO THE SECURED PARTY. 19 SEC. 9209. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 20 (3), THIS SECTION APPLIES IF THERE IS NO OUTSTANDING SECURED 21 OBLIGATION AND THE SECURED PARTY IS NOT COMMITTED TO MAKE 22 ADVANCES, INCUR OBLIGATIONS, OR OTHERWISE GIVE VALUE. 23 (2) WITHIN 10 DAYS AFTER RECEIVING AN AUTHENTICATED DEMAND 24 BY THE DEBTOR, A SECURED PARTY SHALL SEND TO AN ACCOUNT DEBTOR 25 THAT HAS RECEIVED NOTIFICATION OF AN ASSIGNMENT TO THE SECURED 26 PARTY AS ASSIGNEE UNDER SECTION 9406(1) AN AUTHENTICATED RECORD 02120'99 110 1 THAT RELEASES THE ACCOUNT DEBTOR FROM ANY FURTHER OBLIGATION TO 2 THE SECURED PARTY. 3 (3) THIS SECTION DOES NOT APPLY TO AN ASSIGNMENT CONSTITUT- 4 ING THE SALE OF AN ACCOUNT, CHATTEL PAPER, OR PAYMENT INTANGIBLE. 5 SEC. 9210. (1) AS USED IN THIS SECTION: 6 (A) "REQUEST" MEANS A RECORD OF A TYPE DESCRIBED IN SUBDIVI- 7 SION (B), (C), OR (D). 8 (B) "REQUEST FOR AN ACCOUNTING" MEANS A RECORD AUTHENTICATED 9 BY A DEBTOR REQUESTING THAT THE RECIPIENT PROVIDE AN ACCOUNTING 10 OF THE UNPAID OBLIGATIONS SECURED BY COLLATERAL AND REASONABLY 11 IDENTIFYING THE TRANSACTION OR RELATIONSHIP THAT IS THE SUBJECT 12 OF THE REQUEST. 13 (C) "REQUEST REGARDING A LIST OF COLLATERAL" MEANS A RECORD 14 AUTHENTICATED BY A DEBTOR REQUESTING THAT THE RECIPIENT APPROVE 15 OR CORRECT A LIST OF WHAT THE DEBTOR BELIEVES TO BE THE COLLAT- 16 ERAL SECURING AN OBLIGATION AND REASONABLY IDENTIFYING THE TRANS- 17 ACTION OR RELATIONSHIP THAT IS THE SUBJECT OF THE REQUEST. 18 (D) "REQUEST REGARDING A STATEMENT OF ACCOUNT" MEANS A 19 RECORD AUTHENTICATED BY A DEBTOR REQUESTING THAT THE RECIPIENT 20 APPROVE OR CORRECT A STATEMENT INDICATING WHAT THE DEBTOR 21 BELIEVES TO BE THE AGGREGATE AMOUNT OF UNPAID OBLIGATIONS SECURED 22 BY COLLATERAL AS OF A SPECIFIED DATE AND REASONABLY IDENTIFYING 23 THE TRANSACTION OR RELATIONSHIP THAT IS THE SUBJECT OF THE 24 REQUEST. 25 (2) SUBJECT TO SUBSECTIONS (3), (4), (5), AND (6), A SECURED 26 PARTY, OTHER THAN A BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT 27 INTANGIBLES, OR PROMISSORY NOTES OR A CONSIGNOR, SHALL COMPLY 02120'99 111 1 WITH A REQUEST IN THE FOLLOWING MANNER WITHIN 14 DAYS AFTER THE 2 RECEIPT OF THE REQUEST: 3 (A) IN THE CASE OF A REQUEST FOR AN ACCOUNTING, BY AUTHENTI- 4 CATING AND SENDING TO THE DEBTOR AN ACCOUNTING. 5 (B) IN THE CASE OF A REQUEST REGARDING A LIST OF COLLATERAL 6 OR A REQUEST REGARDING A STATEMENT OF ACCOUNT, BY AUTHENTICATING 7 AND SENDING TO THE DEBTOR AN APPROVAL OR CORRECTION. 8 (3) A SECURED PARTY THAT CLAIMS A SECURITY INTEREST IN ALL 9 OF A PARTICULAR TYPE OF COLLATERAL OWNED BY THE DEBTOR MAY COMPLY 10 WITH A REQUEST REGARDING A LIST OF COLLATERAL BY SENDING TO THE 11 DEBTOR AN AUTHENTICATED RECORD INCLUDING A STATEMENT TO THAT 12 EFFECT WITHIN 14 DAYS AFTER RECEIPT. 13 (4) A PERSON THAT RECEIVES A REQUEST REGARDING A LIST OF 14 COLLATERAL, CLAIMS NO INTEREST IN THE COLLATERAL WHEN IT RECEIVES 15 THE REQUEST, AND CLAIMED AN INTEREST IN THE COLLATERAL AT AN EAR- 16 LIER TIME SHALL COMPLY WITH THE REQUEST WITHIN 14 DAYS AFTER 17 RECEIPT BY SENDING TO THE DEBTOR AN AUTHENTICATED RECORD DIS- 18 CLAIMING ANY INTEREST IN THE COLLATERAL, AND IF KNOWN TO THE 19 RECIPIENT, PROVIDING THE NAME AND MAILING ADDRESS OF ANY ASSIGNEE 20 OF OR SUCCESSOR TO THE RECIPIENT'S INTEREST IN THE COLLATERAL. 21 (5) A PERSON THAT RECEIVES A REQUEST FOR AN ACCOUNTING OR A 22 REQUEST REGARDING A STATEMENT OF ACCOUNT, CLAIMS NO INTEREST IN 23 THE OBLIGATIONS WHEN IT RECEIVES THE REQUEST, AND CLAIMED AN 24 INTEREST IN THE OBLIGATIONS AT AN EARLIER TIME SHALL COMPLY WITH 25 THE REQUEST WITHIN 14 DAYS AFTER RECEIPT BY SENDING TO THE DEBTOR 26 AN AUTHENTICATED RECORD DISCLAIMING ANY INTEREST IN THE 27 OBLIGATIONS, AND IF KNOWN TO THE RECIPIENT, PROVIDING THE NAME 02120'99 112 1 AND MAILING ADDRESS OF ANY ASSIGNEE OF OR SUCCESSOR TO THE 2 RECIPIENT'S INTEREST IN THE OBLIGATIONS. 3 (6) A DEBTOR IS ENTITLED WITHOUT CHARGE TO 1 RESPONSE TO A 4 REQUEST UNDER THIS SECTION DURING ANY 6-MONTH PERIOD. THE 5 SECURED PARTY MAY REQUIRE PAYMENT OF A CHARGE NOT EXCEEDING 6 $25.00 FOR EACH ADDITIONAL RESPONSE. 7 PART 3 8RIGHTS OF THIRD PARTIES; PERFECTED AND UNPERFECTED SECURITY9INTERESTS; RULES OFPERFECT AND PRIORITY 10 SUBPART 1. LAW GOVERNING PERFECTION AND PRIORITY 11 Sec. 9301.(1) Except as otherwise provided in subsection12(2), an unperfected security interest is subordinate to the13rights of:14(a) Persons entitled to priority under section 9312;15(b) A person who becomes a lien creditor before the security16interest is perfected;17(c) In the case of goods, instruments, documents, and chat-18tel paper, a person who is not a secured party and who is a19transferee in bulk or other buyer not in ordinary course of busi-20ness, or is a buyer of farm products in the ordinary course of21business, to the extent that the person gives value and receives22delivery of the collateral without knowledge of the security23interest and before it is perfected;24(d) In the case of accounts, general intangibles, and25investment property, a person who is not a secured party and who26is a transferee to the extent that the person gives value without27knowledge of the security interest and before it is perfected.02120'99 113 1(2) If the secured party files with respect to a purchase2money security interest before or within 20 days after the debtor3receives possession of the collateral, the secured party takes4priority over the rights of a transferee in bulk or of a lien5creditor which arise between the time the security interest6attaches and the time of filing.7(3) A "lien creditor" means a creditor who has acquired a8lien on the property involved by attachment, levy, or the like9and includes an assignee for benefit of creditors from the time10of assignment, and a trustee in bankruptcy from the date of the11filing of the petition or a receiver in equity from the time of12appointment.13(4) A person who becomes a lien creditor while a security14interest is perfected takes subject to the security interest only15to the extent that it secures advances made before the person16becomes a lien creditor or within 45 days thereafter or made17without knowledge of the lien or pursuant to a commitment entered18into without knowledge of the lien.EXCEPT AS OTHERWISE PROVIDED 19 IN SECTIONS 9303 THROUGH 9306, THE FOLLOWING RULES DETERMINE THE 20 LAW GOVERNING PERFECTION, THE EFFECT OF PERFECTION OR NONPERFEC- 21 TION, AND THE PRIORITY OF A SECURITY INTEREST IN COLLATERAL: 22 (A) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, WHILE A 23 DEBTOR IS LOCATED IN A JURISDICTION, THE LOCAL LAW OF THAT JURIS- 24 DICTION GOVERNS PERFECTION, THE EFFORT OF PERFECTION OR NONPER- 25 FECTION, AND THE PRIORITY OF A SECURITY INTEREST IN COLLATERAL. 26 (B) WHILE COLLATERAL IS LOCATED IN A JURISDICTION, THE LOCAL 27 LAW OF THAT JURISDICTION GOVERNS PERFECTION, THE EFFECT OF 02120'99 114 1 PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A POSSESSORY 2 SECURITY INTEREST IN THAT COLLATERAL. 3 (C) EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISION (D), WHILE 4 NEGOTIABLE DOCUMENTS, GOODS, INSTRUMENTS, MONEY, OR TANGIBLE 5 CHATTEL PAPER IS LOCATED IN A JURISDICTION, THE LOCAL LAW OF THAT 6 JURISDICTION GOVERNS PERFECTION OF A SECURITY INTEREST IN THE 7 GOODS BY FILING A FIXTURE FILING, PERFECTION OF A SECURITY INTER- 8 EST IN TIMBER TO BE CUT, AND THE EFFECT OF PERFECTION OR NONPER- 9 FECTION AND THE PRIORITY OF A NONPOSSESSORY SECURITY INTEREST IN 10 THE COLLATERAL. 11 (D) THE LOCAL LAW OF THE JURISDICTION IN WHICH THE WELLHEAD 12 OR MINEHEAD IS LOCATED GOVERNS PERFECTION, THE EFFECT OF PERFEC- 13 TION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN 14 AS-EXTRACTED COLLATERAL. 15 Sec. 9302.(1) A financing statement must be filed to per-16fect all security interests except the following:17(a) A security interest in collateral in possession of the18secured party under section 9305;19(b) A security interest temporarily perfected in instru-20ments, certificated securities, or documents without delivery21under section 9304 or in proceeds for a 10-day period under sec-22tion 9306;23(c) A security interest created by an assignment of a bene-24ficial interest in a trust or a decedent's estate;25(d) A purchase money security interest in consumer goods;26other than a vehicle, mobile home, or watercraft, for which a27certificate of title is required by the laws of this state, and02120'99 115 1fixture filing is required for priority over conflicting2interests in fixtures to the extent provided in section 9313;3(e) An assignment of accounts which does not alone or in4conjunction with other assignments to the same assignee transfer5a significant part of the outstanding accounts of the assignor;6(f) A security interest of a collecting bank (section 4210)7or arising under the article on sales (see section 9113) or cov-8ered in subsection (3) of this section;9(g) An assignment for the benefit of all the creditors of10the transferor, and subsequent transfers by the assignee11thereunder.12(h) A security interest in investment property which is per-13fected without filing under section 9115 or section 9116.14(2) If a secured party assigns a perfected security inter-15est, no filing under this article is required in order to con-16tinue the perfected status of the security interest against cred-17itors of and transferees from the original debtor.18(3) The filing of a financing statement otherwise required19by this article is not necessary or effective to perfect a secur-20ity interest in property subject to:21(a) A statute or treaty of the United States which provides22for a national or international registration or a national or23international certificate of title or which specifies a place of24filing different from that specified in this article for filing25of the security interest; or26(b) The following statutes of this state: (i) section 21627of the Michigan vehicle code, Act No. 300 of the Public Acts of02120'99 116 11949, being section 257.216 of the Michigan Compiled Laws; (ii)2section 80320 of part 803 (watercraft transfer and certificate of3title) of the natural resources and environmental protection act,4Act No. 451 of the Public Acts of 1994, being section 324.803205of the Michigan Compiled Laws; and (iii) section 30 of the mobile6home commission act, Act No. 96 of the Public Acts of 1987, being7section 125.2330 of the Michigan Compiled Laws; but during any8period in which collateral is inventory held for sale by a person9who is in the business of selling goods of that kind, the filing10provisions of this article (part 4) apply to a security interest11in that collateral created by that person as debtor; or12(c) A certificate of title statute of another jurisdiction13under the law of which indication of a security interest on the14certificate is required as a condition of perfection as provided15in section 9103(2).16(4) Compliance with a statute or treaty described in subsec-17tion (3)(a) or (3)(c), or in the case of subsection (3)(b)(i),18compliance with section 217 or 238 of Act No. 300 of the Public19Acts of 1949, being sections 257.217 and 257.238 of the Michigan20Compiled Laws, or in the case of subsection (3)(b)(ii), compli-21ance with section 80320 of part 803 of Act No. 451 of the Public22Acts of 1994, or in the case of subsection (3)(b)(iii), compli-23ance with section 30a or 30d of Act No. 96 of the Public Acts of241987, being sections 125.2330a and 125.2330d of the Michigan25Compiled Laws, is equivalent to the filing of a financing state-26ment under this article, and a security interest in property27subject to the statute or treaty can be perfected only by02120'99 117 1compliance therewith except as provided in section 9103 on2multiple state transactions. Duration and renewal of perfection3of a security interest perfected by compliance with the statute4or treaty are governed by the provisions of the statute or5treaty. In other respects the security interest is subject to6this article.WHILE FARM PRODUCTS ARE LOCATED IN A JURISDICTION, 7 THE LOCAL LAW OF THAT JURISDICTION GOVERNS PERFECTION, THE EFFECT 8 OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF AN AGRICUL- 9 TURAL LIEN ON THE FARM PRODUCTS. 10 Sec. 9303.(1) A security interest is perfected when it11has attached and when all of the applicable steps required for12perfection have been taken. Such steps are specified in sections139115, 9302, 9304, 9305 and 9306. If such steps are taken before14the security interest attaches, it is perfected at the time when15it attaches.16(2) If a security interest is originally perfected in any17way permitted under this article and is subsequently perfected in18some other way under this article, without an intermediate period19when it was unperfected, the security interest shall be deemed to20be perfected continuously for the purposes of this article.21 (1) THIS SECTION APPLIES TO GOODS COVERED BY A CERTIFICATE 22 OF TITLE, EVEN IF THERE IS NO OTHER RELATIONSHIP BETWEEN THE 23 JURISDICTION UNDER WHOSE CERTIFICATE OF TITLE THE GOODS ARE COV- 24 ERED AND THE GOODS OR THE DEBTOR. 25 (2) GOODS BECOME COVERED BY A CERTIFICATE OF TITLE WHEN A 26 VALID APPLICATION FOR THE CERTIFICATE OF TITLE AND THE APPLICABLE 27 FEE ARE DELIVERED TO THE APPROPRIATE AUTHORITY. GOODS CEASE TO 02120'99 118 1 BE COVERED BY A CERTIFICATE OF TITLE AT THE EARLIER OF THE TIME 2 THE CERTIFICATE OF TITLE CEASES TO BE EFFECTIVE UNDER THE LAW OF 3 THE ISSUING JURISDICTION OR THE TIME THE GOODS BECOME COVERED 4 SUBSEQUENTLY BY A CERTIFICATE OF TITLE ISSUED BY ANOTHER 5 JURISDICTION. 6 (3) THE LOCAL LAW OF THE JURISDICTION UNDER WHOSE CERTIFI- 7 CATE OF TITLE THE GOODS ARE COVERED GOVERNS PERFECTION, THE 8 EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A 9 SECURITY INTEREST IN GOODS COVERED BY A CERTIFICATE OF TITLE FROM 10 THE TIME THE GOODS BECOME COVERED BY THE CERTIFICATE OF TITLE 11 UNTIL THE GOODS CEASE TO BE COVERED BY THE CERTIFICATE OF TITLE. 12 Sec. 9304.(1) A security interest in chattel paper or13negotiable documents may be perfected by filing. A security14interest in the rights to proceeds of a written letter of credit15can be perfected only by the secured party's taking possession of16the letter of credit. A security interest in money or instru-17ments, other than instruments which constitute part of chattel18paper, can be perfected only by the secured party's taking pos-19session, except as provided in subsections (4) and (5) and sec-20tion 9306(2) and (3) on proceeds.21(2) During the period that goods are in the possession of22the issuer of a negotiable document therefor, a security interest23in the goods is perfected by perfecting a security interest in24the document, and a security interest in the goods otherwise per-25fected during such period is subject thereto.26(3) A security interest in goods in the possession of a27bailee other than one who has issued a negotiable document02120'99 119 1therefor is perfected by issuance of a document in the name of2the security party or by the bailee's receipt of notification of3the secured party's interest or by filing as to the goods.4(4) A security interest in instruments, certificated securi-5ties, or negotiable documents is perfected without filing or the6taking of possession for a period of 21 days from the time it7attaches to the extent that it arises for a new value given under8a written security agreement.9(5) A security interest remains perfected for a period of 2110days without filing where a secured party having a perfected11security interest in an instrument, a certificated security, a12negotiable document, or goods in possession of a bailee other13than one who has issued a negotiable document therefor:14(a) Makes available to the debtor the goods or documents15representing the goods for the purpose of ultimate sale or16exchange or for the purpose of loading, unloading, storing, ship-17ping, transshipping, manufacturing, processing, or otherwise18dealing with them in a manner preliminary to their sale or19exchange; but priority between conflicting security interests in20the goods is subject to section 9312(3); or21(b) Delivers the instrument or certificated security to the22debtor for the purpose of ultimate sale or exchange or of presen-23tation, collection, renewal, or registration of transfer.24(6) After the 21-day period in subsections (4) and (5), per-25fection depends upon compliance with applicable provisions of26this article.02120'99 120 1 (1) THE LOCAL LAW OF A BANK'S JURISDICTION GOVERNS 2 PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION, AND THE 3 PRIORITY OF A SECURITY INTEREST IN A DEPOSIT ACCOUNT MAINTAINED 4 WITH THAT BANK. 5 (2) THE FOLLOWING RULES DETERMINE A BANK'S JURISDICTION FOR 6 PURPOSES OF THIS PART: 7 (A) IF AN AGREEMENT BETWEEN THE BANK AND THE DEBTOR GOVERN- 8 ING THE DEPOSIT ACCOUNT EXPRESSLY PROVIDES THAT A PARTICULAR 9 JURISDICTION IS THE BANK'S JURISDICTION FOR THE PURPOSE OF THIS 10 PART, THIS ARTICLE, OR THIS ACT, THAT JURISDICTION IS THE BANK'S 11 JURISDICTION. 12 (B) IF SUBDIVISION (A) DOES NOT APPLY AND AN AGREEMENT 13 BETWEEN THE BANK AND ITS CUSTOMER GOVERNING THE DEPOSIT ACCOUNT 14 EXPRESSLY PROVIDES THAT THE AGREEMENT IS GOVERNED BY THE LAW OF A 15 PARTICULAR JURISDICTION, THAT JURISDICTION IS THE BANK'S 16 JURISDICTION. 17 (C) IF NEITHER SUBDIVISION (A) NOR (B) APPLIES AND AN AGREE- 18 MENT BETWEEN THE BANK AND ITS CUSTOMER GOVERNING THE DEPOSIT 19 ACCOUNT EXPRESSLY PROVIDES THAT THE DEPOSIT ACCOUNT IS MAINTAINED 20 AT AN OFFICE IN A PARTICULAR JURISDICTION, THAT JURISDICTION IS 21 THE BANK'S JURISDICTION. 22 (D) IF NONE OF THE PRECEDING SUBDIVISIONS APPLY, THE BANK'S 23 JURISDICTION IS THE JURISDICTION IN WHICH THE OFFICE IDENTIFIED 24 IN AN ACCOUNT STATEMENT AS THE OFFICE SERVING THE CUSTOMER'S 25 ACCOUNT IS LOCATED. 02120'99 121 1 (E) IF NONE OF THE PRECEDING SUBDIVISIONS APPLY, THE BANK'S 2 JURISDICTION IS THE JURISDICTION IN WHICH THE CHIEF EXECUTIVE 3 OFFICE OF THE BANK IS LOCATED. 4 Sec. 9305.A security interest in letters of credit and5advices of credit (section 5116(2)(a)), goods, instruments,6money, negotiable documents, or chattel paper may be perfected by7the secured party's taking possession of the collateral. A8security interest in the rights to proceeds of a written letter9of credit can be perfected only by the secured party's taking10possession of the letter of credit. If such collateral other11than goods covered by a negotiable document is held by a bailee,12the secured party is deemed to have possession from the time the13bailee receives notification of the secured party's interest. A14security interest is perfected by possession from the time pos-15session is taken without relation back and continues only so long16as possession is retained, unless otherwise specified in this17article. The security interest may be otherwise perfected as18provided in this article before or after the period of possession19by the secured party.20 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), THE FOL- 21 LOWING RULES APPLY: 22 (A) WHILE A SECURITY CERTIFICATE IS LOCATED IN A JURISDIC- 23 TION, THE LOCAL LAW OF THAT JURISDICTION GOVERNS PERFECTION, THE 24 EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A 25 SECURITY INTEREST IN THE CERTIFICATED SECURITY REPRESENTED 26 THEREBY. 02120'99 122 1 (B) THE LOCAL LAW OF THE ISSUER'S JURISDICTION AS SPECIFIED 2 IN SECTION 8110(4) GOVERNS PERFECTION, THE EFFECT OF PERFECTION 3 OR NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN AN 4 UNCERTIFICATED SECURITY. 5 (C) THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S JURISDIC- 6 TION AS SPECIFIED IN SECTION 8110(5) GOVERNS PERFECTION, THE 7 EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A 8 SECURITY INTEREST IN A SECURITY ENTITLEMENT OR SECURITIES 9 ACCOUNT. 10 (D) THE LOCAL LAW OF THE COMMODITY INTERMEDIARY'S JURISDIC- 11 TION GOVERNS PERFECTION, THE EFFECT OF PERFECTION OR NONPERFEC- 12 TION, AND THE PRIORITY OF A SECURITY INTEREST IN A COMMODITY CON- 13 TRACT OR COMMODITY ACCOUNT. 14 (2) THE FOLLOWING RULES DETERMINE A COMMODITY INTERMEDIARY'S 15 JURISDICTION FOR PURPOSES OF THIS PART: 16 (A) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 17 COMMODITY CUSTOMER GOVERNING THE COMMODITY ACCOUNT EXPRESSLY PRO- 18 VIDES THAT A PARTICULAR JURISDICTION IS THE COMMODITY 19 INTERMEDIARY'S JURISDICTION FOR PURPOSES OF THIS PART, THIS ARTI- 20 CLE, OR THIS ACT, THAT JURISDICTION IS THE COMMODITY 21 INTERMEDIARY'S JURISDICTION. 22 (B) IF SUBDIVISION (A) DOES NOT APPLY AND AN AGREEMENT 23 BETWEEN THE COMMODITY INTERMEDIARY AND COMMODITY CUSTOMER GOVERN- 24 ING THE COMMODITY ACCOUNT EXPRESSLY PROVIDES THAT THE AGREEMENT 25 IS GOVERNED BY THE LAW OF A PARTICULAR JURISDICTION, THAT JURIS- 26 DICTION IS THE COMMODITY INTERMEDIARY'S JURISDICTION. 02120'99 123 1 (C) IF NEITHER SUBDIVISION (A) NOR (B) APPLIES AND AN 2 AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND COMMODITY 3 CUSTOMER GOVERNING THE COMMODITY ACCOUNT EXPRESSLY PROVIDES THAT 4 THE COMMODITY ACCOUNT IS MAINTAINED AT AN OFFICE IN A PARTICULAR 5 JURISDICTION, THAT JURISDICTION IS THE COMMODITY INTERMEDIARY'S 6 JURISDICTION. 7 (D) IF NONE OF THE PRECEDING SUBDIVISIONS APPLY, THE COMMOD- 8 ITY INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN WHICH THE 9 OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS THE OFFICE SERVING 10 THE COMMODITY CUSTOMER'S ACCOUNT IS LOCATED. 11 (E) IF NONE OF THE PRECEDING SUBDIVISIONS APPLY, THE COMMOD- 12 ITY INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN WHICH THE 13 CHIEF EXECUTIVE OFFICE OF THE COMMODITY INTERMEDIARY IS LOCATED. 14 (3) THE LOCAL LAW OF THE JURISDICTION IN WHICH THE DEBTOR IS 15 LOCATED GOVERNS PERFECTION OF A SECURITY INTEREST IN INVESTMENT 16 PROPERTY BY FILING, AUTOMATIC PERFECTION OF A SECURITY INTEREST 17 IN INVESTMENT PROPERTY CREATED BY A BROKER OR SECURITIES INTERME- 18 DIARY, AND AUTOMATIC PERFECTION OF A SECURITY INTEREST IN A COM- 19 MODITY CONTRACT OR COMMODITY ACCOUNT CREATED BY A COMMODITY 20 INTERMEDIARY. 21 Sec. 9306.(1) "Proceeds" includes whatever is received22upon the sale, exchange, collection or other disposition of col-23lateral, or proceeds. Insurance payable by reason of loss or24damage to the collateral is proceeds, except to the extent that25it is payable to a person other than a party to the security26agreement. Any payments or distributions made with respect to27investment property collateral are proceeds. Money, checks,02120'99 124 1deposit accounts, and the like are "cash proceeds". All other2proceeds are "noncash proceeds".3(2) Except where this article otherwise provides, a security4interest continues in collateral notwithstanding sale, exchange5or other disposition thereof unless the disposition was autho-6rized by the secured party in the security agreement or other-7wise, and also continues in any identifiable proceeds including8collections received by the debtor.9(3) The security interest in proceeds is a continuously per-10fected security interest if the interest in the original collat-11eral was perfected but it ceases to be a perfected security12interest and becomes unperfected 10 days after receipt of the13proceeds by the debtor unless:14(a) A filed financing statement covers the original collat-15eral and the proceeds are collateral in which a security interest16may be perfected by filing in the office or offices where the17financing statement has been filed and, if the proceeds are18acquired with cash proceeds, the description of collateral in the19financing statement indicates the types of property constituting20the proceeds; or21(b) A filed financing statement covers the original collat-22eral and the proceeds are identifiable cash proceeds; or23(c) The original collateral was investment property and the24proceeds are identifiable cash proceeds; or25(d) The security interest in the proceeds is perfected26before the expiration of the 10-day period. Except as provided27in this section, a security interest in proceeds can be perfected02120'99 125 1only by the methods or under the circumstances permitted in this2article for original collateral of the same type.3(4) In the event of insolvency proceedings instituted by or4against a debtor, a secured party with a perfected security5interest in proceeds has a perfected security interest only in6the following proceeds:7(a) In identifiable noncash proceeds and in separate deposit8accounts containing only proceeds;9(b) In identifiable cash proceeds in the form of money which10is neither commingled with other money nor deposited in a deposit11account prior to the insolvency proceedings;12(c) In identifiable cash proceeds in the form of checks and13the like which are not deposited in a deposit account prior to14the insolvency proceedings; and15(d) In all cash and deposit accounts of the debtor, in which16proceeds have been commingled with other funds, but the perfected17security interest under this paragraph (d) is18(i) Subject to any right of setoff; and19(ii) Limited to an amount not greater than the amount of any20cash proceeds received by the debtor within 10 days before the21institution of the insolvency proceedings less the sum of (i) the22payments to the secured party on account of cash proceeds23received by the debtor during such period and (ii) the cash pro-24ceeds received by the debtor during such period to which the25secured party is entitled under paragraphs (a) through (c) of26this subsection.02120'99 126 1(5) If a sale of goods results in an account or chattel2paper which is transferred by the seller to a secured party, and3if the goods are returned to or are repossessed by the seller or4the secured party, the following rules determine priorities:5(a) If the goods were collateral at the time of sale for an6indebtedness of the seller which is still unpaid, the original7security interest attaches again to the goods and continues as a8perfected security interest if it was perfected at the time when9the goods were sold. If the security interest was originally10perfected by a filing which is still effective, nothing further11is required to continue the perfected status; in any other case,12the secured party must take possession of the returned or repos-13sessed goods or must file.14(b) An unpaid transferee of the chattel paper has a security15interest in the goods against the transferor. Such security16interest is prior to a security interest asserted under paragraph17(a) to the extent that the transferee of the chattel paper was18entitled to priority under section 9308.19(c) An unpaid transferee of the account has a security20interest in the goods against the transferor. Such security21interest is subordinate to a security interest asserted under22paragraph (a).23(d) A security interest of an unpaid transferee asserted24under paragraph (b) or (c) must be perfected for protection25against creditors of the transferor and purchasers of the26returned or repossessed goods.02120'99 127 1 (1) SUBJECT TO SUBSECTION (3), THE LOCAL LAW OF THE ISSUER'S 2 JURISDICTION OR A NOMINATED PERSON'S JURISDICTION GOVERNS 3 PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION, AND THE 4 PRIORITY OF A SECURITY INTEREST IN A LETTER-OF-CREDIT RIGHT IF 5 THE ISSUER'S JURISDICTION OR NOMINATED PERSON'S JURISDICTION IS A 6 STATE. 7 (2) FOR PURPOSES OF THIS PART, AN ISSUER'S JURISDICTION OR 8 NOMINATED PERSON'S JURISDICTION IS THE JURISDICTION WHOSE LAW 9 GOVERNS THE LIABILITY OF THE ISSUER OR NOMINATED PERSON WITH 10 RESPECT TO THE LETTER-OF-CREDIT RIGHT AS PROVIDED IN SECTION 11 5116. 12 (3) THIS SECTION DOES NOT APPLY TO A SECURITY INTEREST THAT 13 IS PERFECTED ONLY UNDER SECTION 9308(4). 14 Sec. 9307.(1) Except as otherwise provided by subsection15(10), a buyer in ordinary course of business, as defined in sec-16tion 1201(9), takes free of a security interest created by his or17her seller even though the security interest is perfected and18even though the buyer knows of its existence.19(2) Subsections (3) to (10) shall apply in the case of a20person buying farm products from a person engaged in farming21operations.22(3) If requested by the secured party, a debtor engaged in23farming operations who gives a security interest in farm products24shall provide to the secured party a written list identifying25potential buyers and points of delivery of the farm products.26Except as otherwise provided by subsection (4), the number of27potential buyers for each commodity shall not exceed 5. If a02120'99 128 1potential buyer has more than 1 point of delivery, each2additional point of delivery shall be counted as a potential3buyer.4(4) A debtor engaged in farming operations who provides a5written list of potential buyers to a secured party pursuant to6subsection (3) shall not sell farm products that secure the debt7to a buyer who is not identified on the list without the prior8written consent of the secured party. A person who knowingly or9intentionally violates this subsection is guilty of a felony,10punishable by imprisonment for not more than 3 years or a fine of11not more than $10,000.00, or both. If appropriate given the12facts and circumstances of the case, the court shall place the13person on probation upon the condition that restitution be made14to the secured party. Payment of, or application of the proceeds15to, the debt upon which the security interest is based shall be16an absolute defense to a prosecution under this subsection if the17payment or application is made prior to commencement of18prosecution.19(5) A secured party who is provided with a written list of20potential buyers pursuant to subsection (3) may notify buyers21identified on the list of the security interest as provided in22this subsection. A secured party shall not notify a person not23identified on the list, except that the secured party may notify24a buyer concerning whom the secured party has given prior written25consent pursuant to subsection (4) or to whom the secured party26has reasonable cause to believe the debtor is about to sell the27farm products. A notice provided pursuant to this subsection02120'99 129 1shall be in writing, and shall be mailed by certified mail or2delivered by another method by which receipt can be verified.3The notice may be in a form agreed upon in writing by the buyer4and the secured party, but in absence of such an agreement the5notice shall be an original financing statement or a carbon, pho-6tographic, or other reproduction of an original that is effective7under section 9402, or a statement that contains all of the8following:9(a) The full name and address of the debtor.10(b) The full name and address of the secured party.11(c) A description of the collateral.12(d) The date and location of the filing of the security13interest.14(e) The date and signature of the secured party.15(6) If the debt that is the basis of the security interest16is satisfied, the secured party shall notify in writing each17potential buyer to whom the secured party sent notice under sub-18section (5). The notice may be given within a time period agreed19upon in writing by the buyer and the secured party, but in20absence of such an agreement the notice shall be given within 1121days after the debt is satisfied.22(7) A secured party who does any of the following is guilty23of a misdemeanor, punishable by imprisonment for not more than2490 days or a fine of not more than $1,000.00, or both:25(a) Knowingly or intentionally gives false or misleading26information in a notice provided pursuant to subsection (5).02120'99 130 1(b) Sends notice to a potential buyer other than as2permitted in subsection (5).3(c) Fails to notify a potential buyer of the satisfaction of4a debt within the time period prescribed by subsection (6).5(8) A buyer of farm products who receives notice pursuant to6subsection (5) of a security interest in the farm products shall7make payment for the farm products by check or other instrument8made payable to the seller and the secured party jointly, except9that payment may be made directly to the secured party if autho-10rized in writing by the seller. This subsection shall not apply11to any payment or partial payment made before notice under sub-12section (5) has been received by the buyer. A buyer of farm pro-13ducts who violates this subsection is guilty of a misdemeanor,14punishable by imprisonment for not more than 90 days or a fine of15not more than $1,000.00, or both. Payment of the debt upon which16the security interest is based shall be an absolute defense to a17prosecution under this subsection if payment is made prior to18commencement of prosecution.19(9) As used in subsections (2) to (8), "person buying farm20products" or "buyer" includes a commission merchant or selling21agent who sells farm products in the ordinary course of business22for a person engaged in farming operations.23(10) A buyer in ordinary course of business who receives24notice pursuant to subsection (5), who buys farm products from a25person engaged in farming operations, and who withholds all or26part of the proceeds of the sale from the seller in order to27satisfy a debt owed by the seller to the buyer, takes subject to02120'99 131 1a security interest in those farm products created by the seller,2unless the debt owed by the seller to the buyer was secured by a3prior perfected security interest. For purposes of this subsec-4tion, "debt" does not include the cost of harvesting; processing,5including packaging, freezing, canning, and drying; storing; or6marketing the farm products, or transporting the farm products to7market.8(11) Except as otherwise provided by subsection (12), a com-9mission merchant or selling agent who sells farm products, in the10ordinary course of business, for a person engaged in farming11operations shall not be liable to the holder of a security inter-12est in those farm products even though the security interest is13perfected and even though the commission merchant or selling14agent knows of its existence.15(12) A commission merchant or selling agent who sells farm16products, in the ordinary course of business, for a person17engaged in farming operations, and who receives notice pursuant18to subsection (5), shall not be protected from liability under19subsection (11) if the commission merchant or selling agent with-20holds from the seller all or part of the proceeds of a sale of21the farm products in order to satisfy a debt owed by the seller22to the commission merchant or selling agent, unless the debt was23secured by a prior perfected security interest. For purposes of24this subsection, "debt" does not include the cost of harvesting;25processing, including packaging, freezing, canning, and drying;26storing; or marketing the farm products, or transporting the farm27products to market.02120'99 132 1(13) A prosecution under subsections (8) to (10) shall not2be commenced after the expiration of 2 years following the date3the violation occurred.4(14) In the case of consumer goods, a buyer takes free of a5security interest even though perfected if the buyer buys without6knowledge of the security interest, for value and for the buyer's7own personal, family, or household purposes unless prior to the8purchase the secured party has filed a financing statement cover-9ing such goods.10(15) A buyer other than a buyer in ordinary course of busi-11ness under subsection (1) takes free of a security interest to12the extent that it secures future advances made after the secured13party acquires knowledge of the purchase, or more than 45 days14after the purchase, whichever first occurs, unless made pursuant15to a commitment entered into without knowledge of the purchase16and before the expiration of the 45-day period.17 (1) AS USED IN THIS SECTION, "PLACE OF BUSINESS" MEANS A 18 PLACE WHERE A DEBTOR CONDUCTS ITS AFFAIRS. 19 (2) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE FOL- 20 LOWING RULES DETERMINE A DEBTOR'S LOCATION: 21 (A) A DEBTOR WHO IS AN INDIVIDUAL IS LOCATED AT THE 22 INDIVIDUAL'S PRINCIPAL RESIDENCE. 23 (B) A DEBTOR THAT IS AN ORGANIZATION AND HAS ONLY 1 PLACE OF 24 BUSINESS IS LOCATED AT ITS PLACE OF BUSINESS. 25 (C) A DEBTOR THAT IS AN ORGANIZATION AND HAS MORE THAN 1 26 PLACE OF BUSINESS IS LOCATED AT ITS CHIEF EXECUTIVE OFFICE. 02120'99 133 1 (3) SUBSECTION (2) APPLIES ONLY IF A DEBTOR'S RESIDENCE, 2 PLACE OF BUSINESS, OR CHIEF EXECUTIVE OFFICE, AS APPLICABLE, IS 3 LOCATED IN A JURISDICTION WHOSE LAW GENERALLY REQUIRES INFORMA- 4 TION CONCERNING THE EXISTENCE OF A NONPOSSESSORY SECURITY INTER- 5 EST TO BE MADE GENERALLY AVAILABLE IN A FILING, RECORDING, OR 6 REGISTRATION SYSTEM AS A CONDITION OR RESULT OF THE SECURITY 7 INTEREST'S OBTAINING PRIORITY OVER THE RIGHTS OF A LIEN CREDITOR 8 WITH RESPECT TO THE COLLATERAL. IF SUBSECTION (2) DOES NOT 9 APPLY, THE DEBTOR IS LOCATED IN THE DISTRICT OF COLUMBIA. 10 (4) A PERSON THAT CEASES TO EXIST, HAVE A RESIDENCE, OR HAVE 11 A PLACE OF BUSINESS CONTINUES TO BE LOCATED IN THE JURISDICTION 12 SPECIFIED BY SUBSECTIONS (2) AND (3). 13 (5) A REGISTERED ORGANIZATION THAT IS ORGANIZED UNDER THE 14 LAW OF A STATE IS LOCATED IN THAT STATE. 15 (6) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (9), A REGIS- 16 TERED ORGANIZATION THAT IS ORGANIZED UNDER THE LAW OF THE UNITED 17 STATES AND A BRANCH OR AGENCY OF A BANK THAT IS NOT ORGANIZED 18 UNDER THE LAW OF THE UNITED STATES OR A STATE ARE LOCATED IN 1 OF 19 THE FOLLOWING: 20 (A) IN THE STATE THAT THE LAW OF THE UNITED STATES DESIG- 21 NATES, IF THE LAW DESIGNATES A STATE OF LOCATION. 22 (B) IN THE STATE THAT THE REGISTERED ORGANIZATION, BRANCH, 23 OR AGENCY DESIGNATES, IF THE LAW OF THE UNITED STATES AUTHORIZES 24 THE REGISTERED ORGANIZATION, BRANCH, OR AGENCY TO DESIGNATE ITS 25 STATE OF LOCATION. 26 (C) IN THE DISTRICT OF COLUMBIA, IF NEITHER SUBDIVISION (A) 27 NOR (B) APPLIES. 02120'99 134 1 (7) A REGISTERED ORGANIZATION CONTINUES TO BE LOCATED IN THE 2 JURISDICTION SPECIFIED BY SUBSECTION (5) OR (6) NOTWITHSTANDING 3 THE OCCURRENCE OF 1 OF THE FOLLOWING: 4 (A) THE SUSPENSION, REVOCATION, FORFEITURE, OR LAPSE OF THE 5 REGISTERED ORGANIZATION'S STATUS AS SUCH IN ITS JURISDICTION OF 6 ORGANIZATION. 7 (B) THE DISSOLUTION, WINDING UP, OR CANCELLATION OF THE 8 EXISTENCE OF THE REGISTERED ORGANIZATION. 9 (8) THE UNITED STATES IS LOCATED IN THE DISTRICT OF 10 COLUMBIA. 11 (9) A BRANCH OR AGENCY OF A BANK THAT IS NOT ORGANIZED UNDER 12 THE LAW OF THE UNITED STATES OR A STATE IS LOCATED IN THE STATE 13 IN WHICH THE BRANCH OR AGENCY IS LICENSED, IF ALL BRANCHES AND 14 AGENCIES OF THE BANK ARE LICENSED IN ONLY 1 STATE. 15 (10) A FOREIGN AIR CARRIER IS LOCATED AT THE DESIGNATED 16 OFFICE OF THE AGENT UPON WHICH SERVICE OF PROCESS MAY BE MADE ON 17 BEHALF OF THE CARRIER UNDER SECTION 46103 OF TITLE 49 OF THE 18 UNITED STATES CODE, 49 U.S.C. 46103. 19 (11) THIS SECTION APPLIES ONLY FOR PURPOSES OF THIS PART. 20 SUBPART 2. PERFECTION 21 Sec. 9308.A purchaser of chattel paper or an instrument22who gives new value and takes possession of it in the ordinary23course of his business has priority over a security interest in24the chattel paper or instrument:25(a) Which is perfected under section 9304 (permissive filing26and temporary perfection) or under section 9306 (perfection as to02120'99 135 1proceeds) if he acts without knowledge that the specific paper or2instrument is subject to a security interest; or3(b) Which is claimed merely as proceeds of inventory subject4to a security interest (section 9306) even though he knows that5the specific paper or instrument is subject to the security6interest.7 (1) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION AND SECTION 8 9309, A SECURITY INTEREST IS PERFECTED IF IT HAS ATTACHED AND ALL 9 OF THE APPLICABLE REQUIREMENTS FOR PERFECTION IN SECTIONS 9310 10 THROUGH 9316 HAVE BEEN SATISFIED. A SECURITY INTEREST IS PERFEC- 11 TED WHEN IT ATTACHES IF THE APPLICABLE REQUIREMENTS ARE SATISFIED 12 BEFORE THE SECURITY INTEREST ATTACHES. 13 (2) AN AGRICULTURAL LIEN IS PERFECTED IF IT HAS BECOME 14 EFFECTIVE AND ALL OF THE APPLICABLE REQUIREMENTS FOR PERFECTION 15 IN SECTION 9310 HAVE BEEN SATISFIED. AN AGRICULTURAL LIEN IS 16 PERFECTED WHEN IT BECOMES EFFECTIVE IF THE APPLICABLE REQUIRE- 17 MENTS ARE SATISFIED BEFORE THE AGRICULTURAL LIEN BECOMES 18 EFFECTIVE. 19 (3) A SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED 20 CONTINUOUSLY IF IT IS ORIGINALLY PERFECTED BY 1 METHOD UNDER THIS 21 ARTICLE AND IS LATER PERFECTED BY ANOTHER METHOD UNDER THIS ARTI- 22 CLE, WITHOUT AN INTERMEDIATE PERIOD WHEN IT WAS UNPERFECTED. 23 (4) PERFECTION OF A SECURITY INTEREST IN COLLATERAL ALSO 24 PERFECTS A SECURITY INTEREST IN A SUPPORTING OBLIGATION FOR THE 25 COLLATERAL. 26 (5) PERFECTION OF A SECURITY INTEREST IN A RIGHT TO PAYMENT 27 OR PERFORMANCE ALSO PERFECTS A SECURITY INTEREST IN A SECURITY 02120'99 136 1 INTEREST, MORTGAGE, OR OTHER LIEN ON PERSONAL OR REAL PROPERTY 2 SECURING THE RIGHT. 3 (6) PERFECTION OF A SECURITY INTEREST IN A SECURITIES 4 ACCOUNT ALSO PERFECTS A SECURITY INTEREST IN THE SECURITY ENTI- 5 TLEMENTS CARRIED IN THE SECURITIES ACCOUNT. 6 (7) PERFECTION OF A SECURITY INTEREST IN A COMMODITY ACCOUNT 7 ALSO PERFECTS A SECURITY INTEREST IN THE COMMODITY CONTRACTS CAR- 8 RIED IN THE COMMODITY ACCOUNT. 9 Sec. 9309.Nothing in this article limits the rights of a10holder in due course of a negotiable instrument (section 3302) or11a holder to whom a negotiable document of title has been duly12negotiated (section 7501) or a protected purchaser of a security13(section 8303) and such holders or purchasers take priority over14an earlier security interest even though perfected. Filing under15this article does not constitute notice of the security interest16to such holders or purchasers.EACH OF THE FOLLOWING SECURITY 17 INTERESTS IS PERFECTED WHEN IT ATTACHES: 18 (A) A PURCHASE-MONEY SECURITY INTEREST IN CONSUMER GOODS, 19 EXCEPT AS OTHERWISE PROVIDED IN SECTION 9311(2) WITH RESPECT TO 20 CONSUMER GOODS THAT ARE SUBJECT TO A STATUTE OR TREATY DESCRIBED 21 IN SECTION 9311(1). 22 (B) AN ASSIGNMENT OF ACCOUNTS OR PAYMENT INTANGIBLES WHICH 23 DOES NOT BY ITSELF OR IN CONJUNCTION WITH OTHER ASSIGNMENTS TO 24 THE SAME ASSIGNEE TRANSFER A SIGNIFICANT PART OF THE ASSIGNOR'S 25 OUTSTANDING ACCOUNTS OR PAYMENT INTANGIBLES. 26 (C) A SALE OF A PAYMENT INTANGIBLE. 02120'99 137 1 (D) A SALE OF A PROMISSORY NOTE. 2 (E) A SECURITY INTEREST CREATED BY THE ASSIGNMENT OF A 3 HEALTH-CARE-INSURANCE RECEIVABLE TO THE PROVIDER OF THE 4 HEALTH-CARE GOODS OR SERVICES. 5 (F) A SECURITY INTEREST ARISING UNDER SECTION 2401, 2505, 6 2711(3), OR 2A508(5), UNTIL THE DEBTOR OBTAINS POSSESSION OF THE 7 COLLATERAL. 8 (G) A SECURITY INTEREST OF A COLLECTING BANK ARISING UNDER 9 SECTION 4210. 10 (H) A SECURITY INTEREST OF AN ISSUER OR NOMINATED PERSON 11 ARISING UNDER SECTION 5118. 12 (I) A SECURITY INTEREST ARISING IN THE DELIVERY OF A FINAN- 13 CIAL ASSET UNDER SECTION 9206(3). 14 (J) A SECURITY INTEREST IN INVESTMENT PROPERTY CREATED BY A 15 BROKER OR SECURITIES INTERMEDIARY. 16 (K) A SECURITY INTEREST IN A COMMODITY CONTRACT OR A COMMOD- 17 ITY ACCOUNT CREATED BY A COMMODITY INTERMEDIARY. 18 (l) AN ASSIGNMENT FOR THE BENEFIT OF ALL CREDITORS OF THE 19 TRANSFEROR AND SUBSEQUENT TRANSFERS BY THE ASSIGNEE THEREUNDER. 20 (M) A SECURITY INTEREST CREATED BY AN ASSIGNMENT OF A BENE- 21 FICIAL INTEREST IN A DECEDENT'S ESTATE. 22 Sec. 9310.When a person in the ordinary course of his23business furnishes services or materials with respect to goods24subject to a security interest, a lien upon goods in the posses-25sion of such person given by statute or rule of law for such26materials or services takes priority over a perfected security02120'99 138 1interest unless the lien is statutory and the statute expressly2provides otherwise.3 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2) AND SEC- 4 TION 9312(2), A FINANCING STATEMENT MUST BE FILED TO PERFECT ALL 5 SECURITY INTERESTS AND AGRICULTURAL LIENS. 6 (2) THE FILING OF A FINANCING STATEMENT IS NOT NECESSARY TO 7 PERFECT 1 OR MORE OF THE FOLLOWING: 8 (A) A SECURITY INTEREST THAT IS PERFECTED UNDER SECTION 9 9308(4), (5), (6), OR (7). 10 (B) A SECURITY INTEREST THAT IS PERFECTED UNDER SECTION 9309 11 WHEN IT ATTACHES. 12 (C) A SECURITY INTEREST IN PROPERTY SUBJECT TO A STATUTE, 13 REGULATION, OR TREATY DESCRIBED IN SECTION 9311(1). 14 (D) A SECURITY INTEREST IN GOODS IN POSSESSION OF A BAILEE 15 THAT IS PERFECTED UNDER SECTION 9312(4)(A) OR (B). 16 (E) A SECURITY INTEREST IN CERTIFICATED SECURITIES, DOCU- 17 MENTS, GOODS, OR INSTRUMENTS THAT IS PERFECTED WITHOUT FILING OR 18 POSSESSION UNDER SECTION 9312(5), (6), OR (7). 19 (F) A SECURITY INTEREST IN COLLATERAL IN THE SECURED PARTY'S 20 POSSESSION UNDER SECTION 9313. 21 (G) A SECURITY INTEREST IN A CERTIFICATED SECURITY THAT IS 22 PERFECTED BY DELIVERY OF THE SECURITY CERTIFICATE TO THE SECURED 23 PARTY UNDER SECTION 9313. 24 (H) A SECURITY INTEREST IN DEPOSIT ACCOUNTS, ELECTRONIC 25 CHATTEL PAPER, INVESTMENT PROPERTY, OR LETTER-OF-CREDIT RIGHTS 26 THAT IS PERFECTED BY CONTROL UNDER SECTION 9314. 02120'99 139 1 (I) A SECURITY INTEREST IN PROCEEDS THAT IS PERFECTED UNDER 2 SECTION 9315. 3 (J) A SECURITY INTEREST THAT IS PERFECTED UNDER SECTION 4 9316. 5 (3) IF A SECURED PARTY ASSIGNS A PERFECTED SECURITY INTEREST 6 OR AGRICULTURAL LIEN, A FILING UNDER THIS ARTICLE IS NOT REQUIRED 7 TO CONTINUE THE PERFECTED STATUS OF THE SECURITY INTEREST AGAINST 8 CREDITORS OF AND TRANSFEREES FROM THE ORIGINAL DEBTOR. 9 Sec. 9311.The debtor's rights in collateral may be volun-10tarily or involuntarily transferred (by way of sale, creation of11a security interest, attachment, levy, garnishment or other judi-12cial process) notwithstanding a provision in the security agree-13ment prohibiting any transfer or making the transfer constitute a14default.15 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), THE 16 FILING OF A FINANCING STATEMENT IS NOT NECESSARY OR EFFECTIVE TO 17 PERFECT A SECURITY INTEREST IN PROPERTY SUBJECT TO 1 OR MORE OF 18 THE FOLLOWING: 19 (A) A STATUTE, REGULATION, OR TREATY OF THE UNITED STATES 20 WHOSE REQUIREMENTS FOR A SECURITY INTEREST'S OBTAINING PRIORITY 21 OVER THE RIGHTS OF A LIEN CREDITOR WITH RESPECT TO THE PROPERTY 22 PREEMPT SECTION 9310(1). 23 (B) THE FOLLOWING STATUTES OF THIS STATE: 24 (i) CHAPTER II OF THE MICHIGAN VEHICLE CODE, 1949 PA 300, 25 MCL 257.201 TO 257.259. 26 (ii) PART 803 OF THE NATURAL RESOURCES AND ENVIRONMENTAL 27 PROTECTION ACT, 1994 PA 451, MCL 324.80301 TO 324.80322. 02120'99 140 1 (iii) PART 811 OF THE NATURAL RESOURCES AND ENVIRONMENTAL 2 PROTECTION ACT, 1994 PA 451, MCL 324.81101 TO 324.81150. 3 (iv) SECTIONS 30 THROUGH 30H OF THE MOBILE HOME COMMISSION 4 ACT, 1987 PA 96, MCL 125.2330 TO 125.2330H. 5 (C) A CERTIFICATE-OF-TITLE STATUTE OF ANOTHER JURISDICTION 6 WHICH PROVIDES FOR A SECURITY INTEREST TO BE INDICATED ON THE 7 CERTIFICATE AS A CONDITION OR RESULT OF THE SECURITY INTEREST'S 8 OBTAINING PRIORITY OVER THE RIGHTS OF A LIEN CREDITOR WITH 9 RESPECT TO THE PROPERTY. 10 (2) COMPLIANCE WITH THE REQUIREMENTS OF A STATUTE, REGULA- 11 TION, OR TREATY DESCRIBED IN SUBSECTION (1) FOR OBTAINING PRIOR- 12 ITY OVER THE RIGHTS OF A LIEN CREDITOR IS EQUIVALENT TO THE 13 FILING OF A FINANCING STATEMENT UNDER THIS ARTICLE. EXCEPT AS 14 OTHERWISE PROVIDED IN SUBSECTION (4) AND SECTIONS 9313 AND 15 9316(4) AND (5) FOR GOODS COVERED BY A CERTIFICATE OF TITLE, A 16 SECURITY INTEREST IN PROPERTY SUBJECT TO A STATUTE, REGULATION, 17 OR TREATY DESCRIBED IN SUBSECTION (1) MAY BE PERFECTED ONLY BY 18 COMPLIANCE WITH THOSE REQUIREMENTS, AND A SECURITY INTEREST SO 19 PERFECTED REMAINS PERFECTED NOTWITHSTANDING A CHANGE IN THE USE 20 OR TRANSFER OF POSSESSION OF THE COLLATERAL. 21 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4) AND SEC- 22 TION 9316(4) AND (5), DURATION AND RENEWAL OF PERFECTION OF A 23 SECURITY INTEREST PERFECTED BY COMPLIANCE WITH THE REQUIREMENTS 24 PRESCRIBED BY A STATUTE, REGULATION, OR TREATY DESCRIBED IN SUB- 25 SECTION (1) ARE GOVERNED BY THE STATUTE, REGULATION, OR TREATY. 26 IN OTHER RESPECTS, THE SECURITY INTEREST IS SUBJECT TO THIS 27 ARTICLE. 02120'99 141 1 (4) DURING ANY PERIOD IN WHICH COLLATERAL IS INVENTORY HELD 2 FOR SALE OR LEASE BY A PERSON OR LEASED BY THAT PERSON AS LESSOR 3 AND THAT PERSON IS IN THE BUSINESS OF SELLING OR LEASING GOODS OF 4 THAT KIND, THIS SECTION DOES NOT APPLY TO A SECURITY INTEREST IN 5 THAT COLLATERAL CREATED BY THAT PERSON AS DEBTOR. 6 Sec. 9312.(1) The rules of priority stated in other sec-7tions of this part and in the following sections shall govern8when applicable: section 4210 with respect to the security9interests of collecting banks in items being collected, accompa-10nying documents and proceeds; section 9103 on security interests11related to other jurisdictions; section 9114 on consignments; and12section 9115 on security interests in investment property.13(2) A perfected security interest in crops for new value14given to enable the debtor to produce the crops during the pro-15duction season and given not more than 3 months before the crops16become growing crops by planting or otherwise takes priority over17an earlier perfected security interest to the extent that such18earlier interest secures obligations due more than 6 months19before the crops become growing crops by planting or otherwise,20even though the person giving new value had knowledge of the ear-21lier security interest.22(3) Except as provided in subsection (4), a perfected pur-23chase money security interest in inventory has priority over a24conflicting security interest in the same inventory and also has25priority in identifiable cash proceeds received on or before the26delivery of the inventory to a buyer if:02120'99 142 1(a) The purchase money security interest is perfected at the2time the debtor receives possession of the inventory; and3(b) The purchase money secured party gives notification in4writing to the holder of the conflicting security interest if the5holder had filed a financing statement covering the same types of6inventory; (i) before the date of the filing made by the purchase7money secured party; or, (ii) before the beginning of the 21-day8period where the purchase money security interest is temporarily9perfected without filing or possession (section 9304(5)); and10(c) The holder of the conflicting security interest receives11the notification within 5 years before the debtor receives pos-12session of the inventory; and13(d) The notification states that the person giving the14notice has or expects to acquire a purchase money security inter-15est in inventory of the debtor, describing such inventory by item16or type.17(4) A purchase money security interest in inventory collat-18eral which consists entirely of farm produce as defined in the19grain dealers act, Act No. 141 of the Public Acts of 1939, being20sections 285.61 to 285.82a of the Michigan Compiled Laws, and21which is retained by the producer of the farm produce shall have22priority over a conflicting security interest in the same collat-23eral, except for a security interest specified in subsection (2),24if the purchase money security interest is perfected at the time25the debtor receives possession of the collateral or within 2026days thereafter.02120'99 143 1(5) A purchase money security interest in collateral other2than inventory has priority over a conflicting security interest3in the same collateral or its proceeds if the purchase money4security interest is perfected at the time the debtor receives5possession of the collateral or within 20 days thereafter.6(6) In all cases not governed by other rules stated in this7section, including cases of purchase money security interests8which do not qualify for the special priorities set forth in sub-9sections (3), (4), and (5) of this section, priority between con-10flicting security interests in the same collateral shall be11determined according to the following rules:12(a) Conflicting security interests rank according to prior-13ity in time of filing or perfection. Priority dates from the14time a filing is first made covering the collateral or the time15the security interest is first perfected, whichever is earlier,16provided that there is no period thereafter when there is neither17filing nor perfection.18(b) So long as conflicting security interests are unper-19fected, the first to attach has priority.20(7) For the purposes of subsection (6) a date of filing or21perfection as to collateral is also a date of filing or perfec-22tion as to proceeds.23(8) If future advances are made while a security interest is24perfected by filing, the taking of possession, or under section259115 or section 9116 on investment property, the security inter-26est has the same priority for the purposes of subsection (6) or27section 9115(5) with respect to the future advances as it does02120'99 144 1with respect to the first advance. If a commitment is made2before or while the security interest is so perfected, the secur-3ity interest has the same priority with respect to advances made4pursuant thereto. In other cases a perfected security interest5has priority from the date the advance is made.6 (1) A SECURITY INTEREST IN CHATTEL PAPER, NEGOTIABLE DOCU- 7 MENTS, INSTRUMENTS, OR INVESTMENT PROPERTY MAY BE PERFECTED BY 8 FILING. 9 (2) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9315(3) AND (4) 10 FOR PROCEEDS, A SECURITY INTEREST IN A DEPOSIT ACCOUNT, A 11 LETTER-OF-CREDIT RIGHT, OR MONEY MAY BE PERFECTED ONLY AS 12 FOLLOWS: 13 (A) A SECURITY INTEREST IN A DEPOSIT ACCOUNT MAY BE PERFEC- 14 TED ONLY BY CONTROL UNDER SECTION 9314. 15 (B) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9308(4), A 16 SECURITY INTEREST IN A LETTER-OF-CREDIT RIGHT MAY BE PERFECTED 17 ONLY BY CONTROL UNDER SECTION 9314. 18 (C) A SECURITY INTEREST IN MONEY MAY BE PERFECTED ONLY BY 19 THE SECURED PARTY'S TAKING POSSESSION UNDER SECTION 9313. 20 (3) WHILE GOODS ARE IN THE POSSESSION OF A BAILEE THAT HAS 21 ISSUED A NEGOTIABLE DOCUMENT COVERING THE GOODS, A SECURITY 22 INTEREST IN THE GOODS MAY BE PERFECTED BY PERFECTING A SECURITY 23 INTEREST IN THE DOCUMENT, AND A SECURITY INTEREST PERFECTED IN 24 THE DOCUMENT HAS PRIORITY OVER ANY SECURITY INTEREST THAT BECOMES 25 PERFECTED IN THE GOODS BY ANOTHER METHOD DURING THAT TIME. 26 (4) WHILE GOODS ARE IN THE POSSESSION OF A BAILEE THAT HAS 27 ISSUED A NONNEGOTIABLE DOCUMENT COVERING THE GOODS, A SECURITY 02120'99 145 1 INTEREST IN THE GOODS MAY BE PERFECTED BY 1 OR MORE OF THE 2 FOLLOWING: 3 (A) ISSUANCE OF A DOCUMENT IN THE NAME OF THE SECURED 4 PARTY. 5 (B) THE BAILEE'S RECEIPT OF NOTIFICATION OF THE SECURED 6 PARTY'S INTEREST. 7 (C) FILING AS TO THE GOODS. 8 (5) A SECURITY INTEREST IN CERTIFICATED SECURITIES, NEGOTIA- 9 BLE DOCUMENTS, OR INSTRUMENTS IS PERFECTED WITHOUT FILING OR THE 10 TAKING OF POSSESSION FOR A PERIOD OF 20 DAYS FROM THE TIME IT 11 ATTACHES TO THE EXTENT THAT IT ARISES FOR NEW VALUE GIVEN UNDER 12 AN AUTHENTICATED SECURITY AGREEMENT. 13 (6) A PERFECTED SECURITY INTEREST IN A NEGOTIABLE DOCUMENT 14 OR GOODS IN POSSESSION OF A BAILEE, OTHER THAN ONE THAT HAS 15 ISSUED A NEGOTIABLE DOCUMENT FOR THE GOODS, REMAINS PERFECTED FOR 16 20 DAYS WITHOUT FILING IF THE SECURED PARTY MAKES AVAILABLE TO 17 THE DEBTOR THE GOODS OR DOCUMENTS REPRESENTING THE GOODS FOR THE 18 PURPOSE OF ULTIMATE SALE OR EXCHANGE, OR FOR THE PURPOSE OF LOAD- 19 ING, UNLOADING, STORING, SHIPPING, TRANSSHIPPING, MANUFACTURING, 20 PROCESSING, OR OTHERWISE DEALING WITH THEM IN A MANNER PRELIMI- 21 NARY TO THEIR SALE OR EXCHANGE: 22 (7) A PERFECTED SECURITY INTEREST IN A CERTIFICATED SECURITY 23 OR INSTRUMENT REMAINS PERFECTED FOR 20 DAYS WITHOUT FILING IF THE 24 SECURED PARTY DELIVERS THE SECURITY CERTIFICATE OR INSTRUMENT TO 25 THE DEBTOR FOR THE PURPOSE OF ULTIMATE SALE OR EXCHANGE OR FOR 26 THE PURPOSE OF PRESENTATION, COLLECTION, ENFORCEMENT, RENEWAL, OR 27 REGISTRATION OF TRANSFER. 02120'99 146 1 (8) AFTER THE 20-DAY PERIOD SPECIFIED IN SUBSECTION (5), 2 (6), OR (7) EXPIRES, PERFECTION DEPENDS UPON COMPLIANCE WITH THIS 3 ARTICLE. 4 Sec. 9313.(1) In this section and in the provisions of5part 4 of this article referring to fixture filing, unless the6context otherwise requires:7(a) Goods are "fixtures" when they become so related to par-8ticular real estate that an interest in them arises under real9estate law. However, crops growing or to be grown are not10fixtures.11(b) A "fixture filing" is the filing in the office where a12mortgage on the real estate would be filed or recorded of a13financing statement covering goods which are or are to become14fixtures.15(c) A mortgage is a "construction mortgage" to the extent16that it secures an obligation incurred for the construction of an17improvement on land which may include the acquisition cost of the18land, and if the recorded writing so indicates.19(2) A security interest under this article may be created in20goods which are fixtures or may continue in goods which becomes21fixtures, but no security interest exists under this article in22ordinary building materials incorporated into an improvement on23land.24(3) This article does not prevent creation of an encumbrance25upon fixtures pursuant to real estate law.02120'99 147 1(4) A perfected security interest in fixtures has priority2over the conflicting interest of an encumbrancer or owner of the3real estate where:4(a) The security interest is a purchase money security5interest, the interest of the encumbrancer or owner arises before6the goods become fixtures, the security interest is perfected by7a fixture filing before the goods become fixtures or within 108days thereafter, and the debtor has an interest of record in the9real estate or is in possession of the real estate; or10(b) The security interest is perfected by a fixture filing11before the interest of the encumbrancer or owner is of record,12the security interest has priority over any conflicting interest13of a predecessor in title of the encumbrancer or owner, and the14debtor has an interest of record in the real estate or is in pos-15session of the real estate; or16(c) The fixtures are readily removable factory or office17machines or readily removable replacements of domestic appliances18which are consumer goods, and before the goods become fixtures19the security interest is perfected by any method permitted by20this article; or21(d) The conflicting interest is a lien on the real estate22obtained by legal or equitable proceedings after the security23interest was perfected by any method permitted by this article.24(5) A security interest in fixtures, whether or not perfec-25ted, has priority over the conflicting interest of an encum-26brancer or owner of the real estate where:02120'99 148 1(a) The encumbrancer or owner has consented in writing to2the security interest or has disclaimed an interest in the goods3as fixtures; or4(b) The debtor has a right to remove the goods as against5the encumbrancer or owner. If the debtor's right terminates, the6priority of the security interest continues for a reasonable7time.8(6) Notwithstanding subsection (4)(a) but otherwise subject9to subsections (4) and (5), a security interest in fixtures is10subordinate to a construction mortgage recorded before the goods11become fixtures if the goods become fixtures before the comple-12tion of the construction. To the extent that it is given to13refinance a construction mortgage, a mortgage has this priority14to the same extent as the construction mortgage.15(7) In cases not within the preceding subsections, a secur-16ity interest in fixtures is subordinate to the conflicting inter-17est of an encumbrancer or owner of the related real estate who is18not the debtor.19(8) When a secured party has priority over all owners and20encumbrances of the real estate, he or she may, on default,21subject to the provisions of part 5 of this article, remove his22or her collateral from the real estate, but he or she must reim-23burse any encumbrancer or owner of the real estate who is not the24debtor and who has not otherwise agreed for the cost of repair of25any physical injury, but not for any diminution in value of the26real estate caused by the absence of the goods removed or by any27necessity for replacing them. A person entitled to reimbursement02120'99 149 1may refuse permission to remove until the secured party gives2adequate security for the performance of this obligation.3 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2), A 4 SECURED PARTY MAY PERFECT A SECURITY INTEREST IN NEGOTIABLE DOCU- 5 MENTS, GOODS, INSTRUMENTS, MONEY, OR TANGIBLE CHATTEL PAPER BY 6 TAKING POSSESSION OF THE COLLATERAL. A SECURED PARTY MAY PERFECT 7 A SECURITY INTEREST IN CERTIFICATED SECURITIES BY TAKING DELIVERY 8 OF THE CERTIFICATED SECURITIES UNDER SECTION 8301. 9 (2) WITH RESPECT TO GOODS COVERED BY A CERTIFICATE OF TITLE 10 ISSUED BY THIS STATE, A SECURED PARTY MAY PERFECT A SECURITY 11 INTEREST IN THE GOODS BY TAKING POSSESSION OF THE GOODS ONLY IN 12 THE CIRCUMSTANCES DESCRIBED IN SECTION 9316(4). 13 (3) WITH RESPECT TO COLLATERAL OTHER THAN CERTIFICATED 14 SECURITIES AND GOODS COVERED BY A DOCUMENT, A SECURED PARTY TAKES 15 POSSESSION OF COLLATERAL IN THE POSSESSION OF A PERSON OTHER THAN 16 THE DEBTOR, THE SECURED PARTY, OR A LESSEE OF THE COLLATERAL FROM 17 THE DEBTOR IN THE ORDINARY COURSE OF THE DEBTOR'S BUSINESS, WHEN 18 THE PERSON IN POSSESSION AUTHENTICATES A RECORD ACKNOWLEDGING 19 THAT IT HOLDS POSSESSION OF THE COLLATERAL FOR THE SECURED 20 PARTY'S BENEFIT, OR THE PERSON TAKES POSSESSION OF THE COLLATERAL 21 AFTER HAVING AUTHENTICATED A RECORD ACKNOWLEDGING THAT IT WILL 22 HOLD POSSESSION OF COLLATERAL FOR THE SECURED PARTY'S BENEFIT. 23 (4) IF THE PERFECTION OF A SECURITY INTEREST DEPENDS UPON 24 POSSESSION OF THE COLLATERAL BY A SECURED PARTY, PERFECTION 25 OCCURS NO EARLIER THAN THE TIME THE SECURED PARTY TAKES POSSES- 26 SION AND CONTINUES ONLY WHILE THE SECURED PARTY RETAINS 27 POSSESSION. 02120'99 150 1 (5) A SECURITY INTEREST IN A CERTIFICATED SECURITY IN 2 REGISTERED FORM IS PERFECTED BY DELIVERY WHEN DELIVERY OF THE 3 CERTIFICATED SECURITY OCCURS UNDER SECTION 8301 AND REMAINS PER- 4 FECTED BY DELIVERY UNTIL THE DEBTOR OBTAINS POSSESSION OF THE 5 SECURITY CERTIFICATE. 6 (6) A PERSON IN POSSESSION OF COLLATERAL IS NOT REQUIRED TO 7 ACKNOWLEDGE THAT IT HOLDS POSSESSION FOR A SECURED PARTY'S 8 BENEFIT. 9 (7) IF A PERSON ACKNOWLEDGES THAT IT HOLDS POSSESSION FOR 10 THE SECURED PARTY'S BENEFIT, THE ACKNOWLEDGMENT IS EFFECTIVE 11 UNDER SUBSECTION (3) OR SECTION 8301(1), EVEN IF THE ACKNOWLEDG- 12 MENT VIOLATES THE RIGHTS OF A DEBTOR, AND UNLESS THE PERSON OTH- 13 ERWISE AGREES OR LAW OTHER THAN THIS ARTICLE OTHERWISE PROVIDES, 14 THE PERSON DOES NOT OWE ANY DUTY TO THE SECURED PARTY AND IS NOT 15 REQUIRED TO CONFIRM THE ACKNOWLEDGMENT TO ANOTHER PERSON. 16 (8) A SECURED PARTY HAVING POSSESSION OF COLLATERAL DOES NOT 17 RELINQUISH POSSESSION BY DELIVERING THE COLLATERAL TO A PERSON 18 OTHER THAN THE DEBTOR OR A LESSEE OF THE COLLATERAL FROM THE 19 DEBTOR IN THE ORDINARY COURSE OF THE DEBTOR'S BUSINESS IF THE 20 PERSON WAS INSTRUCTED BEFORE THE DELIVERY OR IS INSTRUCTED CON- 21 TEMPORANEOUSLY WITH THE DELIVERY TO HOLD POSSESSION OF THE COL- 22 LATERAL FOR THE SECURED PARTY'S BENEFIT, OR TO REDELIVER THE COL- 23 LATERAL TO THE SECURED PARTY. 24 (9) A SECURED PARTY DOES NOT RELINQUISH POSSESSION, EVEN IF 25 A DELIVERY UNDER SUBSECTION (8) VIOLATES THE RIGHTS OF A DEBTOR. 26 A PERSON TO WHICH COLLATERAL IS DELIVERED UNDER SUBSECTION (8) 27 DOES NOT OWE ANY DUTY TO THE SECURED PARTY AND IS NOT REQUIRED TO 02120'99 151 1 CONFIRM THE DELIVERY TO ANOTHER PERSON UNLESS THE PERSON 2 OTHERWISE AGREES OR LAW OTHER THAN THIS ARTICLE OTHERWISE 3 PROVIDES. 4 Sec. 9314.(1) A security interest in goods which attaches5before they are installed in or affixed to other goods takes pri-6ority as to the goods installed or affixed (called in this sec-7tion "accessions") over the claims of all persons to the whole8except as stated in subsection (3) and subject to section99315(1).10(2) A security interest which attaches to goods after they11become part of a whole is valid against all persons subsequently12acquiring interests in the whole except as stated in subsection13(3) but is invalid against any person with an interest in the14whole at the time the security interest attaches to the goods who15has not in writing consented to the security interest or dis-16claimed an interest in the goods as part of the whole.17(3) The security interests described in subsections (1) and18(2) do not take priority over19(a) a subsequent purchaser for value of any interest in the20whole; or21(b) a creditor with a lien on the whole subsequently22obtained by judicial proceedings; or23(c) a creditor with a prior perfected security interest in24the whole to the extent that he makes subsequent advances25if the subsequent purchase is made, the lien by judicial proceed-26ings obtained or the subsequent advance under the prior perfected27security interest is made or contracted for without knowledge of02120'99 152 1the security interest and before it is perfected. A purchaser of2the whole at a foreclosure sale other than the holder of a per-3fected security interest purchasing at his own foreclosure sale4is a subsequent purchaser within this section.5(4) When under subsections (1) or (2) and (3) a secured6party has an interest in accessions which has priority over the7claims of all persons who have interests in the whole, he may on8default subject to the provisions of part 5 remove his collateral9from the whole but he must reimburse any encumbrancer or owner of10the whole who is not the debtor and who has not otherwise agreed11for the cost of repair of any physical injury but not for any12diminution in value of the whole caused by the absence of the13goods removed or by any necessity for replacing them. A person14entitled to reimbursement may refuse permission to remove until15the secured party gives adequate security for the performance of16this obligation.17 (1) A SECURITY INTEREST IN INVESTMENT PROPERTY, DEPOSIT 18 ACCOUNTS, LETTER-OF-CREDIT RIGHTS, OR ELECTRONIC CHATTEL PAPER 19 MAY BE PERFECTED BY CONTROL OF THE COLLATERAL UNDER SECTION 9104, 20 9105, 9106, OR 9107. 21 (2) A SECURITY INTEREST IN DEPOSIT ACCOUNTS, ELECTRONIC 22 CHATTEL PAPER, OR LETTER-OF-CREDIT RIGHTS IS PERFECTED BY CONTROL 23 UNDER SECTION 9104, 9105, OR 9107 WHEN THE SECURED PARTY OBTAINS 24 CONTROL AND REMAINS PERFECTED BY CONTROL ONLY WHILE THE SECURED 25 PARTY RETAINS CONTROL. 26 (3) A SECURITY INTEREST IN INVESTMENT PROPERTY IS PERFECTED 27 BY CONTROL UNDER SECTION 9106 FROM THE TIME THE SECURED PARTY 02120'99 153 1 OBTAINS CONTROL AND REMAINS PERFECTED BY CONTROL UNTIL BOTH OF 2 THE FOLLOWING OCCUR: 3 (A) THE SECURED PARTY DOES NOT HAVE CONTROL. 4 (B) ONE OF THE FOLLOWING OCCURS: 5 (i) IF THE COLLATERAL IS A CERTIFICATED SECURITY, THE DEBTOR 6 HAS OR ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE. 7 (ii) IF THE COLLATERAL IS AN UNCERTIFICATED SECURITY, THE 8 ISSUER HAS REGISTERED OR REGISTERS THE DEBTOR AS THE REGISTERED 9 OWNER. 10 (iii) IF THE COLLATERAL IS A SECURITY ENTITLEMENT, THE 11 DEBTOR IS OR BECOMES THE ENTITLEMENT HOLDER. 12 Sec. 9315.(1) If a security interest in goods was perfec-13ted and subsequently the goods or a part thereof have become part14of a product or mass, the security interest continues in the pro-15duct or mass if16(a) the goods are so manufactured, processed, assembled or17commingled that their identity is lost in the product or mass; or18(b) a financing statement covering the original goods also19covers the product into which the goods have been manufactured,20processed or assembled.21In a case to which paragraph (b) applies, no separate secur-22ity interest in that part of the original goods which has been23manufactured, processed or assembled into the product may be24claimed under section 9314.25(2) When under subsection (1) more than one security inter-26est attaches to the product or mass, they rank equally according27to the ratio that the cost of the goods to which each interest02120'99 154 1originally attached bears to the cost of the total product or2mass.3 (1) EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE AND IN SEC- 4 TION 2403(2), BOTH OF THE FOLLOWING APPLY: 5 (A) A SECURITY INTEREST OR AGRICULTURAL LIEN CONTINUES IN 6 COLLATERAL NOTWITHSTANDING SALE, LEASE, LICENSE, EXCHANGE, OR 7 OTHER DISPOSITION THEREOF UNLESS THE SECURED PARTY AUTHORIZED THE 8 DISPOSITION FREE OF THE SECURITY INTEREST OR AGRICULTURAL LIEN. 9 (B) A SECURITY INTEREST ATTACHES TO ANY IDENTIFIABLE PRO- 10 CEEDS OF COLLATERAL. 11 (2) PROCEEDS THAT ARE COMMINGLED WITH OTHER PROPERTY ARE 12 IDENTIFIABLE PROCEEDS TO 1 OF THE FOLLOWING EXTENTS: 13 (A) IF THE PROCEEDS ARE GOODS, TO THE EXTENT PROVIDED BY 14 SECTION 9336. 15 (B) IF THE PROCEEDS ARE NOT GOODS, TO THE EXTENT THAT THE 16 SECURED PARTY IDENTIFIES THE PROCEEDS BY A METHOD OF TRACING, 17 INCLUDING APPLICATION OF EQUITABLE PRINCIPLES, THAT IS PERMITTED 18 UNDER LAW OTHER THAN THIS ARTICLE WITH RESPECT TO COMMINGLED 19 PROPERTY OF THE TYPE INVOLVED. 20 (3) A SECURITY INTEREST IN PROCEEDS IS A PERFECTED SECURITY 21 INTEREST IF THE SECURITY INTEREST IN THE ORIGINAL COLLATERAL WAS 22 PERFECTED. 23 (4) A PERFECTED SECURITY INTEREST IN PROCEEDS BECOMES UNPER- 24 FECTED ON THE TWENTY-FIRST DAY AFTER THE SECURITY INTEREST 25 ATTACHES TO THE PROCEEDS UNLESS 1 OF THE FOLLOWING IS MET: 26 (A) ALL OF THE FOLLOWING CONDITIONS ARE SATISFIED: 02120'99 155 1 (i) A FILED FINANCING STATEMENT COVERS THE ORIGINAL 2 COLLATERAL. 3 (ii) THE PROCEEDS ARE COLLATERAL IN WHICH A SECURITY INTER- 4 EST MAY BE PERFECTED BY FILING IN THE OFFICE IN WHICH THE FINANC- 5 ING STATEMENT HAS BEEN FILED. 6 (iii) THE PROCEEDS ARE NOT ACQUIRED WITH CASH PROCEEDS. 7 (B) THE PROCEEDS ARE IDENTIFIABLE CASH PROCEEDS. 8 (C) THE SECURITY INTEREST IN THE PROCEEDS IS PERFECTED OTHER 9 THAN UNDER SUBSECTION (3) WHEN THE SECURITY INTEREST ATTACHES TO 10 THE PROCEEDS OR WITHIN 20 DAYS THEREAFTER. 11 (5) IF A FILED FINANCING STATEMENT COVERS THE ORIGINAL COL- 12 LATERAL, A SECURITY INTEREST IN PROCEEDS WHICH REMAINS PERFECTED 13 UNDER SUBSECTION (4)(A) BECOMES UNPERFECTED AT THE LATER OF WHEN 14 THE EFFECTIVENESS OF THE FILED FINANCING STATEMENT LAPSES UNDER 15 SECTION 9515 OR IS TERMINATED UNDER SECTION 9513, OR THE 16 TWENTY-FIRST DAY AFTER THE SECURITY INTEREST ATTACHES TO THE 17 PROCEEDS. 18 Sec. 9316.Nothing in this article prevents subordination19by agreement by any person entitled to priority.20 (1) A SECURITY INTEREST PERFECTED PURSUANT TO THE LAW OF THE 21 JURISDICTION DESIGNATED IN SECTION 9301(A) OR 9305(3) REMAINS 22 PERFECTED UNTIL THE EARLIEST OF THE FOLLOWING: 23 (A) THE TIME PERFECTION WOULD HAVE CEASED UNDER THE LAW OF 24 THAT JURISDICTION. 25 (B) THE EXPIRATION OF 4 MONTHS AFTER A CHANGE OF THE 26 DEBTOR'S LOCATION TO ANOTHER JURISDICTION. 02120'99 156 1 (C) THE EXPIRATION OF 1 YEAR AFTER A TRANSFER OF COLLATERAL 2 TO A PERSON THAT THEREBY BECOMES A DEBTOR AND IS LOCATED IN 3 ANOTHER JURISDICTION. 4 (2) IF A SECURITY INTEREST DESCRIBED IN SUBSECTION (1) 5 BECOMES PERFECTED UNDER THE LAW OF THE OTHER JURISDICTION BEFORE 6 THE EARLIEST TIME OR EVENT DESCRIBED IN THAT SUBSECTION, IT 7 REMAINS PERFECTED THEREAFTER. IF THE SECURITY INTEREST DOES NOT 8 BECOME PERFECTED UNDER THE LAW OF THE OTHER JURISDICTION BEFORE 9 THE EARLIEST TIME OR EVENT, IT BECOMES UNPERFECTED AND IS DEEMED 10 NEVER TO HAVE BEEN PERFECTED AS AGAINST A PURCHASER OF THE COL- 11 LATERAL FOR VALUE. 12 (3) A POSSESSORY SECURITY INTEREST IN COLLATERAL, OTHER THAN 13 GOODS COVERED BY A CERTIFICATE OF TITLE AND AS-EXTRACTED COLLAT- 14 ERAL CONSISTING OF GOODS, REMAINS CONTINUOUSLY PERFECTED IF ALL 15 OF THE FOLLOWING ARE MET: 16 (A) THE COLLATERAL IS LOCATED IN 1 JURISDICTION AND SUBJECT 17 TO A SECURITY INTEREST PERFECTED UNDER THE LAW OF THAT 18 JURISDICTION. 19 (B) THEREAFTER, THE COLLATERAL IS BROUGHT INTO ANOTHER 20 JURISDICTION. 21 (C) UPON ENTRY OF THE COLLATERAL INTO THE OTHER JURISDIC- 22 TION, THE SECURITY INTEREST IS PERFECTED UNDER THE LAW OF THE 23 OTHER JURISDICTION. 24 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A SECUR- 25 ITY INTEREST IN GOODS COVERED BY A CERTIFICATE OF TITLE THAT IS 26 PERFECTED BY ANY METHOD UNDER THE LAW OF ANOTHER JURISDICTION 27 WHEN THE GOODS BECOME COVERED BY A CERTIFICATE OF TITLE FROM THIS 02120'99 157 1 STATE REMAINS PERFECTED UNTIL THE SECURITY INTEREST WOULD HAVE 2 BECOME UNPERFECTED UNDER THE LAW OF THE OTHER JURISDICTION HAD 3 THE GOODS NOT BECOME SO COVERED. 4 (5) A SECURITY INTEREST DESCRIBED IN SUBSECTION (4) BECOMES 5 UNPERFECTED AS AGAINST A PURCHASER OF THE GOODS FOR VALUE AND IS 6 DEEMED NEVER TO HAVE BEEN PERFECTED AS AGAINST A PURCHASER OF THE 7 GOODS FOR VALUE IF THE APPLICABLE REQUIREMENTS FOR PERFECTION 8 UNDER SECTION 9311(2) OR 9313 ARE NOT SATISFIED BEFORE THE EAR- 9 LIER OF THE FOLLOWING: 10 (A) THE TIME THE SECURITY INTEREST WOULD HAVE BECOME UNPER- 11 FECTED UNDER THE LAW OF THE OTHER JURISDICTION HAD THE GOODS NOT 12 BECOME COVERED BY A CERTIFICATE OF TITLE FROM THIS STATE. 13 (B) THE EXPIRATION OF 4 MONTHS AFTER THE GOODS HAD BECOME SO 14 COVERED. 15 (6) A SECURITY INTEREST IN DEPOSIT ACCOUNTS, 16 LETTER-OF-CREDIT RIGHTS, OR INVESTMENT PROPERTY THAT IS PERFECTED 17 UNDER THE LAW OF THE BANK'S JURISDICTION, THE ISSUER'S JURISDIC- 18 TION, A NOMINATED PERSON'S JURISDICTION, THE SECURITIES 19 INTERMEDIARY'S JURISDICTION, OR THE COMMODITY INTERMEDIARY'S 20 JURISDICTION, AS APPLICABLE, REMAINS PERFECTED UNTIL THE EARLIER 21 OF THE FOLLOWING: 22 (A) THE TIME THE SECURITY INTEREST WOULD HAVE BECOME UNPER- 23 FECTED UNDER THE LAW OF THAT JURISDICTION. 24 (B) THE EXPIRATION OF 4 MONTHS AFTER A CHANGE OF THE APPLI- 25 CABLE JURISDICTION TO ANOTHER JURISDICTION. 26 (7) IF A SECURITY INTEREST DESCRIBED IN SUBSECTION (6) 27 BECOMES PERFECTED UNDER THE LAW OF THE OTHER JURISDICTION BEFORE 02120'99 158 1 THE EARLIER OF THE TIME OR THE END OF THE PERIOD DESCRIBED IN 2 THAT SUBSECTION, IT REMAINS PERFECTED THEREAFTER. IF THE SECUR- 3 ITY INTEREST DOES NOT BECOME PERFECTED UNDER THE LAW OF THE OTHER 4 JURISDICTION BEFORE THE EARLIER OF THAT TIME OR THE END OF THAT 5 PERIOD, IT BECOMES UNPERFECTED AND IS DEEMED NEVER TO HAVE BEEN 6 PERFECTED AS AGAINST A PURCHASER OF THE COLLATERAL FOR VALUE. 7 SUBPART 3. PRIORITY 8 Sec. 9317.The mere existence of a security interest or9authority given to the debtor to dispose of or use collateral10does not impose contract or tort liability upon the secured party11for the debtor's acts or omissions.12 (1) A SECURITY INTEREST OR AGRICULTURAL LIEN IS SUBORDINATE 13 TO THE RIGHTS OF 1 OR MORE OF THE FOLLOWING: 14 (A) A PERSON ENTITLED TO PRIORITY UNDER SECTION 9322. 15 (B) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A PERSON 16 THAT BECOMES A LIEN CREDITOR BEFORE THE EARLIER OF THE TIME THE 17 SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED OR A FINANC- 18 ING STATEMENT COVERING THE COLLATERAL IS FILED. 19 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A BUYER, 20 OTHER THAN A SECURED PARTY, OF TANGIBLE CHATTEL PAPER, DOCUMENTS, 21 GOODS, INSTRUMENTS, OR A SECURITY CERTIFICATE TAKES FREE OF A 22 SECURITY INTEREST OR AGRICULTURAL LIEN IF THE BUYER GIVES VALUE 23 AND RECEIVES DELIVERY OF THE COLLATERAL WITHOUT KNOWLEDGE OF THE 24 SECURITY INTEREST OR AGRICULTURAL LIEN AND BEFORE IT IS 25 PERFECTED. 26 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A LESSEE 27 OF GOODS TAKES FREE OF A SECURITY INTEREST OR AGRICULTURAL LIEN 02120'99 159 1 IF THE LESSEE GIVES VALUE AND RECEIVES DELIVERY OF THE COLLATERAL 2 WITHOUT KNOWLEDGE OF THE SECURITY INTEREST OR AGRICULTURAL LIEN 3 AND BEFORE IT IS PERFECTED. 4 (4) A LICENSEE OF A GENERAL INTANGIBLE OR A BUYER, OTHER 5 THAN A SECURED PARTY, OF ACCOUNTS, ELECTRONIC CHATTEL PAPER, GEN- 6 ERAL INTANGIBLES, OR INVESTMENT PROPERTY OTHER THAN A CERTIFI- 7 CATED SECURITY TAKES FREE OF A SECURITY INTEREST IF THE LICENSEE 8 OR BUYER GIVES VALUE WITHOUT KNOWLEDGE OF THE SECURITY INTEREST 9 AND BEFORE IT IS PERFECTED. 10 (5) EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 9320 AND 9321, 11 IF A PERSON FILES A FINANCING STATEMENT WITH RESPECT TO A 12 PURCHASE-MONEY SECURITY INTEREST BEFORE OR WITHIN 20 DAYS AFTER 13 THE DEBTOR RECEIVES DELIVERY OF THE COLLATERAL, THE SECURITY 14 INTEREST TAKES PRIORITY OVER THE RIGHTS OF A BUYER, LESSEE, OR 15 LIEN CREDITOR THAT ARISE BETWEEN THE TIME THE SECURITY INTEREST 16 ATTACHES AND THE TIME OF FILING. 17 Sec. 9318.(1) Unless an account debtor has made an18enforceable agreement not to assert defenses or claims arising19out of a sale as provided in section 9206 the rights of an20assignee are subject to:21(a) All the terms of the contract between the account debtor22and assignor and any defense or claim arising therefrom; and23(b) Any other defense or claim of the account debtor against24the assignor which accrues before the account debtor receives25notification of the assignment.26(2) So far as the right to payment or a part thereof under27an assigned contract has not been fully earned by performance,02120'99 160 1and notwithstanding notification of the assignment, any2modification of or substitution for the contract made in good3faith and in accordance with reasonable commercial standards is4effective against an assignee unless the account debtor has oth-5erwise agreed but the assignee acquires corresponding rights6under the modified or substituted contract. The assignment may7provide that such modification or substitution is a breach by the8assignor.9(3) The account debtor is authorized to pay the assignor10until the account debtor receives notification that the amount11due or to become due has been assigned and that payment is to be12made to the assignee. A notification which does not reasonably13identify the rights assigned is ineffective. If requested by the14account debtor, the assignee must seasonably furnish reasonable15proof that the assignment has been made and unless he does so the16account debtor may pay the assignor.17(4) A term in any contract between an account debtor and an18assignor is ineffective if it prohibits assignment of an account19or prohibits creation of a security interest in a general intan-20gible for money due or to become due or requires the account21debtor's consent to such assignment or security interest.22 (1) A DEBTOR THAT HAS SOLD AN ACCOUNT, CHATTEL PAPER, PAY- 23 MENT INTANGIBLES, OR PROMISSORY NOTE DOES NOT RETAIN A LEGAL OR 24 EQUITABLE INTEREST IN THE COLLATERAL SOLD. 25 (2) FOR PURPOSES OF DETERMINING THE RIGHTS OF CREDITORS OF, 26 AND PURCHASERS FOR VALUE OF AN ACCOUNT OR CHATTEL PAPER FROM, A 27 DEBTOR THAT HAS SOLD AN ACCOUNT OR CHATTEL PAPER, WHILE THE 02120'99 161 1 BUYER'S SECURITY INTEREST IS UNPERFECTED, THE DEBTOR IS DEEMED TO 2 HAVE RIGHTS AND TITLE TO THE ACCOUNT OR CHATTEL PAPER IDENTICAL 3 TO THOSE THE DEBTOR SOLD. 4 SEC. 9319. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 5 (2), FOR PURPOSES OF DETERMINING THE RIGHTS OF CREDITORS OF, AND 6 PURCHASERS FOR VALUE OF GOODS FROM, A CONSIGNEE, WHILE THE GOODS 7 ARE IN THE POSSESSION OF THE CONSIGNEE, THE CONSIGNEE IS DEEMED 8 TO HAVE RIGHTS AND TITLE TO THE GOODS IDENTICAL TO THOSE THE CON- 9 SIGNOR HAD OR HAD POWER TO TRANSFER. 10 (2) FOR PURPOSES OF DETERMINING THE RIGHTS OF A CREDITOR OF 11 A CONSIGNEE, LAW OTHER THAN THIS ARTICLE DETERMINES THE RIGHTS 12 AND TITLE OF A CONSIGNEE WHILE GOODS ARE IN THE CONSIGNEE'S POS- 13 SESSION IF, UNDER THIS PART, A PERFECTED SECURITY INTEREST HELD 14 BY THE CONSIGNOR WOULD HAVE PRIORITY OVER THE RIGHTS OF THE 15 CREDITOR. 16 SEC. 9320. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 17 (5), A BUYER IN ORDINARY COURSE OF BUSINESS, OTHER THAN A PERSON 18 BUYING FARM PRODUCTS FROM A PERSON ENGAGED IN FARMING OPERATIONS, 19 TAKES FREE OF A SECURITY INTEREST CREATED BY THE BUYER'S SELLER, 20 EVEN IF THE SECURITY INTEREST IS PERFECTED AND THE BUYER KNOWS OF 21 ITS EXISTENCE. 22 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A BUYER 23 OF GOODS FROM A PERSON WHO USED OR BOUGHT THE GOODS FOR USE PRI- 24 MARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES TAKES FREE OF 25 A SECURITY INTEREST, EVEN IF PERFECTED, IF THE BUYER BUYS WITHOUT 26 KNOWLEDGE OF THE SECURITY INTEREST, FOR VALUE, PRIMARILY FOR THE 02120'99 162 1 BUYER'S PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES, AND BEFORE THE 2 FILING OF A FINANCING STATEMENT COVERING THE GOODS. 3 (3) TO THE EXTENT THAT IT AFFECTS THE PRIORITY OF A SECURITY 4 INTEREST OVER A BUYER OF GOODS UNDER SUBSECTION (2), THE PERIOD 5 OF EFFECTIVENESS OF A FILING MADE IN THE JURISDICTION IN WHICH 6 THE SELLER IS LOCATED IS GOVERNED BY SECTION 9316(1) AND (2). 7 (4) A BUYER IN ORDINARY COURSE OF BUSINESS BUYING OIL, GAS, 8 OR OTHER MINERALS AT THE WELLHEAD OR MINEHEAD OR AFTER EXTRACTION 9 TAKES FREE OF AN INTEREST ARISING OUT OF AN ENCUMBRANCE. 10 (5) SUBSECTIONS (1) AND (2) DO NOT AFFECT A SECURITY INTER- 11 EST IN GOODS IN THE POSSESSION OF THE SECURED PARTY UNDER SECTION 12 9313. 13 (6) SUBSECTIONS (7) TO (14) SHALL APPLY IN THE CASE OF A 14 PERSON BUYING FARM PRODUCTS FROM A PERSON ENGAGED IN FARMING 15 OPERATIONS. 16 (7) IF REQUESTED BY THE SECURED PARTY, A DEBTOR ENGAGED IN 17 FARMING OPERATIONS WHO GIVES A SECURITY INTEREST IN FARM PRODUCTS 18 SHALL PROVIDE TO THE SECURED PARTY A WRITTEN LIST IDENTIFYING 19 POTENTIAL BUYERS AND POINTS OF DELIVERY OF THE FARM PRODUCTS. 20 EXCEPT AS OTHERWISE PROVIDED BY SUBSECTION (8), THE NUMBER OF 21 POTENTIAL BUYERS FOR EACH COMMODITY SHALL NOT EXCEED 5. IF A 22 POTENTIAL BUYER HAS MORE THAN 1 POINT OF DELIVERY, EACH ADDI- 23 TIONAL POINT OF DELIVERY SHALL BE COUNTED AS A POTENTIAL BUYER. 24 (8) A DEBTOR ENGAGED IN FARMING OPERATIONS WHO PROVIDES A 25 WRITTEN LIST OF POTENTIAL BUYERS TO A SECURED PARTY PURSUANT TO 26 SUBSECTION (7) SHALL NOT SELL FARM PRODUCTS THAT SECURE THE DEBT 27 TO A BUYER WHO IS NOT IDENTIFIED ON THE LIST WITHOUT THE PRIOR 02120'99 163 1 WRITTEN CONSENT OF THE SECURED PARTY. A PERSON WHO KNOWINGLY OR 2 INTENTIONALLY VIOLATES THIS SUBSECTION IS GUILTY OF A FELONY, 3 PUNISHABLE BY IMPRISONMENT FOR NOT MORE THAN 3 YEARS OR A FINE OF 4 NOT MORE THAN $10,000.00, OR BOTH. IF APPROPRIATE GIVEN THE 5 FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT SHALL PLACE THE 6 PERSON ON PROBATION UPON THE CONDITION THAT RESTITUTION BE MADE 7 TO THE SECURED PARTY. PAYMENT OF, OR APPLICATION OF THE PROCEEDS 8 TO, THE DEBT UPON WHICH THE SECURITY INTEREST IS BASED IS AN 9 ABSOLUTE DEFENSE TO A PROSECUTION UNDER THIS SUBSECTION IF THE 10 PAYMENT OR APPLICATION IS MADE PRIOR TO COMMENCEMENT OF 11 PROSECUTION. 12 (9) A SECURED PARTY WHO IS PROVIDED WITH A WRITTEN LIST OF 13 POTENTIAL BUYERS PURSUANT TO SUBSECTION (7) MAY NOTIFY BUYERS 14 IDENTIFIED ON THE LIST OF THE SECURITY INTEREST AS PROVIDED IN 15 THIS SUBSECTION. A SECURED PARTY SHALL NOT NOTIFY A PERSON NOT 16 IDENTIFIED ON THE LIST, EXCEPT THAT THE SECURED PARTY MAY NOTIFY 17 A BUYER CONCERNING WHOM THE SECURED PARTY HAS GIVEN PRIOR WRITTEN 18 CONSENT PURSUANT TO SUBSECTION (8) OR TO WHOM THE SECURED PARTY 19 HAS REASONABLE CAUSE TO BELIEVE THE DEBTOR IS ABOUT TO SELL THE 20 FARM PRODUCTS. A NOTICE PROVIDED PURSUANT TO THIS SUBSECTION 21 SHALL BE IN WRITING AND SHALL BE MAILED BY CERTIFIED MAIL OR 22 DELIVERED BY ANOTHER METHOD BY WHICH RECEIPT CAN BE VERIFIED. 23 THE NOTICE MAY BE IN A FORM AGREED UPON IN WRITING BY THE BUYER 24 AND THE SECURED PARTY, BUT IN ABSENCE OF SUCH AN AGREEMENT THE 25 NOTICE SHALL BE AN ORIGINAL FINANCING STATEMENT OR A CARBON, PHO- 26 TOGRAPHIC, OR OTHER REPRODUCTION OF AN ORIGINAL OR A STATEMENT 27 THAT CONTAINS ALL OF THE FOLLOWING: 02120'99 164 1 (A) THE FULL NAME AND ADDRESS OF THE DEBTOR. 2 (B) THE FULL NAME AND ADDRESS OF THE SECURED PARTY. 3 (C) A DESCRIPTION OF THE COLLATERAL. 4 (D) THE DATE AND LOCATION OF THE FILING OF THE SECURITY 5 INTEREST. 6 (E) THE DATE AND SIGNATURE OF THE SECURED PARTY. 7 (10) IF THE DEBT THAT IS THE BASIS OF THE SECURITY INTEREST 8 IS SATISFIED, THE SECURED PARTY SHALL NOTIFY IN WRITING EACH 9 POTENTIAL BUYER TO WHOM THE SECURED PARTY SENT NOTICE UNDER SUB- 10 SECTION (9). THE NOTICE MAY BE GIVEN WITHIN A TIME PERIOD AGREED 11 UPON IN WRITING BY THE BUYER AND THE SECURED PARTY, BUT IN 12 ABSENCE OF SUCH AN AGREEMENT THE NOTICE SHALL BE GIVEN WITHIN 11 13 DAYS AFTER THE DEBT IS SATISFIED. 14 (11) A SECURED PARTY WHO DOES ANY OF THE FOLLOWING IS GUILTY 15 OF A MISDEMEANOR, PUNISHABLE BY IMPRISONMENT FOR NOT MORE THAN 90 16 DAYS OR A FINE OF NOT MORE THAN $1,000.00, OR BOTH: 17 (A) KNOWINGLY OR INTENTIONALLY GIVES FALSE OR MISLEADING 18 INFORMATION IN A NOTICE PROVIDED PURSUANT TO SUBSECTION (9). 19 (B) SENDS NOTICE TO A POTENTIAL BUYER OTHER THAN AS PERMIT- 20 TED IN SUBSECTION (9). 21 (C) FAILS TO NOTIFY A POTENTIAL BUYER OF THE SATISFACTION OF 22 A DEBT WITHIN THE TIME PERIOD PRESCRIBED BY SUBSECTION (10). 23 (12) A BUYER OF FARM PRODUCTS WHO RECEIVES NOTICE PURSUANT 24 TO SUBSECTION (9) OF A SECURITY INTEREST IN THE FARM PRODUCTS 25 SHALL MAKE PAYMENT FOR THE FARM PRODUCTS BY CHECK OR OTHER 26 INSTRUMENT MADE PAYABLE TO THE SELLER AND THE SECURED PARTY 27 JOINTLY, EXCEPT THAT PAYMENT MAY BE MADE DIRECTLY TO THE SECURED 02120'99 165 1 PARTY IF AUTHORIZED IN WRITING BY THE SELLER. THIS SUBSECTION 2 DOES NOT APPLY TO ANY PAYMENT OR PARTIAL PAYMENT MADE BEFORE 3 NOTICE UNDER SUBSECTION (9) HAS BEEN RECEIVED BY THE BUYER. A 4 BUYER OF FARM PRODUCTS WHO VIOLATES THIS SUBSECTION IS GUILTY OF 5 A MISDEMEANOR, PUNISHABLE BY IMPRISONMENT FOR NOT MORE THAN 90 6 DAYS OR A FINE OF NOT MORE THAN $1,000.00, OR BOTH. PAYMENT OF 7 THE DEBT UPON WHICH THE SECURITY INTEREST IS BASED IS AN ABSOLUTE 8 DEFENSE TO A PROSECUTION UNDER THIS SUBSECTION IF PAYMENT IS MADE 9 PRIOR TO COMMENCEMENT OF PROSECUTION. 10 (13) AS USED IN SUBSECTIONS (6) TO (12), "PERSON BUYING FARM 11 PRODUCTS" OR "BUYER" INCLUDES A COMMISSION MERCHANT OR SELLING 12 AGENT WHO SELLS FARM PRODUCTS IN THE ORDINARY COURSE OF BUSINESS 13 FOR A PERSON ENGAGED IN FARMING OPERATIONS. 14 (14) A BUYER IN ORDINARY COURSE OF BUSINESS WHO RECEIVES 15 NOTICE PURSUANT TO SUBSECTION (9), WHO BUYS FARM PRODUCTS FROM A 16 PERSON ENGAGED IN FARMING OPERATIONS, AND WHO WITHHOLDS ALL OR 17 PART OF THE PROCEEDS OF THE SALE FROM THE SELLER IN ORDER TO SAT- 18 ISFY A DEBT OWED BY THE SELLER TO THE BUYER, TAKES SUBJECT TO A 19 SECURITY INTEREST IN THOSE FARM PRODUCTS CREATED BY THE SELLER, 20 UNLESS THE DEBT OWED BY THE SELLER TO THE BUYER WAS SECURED BY A 21 PRIOR PERFECTED SECURITY INTEREST. FOR PURPOSES OF THIS SUBSEC- 22 TION, "DEBT" DOES NOT INCLUDE THE COST OF HARVESTING; PROCESSING, 23 INCLUDING PACKAGING, FREEZING, CANNING, AND DRYING; STORING; MAR- 24 KETING; OR TRANSPORTING FARM PRODUCTS TO MARKET. 25 (15) EXCEPT AS OTHERWISE PROVIDED BY SUBSECTION (16), A COM- 26 MISSION MERCHANT OR SELLING AGENT WHO SELLS FARM PRODUCTS, IN THE 27 ORDINARY COURSE OF BUSINESS, FOR A PERSON ENGAGED IN FARMING 02120'99 166 1 OPERATIONS IS NOT LIABLE TO THE HOLDER OF A SECURITY INTEREST IN 2 THOSE FARM PRODUCTS EVEN THOUGH THE SECURITY INTEREST IS PERFEC- 3 TED AND EVEN THOUGH THE COMMISSION MERCHANT OR SELLING AGENT 4 KNOWS OF ITS EXISTENCE. 5 (16) A COMMISSION MERCHANT OR SELLING AGENT WHO SELLS FARM 6 PRODUCTS, IN THE ORDINARY COURSE OF BUSINESS, FOR A PERSON 7 ENGAGED IN FARMING OPERATIONS, AND WHO RECEIVES NOTICE PURSUANT 8 TO SUBSECTION (9), SHALL NOT BE PROTECTED FROM LIABILITY UNDER 9 SUBSECTION (15) IF THE COMMISSION MERCHANT OR SELLING AGENT WITH- 10 HOLDS FROM THE SELLER ALL OR PART OF THE PROCEEDS OF A SALE OF 11 THE FARM PRODUCTS IN ORDER TO SATISFY A DEBT OWED BY THE SELLER 12 TO THE COMMISSION MERCHANT OR SELLING AGENT, UNLESS THE DEBT WAS 13 SECURED BY A PRIOR PERFECTED SECURITY INTEREST. FOR PURPOSES OF 14 THIS SUBSECTION, "DEBT" DOES NOT INCLUDE THE COST OF HARVESTING; 15 PROCESSING, INCLUDING PACKAGING, FREEZING, CANNING, AND DRYING; 16 STORING; MARKETING; OR TRANSPORTING FARM PRODUCTS TO MARKET. 17 (17) A PROSECUTION UNDER SUBSECTIONS (12) TO (14) SHALL NOT 18 BE COMMENCED AFTER THE EXPIRATION OF 2 YEARS FOLLOWING THE DATE 19 THE VIOLATION OCCURRED. 20 SEC. 9321. (1) AS USED IN THIS SECTION, "LICENSEE IN ORDI- 21 NARY COURSE OF BUSINESS" MEANS A PERSON THAT BECOMES A LICENSEE 22 OF A GENERAL INTANGIBLE IN GOOD FAITH, WITHOUT KNOWLEDGE THAT THE 23 LICENSE VIOLATES THE RIGHTS OF ANOTHER PERSON IN THE GENERAL 24 INTANGIBLE, AND IN THE ORDINARY COURSE FROM A PERSON IN THE BUSI- 25 NESS OF LICENSING GENERAL INTANGIBLES OF THAT KIND. A PERSON 26 BECOMES A LICENSEE IN THE ORDINARY COURSE IF THE LICENSE TO THE 27 PERSON COMPORTS WITH THE USUAL OR CUSTOMARY PRACTICES IN THE KIND 02120'99 167 1 OF BUSINESS IN WHICH THE LICENSOR IS ENGAGED OR WITH THE 2 LICENSOR'S OWN USUAL OR CUSTOMARY PRACTICES. 3 (2) A LICENSEE IN ORDINARY COURSE OF BUSINESS TAKES ITS 4 RIGHTS UNDER A NONEXCLUSIVE LICENSE FREE OF A SECURITY INTEREST 5 IN THE GENERAL INTANGIBLE CREATED BY THE LICENSOR, EVEN IF THE 6 SECURITY INTEREST IS PERFECTED AND THE LICENSEE KNOWS OF ITS 7 EXISTENCE. 8 (3) A LESSEE IN ORDINARY COURSE OF BUSINESS TAKES ITS LEASE- 9 HOLD INTEREST FREE OF A SECURITY INTEREST IN THE GOODS CREATED BY 10 THE LESSOR, EVEN IF THE SECURITY INTEREST IS PERFECTED AND THE 11 LESSEE KNOWS OF ITS EXISTENCE. 12 SEC. 9322. (1) EXCEPT AS OTHERWISE PROVIDED IN THIS SEC- 13 TION, PRIORITY AMONG CONFLICTING SECURITY INTERESTS AND AGRICUL- 14 TURAL LIENS IN THE SAME COLLATERAL IS DETERMINED ACCORDING TO THE 15 FOLLOWING RULES: 16 (A) CONFLICTING PERFECTED SECURITY INTERESTS AND AGRICUL- 17 TURAL LIENS RANK ACCORDING TO PRIORITY IN TIME OF FILING OR 18 PERFECTION. PRIORITY DATES FROM THE EARLIER OF THE TIME A FILING 19 COVERING THE COLLATERAL IS FIRST MADE OR THE SECURITY INTEREST OR 20 AGRICULTURAL LIEN IS FIRST PERFECTED, IF THERE IS NO PERIOD 21 THEREAFTER WHEN THERE IS NEITHER FILING NOR PERFECTION. 22 (B) A PERFECTED SECURITY INTEREST OR AGRICULTURAL LIEN HAS 23 PRIORITY OVER A CONFLICTING UNPERFECTED SECURITY INTEREST OR 24 AGRICULTURAL LIEN. 25 (C) THE FIRST SECURITY INTEREST OR AGRICULTURAL LIEN TO 26 ATTACH OR BECOME EFFECTIVE HAS PRIORITY IF CONFLICTING SECURITY 27 INTERESTS AND AGRICULTURAL LIENS ARE UNPERFECTED. 02120'99 168 1 (2) FOR THE PURPOSES OF SUBSECTION (1)(A), BOTH OF THE 2 FOLLOWING APPLY: 3 (A) THE TIME OF FILING OR PERFECTION AS TO A SECURITY INTER- 4 EST IN COLLATERAL IS ALSO THE TIME OF FILING OR PERFECTION AS TO 5 A SECURITY INTEREST IN PROCEEDS. 6 (B) THE TIME OF FILING OF PERFECTION AS TO A SECURITY INTER- 7 EST IN COLLATERAL SUPPORTED BY A SUPPORTING OBLIGATION IS ALSO 8 THE TIME OF FILING OR PERFECTION AS TO A SECURITY INTEREST IN THE 9 SUPPORTING OBLIGATION. 10 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (6), A SECUR- 11 ITY INTEREST IN COLLATERAL THAT QUALIFIES FOR PRIORITY OVER A 12 CONFLICTING SECURITY INTEREST UNDER SECTION 9327, 9328, 9329, 13 9330, OR 9331 ALSO HAS PRIORITY OVER A CONFLICTING SECURITY 14 INTEREST IN 1 OR MORE OF THE FOLLOWING: 15 (A) ANY SUPPORTING OBLIGATION FOR THE COLLATERAL. 16 (B) PROCEEDS OF THE COLLATERAL IF ALL OF THE FOLLOWING ARE 17 MET: 18 (i) THE SECURITY INTEREST IN PROCEEDS IS PERFECTED. 19 (ii) THE PROCEEDS ARE CASH PROCEEDS OR OF THE SAME TYPE AS 20 THE COLLATERAL. 21 (iii) IN THE CASE OF PROCEEDS THAT ARE PROCEEDS OF PROCEEDS, 22 ALL INTERVENING PROCEEDS ARE CASH PROCEEDS, PROCEEDS OF THE SAME 23 TYPE AS THE COLLATERAL, OR AN ACCOUNT RELATING TO THE 24 COLLATERAL. 25 (4) SUBJECT TO SUBSECTION (5) AND EXCEPT AS OTHERWISE PRO- 26 VIDED IN SUBSECTION (6), IF A SECURITY INTEREST IN CHATTEL PAPER, 27 DEPOSIT ACCOUNTS, NEGOTIABLE DOCUMENTS, INSTRUMENTS, INVESTMENT 02120'99 169 1 PROPERTY, OR LETTER-OF-CREDIT RIGHTS IS PERFECTED BY A METHOD 2 OTHER THAN FILING, CONFLICTING PERFECTED SECURITY INTERESTS IN 3 PROCEEDS OF THE COLLATERAL RANK ACCORDING TO PRIORITY IN TIME OF 4 FILING. 5 (5) SUBSECTION (4) APPLIES ONLY IF THE PROCEEDS OF THE COL- 6 LATERAL ARE NOT CASH PROCEEDS, CHATTEL PAPER, NEGOTIABLE DOCU- 7 MENTS, INSTRUMENTS, INVESTMENT PROPERTY, OR LETTER-OF-CREDIT 8 RIGHTS. 9 (6) SUBSECTIONS (1) THROUGH (5) ARE SUBJECT TO ALL OF THE 10 FOLLOWING: 11 (A) SUBSECTION (7) AND THE OTHER PROVISIONS OF THIS PART. 12 (B) SECTION 4210 WITH RESPECT TO A SECURITY INTEREST OF A 13 COLLECTING BANK. 14 (C) SECTION 5118 WITH RESPECT TO A SECURITY INTEREST OF AN 15 ISSUER OR NOMINATED PERSON. 16 (D) SECTION 9110 WITH RESPECT TO A SECURITY INTEREST ARISING 17 UNDER ARTICLE 2 OR 2A. 18 (7) A PERFECTED AGRICULTURAL LIEN ON COLLATERAL HAS PRIORITY 19 OVER A CONFLICTING SECURITY INTEREST IN OR AGRICULTURAL LIEN ON 20 THE SAME COLLATERAL IF THE STATUTE CREATING THE AGRICULTURAL LIEN 21 SO PROVIDES. 22 SEC. 9323. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 23 (3), FOR PURPOSES OF DETERMINING THE PRIORITY OF A PERFECTED 24 SECURITY INTEREST UNDER SECTION 9322(1)(A), PERFECTION OF THE 25 SECURITY INTEREST DATES FROM THE TIME AN ADVANCE IS MADE TO THE 26 EXTENT THAT THE SECURITY INTEREST SECURES AN ADVANCE THAT MEETS 27 BOTH OF THE FOLLOWING: 02120'99 170 1 (A) IS MADE WHILE THE SECURITY INTEREST IS PERFECTED ONLY 2 UNDER 1 OF THE FOLLOWING: 3 (i) UNDER SECTION 9309 WHEN IT ATTACHES. 4 (ii) TEMPORARILY UNDER SECTION 9312(5), (6), OR (7). 5 (B) IS NOT MADE PURSUANT TO A COMMITMENT ENTERED INTO BEFORE 6 OR WHILE THE SECURITY INTEREST IS PERFECTED BY A METHOD OTHER 7 THAN UNDER SECTION 9309 OR 9312(5), (6), OR (7). 8 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), A SECUR- 9 ITY INTEREST IS SUBORDINATE TO THE RIGHTS OF A PERSON THAT 10 BECOMES A LIEN CREDITOR TO THE EXTENT THAT THE SECURITY INTEREST 11 SECURES AN ADVANCE MADE MORE THAN 45 DAYS AFTER THE PERSON 12 BECOMES A LIEN CREDITOR UNLESS THE ADVANCE IS MADE WITHOUT KNOWL- 13 EDGE OF THE LIEN, OR PURSUANT TO A COMMITMENT ENTERED INTO WITH- 14 OUT KNOWLEDGE OF THE LIEN. 15 (3) SUBSECTIONS (1) AND (2) DO NOT APPLY TO A SECURITY 16 INTEREST HELD BY A SECURED PARTY THAT IS A BUYER OF ACCOUNTS, 17 CHATTEL PAPER, PAYMENT INTANGIBLES, OR PROMISSORY NOTES OR A 18 CONSIGNOR. 19 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), A BUYER 20 OF GOODS OTHER THAN A BUYER IN ORDINARY COURSE OF BUSINESS TAKES 21 FREE OF A SECURITY INTEREST TO THE EXTENT THAT IT SECURES 22 ADVANCES MADE AFTER THE EARLIER OF THE FOLLOWING: 23 (A) THE TIME THE SECURED PARTY ACQUIRES KNOWLEDGE OF THE 24 BUYER'S PURCHASE. 25 (B) FORTY-FIVE DAYS AFTER THE PURCHASE. 02120'99 171 1 (5) SUBSECTION (4) DOES NOT APPLY IF THE ADVANCE IS MADE 2 PURSUANT TO A COMMITMENT ENTERED INTO WITHOUT KNOWLEDGE OF THE 3 BUYER'S PURCHASE AND BEFORE THE EXPIRATION OF THE 45-DAY PERIOD. 4 (6) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (7), A LESSEE 5 OF GOODS, OTHER THAN A LESSEE IN ORDINARY COURSE OF BUSINESS, 6 TAKES THE LEASEHOLD INTEREST FREE OF A SECURITY INTEREST TO THE 7 EXTENT THAT IT SECURES ADVANCES MADE AFTER THE EARLIER OF THE 8 FOLLOWING: 9 (A) THE TIME THE SECURED PARTY ACQUIRES KNOWLEDGE OF THE 10 LEASE. 11 (B) FORTY-FIVE DAYS AFTER THE LEASE CONTRACT BECOMES 12 ENFORCEABLE. 13 (7) SUBSECTION (6) DOES NOT APPLY IF THE ADVANCE IS MADE 14 PURSUANT TO A COMMITMENT ENTERED INTO WITHOUT KNOWLEDGE OF THE 15 LEASE AND BEFORE THE EXPIRATION OF THE 45-DAY PERIOD. 16 SEC. 9324. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 17 (7), A PERFECTED PURCHASE-MONEY SECURITY INTEREST IN GOODS OTHER 18 THAN INVENTORY OR LIVESTOCK HAS PRIORITY OVER A CONFLICTING 19 SECURITY INTEREST IN THE SAME GOODS, AND, EXCEPT AS OTHERWISE 20 PROVIDED IN SECTION 9327, A PERFECTED SECURITY INTEREST IN ITS 21 IDENTIFIABLE PROCEEDS ALSO HAS PRIORITY, IF THE PURCHASE-MONEY 22 SECURITY INTEREST IS PERFECTED WHEN THE DEBTOR RECEIVES POSSES- 23 SION OF THE COLLATERAL OR WITHIN 20 DAYS THEREAFTER. 24 (2) SUBJECT TO SUBSECTION (3) AND EXCEPT AS OTHERWISE PRO- 25 VIDED IN SUBSECTIONS (7) AND (8), A PERFECTED PURCHASE-MONEY 26 SECURITY INTEREST IN INVENTORY HAS PRIORITY OVER A CONFLICTING 27 SECURITY INTEREST IN THE SAME INVENTORY, HAS PRIORITY OVER A 02120'99 172 1 CONFLICTING SECURITY INTEREST IN CHATTEL PAPER OR AN INSTRUMENT 2 CONSTITUTING PROCEEDS OF THE INVENTORY AND IN PROCEEDS OF THE 3 CHATTEL PAPER, IF SO PROVIDED IN SECTION 9330, AND, EXCEPT AS 4 OTHERWISE PROVIDED IN SECTION 9327, ALSO HAS PRIORITY IN IDENTI- 5 FIABLE CASH PROCEEDS OF THE INVENTORY TO THE EXTENT THE IDENTI- 6 FIABLE CASH PROCEEDS ARE RECEIVED ON OR BEFORE THE DELIVERY OF 7 THE INVENTORY TO A BUYER, IF ALL OF THE FOLLOWING ARE MET: 8 (A) THE PURCHASE-MONEY SECURITY INTEREST IS PERFECTED WHEN 9 THE DEBTOR RECEIVES POSSESSION OF THE INVENTORY. 10 (B) THE PURCHASE-MONEY SECURED PARTY SENDS AN AUTHENTICATED 11 NOTIFICATION TO THE HOLDER OF THE CONFLICTING SECURITY INTEREST. 12 (C) THE HOLDER OF THE CONFLICTING SECURITY INTEREST RECEIVES 13 THE NOTIFICATION WITHIN 5 YEARS BEFORE THE DEBTOR RECEIVES POS- 14 SESSION OF THE INVENTORY. 15 (D) THE NOTIFICATION STATES THAT THE PERSON SENDING THE 16 NOTIFICATION HAS OR EXPECTS TO ACQUIRE A PURCHASE-MONEY SECURITY 17 INTEREST IN INVENTORY OF THE DEBTOR AND DESCRIBES THE INVENTORY. 18 (3) SUBSECTION (2)(B) THROUGH (D) APPLY ONLY IF THE HOLDER 19 OF THE CONFLICTING SECURITY INTEREST HAD FILED A FINANCING STATE- 20 MENT COVERING THE SAME TYPES OF INVENTORY BEFORE 1 OF THE 21 FOLLOWING: 22 (A) IF THE PURCHASE-MONEY SECURITY INTEREST IS PERFECTED BY 23 FILING, BEFORE THE DATE OF THE FILING. 24 (B) IF THE PURCHASE-MONEY SECURITY INTEREST IS TEMPORARILY 25 PERFECTED WITHOUT FILING OR POSSESSION UNDER SECTION 9312(6), 26 BEFORE THE BEGINNING OF THE 20-DAY PERIOD THEREUNDER. 02120'99 173 1 (4) SUBJECT TO SUBSECTION (5) AND EXCEPT AS OTHERWISE 2 PROVIDED IN SUBSECTION (7), A PERFECTED PURCHASE-MONEY SECURITY 3 INTEREST IN LIVESTOCK THAT ARE FARM PRODUCTS HAS PRIORITY OVER A 4 CONFLICTING SECURITY INTEREST IN THE SAME LIVESTOCK, AND, EXCEPT 5 AS OTHERWISE PROVIDED IN SECTION 9327, A PERFECTED SECURITY 6 INTEREST IN THEIR IDENTIFIABLE PROCEEDS AND IDENTIFIABLE PRODUCTS 7 IN THEIR UNMANUFACTURED STATES ALSO HAS PRIORITY, IF ALL OF THE 8 FOLLOWING ARE MET: 9 (A) THE PURCHASE-MONEY SECURITY INTEREST IS PERFECTED WHEN 10 THE DEBTOR RECEIVES POSSESSION OF THE LIVESTOCK. 11 (B) THE PURCHASE-MONEY SECURED PARTY SENDS AN AUTHENTICATED 12 NOTIFICATION TO THE HOLDER OF THE CONFLICTING SECURITY INTEREST. 13 (C) THE HOLDER OF THE CONFLICTING SECURITY INTEREST RECEIVES 14 THE NOTIFICATION WITHIN 6 MONTHS BEFORE THE DEBTOR RECEIVES POS- 15 SESSION OF THE LIVESTOCK. 16 (D) THE NOTIFICATION STATES THAT THE PERSON SENDING THE 17 NOTIFICATION HAS OR EXPECTS TO ACQUIRE A PURCHASE-MONEY SECURITY 18 INTEREST IN LIVESTOCK OF THE DEBTOR AND DESCRIBES THE LIVESTOCK. 19 (5) SUBSECTION (4)(B) THROUGH (D) APPLY ONLY IF THE HOLDER 20 OF THE CONFLICTING SECURITY INTEREST HAD FILED A FINANCING STATE- 21 MENT COVERING THE SAME TYPES OF LIVESTOCK BEFORE 1 OF THE 22 FOLLOWING: 23 (A) IF THE PURCHASE-MONEY SECURITY INTEREST IS PERFECTED BY 24 FILING, BEFORE THE DATE OF THE FILING. 25 (B) IF THE PURCHASE-MONEY SECURITY INTEREST IS TEMPORARILY 26 PERFECTED WITHOUT FILING OR POSSESSION UNDER SECTION 9312(6), 27 BEFORE THE BEGINNING OF THE 20-DAY PERIOD THEREUNDER. 02120'99 174 1 (6) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (7), A 2 PERFECTED PURCHASE-MONEY SECURITY INTEREST IN SOFTWARE HAS PRIOR- 3 ITY OVER A CONFLICTING SECURITY INTEREST IN THE SAME COLLATERAL, 4 AND, EXCEPT AS OTHERWISE PROVIDED IN SECTION 9327, A PERFECTED 5 SECURITY INTEREST IN ITS IDENTIFIABLE PROCEEDS ALSO HAS PRIORITY, 6 TO THE EXTENT THAT THE PURCHASE-MONEY SECURITY INTEREST IN THE 7 GOODS IN WHICH THE SOFTWARE WAS ACQUIRED FOR USE HAS PRIORITY IN 8 THE GOODS AND PROCEEDS OF THE GOODS UNDER THIS SECTION. 9 (7) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (8), IF MORE 10 THAN 1 SECURITY INTEREST QUALIFIES FOR PRIORITY IN THE SAME COL- 11 LATERAL UNDER SUBSECTION (1), (2), (4), OR (6), 1 OF THE FOLLOW- 12 ING APPLIES: 13 (A) A SECURITY INTEREST SECURING AN OBLIGATION INCURRED AS 14 ALL OR PART OF THE PRICE OF THE COLLATERAL HAS PRIORITY OVER A 15 SECURITY INTEREST SECURING AN OBLIGATION INCURRED FOR VALUE GIVEN 16 TO ENABLE THE DEBTOR TO ACQUIRE RIGHTS IN OR THE USE OF 17 COLLATERAL. 18 (B) IN ALL OTHER CASES, SECTION 9322(1) APPLIES TO THE QUAL- 19 IFYING SECURITY INTEREST. 20 (8) A PURCHASE-MONEY SECURITY INTEREST IN INVENTORY COLLAT- 21 ERAL THAT CONSISTS ENTIRELY OF FARM PRODUCE AS DEFINED IN THE 22 GRAIN DEALERS ACT, 1939 PA 141, MCL 285.61 TO 285.82A, AND THAT 23 IS RETAINED BY THE PRODUCER OF THE FARM PRODUCE HAS PRIORITY OVER 24 A CONFLICTING SECURITY INTEREST IN THE SAME COLLATERAL, EXCEPT 25 FOR A SECURITY INTEREST SPECIFIED IN SECTION 9324A, IF THE 26 PURCHASE-MONEY SECURITY INTEREST IS PERFECTED AT THE TIME THE 02120'99 175 1 DEBTOR RECEIVES POSSESSION OF THE COLLATERAL OR WITHIN 20 DAYS 2 THEREAFTER. 3 SEC. 9324A. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS 4 (3), (4), AND (5), IF THE REQUIREMENTS OF SUBSECTION (2) ARE SAT- 5 ISFIED, A PERFECTED PRODUCTION-MONEY SECURITY INTEREST IN 6 PRODUCTION-MONEY CROPS HAS PRIORITY OVER A CONFLICTING SECURITY 7 INTEREST IN THE SAME CROPS AND, EXCEPT AS OTHERWISE PROVIDED IN 8 SECTION 9327, ALSO HAS PRIORITY IN THEIR IDENTIFIABLE PROCEEDS. 9 (2) A PRODUCTION-MONEY SECURITY INTEREST HAS PRIORITY UNDER 10 SUBSECTION (1) IF ALL OF THE FOLLOWING ARE MET: 11 (A) THE PRODUCTION-MONEY SECURITY INTEREST IS PERFECTED BY 12 FILING WHEN THE PRODUCTION-MONEY SECURED PARTY FIRST GIVES NEW 13 VALUE TO ENABLE THE DEBTOR TO PRODUCE THE CROPS. 14 (B) THE PRODUCTION-MONEY SECURED PARTY SENDS AN AUTHENTI- 15 CATED NOTIFICATION TO THE HOLDER OF THE CONFLICTING SECURITY 16 INTEREST NOT LESS THAN 10 OR MORE THAN 30 DAYS BEFORE THE 17 PRODUCTION-MONEY SECURED PARTY FIRST GIVES NEW VALUE TO ENABLE 18 THE DEBTOR TO PRODUCE THE CROPS IF THE HOLDER HAD FILED A FINANC- 19 ING STATEMENT COVERING THE CROPS BEFORE THE DATE OF THE FILING 20 MADE BY THE PRODUCTION-MONEY SECURED PARTY. 21 (C) THE NOTIFICATION STATES THAT THE PRODUCTION-MONEY 22 SECURED PARTY HAS OR EXPECTS TO ACQUIRE A PRODUCTION-MONEY SECUR- 23 ITY INTEREST IN THE DEBTOR'S CROPS AND PROVIDES A DESCRIPTION OF 24 THE CROPS. 25 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4) OR (5), 26 IF MORE THAN 1 SECURITY INTEREST QUALIFIES FOR PRIORITY IN THE 02120'99 176 1 SAME COLLATERAL UNDER SUBSECTION (1), THE SECURITY INTERESTS RANK 2 ACCORDING TO PRIORITY IN TIME OF FILING UNDER SECTION 9322(1). 3 (4) TO THE EXTENT THAT A PERSON HOLDING A PERFECTED SECURITY 4 INTEREST IN PRODUCTION-MONEY CROPS THAT ARE THE SUBJECT OF A 5 PRODUCTION-MONEY SECURITY INTEREST GIVES NEW VALUE TO ENABLE THE 6 DEBTOR TO PRODUCE THE PRODUCTION-MONEY CROPS AND THE VALUE IS IN 7 FACT USED FOR THE PRODUCTION OF THE PRODUCTION-MONEY CROPS, THE 8 SECURITY INTERESTS RANK ACCORDING TO PRIORITY IN TIME OF FILING 9 UNDER SECTION 9322(1). 10 (5) TO THE EXTENT THAT A PERSON HOLDS BOTH AN AGRICULTURAL 11 LIEN AND A PRODUCTION-MONEY SECURITY INTEREST IN THE SAME COLLAT- 12 ERAL SECURING THE SAME OBLIGATIONS, THE RULES OF PRIORITY APPLI- 13 CABLE TO AGRICULTURAL LIENS GOVERN PRIORITY. 14 SEC. 9325. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 15 (2), A SECURITY INTEREST CREATED BY A DEBTOR IS SUBORDINATE TO A 16 SECURITY INTEREST IN THE SAME COLLATERAL CREATED BY ANOTHER 17 PERSON IF ALL OF THE FOLLOWING ARE MET: 18 (A) THE DEBTOR ACQUIRED THE COLLATERAL SUBJECT TO THE SECUR- 19 ITY INTEREST CREATED BY THE OTHER PERSON. 20 (B) THE SECURITY INTEREST CREATED BY THE OTHER PERSON WAS 21 PERFECTED WHEN THE DEBTOR ACQUIRED THE COLLATERAL. 22 (C) THERE IS NO PERIOD THEREAFTER WHEN THE SECURITY INTEREST 23 IS UNPERFECTED. 24 (2) SUBSECTION (1) SUBORDINATES A SECURITY INTEREST ONLY IF 25 THE SECURITY INTEREST OTHERWISE WOULD HAVE PRIORITY SOLELY UNDER 26 SECTION 9322(1) OR 9324, OR AROSE SOLELY UNDER SECTION 2711(3) OR 27 2A508(5). 02120'99 177 1 SEC. 9326. (1) SUBJECT TO SUBSECTION (2), A SECURITY 2 INTEREST CREATED BY A NEW DEBTOR THAT IS PERFECTED BY A FILED 3 FINANCING STATEMENT THAT IS EFFECTIVE SOLELY UNDER SECTION 9508 4 IN COLLATERAL IN THAT A NEW DEBTOR HAS OR ACQUIRES RIGHTS IS SUB- 5 ORDINATE TO A SECURITY INTEREST IN THE SAME COLLATERAL THAT IS 6 PERFECTED OTHER THAN BY A FILED FINANCING STATEMENT THAT IS 7 EFFECTIVE SOLELY UNDER SECTION 9508. 8 (2) THE OTHER PROVISIONS OF THIS PART DETERMINE THE PRIORITY 9 AMONG CONFLICTING SECURITY INTERESTS IN THE SAME COLLATERAL PER- 10 FECTED BY FILED FINANCING STATEMENTS THAT ARE EFFECTIVE SOLELY 11 UNDER SECTION 9508. HOWEVER, IF THE SECURITY AGREEMENTS TO WHICH 12 A NEW DEBTOR BECAME BOUND AS DEBTOR WERE NOT ENTERED INTO BY THE 13 SAME ORIGINAL DEBTOR, THE CONFLICTING SECURITY INTERESTS RANK 14 ACCORDING TO PRIORITY IN TIME OF THE NEW DEBTOR'S HAVING BECOME 15 BOUND. 16 SEC. 9327. THE FOLLOWING RULES GOVERN PRIORITY AMONG CON- 17 FLICTING SECURITY INTERESTS IN THE SAME DEPOSIT ACCOUNT: 18 (A) A SECURITY INTEREST HELD BY A SECURED PARTY HAVING CON- 19 TROL OF THE DEPOSIT ACCOUNT UNDER SECTION 9104 HAS PRIORITY OVER 20 A CONFLICTING SECURITY INTEREST HELD BY A SECURED PARTY THAT DOES 21 NOT HAVE CONTROL. 22 (B) EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISIONS (C) AND 23 (D), SECURITY INTERESTS PERFECTED BY CONTROL UNDER SECTION 9314 24 RANK ACCORDING TO PRIORITY IN TIME OF OBTAINING CONTROL. 25 (C) EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISION (D), A 26 SECURITY INTEREST HELD BY THE BANK WITH WHICH THE DEPOSIT ACCOUNT 02120'99 178 1 IS MAINTAINED HAS PRIORITY OVER A CONFLICTING SECURITY INTEREST 2 HELD BY ANOTHER SECURED PARTY. 3 (D) A SECURITY INTEREST PERFECTED BY CONTROL UNDER SECTION 4 9104(1)(C) HAS PRIORITY OVER A SECURITY INTEREST HELD BY THE BANK 5 WITH WHICH THE DEPOSIT ACCOUNT IS MAINTAINED. 6 SEC. 9328. THE FOLLOWING RULES GOVERN PRIORITY AMONG CON- 7 FLICTING SECURITY INTERESTS IN THE SAME INVESTMENT PROPERTY: 8 (A) A SECURITY INTEREST HELD BY A SECURED PARTY HAVING CON- 9 TROL OF INVESTMENT PROPERTY UNDER SECTION 9106 HAS PRIORITY OVER 10 A SECURITY INTEREST HELD BY A SECURED PARTY THAT DOES NOT HAVE 11 CONTROL OF THE INVESTMENT PROPERTY. 12 (B) EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISIONS (C) AND 13 (D), CONFLICTING SECURITY INTERESTS HELD BY SECURED PARTIES EACH 14 OF WHICH HAS CONTROL UNDER SECTION 9106 RANK ACCORDING TO PRIOR- 15 ITY IN TIME OF 1 OF THE FOLLOWING: 16 (i) IF THE COLLATERAL IS A SECURITY, OBTAINING CONTROL. 17 (ii) IF THE COLLATERAL IS A SECURITY ENTITLEMENT CARRIED IN 18 A SECURITIES ACCOUNT, ACCORDING TO 1 OF THE FOLLOWING: 19 (A) IF THE SECURED PARTY OBTAINED CONTROL UNDER SECTION 20 8106(4)(A), THE SECURED PARTY'S BECOMING THE PERSON FOR WHICH THE 21 SECURITIES ACCOUNT IS MAINTAINED. 22 (B) IF THE SECURED PARTY OBTAINED CONTROL UNDER SECTION 23 8106(4)(B), THE SECURITIES INTERMEDIARY'S AGREEMENT TO COMPLY 24 WITH THE SECURED PARTY'S ENTITLEMENT ORDERS WITH RESPECT TO 25 SECURITY ENTITLEMENTS CARRIED OR TO BE CARRIED IN THE SECURITIES 26 ACCOUNT. 02120'99 179 1 (C) IF THE SECURED PARTY OBTAINED CONTROL THROUGH ANOTHER 2 PERSON UNDER SECTION 8106(4)(C), THE TIME ON WHICH PRIORITY WOULD 3 BE BASED UNDER THIS PARAGRAPH IF THE OTHER PERSON WERE THE 4 SECURED PARTY. 5 (iii) IF THE COLLATERAL IS A COMMODITY CONTRACT CARRIED WITH 6 A COMMODITY INTERMEDIARY, THE SATISFACTION OF THE REQUIREMENT FOR 7 CONTROL SPECIFIED IN SECTION 9106(2)(B) WITH RESPECT TO COMMODITY 8 CONTRACTS CARRIED OR TO BE CARRIED WITH THE COMMODITY 9 INTERMEDIARY. 10 (C) A SECURITY INTEREST HELD BY A SECURITIES INTERMEDIARY IN 11 A SECURITY ENTITLEMENT OR A SECURITIES ACCOUNT MAINTAINED WITH 12 THE SECURITIES INTERMEDIARY HAS PRIORITY OVER A CONFLICTING 13 SECURITY INTEREST HELD BY ANOTHER SECURED PARTY. 14 (D) A SECURITY INTEREST HELD BY A COMMODITY INTERMEDIARY IN 15 A COMMODITY CONTRACT OR A COMMODITY ACCOUNT MAINTAINED WITH THE 16 COMMODITY INTERMEDIARY HAS PRIORITY OVER A CONFLICTING SECURITY 17 INTEREST HELD BY ANOTHER SECURED PARTY. 18 (E) A SECURITY INTEREST IN A CERTIFICATED SECURITY IN REGIS- 19 TERED FORM THAT IS PERFECTED BY TAKING DELIVERY UNDER SECTION 20 9313(1) AND NOT BY CONTROL UNDER SECTION 9314 HAS PRIORITY OVER A 21 CONFLICTING SECURITY INTEREST PERFECTED BY A METHOD OTHER THAN 22 CONTROL. 23 (F) CONFLICTING SECURITY INTERESTS CREATED BY A BROKER, 24 SECURITIES INTERMEDIARY, OR COMMODITY INTERMEDIARY THAT ARE PER- 25 FECTED WITHOUT CONTROL UNDER SECTION 9106 RANK EQUALLY. 02120'99 180 1 (G) IN ALL OTHER CASES, PRIORITY AMONG CONFLICTING SECURITY 2 INTERESTS IN INVESTMENT PROPERTY IS GOVERNED BY SECTIONS 9322 AND 3 9323. 4 SEC. 9329. THE FOLLOWING RULES GOVERN PRIORITY AMONG CON- 5 FLICTING SECURITY INTERESTS IN THE SAME LETTER-OF-CREDIT RIGHT: 6 (A) A SECURITY INTEREST HELD BY A SECURED PARTY HAVING CON- 7 TROL OF THE LETTER-OF-CREDIT RIGHT UNDER SECTION 9107 HAS PRIOR- 8 ITY TO THE EXTENT OF ITS CONTROL OVER A CONFLICTING SECURITY 9 INTEREST HELD BY A SECURED PARTY THAT DOES NOT HAVE CONTROL. 10 (B) SECURITY INTERESTS PERFECTED BY CONTROL UNDER SECTION 11 9314 RANK ACCORDING TO PRIORITY IN TIME OF OBTAINING CONTROL. 12 SEC. 9330. (1) A PURCHASER OF CHATTEL PAPER HAS PRIORITY 13 OVER A SECURITY INTEREST IN THE CHATTEL PAPER THAT IS CLAIMED 14 MERELY AS PROCEEDS OF INVENTORY SUBJECT TO A SECURITY INTEREST IF 15 BOTH OF THE FOLLOWING ARE MET: 16 (A) IN GOOD FAITH AND IN THE ORDINARY COURSE OF THE 17 PURCHASER'S BUSINESS, THE PURCHASER GIVES NEW VALUE AND TAKES 18 POSSESSION OF THE CHATTEL PAPER OR OBTAINS CONTROL OF THE CHATTEL 19 PAPER UNDER SECTION 9105. 20 (B) THE CHATTEL PAPER DOES NOT INDICATE THAT IT HAS BEEN 21 ASSIGNED TO AN IDENTIFIED ASSIGNEE OTHER THAN THE PURCHASER. 22 (2) A PURCHASER OF CHATTEL PAPER HAS PRIORITY OVER A SECUR- 23 ITY INTEREST IN THE CHATTEL PAPER THAT IS CLAIMED OTHER THAN 24 MERELY AS PROCEEDS OF INVENTORY SUBJECT TO A SECURITY INTEREST IF 25 THE PURCHASER GIVES NEW VALUE AND TAKES POSSESSION OF THE CHATTEL 26 PAPER OR OBTAINS CONTROL OF THE CHATTEL PAPER UNDER SECTION 9105 27 IN GOOD FAITH, IN THE ORDINARY COURSE OF THE PURCHASER'S 02120'99 181 1 BUSINESS, AND WITHOUT KNOWLEDGE THAT THE PURCHASE VIOLATES THE 2 RIGHTS OF THE SECURED PARTY. 3 (3) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9327, A PUR- 4 CHASER HAVING PRIORITY IN CHATTEL PAPER UNDER SUBSECTION (1) OR 5 (2) ALSO HAS PRIORITY IN PROCEEDS OF THE CHATTEL PAPER TO THE 6 EXTENT THAT SECTION 9322 PROVIDES FOR PRIORITY IN THE PROCEEDS, 7 OR THE PROCEEDS CONSIST OF THE SPECIFIC GOODS COVERED BY THE 8 CHATTEL PAPER OR CASH PROCEEDS OF THE SPECIFIC GOODS, EVEN IF THE 9 PURCHASER'S SECURITY INTEREST IN THE PROCEEDS IS UNPERFECTED. 10 (4) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9331(1), A PUR- 11 CHASER OF AN INSTRUMENT HAS PRIORITY OVER A SECURITY INTEREST IN 12 THE INSTRUMENT PERFECTED BY A METHOD OTHER THAN POSSESSION IF THE 13 PURCHASER GIVES VALUE AND TAKES POSSESSION OF THE INSTRUMENT IN 14 GOOD FAITH AND WITHOUT KNOWLEDGE THAT THE PURCHASE VIOLATES THE 15 RIGHTS OF THE SECURED PARTY. 16 (5) FOR PURPOSES OF SUBSECTIONS (1) AND (2), THE HOLDER OF A 17 PURCHASE-MONEY SECURITY INTEREST IN INVENTORY GIVES NEW VALUE FOR 18 CHATTEL PAPER CONSTITUTING PROCEEDS OF THE INVENTORY. 19 (6) FOR PURPOSES OF SUBSECTIONS (2) AND (4), IF CHATTEL 20 PAPER OR AN INSTRUMENT INDICATES THAT IT HAS BEEN ASSIGNED TO AN 21 IDENTIFIED SECURED PARTY OTHER THAN THE PURCHASER, A PURCHASER OF 22 THE CHATTEL PAPER OR INSTRUMENT HAS KNOWLEDGE THAT THE PURCHASE 23 VIOLATES THE RIGHTS OF THE SECURED PARTY. 24 SEC. 9331. (1) THIS ARTICLE DOES NOT LIMIT THE RIGHTS OF A 25 HOLDER IN DUE COURSE OF A NEGOTIABLE INSTRUMENT, A HOLDER TO 26 WHICH A NEGOTIABLE DOCUMENT OF TITLE HAS BEEN DULY NEGOTIATED, OR 27 A PROTECTED PURCHASER OF A SECURITY. THESE HOLDERS OR PURCHASERS 02120'99 182 1 TAKE PRIORITY OVER AN EARLIER SECURITY INTEREST, EVEN IF 2 PERFECTED, TO THE EXTENT PROVIDED IN ARTICLES 3, 7, AND 8. 3 (2) THIS ARTICLE DOES NOT LIMIT THE RIGHTS OF OR IMPOSE 4 LIABILITY ON A PERSON TO THE EXTENT THAT THE PERSON IS PROTECTED 5 AGAINST THE ASSERTION OF AN ADVERSE CLAIM UNDER ARTICLE 8. 6 (3) FILING UNDER THIS ARTICLE DOES NOT CONSTITUTE NOTICE OF 7 A CLAIM OR DEFENSE TO THE HOLDERS, OR PURCHASERS, OR PERSONS 8 DESCRIBED IN SUBSECTIONS (1) AND (2). 9 SEC. 9332. (1) A TRANSFEREE OF MONEY TAKES THE MONEY FREE 10 OF A SECURITY INTEREST UNLESS THE TRANSFEREE ACTS IN COLLUSION 11 WITH THE DEBTOR IN VIOLATING THE RIGHTS OF THE SECURED PARTY. 12 (2) A TRANSFEREE OF FUNDS FROM A DEPOSIT ACCOUNT TAKES THE 13 FUNDS FREE OF A SECURITY INTEREST IN THE DEPOSIT ACCOUNT UNLESS 14 THE TRANSFEREE ACTS IN COLLUSION WITH THE DEBTOR IN VIOLATING THE 15 RIGHTS OF THE SECURED PARTY. 16 SEC. 9333. (1) AS USED IN THIS SECTION, "POSSESSORY LIEN" 17 MEANS AN INTEREST, OTHER THAN A SECURITY INTEREST OR AN AGRICUL- 18 TURAL LIEN, THAT MEETS ALL OF THE FOLLOWING: 19 (A) IT SECURES PAYMENT OR PERFORMANCE OF AN OBLIGATION FOR 20 SERVICES OR MATERIALS FURNISHED WITH RESPECT TO GOODS BY A PERSON 21 IN THE ORDINARY COURSE OF THE PERSON'S BUSINESS. 22 (B) IT IS CREATED BY STATUTE OR RULE OF LAW IN FAVOR OF THE 23 PERSON. 24 (C) ITS EFFECTIVENESS DEPENDS ON THE PERSON'S POSSESSION OF 25 THE GOODS. 02120'99 183 1 (2) A POSSESSORY LIEN ON GOODS HAS PRIORITY OVER A SECURITY 2 INTEREST IN THE GOODS UNLESS THE LIEN IS CREATED BY A STATUTE 3 THAT EXPRESSLY PROVIDES OTHERWISE. 4 SEC. 9334. (1) A SECURITY INTEREST UNDER THIS ARTICLE MAY 5 BE CREATED IN GOODS THAT ARE FIXTURES OR MAY CONTINUE IN GOODS 6 THAT BECOME FIXTURES. A SECURITY INTEREST DOES NOT EXIST UNDER 7 THIS ARTICLE IN ORDINARY BUILDING MATERIALS INCORPORATED INTO AN 8 IMPROVEMENT ON LAND. 9 (2) THIS ARTICLE DOES NOT PREVENT CREATION OF AN ENCUMBRANCE 10 UPON FIXTURES UNDER REAL PROPERTY LAW. 11 (3) IN CASES NOT GOVERNED BY SUBSECTIONS (4) THROUGH (8), A 12 SECURITY INTEREST IN FIXTURES IS SUBORDINATE TO A CONFLICTING 13 INTEREST OF AN ENCUMBRANCER OR OWNER OF THE RELATED REAL PROPERTY 14 OTHER THAN THE DEBTOR. 15 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (8), A PER- 16 FECTED SECURITY INTEREST IN FIXTURES HAS PRIORITY OVER A CON- 17 FLICTING INTEREST OF AN ENCUMBRANCER OR OWNER OF THE REAL PROP- 18 ERTY IF THE DEBTOR HAS AN INTEREST OF RECORD IN OR IS IN POSSES- 19 SION OF THE REAL PROPERTY AND ALL OF THE FOLLOWING ARE MET: 20 (A) THE SECURITY INTEREST IS A PURCHASE-MONEY SECURITY 21 INTEREST. 22 (B) THE INTEREST OF THE ENCUMBRANCER OR OWNER ARISES BEFORE 23 THE GOODS BECOME FIXTURES. 24 (C) THE SECURITY INTEREST IS PERFECTED BY A FIXTURE FILING 25 BEFORE THE GOODS BECOME FIXTURES OR WITHIN 20 DAYS THEREAFTER. 02120'99 184 1 (5) A PERFECTED SECURITY INTEREST IN FIXTURES HAS PRIORITY 2 OVER A CONFLICTING INTEREST OF AN ENCUMBRANCER OR OWNER OF THE 3 REAL PROPERTY IN EACH OF THE FOLLOWING CIRCUMSTANCES: 4 (A) IF THE DEBTOR HAS AN INTEREST OF RECORD IN THE REAL 5 PROPERTY OR IS IN POSSESSION OF THE REAL PROPERTY, AND THE SECUR- 6 ITY INTEREST IS PERFECTED BY A FIXTURE FILING BEFORE THE INTEREST 7 OF THE ENCUMBRANCER OR OWNER IS OF RECORD AND HAS PRIORITY OVER 8 ANY CONFLICTING INTEREST OF A PREDECESSOR IN TITLE OF THE ENCUM- 9 BRANCER OR OWNER. 10 (B) IF BEFORE THE GOODS BECOME FIXTURES, THE SECURITY INTER- 11 EST IS PERFECTED BY ANY METHOD PERMITTED BY THIS ARTICLE AND THE 12 FIXTURES ARE READILY REMOVABLE FACTORY OR OFFICE MACHINES, 13 READILY REMOVABLE EQUIPMENT THAT IS NOT PRIMARILY USED OR LEASED 14 FOR USE IN THE OPERATION OF THE REAL PROPERTY, OR READILY REMOV- 15 ABLE REPLACEMENTS OF DOMESTIC APPLIANCES THAT ARE CONSUMER 16 GOODS. 17 (C) IF THE CONFLICTING INTEREST IS A LIEN ON THE REAL PROP- 18 ERTY OBTAINED BY LEGAL OR EQUITABLE PROCEEDINGS AFTER THE SECUR- 19 ITY INTEREST WAS PERFECTED BY ANY METHOD PERMITTED BY THIS 20 ARTICLE. 21 (D) IF THE SECURITY INTEREST IS CREATED IN A MANUFACTURED 22 HOME IN A MANUFACTURED-HOME TRANSACTION AND PERFECTED PURSUANT TO 23 A STATUTE DESCRIBED IN SECTION 9311(1)(B). 24 (6) A SECURITY INTEREST IN FIXTURES, WHETHER OR NOT PERFEC- 25 TED, HAS PRIORITY OVER A CONFLICTING INTEREST OF AN ENCUMBRANCER 26 OR OWNER OF THE REAL PROPERTY IF EITHER OF THE FOLLOWING IS MET: 02120'99 185 1 (A) THE ENCUMBRANCER OR OWNER HAS, IN AN AUTHENTICATED 2 RECORD, CONSENTED TO THE SECURITY INTEREST OR DISCLAIMED AN 3 INTEREST IN THE GOODS AS FIXTURES. 4 (B) THE DEBTOR HAS A RIGHT TO REMOVE THE GOODS AS AGAINST 5 THE ENCUMBRANCER OR OWNER. 6 (7) THE PRIORITY OF THE SECURITY INTEREST UNDER SUBSECTION 7 (6)(B) CONTINUES FOR A REASONABLE TIME IF THE DEBTOR'S RIGHT TO 8 REMOVE THE GOODS AS AGAINST THE ENCUMBRANCER OR OWNER 9 TERMINATES. 10 (8) A MORTGAGE IS A CONSTRUCTION MORTGAGE TO THE EXTENT THAT 11 IT SECURES AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF AN 12 IMPROVEMENT ON LAND, INCLUDING THE ACQUISITION COST OF THE LAND, 13 IF A RECORDED RECORD OF THE MORTGAGE SO INDICATES. EXCEPT AS 14 OTHERWISE PROVIDED IN SUBSECTIONS (5) AND (6), A SECURITY INTER- 15 EST IN FIXTURES IS SUBORDINATE TO A CONSTRUCTION MORTGAGE IF A 16 RECORD OF THE MORTGAGE IS RECORDED BEFORE THE GOODS BECOME FIX- 17 TURES AND THE GOODS BECOME FIXTURES BEFORE THE COMPLETION OF THE 18 CONSTRUCTION. A MORTGAGE HAS THIS PRIORITY TO THE SAME EXTENT AS 19 A CONSTRUCTION MORTGAGE TO THE EXTENT THAT IT IS GIVEN TO REFI- 20 NANCE A CONSTRUCTION MORTGAGE. 21 (9) A PERFECTED SECURITY INTEREST IN CROPS GROWING ON REAL 22 PROPERTY HAS PRIORITY OVER A CONFLICTING INTEREST OF AN ENCUM- 23 BRANCER OR OWNER OF THE REAL PROPERTY IF THE DEBTOR HAS AN INTER- 24 EST OR RECORD IN OR IS IN POSSESSION OF THE REAL PROPERTY. 25 SEC. 9335. (1) A SECURITY INTEREST MAY BE CREATED IN AN 26 ACCESSION AND CONTINUES IN COLLATERAL THAT BECOMES AN ACCESSION. 02120'99 186 1 (2) IF A SECURITY INTEREST IS PERFECTED WHEN THE COLLATERAL 2 BECOMES AN ACCESSION, THE SECURITY INTEREST REMAINS PERFECTED IN 3 THE COLLATERAL. 4 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), THE 5 OTHER PROVISIONS OF THIS PART DETERMINE THE PRIORITY OF A SECUR- 6 ITY INTEREST IN AN ACCESSION. 7 (4) A SECURITY INTEREST IN AN ACCESSION IS SUBORDINATE TO A 8 SECURITY INTEREST IN THE WHOLE WHICH IS PERFECTED BY COMPLIANCE 9 WITH THE REQUIREMENTS OF A CERTIFICATE-OF-TITLE STATUTE UNDER 10 SECTION 9311(2). 11 (5) AFTER DEFAULT, SUBJECT TO PART 6 OF THIS ARTICLE, A 12 SECURED PARTY MAY REMOVE AN ACCESSION FROM OTHER GOODS IF THE 13 SECURITY INTEREST IN THE ACCESSION HAS PRIORITY OVER THE CLAIMS 14 OF EVERY PERSON HAVING AN INTEREST IN THE WHOLE. 15 (6) A SECURED PARTY THAT REMOVES AN ACCESSION FROM OTHER 16 GOODS UNDER SUBSECTION (5) SHALL PROMPTLY REIMBURSE ANY HOLDER OF 17 A SECURITY INTEREST OR OTHER LIEN ON, OR OWNER OF, THE WHOLE OR 18 OF THE OTHER GOODS, OTHER THAN THE DEBTOR, FOR THE COST OF REPAIR 19 OF ANY PHYSICAL INJURY TO THE WHOLE OR THE OTHER GOODS. THE 20 SECURED PARTY NEED NOT REIMBURSE THE HOLDER OR OWNER FOR ANY DIM- 21 INUTION IN VALUE OF THE WHOLE OR THE OTHER GOODS CAUSED BY THE 22 ABSENCE OF THE ACCESSION REMOVED OR BY ANY NECESSITY FOR REPLAC- 23 ING IT. A PERSON ENTITLED TO REIMBURSEMENT MAY REFUSE PERMISSION 24 TO REMOVE UNTIL THE SECURED PARTY GIVES ADEQUATE ASSURANCE FOR 25 THE PERFORMANCE OF THE OBLIGATION TO REIMBURSE. 02120'99 187 1 SEC. 9336. (1) AS USED IN THIS SECTION, "COMMINGLED GOODS" 2 MEANS GOODS THAT ARE PHYSICALLY UNITED WITH OTHER GOODS IN SUCH A 3 MANNER THAT THEIR IDENTITY IS LOST IN A PRODUCT OR MASS. 4 (2) A SECURITY INTEREST DOES NOT EXIST IN COMMINGLED GOODS 5 AS SUCH. HOWEVER, A SECURITY INTEREST MAY ATTACH TO A PRODUCT OR 6 MASS THAT RESULTS WHEN GOODS BECOME COMMINGLED GOODS. 7 (3) IF COLLATERAL BECOMES COMMINGLED GOODS, A SECURITY 8 INTEREST ATTACHES TO THE PRODUCT OR MASS. 9 (4) IF A SECURITY INTEREST IN COLLATERAL IS PERFECTED BEFORE 10 THE COLLATERAL BECOMES COMMINGLED GOODS, THE SECURITY INTEREST 11 THAT ATTACHES TO THE PRODUCT OR MASS UNDER SUBSECTION (3) IS 12 PERFECTED. 13 (5) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (6), THE 14 OTHER PROVISIONS OF THIS PART DETERMINE THE PRIORITY OF A SECUR- 15 ITY INTEREST THAT ATTACHES TO THE PRODUCT OR MASS UNDER SUBSEC- 16 TION (3). 17 (6) IF MORE THAN 1 SECURITY INTEREST ATTACHES TO THE PRODUCT 18 OR MASS UNDER SUBSECTION (3), THE FOLLOWING RULES DETERMINE 19 PRIORITY: 20 (A) A SECURITY INTEREST THAT IS PERFECTED UNDER SUBSECTION 21 (4) HAS PRIORITY OVER A SECURITY INTEREST THAT IS UNPERFECTED AT 22 THE TIME THE COLLATERAL BECOMES COMMINGLED GOODS. 23 (B) IF MORE THAN 1 SECURITY INTEREST IS PERFECTED UNDER SUB- 24 SECTION (4), THE SECURITY INTERESTS RANK EQUALLY IN PROPORTION TO 25 VALUE OF THE COLLATERAL AT THE TIME IT BECAME COMMINGLED GOODS. 26 SEC. 9337. IF, WHILE A SECURITY INTEREST IN GOODS IS 27 PERFECTED BY ANY METHOD UNDER THE LAW OF ANOTHER JURISDICTION, 02120'99 188 1 THIS STATE ISSUES A CERTIFICATE OF TITLE THAT DOES NOT SHOW THAT 2 THE GOODS ARE SUBJECT TO THE SECURITY INTEREST OR CONTAIN A 3 STATEMENT THAT THEY MAY BE SUBJECT TO SECURITY INTERESTS NOT 4 SHOWN ON THE CERTIFICATE, BOTH OF THE FOLLOWING APPLY: 5 (A) A BUYER OF THE GOODS, OTHER THAN A PERSON IN THE BUSI- 6 NESS OF SELLING GOODS OF THAT KIND, TAKES FREE OF THE SECURITY 7 INTEREST IF THE BUYER GIVES VALUE AND RECEIVES DELIVERY OF THE 8 GOODS AFTER ISSUANCE OF THE CERTIFICATE AND WITHOUT KNOWLEDGE OF 9 THE SECURITY INTEREST. 10 (B) THE SECURITY INTEREST IS SUBORDINATE TO A CONFLICTING 11 SECURITY INTEREST IN THE GOODS THAT ATTACHES, AND IS PERFECTED 12 UNDER SECTION 9311(2), AFTER ISSUANCE OF THE CERTIFICATE AND 13 WITHOUT THE CONFLICTING SECURED PARTY'S KNOWLEDGE OF THE SECURITY 14 INTERESTS. 15 SEC. 9338. IF A SECURITY INTEREST OR AGRICULTURAL LIEN IS 16 PERFECTED BY A FILED FINANCING STATEMENT PROVIDING INFORMATION 17 DESCRIBED IN SECTION 9516(2)(E) THAT IS INCORRECT AT THE TIME THE 18 FINANCING STATEMENT IS FILED, ALL OF THE FOLLOWING APPLY: 19 (A) THE SECURITY INTEREST OR AGRICULTURAL LIEN IS SUBORDI- 20 NATE TO A CONFLICTING PERFECTED SECURITY INTEREST IN THE COLLAT- 21 ERAL TO THE EXTENT THAT THE HOLDER OF THE CONFLICTING SECURITY 22 INTEREST GIVES VALUE IN REASONABLE RELIANCE UPON THE INCORRECT 23 INFORMATION. 24 (B) A PURCHASER, OTHER THAN A SECURED PARTY, OF THE COLLAT- 25 ERAL TAKES FREE OF THE SECURITY INTEREST OR AGRICULTURAL LIEN TO 26 THE EXTENT THAT, IN REASONABLE RELIANCE UPON THE INCORRECT 27 INFORMATION, THE PURCHASER GIVES VALUE AND, IN THE CASE OF 02120'99 189 1 CHATTEL PAPER, DOCUMENTS, GOODS, INSTRUMENTS, OR A SECURITY 2 CERTIFICATE, RECEIVES DELIVERY OF THE COLLATERAL. 3 SEC. 9339. THIS ARTICLE DOES NOT PRECLUDE SUBORDINATION BY 4 AGREEMENT BY A PERSON ENTITLED TO PRIORITY. 5 SUBPART 4. RIGHTS OF BANK 6 SEC. 9340. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 7 (3), A BANK WITH WHICH A DEPOSIT ACCOUNT IS MAINTAINED MAY EXER- 8 CISE ANY RIGHT OF RECOUPMENT OR SETOFF AGAINST A SECURED PARTY 9 THAT HOLDS A SECURITY INTEREST IN THE DEPOSIT ACCOUNT. 10 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), THE 11 APPLICATION OF THIS ARTICLE TO A SECURITY INTEREST IN A DEPOSIT 12 ACCOUNT DOES NOT AFFECT A RIGHT OF RECOUPMENT OR SETOFF OF THE 13 SECURED PARTY AS TO A DEPOSIT ACCOUNT MAINTAINED WITH THE SECURED 14 PARTY. 15 (3) THE EXERCISE BY A BANK OF A SETOFF AGAINST A DEPOSIT 16 ACCOUNT IS INEFFECTIVE AGAINST A SECURED PARTY THAT HOLDS A 17 SECURITY INTEREST IN THE DEPOSIT ACCOUNT THAT IS PERFECTED BY 18 CONTROL UNDER SECTION 9104(1)(C), IF THE SETOFF IS BASED ON A 19 CLAIM AGAINST THE DEBTOR. 20 SEC. 9341. EXCEPT AS OTHERWISE PROVIDED IN SECTION 9340(3), 21 AND UNLESS THE BANK OTHERWISE AGREES IN AN AUTHENTICATED RECORD, 22 A BANK'S RIGHTS AND DUTIES WITH RESPECT TO A DEPOSIT ACCOUNT 23 MAINTAINED WITH THE BANK ARE NOT TERMINATED, SUSPENDED, OR MODI- 24 FIED BY 1 OR MORE OF THE FOLLOWING: 25 (A) THE CREATION, ATTACHMENT, OR PERFECTION OF A SECURITY 26 INTEREST IN THE DEPOSIT ACCOUNT. 02120'99 190 1 (B) THE BANK'S KNOWLEDGE OF THE SECURITY INTEREST. 2 (C) THE BANK'S RECEIPT OF INSTRUCTIONS FROM THE SECURED 3 PARTY. 4 SEC. 9342. THIS ARTICLE DOES NOT REQUIRE A BANK TO ENTER 5 INTO AN AGREEMENT OF THE KIND DESCRIBED IN SECTION 9104(1)(B), 6 EVEN IF ITS CUSTOMER SO REQUESTS OR DIRECTS. A BANK THAT HAS 7 ENTERED INTO SUCH AN AGREEMENT IS NOT REQUIRED TO CONFIRM THE 8 EXISTENCE OF THE AGREEMENT TO ANOTHER PERSON UNLESS REQUESTED TO 9 DO SO BY ITS CUSTOMER. 10 PART 4 11FILINGRIGHTS OF THIRD PARTIES 12 Sec. 9401.(1) The proper place to file in order to per-13fect a security interest is as follows:14(a) When the collateral is equipment used in farming opera-15tions, or farm products, or accounts or general intangibles aris-16ing from or relating to the sale of farm products by a farmer, or17consumer goods, then in the office of the register of deeds in18the county of the debtor's residence, or if the debtor is not a19resident of this state, then in the office of the register of20deeds in the county where the goods are kept, and, in addition,21when the collateral is crops, growing or to be grown, in the22office of the register of deeds in the county where the land is23located, but shall not be recorded in the real estate records of24the county.25(b) When the collateral is timber to be cut or is minerals26or the like (including oil and gas), or accounts subject to27section 9103(5), or when the financing statement is filed as a02120'99 191 1fixture filing under section 9313 and the collateral is goods2which are or are to become fixtures, then in the office where a3mortgage on the real estate would be filed or recorded.4(c) In all other cases, in the office of the secretary of5state.6(2) A filing which is made in good faith in an improper7place or not in all of the places required by this section is8nevertheless effective with regard to any collateral as to which9the filing complied with the requirements of this article and is10also effective with regard to collateral covered by the financing11statement against any person who has knowledge of the contents of12such financing statement.13(3) A filing which is made in the proper place in this state14continues effective even though the debtor's residence or place15of business or the location of the collateral or its use, which-16ever controlled the original filing, is thereafter changed.17(4) The rules stated in section 9103 determine whether18filing is necessary in this state.19(5) Notwithstanding the preceding subsections, and subject20to section 9302(3), the proper place to file in order to perfect21a security interest in collateral, including fixtures, of a22transmitting utility is the office of the secretary of state.23This filing constitutes a fixture filing (section 9313) as to the24collateral described therein which is or is to become fixtures.25(6) For the purposes of this section, the residence of an26organization is its place of business if it has one or its chief27executive office if it has more than 1 place of business.02120'99 192 1 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2) AND 2 SECTIONS 9406, 9407, 9408, AND 9409, WHETHER A DEBTOR'S RIGHTS IN 3 COLLATERAL MAY BE VOLUNTARILY OR INVOLUNTARILY TRANSFERRED IS 4 GOVERNED BY LAW OTHER THAN THIS ARTICLE. 5 (2) AN AGREEMENT BETWEEN THE DEBTOR AND SECURED PARTY THAT 6 PROHIBITS A TRANSFER OF THE DEBTOR'S RIGHTS IN COLLATERAL OR 7 MAKES THE TRANSFER A DEFAULT DOES NOT PREVENT THE TRANSFER FROM 8 TAKING EFFECT. 9 Sec. 9402.(1) A financing statement is sufficient if it10gives the names of the debtor and the secured party, in printed11or typewritten form, is signed by the debtor, gives an address of12the secured party from which information concerning the security13interest may be obtained, gives a mailing address of the debtor,14and contains a statement indicating the types or describing the15items of collateral. A financing statement may be filed before a16security agreement is made or a security interest otherwise17attaches. If the financing statement covers timber to be cut,18covers minerals or similar substances, including oil and gas, or19accounts subject to section 9103(5), or if the financing state-20ment is filed as a fixture filing under section 9313 and the col-21lateral is goods that are or are to become fixtures, the state-22ment shall also comply with subsection (5). A copy of the secur-23ity agreement is sufficient as a financing statement if it con-24tains the above information and is signed by the debtor. A legi-25ble carbon, photographic, or other reproduction of a security26agreement or a financing statement is sufficient as a financing02120'99 193 1statement if the security agreement so provides or if the2original has been filed in this state.3(2) A financing statement that otherwise complies with sub-4section (1) is sufficient if it is signed by the secured party5instead of the debtor if it is filed to perfect a security inter-6est in any of the following:7(a) Collateral already subject to a security interest in8another jurisdiction when it is brought into this state, or when9the debtor's location is changed to this state. The financing10statement shall state that the collateral was brought into this11state or that the debtor's location was changed to this state12under those circumstances.13(b) Proceeds under section 9306 if the security interest in14the original collateral was perfected. The financing statement15shall describe the original collateral.16(c) Collateral as to which the filing has lapsed.17(d) Collateral acquired after a change of name, identity, or18corporate structure of the debtor as provided in subsection (7).19(3) A form substantially as follows is sufficient to comply20with subsection (1):21(PRINT OR TYPE)22Name of debtor (or assignor).....................................23Address..........................................................24Name of secured party (or assignee)..............................02120'99 194 1Social security number or federal employer tax identification number2of debtor (when required)........................................3Address..........................................................41. This financing statement covers the following types or items5of property:6(Describe)....................................................72. (If applicable check box below)8a. The goods are to become fixtures on []9b. The above described timber is standing on []10c. The above described minerals or the like (including11oil and gas) are to be extracted from the wellhead12or minehead of the well or mine located on []13d. The above described accounts include accounts14resulting from the sale of minerals or the like15(including oil and gas) to be extracted from the16wellhead or minehead of the well or mine located on []17(Describe real estate)...........................................18If 1 of the above boxes is checked, this financing statement is to be19recorded in the real estate records. If the debtor does not have an20interest of record, the name of the record owner is..............213. (If products of collateral are claimed) Products of the col-22lateral are also covered.23(Use whichever is applicable)24Signature of debtor (or assignor)................................25Signature of secured party (or assignee).........................26(4) A financing statement may be amended by filing a writing27signed by both the debtor and the secured party that identifies02120'99 195 1the original filing by file number and, if applicable, by liber2and page. An amendment also may, but is not required to, include3the debtor's tax identification number. An amendment does not4extend the period of effectiveness of a financing statement. If5any amendment adds collateral, it is effective as to the added6collateral only from the filing date of the amendment. As used7in this article, unless the context otherwise requires,8"financing statement" means the original financing statement and9any amendments.10(5) A financing statement covering timber to be cut, cover-11ing minerals or similar substances, including oil and gas, or12accounts subject to section 9103(5), or a financing statement13filed as a fixture filing under section 9313 if the debtor is not14a transmitting utility, shall show that it covers this type of15collateral, recite that it is to be recorded in the real estate16records, and contain a description of the real estate sufficient17if it were contained in a mortgage of the real estate to give18constructive notice of the mortgage under the law of this state.19If the debtor does not have an interest of record in the real20estate, the financing statement shall show the name of a record21owner.22(6) A mortgage is effective as a financing statement filed23as a fixture filing from the date of its recording if all of the24following apply:25(a) The goods are described in the mortgage by item or26type.02120'99 196 1(b) The goods are or are to become fixtures related to the2real estate described in the mortgage.3(c) The mortgage complies with the requirements for a4financing statement in this section other than a recital that it5is to be recorded in the real estate records.6(d) The mortgage is duly recorded. Other than the regular7recording and satisfaction fees for the mortgage, a fee for the8financing statement is not required.9(7) A financing statement sufficiently shows the name of the10debtor if it includes the individual, partnership, or corporate11name of the debtor, whether or not it adds other trade names or12the names of partners. If the debtor changes his or her name, or13in the case of an organization, its name, identity, or corporate14structure, so that a filed financing statement becomes seriously15misleading, the filing is not effective to perfect a security16interest in collateral acquired by the debtor more than 4 months17after the debtor notifies the secured party in writing of the18change, unless a new appropriate financing statement is filed19before the expiration of that time. A filed financing statement20remains effective for collateral transferred by the debtor even21though the secured party knows of or consents to the transfer.22(8) A financing statement substantially complying with the23requirements of this section is effective even though it contains24minor errors that are not seriously misleading.25(9) Any financing statement, indicating that it is to be26recorded in the real estate records, as provided in subsections27(3) and (5), and any continuation statement, termination02120'99 197 1statement, amendment, or assignment relating to the statement and2meeting the formal requisites of this section, section 9404, and3section 9405, shall be recorded by the register of deeds of the4county in which the real property described in the financing5statement is located, notwithstanding the provisions for witness-6ing and acknowledging instruments to be recorded in the real7property records contained in section 47 of 1846 RS 65,8MCL 565.47.9(10) Each register of deeds shall certify on every financing10statement indicating that it is to be recorded in the real estate11records, as provided in subsections (3) and (5), and any continu-12ation statement, termination statement, amendment, or assignment13relating to the statement and meeting the formal requisites of14this section, section 9404, and section 9405, the date and time15when it was received for record, and a reference to the liber and16page where it is recorded.17(11) Each register of deeds shall enter any financing state-18ment indicating that it is to be recorded in the real estate19records, as provided in subsections (3) and (5), and any continu-20ation statement, termination statement, amendment, or assignment21relating to the statement and meeting the formal requisites of22this section, section 9404, and section 9405, in an entry book23where a real estate mortgage would be entered, noting in the24entry book the day, hour, and minute of reception, and other par-25ticulars in the order in which the financing statements, continu-26ation statements, termination statements, amendments, and02120'99 198 1assignments are respectively received, and each instrument shall2be considered recorded at the time so noted.3(12) Each register of deeds shall index each financing4statement, continuation statement, termination statement, amend-5ment, or assignment, recorded under subsection (11), in a book or6card index under the name of the debtor, and, if applicable,7under the name of the record owner of the real estate, in the8same manner as recordings of real estate mortgages are indexed.9(13) Beginning April 1, 1990 all original filings of a10security agreement or a financing statement tendered to the sec-11retary of state shall contain the tax identification number of12each debtor except for the following:13(a) A reproduction of a security agreement or of a financing14statement filed under the last sentence of subsection (1) if the15security agreement was entered into or the financing statement16was filed before April 1, 1990.17(b) A financing statement filed under subsection (2).18(c) A financing statement that is accompanied by a certifi-19cate prescribed by the secretary of state and is signed by the20debtor stating that the debtor does not have a tax identification21number.22(14) If an original filing of a security agreement or a23financing statement fails to contain the tax identification24number of each debtor and is not exempted under subsection (13),25the secretary of state shall not accept it for filing and shall26return it to the secured party or other person who submitted it.27If the records of the secretary of state indicate that a debtor's02120'99 199 1tax identification number contained on a financing statement2received for filing is or may be incorrect, the secretary of3state shall nevertheless accept and file the financing4statement. The secretary of state may request the secured party5or other person who submitted the financing statement to file an6amendment to the statement giving the debtor's correct tax iden-7tification number. The signature of the debtor shall not be8required on an amendment that changes only the debtor's tax iden-9tification number.10(15) Notwithstanding subsections (13) and (14), if the sec-11retary of state files a financing statement that does not con-12tain, or that incorrectly states, the debtor's tax identification13number and if the financing statement otherwise complies with14applicable requirements, the financing statement shall be consid-15ered sufficient, valid, and effective.16(16) The secretary of state shall adopt and utilize computer17assisted search procedures to enable the secretary of state to18provide information to a person making a request under19section 9407(2). The secretary of state shall provide the infor-20mation requested by a person under section 9407(2) as accurate21and complete as the information the person would have received if22the same request had been processed under the search procedures23followed by the secretary of state immediately before the imple-24mentation of computer assisted searches.THE EXISTENCE OF A 25 SECURITY INTEREST, AGRICULTURAL LIEN, OR AUTHORITY GIVEN TO A 26 DEBTOR TO DISPOSE OF OR USE COLLATERAL, WITHOUT MORE, DOES NOT 02120'99 200 1 SUBJECT A SECURED PARTY TO LIABILITY IN CONTRACT OR TORT FOR THE 2 DEBTOR'S ACTS OR OMISSIONS. 3 Sec. 9403.(1) Presentation for filing of a financing4statement and tender of the filing fee or acceptance of the5statement by the filing officer constitutes filing under this6article.7(2) Except as provided in subsection (7), a filed financing8statement is effective for a period of 5 years after the date of9filing. The effectiveness of a filed financing statement lapses10on the expiration of the 5-year period, unless a continuation11statement is filed within 6 months before the lapse. If a secur-12ity interest perfected by filing exists at the time insolvency13proceedings are commenced by or against the debtor, the security14interest remains perfected until termination of the insolvency15proceedings and thereafter for a period of 60 days or until expi-16ration of the 5-year period, whichever occurs later. Upon lapse,17the security interest becomes unperfected, unless it is perfected18without filing. If the security interest becomes unperfected19upon lapse, it is considered to have been unperfected as against20a person who became a purchaser or lien creditor before the21lapse.22(3) A continuation statement may be filed or recorded by the23secured party within 6 months before the expiration of the 5-year24period specified in subsection (2). A continuation statement25shall be signed by the secured party, identify the original26statement by file number and, if the original financing statement27describes real property, by the liber and page where the property02120'99 201 1is recorded, and state that the original statement is still2effective. A continuation statement also may, but is not3required to, include the debtor's tax identification number. A4continuation statement signed by a person other than the secured5party of record shall be accompanied by a separate written state-6ment of assignment that is signed by the secured party of record7and that complies with section 9405(2), including payment of the8required fee. Upon timely filing of the continuation statement,9the effectiveness of the financing statement is continued for 510years after the last date to which the filing was effective11whereupon it lapses in the same manner as provided in subsection12(2) unless another continuation statement is filed before the13lapse. Succeeding continuation statements may be filed in the14same manner to continue the effectiveness of the financing15statement. Unless a statute on disposition of public records16provides otherwise, the filing officer may remove a lapsed state-17ment from the files and destroy it immediately if he or she has18retained a reproduction pursuant to the records media act, or in19other cases after 1 year after the lapse. The filing officer20shall so arrange matters by physical annexation of financing21statements to continuation statements or other related filings,22or by other means, that if he or she physically destroys the23financing statements of a period more than 5 years past, those24which have been continued by a continuation statement or which25are still effective under subsection (7) shall be retained.26(4) Except as provided in subsection (8), a filing officer27shall mark a statement with a file number and with the date and02120'99 202 1hour of filing and shall hold the statement or a reproduction of2the statement pursuant to the records media act for public3inspection. In addition, the filing officer shall index the4statements according to the name of the debtor and shall note in5the index the file number and the address of the debtor given in6the statement.7(5) The uniform fee for filing and indexing and for stamping8a copy furnished by the secured party to show the date and place9of filing for an original financing statement, for a continuation10statement, for an amendment of a financing statement, or for an11assignment shall be as follows:12(a) For a filing with the secretary of state or the register13of deeds, $3.00 if the statement includes the information14required under this act for the filing, and is in the standard15form prescribed by the secretary of state. For a statement not16complying with these requirements, the fee is $6.00.17(b) For a filing with a register of deeds, if the financing18statement, continuation statement, assignment, or amendment indi-19cates that it is to be recorded in the real estate records, as20provided in sections 9402(3) and 9402(5), $5.00 for the first21page and $2.00 for each additional page.22(6) The uniform fee for each name more than 1 required to be23indexed is $3.00. The secured party may, at his or her option,24show a trade name for a person, and an extra uniform indexing fee25of $3.00 shall be paid with respect to that name.26(7) If the debtor is a transmitting utility under section279401(5) and a filed financing statement so states, it is02120'99 203 1effective until a termination statement is filed. A real estate2mortgage that is effective as a fixture filing under section39402(6) remains effective as a fixture filing until the mortgage4is released or satisfied of record or its effectiveness otherwise5terminates as to the real estate.6(8) If a financing statement covers timber to be cut, covers7minerals or the like including oil and gas, or accounts subject8to section 9103(5), or is filed as a fixture filing, it shall be9recorded, and the filing officer shall index it under the names10of the debtor and any owner of record shown on the financing11statement in the same fashion as if they were the mortgagors in a12mortgage of the real estate described, and, to the extent that13the law of this state provides for indexing of mortgages under14the name of the mortgagee, under the name of the secured party as15if he or she were the mortgagee of the mortgage, or where index-16ing is by description, in the same fashion as if the financing17statement were a mortgage of the real estate described.18 (1) AS USED IN THIS SECTION, "VALUE" HAS THE MEANING PRO- 19 VIDED IN SECTION 3303(1). 20 (2) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, AN AGREE- 21 MENT BETWEEN AN ACCOUNT DEBTOR AND AN ASSIGNOR NOT TO ASSERT 22 AGAINST AN ASSIGNEE ANY CLAIM OR DEFENSE THAT THE ACCOUNT DEBTOR 23 MAY HAVE AGAINST THE ASSIGNOR IS ENFORCEABLE BY AN ASSIGNEE THAT 24 TAKES AN ASSIGNMENT FOR VALUE, IN GOOD FAITH, WITHOUT NOTICE OF A 25 CLAIM OF A PROPERTY OR POSSESSORY RIGHT TO THE PROPERTY ASSIGNED, 26 AND WITHOUT NOTICE OF A DEFENSE OR CLAIM IN RECOUPMENT OF THE 02120'99 204 1 TYPE THAT MAY BE ASSERTED AGAINST A PERSON ENTITLED TO ENFORCE A 2 NEGOTIABLE INSTRUMENT UNDER SECTION 3305(1). 3 (3) SUBSECTION (2) DOES NOT APPLY TO DEFENSES OF A TYPE THAT 4 MAY BE ASSERTED AGAINST A HOLDER IN DUE COURSE OF A NEGOTIABLE 5 INSTRUMENT UNDER SECTION 3305(2). 6 (4) IN A CONSUMER TRANSACTION, IF A RECORD EVIDENCES THE 7 ACCOUNT DEBTOR'S OBLIGATION, LAW OTHER THAN THIS ARTICLE REQUIRES 8 THAT THE RECORD INCLUDE A STATEMENT TO THE EFFECT THAT THE RIGHTS 9 OF AN ASSIGNEE ARE SUBJECT TO CLAIMS OR DEFENSES THAT THE ACCOUNT 10 DEBTOR COULD ASSERT AGAINST THE ORIGINAL OBLIGEE, AND THE RECORD 11 DOES NOT INCLUDE SUCH A STATEMENT, ALL OF THE FOLLOWING APPLY: 12 (A) THE RECORD HAS THE SAME EFFECT AS IF THE RECORD INCLUDED 13 SUCH A STATEMENT. 14 (B) THE ACCOUNT DEBTOR MAY ASSERT AGAINST AN ASSIGNEE THOSE 15 CLAIMS AND DEFENSES THAT WOULD HAVE BEEN AVAILABLE IF THE RECORD 16 INCLUDED SUCH A STATEMENT. 17 (5) THIS SECTION IS SUBJECT TO LAW OTHER THAN THIS ARTICLE 18 THAT ESTABLISHES A DIFFERENT RULE FOR AN ACCOUNT DEBTOR WHO IS AN 19 INDIVIDUAL AND WHO INCURRED THE OBLIGATION PRIMARILY FOR PERSON- 20 AL, FAMILY, OR HOUSEHOLD PURPOSES. 21 (6) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), THIS 22 SECTION DOES NOT DISPLACE LAW OTHER THAN THIS ARTICLE THAT GIVES 23 EFFECT TO AN AGREEMENT BY AN ACCOUNT DEBTOR NOT TO ASSERT A CLAIM 24 OR DEFENSE AGAINST AN ASSIGNEE. 25 Sec. 9404.(1) If a financing statement covering consumer26goods is filed on or after January 1, 1979, then within 1 month27or within 10 days following written demand by the debtor,02120'99 205 1whichever occurs first, after there is no outstanding secured2obligation and no commitment to make advances, incur obligations,3or otherwise give value, and the secured party does not in good4faith expect to make optional future advances, the secured party5shall file with each filing officer with whom the financing6statement was filed a termination statement to the effect that he7or she no longer claims a security interest under the financing8statement, which shall be identified by file number, and if the9original financing statement describes real property, by liber10and page of recording of the financing statement. In other11cases, if there is no outstanding secured obligation and no com-12mitment to make advances, incur obligations, or otherwise give13value and the secured party does not in good faith expect to make14future optional advances, the secured party shall, on written15demand of the debtor, send for each filing officer with whom the16financing statement was filed a termination statement to the17effect that he or she no longer claims a security interest under18the financing statement, which shall be identified by file19number. With respect to original financing statements filed20before July 1, 1976 with a filing officer other than the secre-21tary of state, the secured party may elect to send the statement22directly to the debtor instead of the filing officer. A termina-23tion statement may, but is not required to, include the debtor's24tax identification number. A termination statement signed by a25person other than the secured party of record shall be accom-26panied by a separate written statement of assignment signed by27the secured party of record complying with section 9405(2),02120'99 206 1including payment of the required fee. If the affected secured2party fails to file such a termination statement as required by3this subsection, or to send such a termination statement within4the required period, he or she is liable to the debtor for any5loss caused to the debtor by that failure. In addition, the6secured party is liable to the debtor for $100.00 if he or she7fails to file the termination statement within 20 days after8written demand for the termination statement by the debtor.9(2) On presentation to the filing officer of a termination10statement, the filing officer shall note it in the index. If the11filing officer has received the termination statement in dupli-12cate, he or she shall return 1 copy of the termination statement13to the secured party stamped to show the time of receipt of the14termination statement. If the filing officer has a reproduction15of the financing statement pursuant to the records media act, and16of any related continuation statement, statement of assignment,17and statement of release, he or she may remove the originals from18the files at any time after receipt of the termination statement,19or if the filing officer has no such record, he or she may remove20them from the files at any time after 1 year after receipt of the21termination statement.22(3) If the termination statement is in the standard form23prescribed by the secretary of state, the uniform fee for filing24and indexing a termination statement is $1.00, and otherwise is25$1.00, plus, in each case an additional fee of $1.00 for each26additional name against which the termination statement is27required to be indexed, except that a fee shall not be charged02120'99 207 1for the filing and indexing of a termination statement with2respect to an original financing statement filed after June 30,31976, unless the filing was made with the register of deeds as4provided in sections 9402(3) and 9402(5), and in that event the5fee is the same as that required to file a discharge of a real6estate mortgage.7 (1) UNLESS AN ACCOUNT DEBTOR HAS MADE AN ENFORCEABLE AGREE- 8 MENT NOT TO ASSERT DEFENSES OR CLAIMS, AND SUBJECT TO SUBSECTIONS 9 (2) THROUGH (5), THE RIGHTS OF AN ASSIGNEE ARE SUBJECT TO ALL OF 10 THE FOLLOWING: 11 (A) ALL TERMS OF THE AGREEMENT BETWEEN THE ACCOUNT DEBTOR 12 AND ASSIGNOR AND ANY DEFENSE OR CLAIM IN RECOUPMENT ARISING FROM 13 THE TRANSACTION THAT GAVE RISE TO THE CONTRACT. 14 (B) ANY OTHER DEFENSE OR CLAIM OF THE ACCOUNT DEBTOR AGAINST 15 THE ASSIGNOR THAT ACCRUES BEFORE THE ACCOUNT DEBTOR RECEIVES A 16 NOTIFICATION OF THE ASSIGNMENT AUTHENTICATED BY THE ASSIGNOR OR 17 THE ASSIGNEE. 18 (2) SUBJECT TO SUBSECTION (3) AND EXCEPT AS OTHERWISE PRO- 19 VIDED IN SUBSECTION (4), THE CLAIM OF AN ACCOUNT DEBTOR AGAINST 20 AN ASSIGNOR MAY BE ASSERTED AGAINST AN ASSIGNEE UNDER SUBSECTION 21 (1) ONLY TO REDUCE THE AMOUNT THE ACCOUNT DEBTOR OWES. 22 (3) THIS SECTION IS SUBJECT TO LAW OTHER THAN THIS ARTICLE 23 THAT ESTABLISHES A DIFFERENT RULE FOR AN ACCOUNT DEBTOR WHO IS AN 24 INDIVIDUAL AND WHO INCURRED THE OBLIGATION PRIMARILY FOR PERSON- 25 AL, FAMILY, OR HOUSEHOLD PURPOSES. 26 (4) IN A CONSUMER TRANSACTION, IF A RECORD EVIDENCES THE 27 ACCOUNT DEBTOR'S OBLIGATION, LAW OTHER THAN THIS ARTICLE REQUIRES 02120'99 208 1 THAT THE RECORD INCLUDE A STATEMENT TO THE EFFECT THAT THE 2 ACCOUNT DEBTOR'S RECOVERY AGAINST AN ASSIGNEE WITH RESPECT TO 3 CLAIMS AND DEFENSES AGAINST THE ASSIGNOR MAY NOT EXCEED AMOUNTS 4 PAID BY THE ACCOUNT DEBTOR UNDER THE RECORD, AND THE RECORD DOES 5 NOT INCLUDE SUCH A STATEMENT, THE EXTENT TO WHICH A CLAIM OF AN 6 ACCOUNT DEBTOR AGAINST THE ASSIGNOR MAY BE ASSERTED AGAINST AN 7 ASSIGNEE IS DETERMINED AS IF THE RECORD INCLUDED SUCH A 8 STATEMENT. 9 (5) THIS SECTION DOES NOT APPLY TO AN ASSIGNMENT OF A 10 HEALTH-CARE-INSURANCE RECEIVABLE. 11 Sec. 9405.(1) A financing statement may disclose an12assignment of a security interest in the collateral described in13the financing statement by indication in the financing statement14of the name and address of the assignee, or by an assignment15itself or a copy of the assignment on the face or back of the16statement. On presentation to the filing officer of the financ-17ing statement, the filing officer shall mark the same as provided18in section 9403(4). The uniform fee for filing, indexing, and19furnishing filing data for a financing statement indicating an20assignment is $3.00, if the statement is in the standard form21prescribed by the secretary of state. For statements not comply-22ing with these requirements, the fee is $6.00, plus an additional23fee of $3.00 for each name more than 1 against which the financ-24ing statement is required to be indexed.25(2) A secured party may assign of record all or a part of26his or her rights under a financing statement by filing, in the27place where the original financing statement was filed, a02120'99 209 1separate written statement of assignment signed by the secured2party of record and setting forth the name of the secured party3of record and the debtor, the file number, and if the original4financing statement describes real property, by the liber and5page where the property is recorded, the date of filing of the6financing statement, the name and address of the assignee and a7description of the collateral assigned. A copy of the assignment8is sufficient as a separate statement if it complies with the9preceding sentence. An assignment also may, but is not required10to, include the debtor's tax identification number. On presenta-11tion to the filing officer of a separate statement, the filing12officer shall mark the separate statement with the date and hour13of the filing. The filing officer shall note the assignment on14the index of the financing statement, or for a fixture filing, a15filing covering timber to be cut, or covering minerals or the16like including oil and gas, or accounts subject to section179103(5), he or she shall index the assignment under the name of18the assignor as grantor and, to the extent that the law of this19state provides for indexing the assignment of a mortgage under20the name of the assignee, he or she shall index the assignment of21the financing statement under the name of the assignee. The uni-22form fee for filing, indexing, and furnishing filing data about a23separate statement of assignment is $3.00, if the statement is in24the standard form prescribed by the secretary of state. For25statements not complying with these requirements, the fee is26$6.00, plus an additional fee of $3.00 for each name more than 127against which the statement of assignment is required to be02120'99 210 1indexed. Notwithstanding the provisions of this subsection, an2assignment of record of a security interest in a fixture con-3tained in a mortgage effective as a fixture filing under section49402(6) may be made only by an assignment of the mortgage in the5manner provided by the law of this state other than this act.6(3) After the disclosure or filing of an assignment under7this section, the assignee is the secured party of record.8 (1) A MODIFICATION OF OR SUBSTITUTION FOR AN ASSIGNED CON- 9 TRACT IS EFFECTIVE AGAINST AN ASSIGNEE IF MADE IN GOOD FAITH. 10 THE ASSIGNEE ACQUIRES CORRESPONDING RIGHTS UNDER THE MODIFIED OR 11 SUBSTITUTED CONTRACT. THE ASSIGNMENT MAY PROVIDE THAT THE MODI- 12 FICATION OR SUBSTITUTION IS A BREACH OF CONTRACT BY THE 13 ASSIGNOR. THIS SUBSECTION IS SUBJECT TO SUBSECTIONS (2) THROUGH 14 (4). 15 (2) SUBSECTION (1) APPLIES TO THE EXTENT THAT THE RIGHT TO 16 PAYMENT OR A PART THEREOF UNDER AN ASSIGNED CONTRACT HAS NOT BEEN 17 FULLY EARNED BY PERFORMANCE, OR TO THE EXTENT THAT THE RIGHT TO 18 PAYMENT OR A PART THEREOF HAS BEEN FULLY EARNED BY PERFORMANCE 19 AND THE ACCOUNT DEBTOR HAS NOT RECEIVED NOTIFICATION OF THE 20 ASSIGNMENT UNDER SECTION 9406(1). 21 (3) THIS SECTION IS SUBJECT TO LAW OTHER THAN THIS ARTICLE 22 THAT ESTABLISHES A DIFFERENT RULE FOR AN ACCOUNT DEBTOR WHO IS AN 23 INDIVIDUAL AND WHO INCURRED THE OBLIGATION PRIMARILY FOR PERSON- 24 AL, FAMILY, OR HOUSEHOLD PURPOSES. 25 (4) THIS SECTION DOES NOT APPLY TO AN ASSIGNMENT OF A 26 HEALTH-CARE-INSURANCE RECEIVABLE. 02120'99 211 1 Sec. 9406.A secured party of record may by his or her2signed statement release all or a part of any collateral3described in a filed financing statement. The statement of4release is sufficient if it contains a description of the collat-5eral being released, the name and address of the debtor, the name6and address of the secured party, and the file number of the7financing statement. A statement of release may, but is not8required to, include the debtor's tax identification number. A9statement of release signed by a person other than the secured10party of record shall be accompanied by a separate written state-11ment of assignment signed by the secured party of record and com-12plying with section 9405(2), including payment of the required13fee. Upon presentation of the statement of release to the filing14officer, he or she shall mark the statement with the hour and15date of filing and shall also note this information on the margin16of the index of the filing of the financing statement. The uni-17form fee for filing and noting a statement of release is $3.00 if18the statement is in the standard form prescribed by the secretary19of state. For financing statements not complying with the20requirements of this section as to form, the fee is $6.00, plus21an additional fee of $3.00 for each name more than 1 against22which the statement of release is required to be indexed.23 (1) SUBJECT TO SUBSECTIONS (2) THROUGH (9), AN ACCOUNT 24 DEBTOR ON AN ACCOUNT, CHATTEL PAPER, OR A PAYMENT INTANGIBLE MAY 25 DISCHARGE ITS OBLIGATION BY PAYING THE ASSIGNOR UNTIL, BUT NOT 26 AFTER, THE ACCOUNT DEBTOR RECEIVES A NOTIFICATION, AUTHENTICATED 27 BY THE ASSIGNOR OR THE ASSIGNEE, THAT THE AMOUNT DUE OR TO BECOME 02120'99 212 1 DUE HAS BEEN ASSIGNED AND THAT PAYMENT IS TO BE MADE TO THE 2 ASSIGNEE. AFTER RECEIPT OF THE NOTIFICATION, THE ACCOUNT DEBTOR 3 MAY DISCHARGE ITS OBLIGATION BY PAYING THE ASSIGNEE AND MAY NOT 4 DISCHARGE THE OBLIGATION BY PAYING THE ASSIGNOR. 5 (2) SUBJECT TO SUBSECTION (8), NOTIFICATION IS INEFFECTIVE 6 UNDER SUBSECTION (1) IF 1 OR MORE OF THE FOLLOWING APPLY: 7 (A) IF NOTIFICATION DOES NOT REASONABLY IDENTIFY THE RIGHTS 8 ASSIGNED. 9 (B) TO THE EXTENT THAT AN AGREEMENT BETWEEN AN ACCOUNT 10 DEBTOR AND A SELLER OF A PAYMENT INTANGIBLE LIMITS THE ACCOUNT 11 DEBTOR'S DUTY TO PAY A PERSON OTHER THAN THE SELLER AND THE LIMI- 12 TATION IS EFFECTIVE UNDER LAW OTHER THAN THIS ARTICLE. 13 (C) AT THE OPTION OF AN ACCOUNT DEBTOR, IF THE NOTIFICATION 14 NOTIFIES THE ACCOUNT DEBTOR TO MAKE LESS THAN THE FULL AMOUNT OF 15 ANY INSTALLMENT OR OTHER PERIODIC PAYMENT TO THE ASSIGNEE, EVEN 16 IF 1 OR MORE OF THE FOLLOWING OCCUR: 17 (i) ONLY A PORTION OF THE ACCOUNT, CHATTEL PAPER, OR GENERAL 18 INTANGIBLE HAS BEEN ASSIGNED TO THAT ASSIGNEE. 19 (ii) A PORTION HAS BEEN ASSIGNED TO ANOTHER ASSIGNEE. 20 (iii) THE ACCOUNT DEBTOR KNOWS THAT THE ASSIGNMENT TO THAT 21 ASSIGNEE IS LIMITED. 22 (3) SUBJECT TO SUBSECTION (8), IF REQUESTED BY THE ACCOUNT 23 DEBTOR, AN ASSIGNEE SHALL SEASONABLY FURNISH REASONABLE PROOF 24 THAT THE ASSIGNMENT HAS BEEN MADE. UNLESS THE ASSIGNEE COMPLIES, 25 THE ACCOUNT DEBTOR MAY DISCHARGE ITS OBLIGATION BY PAYING THE 26 ASSIGNOR, EVEN IF THE ACCOUNT DEBTOR HAS RECEIVED A NOTIFICATION 27 UNDER SUBSECTION (1). 02120'99 213 1 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5) AND 2 SECTIONS 2A303 AND 9407, AND SUBJECT TO SUBSECTION (8), A TERM IN 3 AN AGREEMENT BETWEEN AN ACCOUNT DEBTOR AND AN ASSIGNOR OR IN A 4 PROMISSORY NOTE IS INEFFECTIVE TO THE EXTENT THAT IT DOES 1 OR 5 MORE OF THE FOLLOWING: 6 (A) PROHIBITS, RESTRICTS, OR REQUIRES THE CONSENT OF THE 7 ACCOUNT DEBTOR OR PERSON OBLIGATED ON THE PROMISSORY NOTE TO THE 8 ASSIGNMENT OR TRANSFER OF, OR THE CREATION, ATTACHMENT, PERFEC- 9 TION, OR ENFORCEMENT OF A SECURITY INTEREST IN, THE ACCOUNT, 10 CHATTEL PAPER, PAYMENT INTANGIBLE, OR PROMISSORY NOTE. 11 (B) PROVIDES THAT THE ASSIGNMENT OR TRANSFER OR THE CRE- 12 ATION, ATTACHMENT, PERFECTION, OR ENFORCEMENT OF THE SECURITY 13 INTEREST MAY GIVE RISE TO A DEFAULT, BREACH, RIGHT OF RECOUPMENT, 14 CLAIM, DEFENSE, TERMINATION, RIGHT OF TERMINATION, OR REMEDY 15 UNDER THE ACCOUNT, CHATTEL PAPER, PAYMENT INTANGIBLE, OR PROMIS- 16 SORY NOTE. 17 (5) SUBSECTION (4) DOES NOT APPLY TO THE SALE OF A PAYMENT 18 INTANGIBLE OR PROMISSORY NOTE. 19 (6) EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 2A303 AND 9407 20 AND SUBJECT TO SUBSECTIONS (8) AND (9), A RULE OF LAW, STATUTE, 21 OR REGULATION, THAT PROHIBITS, RESTRICTS, OR REQUIRES THE CONSENT 22 OF A GOVERNMENT, GOVERNMENTAL BODY OR OFFICIAL, OR ACCOUNT DEBTOR 23 TO THE ASSIGNMENT OR TRANSFER OF, OR CREATION OF A SECURITY 24 INTEREST IN, AN ACCOUNT OR CHATTEL PAPER IS INEFFECTIVE TO THE 25 EXTENT THAT THE RULE OF LAW, STATUTE, OR REGULATION DOES 1 OR 26 MORE OF THE FOLLOWING: 02120'99 214 1 (A) PROHIBITS, RESTRICTS, OR REQUIRES THE CONSENT OF THE 2 GOVERNMENT, GOVERNMENTAL BODY OR OFFICIAL, OR ACCOUNT DEBTOR TO 3 THE ASSIGNMENT OR TRANSFER OF, OR THE CREATION, ATTACHMENT, PER- 4 FECTION, OR ENFORCEMENT OF A SECURITY INTEREST IN, THE ACCOUNT OR 5 CHATTEL PAPER. 6 (B) PROVIDES THAT THE ASSIGNMENT OR TRANSFER OR THE CRE- 7 ATION, ATTACHMENT, PERFECTION, OR ENFORCEMENT OF THE SECURITY 8 INTEREST MAY GIVE RISE TO A DEFAULT, BREACH, RIGHT OF RECOUPMENT, 9 CLAIM, DEFENSE, TERMINATION, RIGHT OF TERMINATION, OR REMEDY 10 UNDER THE ACCOUNT OR CHATTEL PAPER. 11 (7) SUBJECT TO SUBSECTION (8), AN ACCOUNT DEBTOR MAY NOT 12 WAIVE OR VARY ITS OPTION UNDER SUBSECTION (2)(C). 13 (8) THIS SECTION IS SUBJECT TO LAW OTHER THAN THIS ARTICLE 14 THAT ESTABLISHES A DIFFERENT RULE FOR AN ACCOUNT DEBTOR WHO IS AN 15 INDIVIDUAL AND WHO INCURRED THE OBLIGATION PRIMARILY FOR PERSON- 16 AL, FAMILY, OR HOUSEHOLD PURPOSES. 17 (9) THIS SECTION DOES NOT APPLY TO AN ASSIGNMENT OF A 18 HEALTH-CARE-INSURANCE RECEIVABLE. 19 Sec. 9407.(1) If the person filing a financing statement,20termination statement, statement of assignment, or statement of21release furnishes the filing officer a copy of the statement, the22filing officer shall upon request note upon the copy the file23number and date and hour of the filing of the original and24deliver or send the copy to the person.25(2) Upon request of any person, the filing officer shall26issue a certificate showing whether there is on file, on the date27and hour stated on the certificate, any presently effective02120'99 215 1financing statement naming a particular debtor and any statement2of assignment and if there is, giving the date and hour of filing3of each statement and the names and addresses of each secured4party in the statement. The uniform fee for a certificate is5$3.00 if the request for the certificate is in the standard form6prescribed by the secretary of state and, for certificates which7concern financing statements filed beginning September 1, 1988,8includes the social security number of the debtor or the debtor's9federal employer tax identification number. If the request does10not comply with these requirements, the fee is $6.00. Upon11request, the filing officer shall furnish a copy of a filed12financing statement or statement of assignment for a uniform fee13of $1.00 per page. The secretary of state shall charge an addi-14tional fee of $25.00 if a person requests expediting of the regu-15lar search process. The secretary of state shall promulgate16rules under the administrative procedures act of 1969, Act17No. 306 of the Public Acts of 1969, being sections 24.201 to1824.328 of the Michigan Compiled Laws, to define what constitutes19expediting of the regular search process.20 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2), A TERM 21 IN A LEASE AGREEMENT IS INEFFECTIVE TO THE EXTENT THAT IT DOES 1 22 OR MORE OF THE FOLLOWING: 23 (A) PROHIBITS, RESTRICTS, OR REQUIRES THE CONSENT OF A PARTY 24 TO THE LEASE TO THE ASSIGNMENT OR TRANSFER OF, OR THE CREATION, 25 ATTACHMENT, PERFECTION, OR ENFORCEMENT OF A SECURITY INTEREST IN, 26 AN INTEREST OF A PARTY UNDER THE LEASE CONTRACT OR IN THE 27 LESSOR'S RESIDUAL INTEREST IN THE GOODS. 02120'99 216 1 (B) PROVIDES THAT THE ASSIGNMENT OR TRANSFER OR THE 2 CREATION, ATTACHMENT, PERFECTION, OR ENFORCEMENT OF THE SECURITY 3 INTEREST MAY GIVE RISE TO A DEFAULT, BREACH, RIGHT OF RECOUPMENT, 4 CLAIM, DEFENSE, TERMINATION, RIGHT OF TERMINATION, OR REMEDY 5 UNDER THE LEASE. 6 (2) EXCEPT AS OTHERWISE PROVIDED IN SECTION 2A303(7), A TERM 7 DESCRIBED IN SUBSECTION (1)(B) IS EFFECTIVE TO THE EXTENT THAT 8 THERE IS 1 OR MORE OF THE FOLLOWING: 9 (A) A TRANSFER BY THE LESSEE OF THE LESSEE'S RIGHT OF POS- 10 SESSION OR USE OF THE GOODS IN VIOLATION OF THE TERM. 11 (B) A DELEGATION OF A MATERIAL PERFORMANCE OF EITHER PARTY 12 TO THE LEASE CONTRACT IN VIOLATION OF THE TERM. 13 (3) THE CREATION, ATTACHMENT, PERFECTION, OR ENFORCEMENT OF 14 A SECURITY INTEREST IN THE LESSOR'S INTEREST UNDER THE LEASE CON- 15 TRACT OR THE LESSOR'S RESIDUAL INTEREST IN THE GOODS IS NOT A 16 TRANSFER THAT MATERIALLY IMPAIRS THE LESSEE'S PROSPECT OF OBTAIN- 17 ING RETURN PERFORMANCE OR MATERIALLY CHANGES THE DUTY OF OR MATE- 18 RIALLY INCREASES THE BURDEN OR RISK IMPOSED ON THE LESSEE WITHIN 19 THE PURVIEW OF SECTION 2A303(4) UNLESS, AND THEN ONLY TO THE 20 EXTENT THAT, ENFORCEMENT ACTUALLY RESULTS IN A DELEGATION OF 21 MATERIAL PERFORMANCE OF THE LESSOR. 22 Sec. 9408.Registers of deeds need not accept at standard23rates after January 1, 1964 chattel instruments or financing24statements for filing unless prepared on paper 8 1/2x13 inches in25size, with a 1/2 inch in length and width allowed for tolerance26before such papers shall be deemed nonstandard, and of not less27than 16 pound weight. Nonstandard chattel papers in size or02120'99 217 1weight may be filed by paying 50 cents extra for each paper so2filed.3 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2), A TERM 4 IN A PROMISSORY NOTE OR IN AN AGREEMENT BETWEEN AN ACCOUNT DEBTOR 5 AND A DEBTOR THAT RELATES TO A HEALTH-CARE-INSURANCE RECEIVABLE 6 OR A GENERAL INTANGIBLE, INCLUDING A CONTRACT, PERMIT, LICENSE, 7 OR FRANCHISE, AND WHICH TERM PROHIBITS, RESTRICTS, OR REQUIRES 8 THE CONSENT OF THE PERSON OBLIGATED ON THE PROMISSORY NOTE OR THE 9 ACCOUNT DEBTOR TO, THE ASSIGNMENT OR TRANSFER OF, OR CREATION, 10 ATTACHMENT, OR PERFECTION OF A SECURITY INTEREST IN, THE PROMIS- 11 SORY NOTE, HEALTH-CARE-INSURANCE RECEIVABLE, OR GENERAL INTANGI- 12 BLE, IS INEFFECTIVE TO THE EXTENT THAT THE TERM DOES 1 OR MORE OF 13 THE FOLLOWING: 14 (A) WOULD IMPAIR THE CREATION, ATTACHMENT, OR PERFECTION OF 15 A SECURITY INTEREST. 16 (B) PROVIDES THAT THE ASSIGNMENT OR TRANSFER OR THE CRE- 17 ATION, ATTACHMENT, OR PERFECTION OF THE SECURITY INTEREST MAY 18 GIVE RISE TO A DEFAULT, BREACH, RIGHT OF RECOUPMENT, CLAIM, 19 DEFENSE, TERMINATION, RIGHT OF TERMINATION, OR REMEDY UNDER THE 20 PROMISSORY NOTE, HEALTH-CARE-INSURANCE RECEIVABLE, OR GENERAL 21 INTANGIBLE. 22 (2) SUBSECTION (1) APPLIES TO A SECURITY INTEREST IN A PAY- 23 MENT INTANGIBLE OR PROMISSORY NOTE ONLY IF THE SECURITY INTEREST 24 ARISES OUT OF A SALE OF THE PAYMENT INTANGIBLE OR PROMISSORY 25 NOTE. 26 (3) A RULE OF LAW, STATUTE, OR REGULATION THAT PROHIBITS, 27 RESTRICTS, OR REQUIRES THE CONSENT OF A GOVERNMENT, GOVERNMENTAL 02120'99 218 1 BODY OR OFFICIAL, PERSON OBLIGATED ON A PROMISSORY NOTE, OR 2 ACCOUNT DEBTOR TO THE ASSIGNMENT OR TRANSFER OF, OR CREATION OF A 3 SECURITY INTEREST IN, A PROMISSORY NOTE, HEALTH-CARE-INSURANCE 4 RECEIVABLE, OR GENERAL INTANGIBLE, INCLUDING A CONTRACT, PERMIT, 5 LICENSE, OR FRANCHISE BETWEEN AN ACCOUNT DEBTOR AND A DEBTOR, IS 6 INEFFECTIVE TO THE EXTENT THAT THE RULE OF LAW, STATUTE, OR REGU- 7 LATION DOES 1 OR MORE OF THE FOLLOWING: 8 (A) WOULD IMPAIR THE CREATION, ATTACHMENT, OR PERFECTION OF 9 A SECURITY INTEREST. 10 (B) PROVIDES THAT THE ASSIGNMENT OR TRANSFER OR THE CRE- 11 ATION, ATTACHMENT, OR PERFECTION OF THE SECURITY INTEREST MAY 12 GIVE RISE TO A DEFAULT, BREACH, RIGHT OF RECOUPMENT, CLAIM, 13 DEFENSE, TERMINATION, RIGHT OF TERMINATION, OR REMEDY UNDER THE 14 PROMISSORY NOTE, HEALTH-CARE-INSURANCE RECEIVABLE, OR GENERAL 15 INTANGIBLE. 16 (4) TO THE EXTENT THAT A TERM IN A PROMISSORY NOTE OR IN AN 17 AGREEMENT BETWEEN AN ACCOUNT DEBTOR AND A DEBTOR THAT RELATES TO 18 A HEALTH-CARE-INSURANCE RECEIVABLE OR GENERAL INTANGIBLE OR A 19 RULE OF LAW, STATUTE, OR REGULATION DESCRIBED IN SUBSECTION (3) 20 WOULD BE EFFECTIVE UNDER LAW OTHER THAN THIS ARTICLE BUT IS INEF- 21 FECTIVE UNDER SUBSECTION (1) OR (3), THE CREATION, ATTACHMENT, OR 22 PERFECTION OF A SECURITY INTEREST IN THE PROMISSORY NOTE, 23 HEALTH-CARE-INSURANCE RECEIVABLE, OR GENERAL INTANGIBLE IS NOT OR 24 DOES NOT DO ALL OF THE FOLLOWING: 25 (A) IS NOT ENFORCEABLE AGAINST THE PERSON OBLIGATED ON THE 26 PROMISSORY NOTE OR THE ACCOUNT DEBTOR. 02120'99 219 1 (B) DOES NOT IMPOSE A DUTY OR OBLIGATION ON THE PERSON 2 OBLIGATED ON THE PROMISSORY NOTE OR THE ACCOUNT DEBTOR. 3 (C) DOES NOT REQUIRE THE PERSON OBLIGATED ON THE PROMISSORY 4 NOTE OR THE ACCOUNT DEBTOR TO RECOGNIZE THE SECURITY INTEREST, 5 PAY OR RENDER PERFORMANCE TO THE SECURED PARTY, OR ACCEPT PAYMENT 6 OR PERFORMANCE FROM THE SECURED PARTY. 7 (D) DOES NOT ENTITLE THE SECURED PARTY TO USE OR ASSIGN THE 8 DEBTOR'S RIGHTS UNDER THE PROMISSORY NOTE, HEALTH-CARE-INSURANCE 9 RECEIVABLE, OR GENERAL INTANGIBLE, INCLUDING ANY RELATED INFORMA- 10 TION OR MATERIALS FURNISHED TO THE DEBTOR IN THE TRANSACTION 11 GIVING RISE TO THE PROMISSORY NOTE, HEALTH-CARE-INSURANCE RECEIV- 12 ABLE, OR GENERAL INTANGIBLE. 13 (E) DOES NOT ENTITLE THE SECURED PARTY TO USE, ASSIGN, POS- 14 SESS, OR HAVE ACCESS TO ANY TRADE SECRETS OR CONFIDENTIAL INFOR- 15 MATION OF THE PERSON OBLIGATED ON THE PROMISSORY NOTE OR THE 16 ACCOUNT DEBTOR. 17 (F) DOES NOT ENTITLE THE SECURED PARTY TO ENFORCE THE SECUR- 18 ITY INTEREST IN THE PROMISSORY NOTE, HEALTH-CARE-INSURANCE 19 RECEIVABLE, OR GENERAL INTANGIBLE. 20 Sec. 9409.The fees collected by the secretary of state21under this act shall be deposited in the general fund and are22appropriated to the department of state to cover the secretary of23state's expenses of administering this act, including the cost of24converting secretary of state uniform commercial code records25from a manual to an electronic data processing record-keeping26system. Any unexpended and unencumbered balance remaining at the27close of each fiscal year shall revert to the general fund.02120'99 220 1 (1) A TERM IN A LETTER OF CREDIT OR A RULE OF LAW, STATUTE, 2 REGULATION, CUSTOM, OR PRACTICE APPLICABLE TO THE LETTER OF 3 CREDIT THAT PROHIBITS, RESTRICTS, OR REQUIRES THE CONSENT OF AN 4 APPLICANT, ISSUER, OR NOMINATED PERSON TO A BENEFICIARY'S ASSIGN- 5 MENT OF OR CREATION OF A SECURITY INTEREST IN A LETTER-OF-CREDIT 6 RIGHT IS INEFFECTIVE TO THE EXTENT THAT THE TERM OR RULE OF LAW, 7 STATUTE, REGULATION, CUSTOM, OR PRACTICE DOES 1 OR MORE OF THE 8 FOLLOWING: 9 (A) WOULD IMPAIR THE CREATION, ATTACHMENT, OR PERFECTION OF 10 A SECURITY INTEREST IN THE LETTER-OF-CREDIT RIGHT. 11 (B) PROVIDES THAT THE ASSIGNMENT OR THE CREATION, ATTACH- 12 MENT, OR PERFECTION OF THE SECURITY INTEREST MAY GIVE RISE TO A 13 DEFAULT, BREACH, RIGHT OF RECOUPMENT, CLAIM, DEFENSE, TERMINA- 14 TION, RIGHT OF TERMINATION, OR REMEDY UNDER THE LETTER-OF-CREDIT 15 RIGHT. 16 (2) TO THE EXTENT THAT A TERM IN A LETTER OF CREDIT IS INEF- 17 FECTIVE UNDER SUBSECTION (1) BUT WOULD BE EFFECTIVE UNDER LAW 18 OTHER THAN THIS ARTICLE OR A CUSTOM OR PRACTICE APPLICABLE TO THE 19 LETTER OF CREDIT, TO THE TRANSFER OF A RIGHT TO DRAW OR OTHERWISE 20 DEMAND PERFORMANCE UNDER THE LETTER OF CREDIT, OR TO THE ASSIGN- 21 MENT OF A RIGHT TO PROCEEDS OF THE LETTER OF CREDIT, THE CRE- 22 ATION, ATTACHMENT, OR PERFECTION OF A SECURITY INTEREST IN THE 23 LETTER-OF-CREDIT RIGHT, THE TERM IS NOT ENFORCEABLE AGAINST THE 24 APPLICANT, ISSUER, NOMINATED PERSON, OR TRANSFEREE BENEFICIARY, 25 IMPOSES NO DUTIES OR OBLIGATIONS ON THE APPLICANT, ISSUER, NOMI- 26 NATED PERSON, OR TRANSFEREE BENEFICIARY, AND DOES NOT REQUIRE THE 27 APPLICANT, ISSUER, NOMINATED PERSON, OR TRANSFEREE BENEFICIARY TO 02120'99 221 1 RECOGNIZE THE SECURITY INTEREST, PAY OR RENDER PERFORMANCE TO THE 2 SECURED PARTY, OR ACCEPT PAYMENT OR OTHER PERFORMANCE FROM THE 3 SECURED PARTY. 4 PART 5 5DEFAULTFILING 6 SUBPART 1. FILING OFFICE; CONTENTS AND EFFECTIVENESS OF 7 FINANCING STATEMENT 8 Sec. 9501.(1) When a debtor is in default under a secur-9ity agreement, a secured party has the rights and remedies pro-10vided in this part and except as limited by subsection (3) those11provided in the security agreement. He may reduce his claim to12judgment, foreclose, or otherwise enforce the security interest13by any available judicial procedure. If the collateral is docu-14ments the secured party may proceed either as to the documents,15or as to the goods covered thereby. A secured party in posses-16sion has the rights, remedies, and duties provided in section179207. The rights and remedies referred to in this subsection are18cumulative.19(2) After default, the debtor has the rights and remedies20provided in this part, those provided in the security agreement,21and those provided in section 9207.22(3) To the extent that they give rights to the debtor and23impose duties on the secured party, the rules stated in the sub-24sections referred to below may not be waived or varied except as25provided with respect to compulsory disposition of collateral26(section 9504(3) and section 9505) and with respect to redemption27of collateral (section 9506) but the parties may by agreement02120'99 222 1determine the standards by which the fulfillment of these rights2and duties is to be measured if such standards are not manifestly3unreasonable:4(a) subsection (2) of section 9502 and subsection (2) of5section 9504 insofar as they require accounting for surplus pro-6ceeds of collateral;7(b) subsection (3) of section 9504 and subsection (1) of8section 9505 which deal with disposition of collateral;9(c) subsection (2) of section 9505 which deals with accep-10tance of collateral as discharge of obligation;11(d) section 9506 which deals with redemption of collateral;12and13(e) subsection (1) of section 9507 which deals with the14secured party's liability for failure to comply with this part.15(4) If the security agreement covers both real and personal16property, the secured party may proceed under this part as to the17personal property or he may proceed as to both the real and the18personal property in accordance with his rights and remedies in19respect of the real property in which case the provisions of this20part do not apply.21(5) When a secured party has reduced his claim to judgment22the lien of any levy which may be made upon his collateral by23virtue of any execution based upon the judgment shall relate back24to the date of the perfection of the security interest in such25collateral. A judicial sale, pursuant to such execution, is a26foreclosure of the security interest by judicial procedure within27the meaning of this section, and the secured party may purchase02120'99 223 1at the sale and thereafter hold the collateral free of any other2requirements of this article.3 (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2), THE 4 OFFICE IN WHICH TO FILE A FINANCING STATEMENT TO PERFECT THE 5 SECURITY INTEREST OR AGRICULTURAL LIEN IS 1 OF THE FOLLOWING: 6 (A) THE OFFICE DESIGNATED FOR THE FILING OR RECORDING OF A 7 RECORD OF A MORTGAGE ON THE RELATED REAL PROPERTY, IF THE COLLAT- 8 ERAL IS AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT, OR THE 9 FINANCING STATEMENT IS FILED AS A FIXTURE FILING AND THE COLLAT- 10 ERAL IS GOODS THAT ARE OR ARE TO BECOME FIXTURES. 11 (B) THE OFFICE OF SECRETARY OF STATE IN ALL OTHER CASES, 12 INCLUDING A CASE IN WHICH THE COLLATERAL IS GOODS THAT ARE OR ARE 13 TO BECOME FIXTURES AND THE FINANCING STATEMENT IS NOT FILED AS A 14 FIXTURE FILING. 15 (2) THE OFFICE IN WHICH TO FILE A FINANCING STATEMENT TO 16 PERFECT A SECURITY INTEREST IN COLLATERAL, INCLUDING FIXTURES, OF 17 A TRANSMITTING UTILITY IS THE OFFICE OF THE SECRETARY OF STATE. 18 THE FINANCING STATEMENT ALSO CONSTITUTES A FIXTURE FILING AS TO 19 THE COLLATERAL INDICATED IN THE FINANCING STATEMENT WHICH IS OR 20 IS TO BECOME FIXTURES. 21 (3) ANY FINANCING STATEMENT FILED UNDER SUBSECTION (1)(A) 22 WITH A REGISTER OF DEEDS AND ANY CONTINUATION STATEMENT, TERMINA- 23 TION STATEMENT, AMENDMENT, OR ASSIGNMENT RELATING TO THE FINANC- 24 ING STATEMENT AND MEETING THE FORMAL REQUISITES OF THIS PART 25 SHALL BE RECORDED BY THE REGISTER OF DEEDS, NOTWITHSTANDING THE 26 PROVISIONS FOR WITNESSING AND ACKNOWLEDGING INSTRUMENTS TO BE 02120'99 224 1 RECORDED IN THE REAL PROPERTY RECORDS CONTAINED IN SECTION 47 OF 2 1846 RS 65, MCL 565.47. 3 Sec. 9502.(1) When so agreed and in any event on default4the secured party is entitled to notify an account debtor or the5obligor on an instrument to make payment to him whether or not6the assignor was theretofore making collections on the collater-7al, and also to take control of any proceeds to which he is enti-8tled under section 9306.9(2) A secured party who by agreement is entitled to charge10back uncollected collateral or otherwise to full or limited11recourse against the debtor and who undertakes to collect from12the account debtors or obligors must proceed in a commercially13reasonable manner and may deduct his reasonable expenses of real-14ization from the collections. If the security agreement secures15an indebtedness, the secured party must account to the debtor for16any surplus, and unless otherwise agreed, the debtor is liable17for any deficiency. But, if the underlying transaction was a18sale of accounts or chattel paper, the debtor is entitled to any19surplus or is liable for any deficiency only if the security20agreement so provides.21 (1) SUBJECT TO SUBSECTION (2), A FINANCING STATEMENT IS SUF- 22 FICIENT ONLY IF IT DOES ALL OF THE FOLLOWING: 23 (A) PROVIDES THE NAME OF THE DEBTOR. 24 (B) PROVIDES THE NAME OF THE SECURED PARTY OR A REPRESENTA- 25 TIVE OF THE SECURED PARTY. 26 (C) INDICATES THE COLLATERAL COVERED BY THE FINANCING 27 STATEMENT. 02120'99 225 1 (2) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9501(2), TO BE 2 SUFFICIENT, A FINANCING STATEMENT THAT COVERS AS-EXTRACTED COL- 3 LATERAL OR TIMBER TO BE CUT, OR THAT IS FILED AS A FIXTURE FILING 4 AND COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES, MUST SATISFY 5 SUBSECTION (1) AND ALSO DO ALL OF THE FOLLOWING: 6 (A) INDICATE THAT IT COVERS THIS TYPE OF COLLATERAL. 7 (B) INDICATE THAT IT IS TO BE RECORDED IN THE REAL PROPERTY 8 RECORDS. 9 (C) PROVIDE A DESCRIPTION OF THE REAL PROPERTY TO WHICH THE 10 COLLATERAL IS RELATED SUFFICIENT TO GIVE CONSTRUCTIVE NOTICE OF A 11 MORTGAGE UNDER THE LAW OF THIS STATE IF THE DESCRIPTION WERE CON- 12 TAINED IN A RECORD OF THE MORTGAGE OF THE REAL PROPERTY. 13 (D) IF THE DEBTOR DOES NOT HAVE AN INTEREST OF RECORD IN THE 14 REAL PROPERTY, PROVIDE THE NAME OF A RECORD OWNER. 15 (3) A RECORD OF A MORTGAGE IS EFFECTIVE, FROM THE DATE OF 16 RECORDING, AS A FINANCING STATEMENT FILED AS A FIXTURE FILING OR 17 AS A FINANCING STATEMENT COVERING AS-EXTRACTED COLLATERAL OR 18 TIMBER TO BE CUT ONLY IF ALL OF THE FOLLOWING APPLY: 19 (A) THE RECORD INDICATES THE GOODS OR ACCOUNTS THAT IT 20 COVERS. 21 (B) THE GOODS ARE OR ARE TO BECOME FIXTURES RELATED TO THE 22 REAL PROPERTY DESCRIBED IN THE RECORD OR THE COLLATERAL IS 23 RELATED TO THE REAL PROPERTY DESCRIBED IN THE RECORD AND IS 24 AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT. 25 (C) THE RECORD SATISFIES THE REQUIREMENTS FOR A FINANCING 26 STATEMENT IN THIS SECTION OTHER THAN AN INDICATION THAT IT IS TO 27 BE FILED IN THE REAL PROPERTY RECORDS. 02120'99 226 1 (D) THE RECORD IS DULY RECORDED. 2 (4) A FINANCING STATEMENT MAY BE FILED BEFORE A SECURITY 3 AGREEMENT IS MADE OR A SECURITY INTEREST OTHERWISE ATTACHES. 4 Sec. 9503.Unless otherwise agreed a secured party has on5default the right to take possession of the collateral. In6taking possession a secured party may proceed without judicial7process if this can be done without breach of the peace or may8proceed by action. If the security agreement so provides the9secured party may require the debtor to assemble the collateral10and make it available to the secured party at a place to be des-11ignated by the secured party which is reasonably convenient to12both parties. Without removal a secured party may render equip-13ment unusable, and may dispose of collateral on the debtor's14premises under section 9504.15 (1) A FINANCING STATEMENT SUFFICIENTLY PROVIDES THE NAME OF 16 THE DEBTOR IF IT MEETS ALL OF THE FOLLOWING THAT APPLY TO THE 17 DEBTOR: 18 (A) IF THE DEBTOR IS A REGISTERED ORGANIZATION, ONLY IF THE 19 FINANCING STATEMENT PROVIDES THE NAME OF THE DEBTOR INDICATED ON 20 THE PUBLIC RECORD OF THE DEBTOR'S JURISDICTION OF ORGANIZATION 21 WHICH SHOWS THE DEBTOR TO HAVE BEEN ORGANIZED. 22 (B) IF THE DEBTOR IS A DECEDENT'S ESTATE, ONLY IF THE 23 FINANCING STATEMENT PROVIDES THE NAME OF THE DECEDENT AND INDI- 24 CATES THAT THE DEBTOR IS AN ESTATE. 25 (C) IF THE DEBTOR IS A TRUST OR A TRUSTEE ACTING WITH 26 RESPECT TO PROPERTY HELD IN TRUST, ONLY IF THE FINANCING 27 STATEMENT DOES BOTH OF THE FOLLOWING: 02120'99 227 1 (i) PROVIDES THE NAME SPECIFIED FOR THE TRUST IN ITS ORGANIC 2 DOCUMENTS OR, IF NO NAME IS SPECIFIED, PROVIDES THE NAME OF THE 3 SETTLOR AND ADDITIONAL INFORMATION SUFFICIENT TO DISTINGUISH THE 4 DEBTOR FROM OTHER TRUSTS HAVING 1 OR MORE OF THE SAME SETTLORS. 5 (ii) INDICATES, IN THE DEBTOR'S NAME OR OTHERWISE, THAT THE 6 DEBTOR IS A TRUST OR IS A TRUSTEE ACTING WITH RESPECT TO PROPERTY 7 HELD IN TRUST. 8 (D) IN OTHER CASES, SATISFIES 1 OF THE FOLLOWING: 9 (i) IF THE DEBTOR HAS A NAME, ONLY IF IT PROVIDES THE INDI- 10 VIDUAL OR ORGANIZATIONAL NAME OF THE DEBTOR. 11 (ii) IF THE DEBTOR DOES NOT HAVE A NAME, ONLY IF IT PROVIDES 12 THE NAMES OF THE PARTNERS, MEMBERS, ASSOCIATES, OR OTHER PERSONS 13 COMPRISING THE DEBTOR. 14 (2) A FINANCING STATEMENT THAT PROVIDES THE NAME OF THE 15 DEBTOR IN ACCORDANCE WITH SUBSECTION (1) IS NOT RENDERED INEFFEC- 16 TIVE BY THE ABSENCE OF 1 OR MORE OF THE FOLLOWING: 17 (A) A TRADE NAME OR OTHER NAME OF THE DEBTOR. 18 (B) UNLESS REQUIRED UNDER SUBSECTION (1)(D)(ii), NAMES OF 19 PARTNERS, MEMBERS, ASSOCIATES, OR OTHER PERSONS COMPRISING THE 20 DEBTOR. 21 (3) A FINANCING STATEMENT THAT PROVIDES ONLY THE DEBTOR'S 22 TRADE NAME DOES NOT SUFFICIENTLY PROVIDE THE NAME OF THE DEBTOR. 23 (4) FAILURE TO INDICATE THE REPRESENTATIVE CAPACITY OF A 24 SECURED PARTY OR REPRESENTATIVE OF A SECURED PARTY DOES NOT 25 AFFECT THE SUFFICIENCY OF A FINANCING STATEMENT. 26 (5) A FINANCING STATEMENT MAY PROVIDE THE NAME OF MORE THAN 27 1 DEBTOR AND THE NAME OF MORE THAN 1 SECURED PARTY. 02120'99 228 1 Sec. 9504.(1) A secured party after default may sell,2lease, or otherwise dispose of any or all of the collateral in3its then condition or following any commercially reasonable prep-4aration or processing. Any sale of goods is subject to the arti-5cle on sales (article 2). The proceeds of disposition shall be6applied in the order following to:7(a) The reasonable expenses of retaking, holding, preparing8for sale or lease, selling, leasing, and the like and, to the9extent provided for in the agreement and not prohibited by law,10the reasonable attorneys' fees and legal expenses incurred by the11secured party;12(b) The satisfaction of indebtedness secured by the security13interest under which the disposition is made;14(c) The satisfaction of indebtedness secured by any subordi-15nate security interest in the collateral if written notification16of demand therefor is received before distribution of the pro-17ceeds is completed. If requested by the secured party, the18holder of a subordinate security interest must seasonably furnish19reasonable proof of his interest, and unless he does so, the20secured party need not comply with his demand.21(2) If the security interest secures an indebtedness, the22secured party must account to the debtor for any surplus, and,23unless otherwise agreed, the debtor is liable for any24deficiency. But if the underlying transaction was a sale of25accounts or chattel paper, the debtor is entitled to any surplus26or is liable for any deficiency only if the security agreement so27provides.02120'99 229 1(3) Disposition of the collateral may be by public or2private proceedings and may be made by way of 1 or more3contracts. Sale or other disposition may be as a unit or in par-4cels and at any time and place and on any terms but every aspect5of the disposition including the method, manner, time, place, and6terms must be commercially reasonable. Unless collateral is per-7ishable or threatens to decline speedily in value or is of a type8customarily sold on a recognized market, reasonable notification9of the time and place of any public sale or reasonable notifica-10tion of the time after which any private sale or other intended11disposition is to be made shall be sent by the secured party to12the debtor, if he has not signed after default a statement13renouncing or modifying his right to notification of sale. In14the case of consumer goods no other notification need be sent.15In other cases notification shall be sent to any other secured16party from whom the secured party has received (before sending17his notification to the debtor or before the debtor's renuncia-18tion of his rights) written notice of a claim of an interest in19the collateral. The secured party may buy at any public sale and20if the collateral is of a type customarily sold in a recognized21market or is of a type which is the subject of widely distributed22standard price quotations he may buy at private sale.23(4) When collateral is disposed of by a secured party after24default, the disposition transfers to a purchaser for value all25of the debtor's rights therein, discharges the security interest26under which it is made and any security interest or lien27subordinate thereto. The purchaser takes free of all such rights02120'99 230 1and interests even though the secured party fails to comply with2the requirements of this part or of any judicial proceedings:3(a) In the case of a public sale, if the purchaser has no4knowledge of any defects in the sale and if he does not buy in5collusion with the secured party, other bidders or the person6conducting the sale; or7(b) In any other case, if the purchaser acts in good faith.8(5) A person who is liable to a secured party under a guar-9anty, indorsement, repurchase agreement, or the like and who10receives a transfer of collateral from the secured party or is11subrogated to his rights has thereafter the rights and duties of12the secured party. Such a transfer of collateral is not a sale13or disposition of the collateral under this article.A FINANCING 14 STATEMENT SUFFICIENTLY INDICATES THE COLLATERAL THAT IT COVERS IF 15 THE FINANCING STATEMENT PROVIDES 1 OF THE FOLLOWING: 16 (A) A DESCRIPTION OF THE COLLATERAL PURSUANT TO SECTION 17 9108. 18 (B) AN INDICATION THAT THE FINANCING STATEMENT COVERS ALL 19 ASSETS OR ALL PERSONAL PROPERTY. 20 Sec. 9505.(1) If the debtor has paid 60% of the cash21price in the case of a purchase money security interest in con-22sumer goods or 60% of the loan in the case of another security23interest in consumer goods, and has not signed after default a24statement renouncing or modifying his rights under this part a25secured party who has taken possession of collateral must dispose26of it under section 9504, and if he fails to do so within 90 days27after he takes possession the debtor at his option may recover in02120'99 231 1conversion or under section 9507(1) on secured party's2liability.3(2) In any other case involving consumer goods or any other4collateral a secured party in possession may, after default, pro-5pose to retain the collateral in satisfaction of the obligation.6Written notice of such proposal shall be sent to the debtor if he7has not signed after default a statement renouncing or modifying8his rights under this subsection. In the case of consumer goods9no other notice need be given. In other cases notice shall be10sent to any other secured party from whom the secured party has11received (before sending his notice to the debtor or before the12debtor's renunciation of his rights) written notice of a claim of13an interest in the collateral. If the secured party receives14objection in writing from a person entitled to receive notifica-15tion within 21 days after the notice was sent, the secured party16must dispose of the collateral under section 9504. In the17absence of such written objection the secured party may retain18the collateral in satisfaction of the debtor's obligation.19 (1) A CONSIGNOR, LESSOR, OR OTHER BAILOR OF GOODS, A LICEN- 20 SOR, OR A BUYER OF A PAYMENT INTANGIBLE OR PROMISSORY NOTE MAY 21 FILE A FINANCING STATEMENT, OR MAY COMPLY WITH A STATUTE OR 22 TREATY DESCRIBED IN SECTION 9311(1), USING THE TERMS "CONSIGNOR", 23 "CONSIGNEE", "LESSOR", "LESSEE", "BAILOR", "BAILEE", "LICENSOR", 24 "LICENSEE", "OWNER", "REGISTERED OWNER", "BUYER", "SELLER", OR 25 WORDS OF SIMILAR IMPORT, INSTEAD OF THE TERMS "SECURED PARTY" AND 26 "DEBTOR". 02120'99 232 1 (2) THIS PART APPLIES TO THE FILING OF A FINANCING STATEMENT 2 UNDER SUBSECTION (1) AND, AS APPROPRIATE, TO COMPLIANCE THAT IS 3 EQUIVALENT TO FILING A FINANCING STATEMENT UNDER SECTION 9311(2), 4 BUT THE FILING OR COMPLIANCE IS NOT OF ITSELF A FACTOR IN DETER- 5 MINING WHETHER THE COLLATERAL SECURES AN OBLIGATION. IF IT IS 6 DETERMINED FOR ANOTHER REASON THAT THE COLLATERAL SECURES AN 7 OBLIGATION, A SECURITY INTEREST HELD BY THE CONSIGNOR, LESSOR, 8 BAILOR, LICENSOR, OWNER, OR BUYER WHICH ATTACHES TO THE COLLAT- 9 ERAL IS PERFECTED BY THE FILING OR COMPLIANCE. 10 Sec. 9506.At any time before the secured party has dis-11posed of collateral or entered into a contract for its disposi-12tion under section 9504 or before the obligation has been dis-13charged under section 9505(2) the debtor or any other secured14party may unless otherwise agreed in writing after default redeem15the collateral by tendering fulfillment of all obligations16secured by the collateral as well as the expenses reasonably17incurred by the secured party in retaking, holding and preparing18the collateral for disposition, in arranging for the sale, and to19the extent provided in the agreement and not prohibited by law,20his reasonable attorney's fees and legal expenses.21 (1) A FINANCING STATEMENT SUBSTANTIALLY SATISFYING THE 22 REQUIREMENTS OF THIS PART IS EFFECTIVE, EVEN IF IT HAS MINOR 23 ERRORS OR OMISSIONS, UNLESS THE ERRORS OR OMISSIONS MAKE THE 24 FINANCING STATEMENT SERIOUSLY MISLEADING. 25 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), A 26 FINANCING STATEMENT THAT FAILS SUFFICIENTLY TO PROVIDE THE NAME 02120'99 233 1 OF THE DEBTOR IN ACCORDANCE WITH SECTION 9503(1) IS SERIOUSLY 2 MISLEADING. 3 (3) IF A SEARCH OF THE RECORDS OF THE FILING OFFICE UNDER 4 THE DEBTOR'S CORRECT NAME, USING THE FILING OFFICE'S STANDARD 5 SEARCH LOGIC, IF ANY, WOULD DISCLOSE A FINANCING STATEMENT THAT 6 FAILS SUFFICIENTLY TO PROVIDE THE NAME OF THE DEBTOR IN ACCORD- 7 ANCE WITH SECTION 9503(1), THE NAME PROVIDED DOES NOT MAKE THE 8 FINANCING STATEMENT SERIOUSLY MISLEADING. 9 (4) FOR PURPOSES OF SECTION 9508(2), THE "DEBTOR'S CORRECT 10 NAME" IN SUBSECTION (3) MEANS THE CORRECT NAME OF THE NEW DEBTOR. 11 Sec. 9507.(1) If it is established that the secured party12is not proceeding in accordance with the provisions of this part13disposition may be ordered or restrained on appropriate terms and14conditions. If the disposition has occurred the debtor or any15person entitled to notification or whose security interest has16been made known to the secured party prior to the disposition has17a right to recover from the secured party any loss caused by a18failure to comply with the provisions of this part. If the col-19lateral is consumer goods, the debtor has a right to recover in20any event an amount not less than the credit service charge plus2110% of the principal amount of the debt or the time price differ-22ential plus 10% of the cash price.23(2) The fact that a better price could have been obtained by24a sale at a different time or in a different method from that25selected by the secured party is not of itself sufficient to26establish that the sale was not made in a commercially reasonable27manner. If the secured party either sells the collateral in the02120'99 234 1usual manner in any recognized market therefor or if he sells at2the price current in such market at the time of his sale or if he3has otherwise sold in conformity with reasonable commercial prac-4tices among dealers in the type of property sold he has sold in a5commercially reasonable manner. The principles stated in the 26preceding sentences with respect to sales also apply as may be7appropriate to other types of disposition. A disposition which8has been approved in any judicial proceeding or by any bona fide9creditors' committee or representative of creditors shall conclu-10sively be deemed to be commercially reasonable, but this sentence11does not indicate that any such approval must be obtained in any12case nor does it indicate that any disposition not so approved is13not commercially reasonable.14 (1) A FILED FINANCING STATEMENT REMAINS EFFECTIVE WITH 15 RESPECT TO COLLATERAL THAT IS SOLD, EXCHANGED, LEASED, LICENSED, 16 OR OTHERWISE DISPOSED OF AND IN WHICH A SECURITY INTEREST OR 17 AGRICULTURAL LIEN CONTINUES, EVEN IF THE SECURED PARTY KNOWS OF 18 OR CONSENTS TO THE DISPOSITION. 19 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3) AND SEC- 20 TION 9508, A FINANCING STATEMENT IS NOT RENDERED INEFFECTIVE IF, 21 AFTER THE FINANCING STATEMENT IS FILED, THE INFORMATION PROVIDED 22 IN THE FINANCING STATEMENT BECOMES SERIOUSLY MISLEADING UNDER 23 SECTION 9506. 24 (3) IF A DEBTOR SO CHANGES ITS NAME THAT A FILED FINANCING 25 STATEMENT BECOMES SERIOUSLY MISLEADING UNDER SECTION 9506, BOTH 26 OF THE FOLLOWING APPLY: 02120'99 235 1 (A) THE FINANCING STATEMENT IS EFFECTIVE TO PERFECT A 2 SECURITY INTEREST IN COLLATERAL ACQUIRED BY THE DEBTOR BEFORE, OR 3 WITHIN 4 MONTHS AFTER, THE CHANGE. 4 (B) THE FINANCING STATEMENT IS NOT EFFECTIVE TO PERFECT A 5 SECURITY INTEREST IN COLLATERAL ACQUIRED BY THE DEBTOR MORE THAN 6 4 MONTHS AFTER THE CHANGE, UNLESS AN AMENDMENT TO THE FINANCING 7 STATEMENT THAT RENDERS THE FINANCING STATEMENT NOT SERIOUSLY MIS- 8 LEADING IS FILED WITHIN 4 MONTHS AFTER THE CHANGE. 9 SEC. 9508. (1) EXCEPT AS OTHERWISE PROVIDED IN THIS SEC- 10 TION, A FILED FINANCING STATEMENT NAMING AN ORIGINAL DEBTOR IS 11 EFFECTIVE TO PERFECT A SECURITY INTEREST IN COLLATERAL IN WHICH A 12 NEW DEBTOR HAS OR ACQUIRES RIGHTS TO THE EXTENT THAT THE FINANC- 13 ING STATEMENT WOULD HAVE BEEN EFFECTIVE HAD THE ORIGINAL DEBTOR 14 ACQUIRED RIGHTS IN THE COLLATERAL. 15 (2) IF THE DIFFERENCE BETWEEN THE NAME OF THE ORIGINAL 16 DEBTOR AND THAT OF THE NEW DEBTOR CAUSES A FILED FINANCING STATE- 17 MENT THAT IS EFFECTIVE UNDER SUBSECTION (1) TO BE SERIOUSLY MIS- 18 LEADING UNDER SECTION 9506, BOTH OF THE FOLLOWING APPLY: 19 (A) THE FINANCING STATEMENT IS EFFECTIVE TO PERFECT A SECUR- 20 ITY INTEREST IN COLLATERAL ACQUIRED BY THE NEW DEBTOR BEFORE, AND 21 WITHIN 4 MONTHS AFTER, THE NEW DEBTOR BECOMES BOUND UNDER SECTION 22 9203(4). 23 (B) THE FINANCING STATEMENT IS NOT EFFECTIVE TO PERFECT A 24 SECURITY INTEREST IN COLLATERAL ACQUIRED BY THE NEW DEBTOR MORE 25 THAN 4 MONTHS AFTER THE NEW DEBTOR BECOMES BOUND UNDER SECTION 26 9203(4) UNLESS AN INITIAL FINANCING STATEMENT PROVIDING THE NAME 27 OF THE NEW DEBTOR IS FILED BEFORE THE EXPIRATION OF THAT TIME. 02120'99 236 1 (3) THIS SECTION DOES NOT APPLY TO COLLATERAL AS TO WHICH A 2 FILED FINANCING STATEMENT REMAINS EFFECTIVE AGAINST THE NEW 3 DEBTOR UNDER SECTION 9507(1). 4 SEC. 9509. (1) A PERSON MAY FILE AN INITIAL FINANCING 5 STATEMENT, AMENDMENT THAT ADDS COLLATERAL COVERED BY A FINANCING 6 STATEMENT, OR AMENDMENT THAT ADDS A DEBTOR TO A FINANCING STATE- 7 MENT ONLY IF THE DEBTOR AUTHORIZES THE FILING IN AN AUTHENTICATED 8 RECORD, OR THE PERSON HOLDS AN AGRICULTURAL LIEN THAT HAS BECOME 9 EFFECTIVE AT TIME OF FILING AND THE FINANCING STATEMENT COVERS 10 ONLY COLLATERAL IN WHICH THE PERSON HOLDS AN AGRICULTURAL LIEN. 11 (2) BY AUTHENTICATING OR BECOMING BOUND AS DEBTOR BY A 12 SECURITY AGREEMENT, A DEBTOR OR NEW DEBTOR AUTHORIZES THE FILING 13 OF AN INITIAL FINANCING STATEMENT, AND AN AMENDMENT, COVERING 14 BOTH OF THE FOLLOWING: 15 (A) THE COLLATERAL DESCRIBED IN THE SECURITY AGREEMENT. 16 (B) PROPERTY THAT BECOMES COLLATERAL UNDER SECTION 17 9315(1)(B), WHETHER OR NOT THE SECURITY AGREEMENT EXPRESSLY 18 COVERS PROCEEDS. 19 (3) BY ACQUIRING COLLATERAL IN WHICH A SECURITY INTEREST OR 20 AGRICULTURAL LIEN CONTINUES UNDER SECTION 9315(1)(A), A DEBTOR 21 AUTHORIZES THE FILING OF AN INITIAL FINANCING STATEMENT, AND AN 22 AMENDMENT, COVERING THE COLLATERAL AND PROPERTY THAT BECOMES COL- 23 LATERAL UNDER SECTION 9315(1)(B). 24 (4) A PERSON MAY FILE AN AMENDMENT OTHER THAN AN AMENDMENT 25 THAT ADDS COLLATERAL COVERED BY A FINANCING STATEMENT OR AN 26 AMENDMENT THAT ADDS A DEBTOR TO A FINANCING STATEMENT ONLY IF 1 27 OF THE FOLLOWING APPLIES: 02120'99 237 1 (A) THE SECURED PARTY OF RECORD AUTHORIZES THE FILING. 2 (B) THE AMENDMENT IS A TERMINATION STATEMENT FOR A FINANCING 3 STATEMENT AS TO WHICH THE SECURED PARTY OF RECORD HAS FAILED TO 4 FILE OR SEND A TERMINATION STATEMENT AS REQUIRED BY SECTION 5 9513(1) OR (3), THE DEBTOR AUTHORIZES THE FILING, AND THE TERMI- 6 NATION STATEMENT INDICATES THAT THE DEBTOR AUTHORIZED IT TO BE 7 FILED. 8 (5) IF THERE IS MORE THAN 1 SECURED PARTY OF RECORD FOR A 9 FINANCING STATEMENT, EACH SECURED PARTY OF RECORD MAY AUTHORIZE 10 THE FILING OF AN AMENDMENT UNDER SUBSECTION (4). 11 SEC. 9510. (1) A FILED RECORD IS EFFECTIVE ONLY TO THE 12 EXTENT THAT IT WAS FILED BY A PERSON THAT MAY FILE IT UNDER SEC- 13 TION 9509. 14 (2) A RECORD AUTHORIZED BY 1 SECURED PARTY OF RECORD DOES 15 NOT AFFECT THE FINANCING STATEMENT WITH RESPECT TO ANOTHER 16 SECURED PARTY OF RECORD. 17 (3) A CONTINUATION STATEMENT THAT IS NOT FILED WITHIN THE 18 6-MONTH PERIOD PRESCRIBED BY SECTION 9515(4) IS INEFFECTIVE. 19 SEC. 9511. (1) A SECURED PARTY OF RECORD WITH RESPECT TO A 20 FINANCING STATEMENT IS A PERSON WHOSE NAME IS PROVIDED AS THE 21 NAME OF THE SECURED PARTY OR A REPRESENTATIVE OF THE SECURED 22 PARTY IN AN INITIAL FINANCING STATEMENT THAT HAS BEEN FILED. IF 23 AN INITIAL FINANCING STATEMENT IS FILED UNDER SECTION 9514(1), 24 THE ASSIGNEE NAMED IN THE INITIAL FINANCING STATEMENT IS THE 25 SECURED PARTY OF RECORD WITH RESPECT TO THE FINANCING STATEMENT. 26 (2) IF AN AMENDMENT OF A FINANCING STATEMENT THAT PROVIDES 27 THE NAME OF A PERSON AS A SECURED PARTY OR A REPRESENTATIVE OF A 02120'99 238 1 SECURED PARTY IS FILED, THE PERSON NAMED IN THE AMENDMENT IS A 2 SECURED PARTY OF RECORD. IF AN AMENDMENT IS FILED UNDER SECTION 3 9514(2), THE ASSIGNEE NAMED IN THE AMENDMENT IS A SECURED PARTY 4 OF RECORD. 5 (3) A PERSON REMAINS A SECURED PARTY OF RECORD UNTIL THE 6 FILING OF AN AMENDMENT OF THE FINANCING STATEMENT THAT DELETES 7 THE PERSON. 8 SEC. 9512. (1) SUBJECT TO SECTION 9509, A PERSON MAY ADD OR 9 DELETE COLLATERAL COVERED BY, CONTINUE OR TERMINATE THE EFFEC- 10 TIVENESS OF, OR, SUBJECT TO SUBSECTION (5), OTHERWISE AMEND THE 11 INFORMATION PROVIDED IN, A FINANCING STATEMENT BY FILING AN 12 AMENDMENT THAT DOES BOTH OF THE FOLLOWING: 13 (A) IDENTIFIES, BY ITS FILE NUMBER, AND, IF APPLICABLE, BY 14 LIBER AND PAGE, THE INITIAL FINANCING STATEMENT TO WHICH THE 15 AMENDMENT RELATES. 16 (B) IF THE AMENDMENT RELATES TO AN INITIAL FINANCING STATE- 17 MENT FILED OR RECORDED IN A FILING OFFICE DESCRIBED IN SECTION 18 9501(1)(A), PROVIDES THE DATE THAT THE INITIAL FINANCING STATE- 19 MENT WAS FILED OR RECORDED AND THE INFORMATION SPECIFIED IN SEC- 20 TION 9502(2). 21 (2) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9515, THE FILING 22 OF AN AMENDMENT DOES NOT EXTEND THE PERIOD OF EFFECTIVENESS OF 23 THE FINANCING STATEMENT. 24 (3) A FINANCING STATEMENT THAT IS AMENDED BY AN AMENDMENT 25 THAT ADDS COLLATERAL IS EFFECTIVE AS TO THE ADDED COLLATERAL ONLY 26 FROM THE DATE OF THE FILING OF THE AMENDMENT. 02120'99 239 1 (4) A FINANCING STATEMENT THAT IS AMENDED BY AN AMENDMENT 2 THAT ADDS A DEBTOR IS EFFECTIVE AS TO THE ADDED DEBTOR ONLY FROM 3 THE DATE OF THE FILING OF THE AMENDMENT. 4 (5) AN AMENDMENT IS INEFFECTIVE TO THE EXTENT 1 OR MORE OF 5 THE FOLLOWING APPLY TO IT: 6 (A) IT PURPORTS TO DELETE ALL DEBTORS AND FAILS TO PROVIDE 7 THE NAME OF A DEBTOR TO BE COVERED BY THE FINANCING STATEMENT. 8 (B) IT PURPORTS TO DELETE ALL SECURED PARTIES OF RECORD AND 9 FAILS TO PROVIDE THE NAME OF A NEW SECURED PARTY OF RECORD. 10 SEC. 9513. (1) A SECURED PARTY SHALL CAUSE THE SECURED 11 PARTY OF RECORD FOR A FINANCING STATEMENT TO FILE A TERMINATION 12 STATEMENT FOR THE FINANCING STATEMENT IF THE FINANCING STATEMENT 13 COVERS CONSUMER GOODS AND 1 OR MORE OF THE FOLLOWING APPLY: 14 (A) THERE IS NO OBLIGATION SECURED BY THE COLLATERAL COVERED 15 BY THE FINANCING STATEMENT AND NO COMMITMENT TO MAKE AN ADVANCE, 16 INCUR AN OBLIGATION, OR OTHERWISE GIVE VALUE. 17 (B) THE DEBTOR DID NOT AUTHORIZE THE FILING OF THE INITIAL 18 FINANCING STATEMENT. 19 (2) TO COMPLY WITH SUBSECTION (1), A SECURED PARTY SHALL 20 CAUSE THE SECURED PARTY OF RECORD TO FILE THE TERMINATION STATE- 21 MENT WITHIN 1 OF THE FOLLOWING PERIODS: 22 (A) WITHIN 1 MONTH AFTER THERE IS NO OBLIGATION SECURED BY 23 THE COLLATERAL COVERED BY THE FINANCING STATEMENT AND NO COMMIT- 24 MENT TO MAKE AN ADVANCE, INCUR AN OBLIGATION, OR OTHERWISE GIVE 25 VALUE. 26 (B) IF EARLIER, WITHIN 20 DAYS AFTER THE SECURED PARTY 27 RECEIVES AN AUTHENTICATED DEMAND FROM A DEBTOR. 02120'99 240 1 (3) IN CASES NOT GOVERNED BY SUBSECTION (1), WITHIN 20 DAYS 2 AFTER A SECURED PARTY RECEIVES AN AUTHENTICATED DEMAND FROM A 3 DEBTOR, THE SECURED PARTY SHALL CAUSE THE SECURED PARTY OF RECORD 4 FOR A FINANCING STATEMENT TO SEND TO THE DEBTOR A TERMINATION 5 STATEMENT FOR THE FINANCING STATEMENT OR FILE THE TERMINATION 6 STATEMENT IN THE FILING OFFICE IF 1 OR MORE OF THE FOLLOWING 7 APPLY: 8 (A) EXCEPT IN THE CASE OF A FINANCING STATEMENT COVERING 9 ACCOUNTS OR CHATTEL PAPER THAT HAS BEEN SOLD OR GOODS THAT ARE 10 THE SUBJECT OF A CONSIGNMENT, THERE IS NO OBLIGATION SECURED BY 11 THE COLLATERAL COVERED BY THE FINANCING STATEMENT AND NO COMMIT- 12 MENT TO MAKE AN ADVANCE, INCUR AN OBLIGATION, OR OTHERWISE GIVE 13 VALUE. 14 (B) THE FINANCING STATEMENT COVERS ACCOUNTS OR CHATTEL PAPER 15 THAT HAS BEEN SOLD BUT AS TO WHICH THE ACCOUNT DEBTOR OR OTHER 16 PERSON OBLIGATED HAS DISCHARGED ITS OBLIGATION. 17 (C) THE FINANCING STATEMENT COVERS GOODS THAT WERE THE 18 SUBJECT OF A CONSIGNMENT TO THE DEBTOR BUT ARE NOT IN THE 19 DEBTOR'S POSSESSION. 20 (D) THE DEBTOR DID NOT AUTHORIZE THE FILING OF THE INITIAL 21 FINANCING STATEMENT. 22 (4) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9510, UPON THE 23 FILING OF A TERMINATION STATEMENT WITH THE FILING OFFICE, THE 24 FINANCING STATEMENT TO WHICH THE TERMINATION STATEMENT RELATES 25 CEASES TO BE EFFECTIVE. 26 SEC. 9514. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 27 (3), AN INITIAL FINANCING STATEMENT MAY REFLECT AN ASSIGNMENT OF 02120'99 241 1 ALL OF THE SECURED PARTY'S POWER TO AUTHORIZE AN AMENDMENT TO THE 2 FINANCING STATEMENT PROVIDING THE NAME AND MAILING ADDRESS OF THE 3 ASSIGNEE AS THE NAME AND ADDRESS OF THE SECURED PARTY. 4 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3), A 5 SECURED PARTY OF RECORD MAY ASSIGN OF RECORD ALL OR PART OF ITS 6 POWER TO AUTHORIZE AN AMENDMENT TO A FINANCING STATEMENT BY 7 FILING IN THE FILING OFFICE AN AMENDMENT OF THE FINANCING STATE- 8 MENT THAT DOES ALL OF THE FOLLOWING: 9 (A) IDENTIFIES, BY ITS FILE NUMBER, THE INITIAL FINANCING 10 STATEMENT TO WHICH IT RELATES. 11 (B) PROVIDES THE NAME OF THE ASSIGNOR. 12 (C) PROVIDES THE NAME AND MAILING ADDRESS OF THE ASSIGNEE. 13 (3) AN ASSIGNMENT OF RECORD OF A SECURITY INTEREST IN A FIX- 14 TURE COVERED BY A RECORD OF A MORTGAGE WHICH IS EFFECTIVE AS A 15 FINANCING STATEMENT FILED AS A FIXTURE FILING UNDER SECTION 16 9502(3) MAY BE MADE ONLY BY AN ASSIGNMENT OF RECORD OF THE MORT- 17 GAGE IN THE MANNER PROVIDED BY LAW OF THIS STATE OTHER THAN THIS 18 ACT. 19 SEC. 9515. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS 20 (2), (5), (6), AND (7), A FILED FINANCING STATEMENT IS EFFECTIVE 21 FOR A PERIOD OF 5 YEARS AFTER THE DATE OF FILING. 22 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS (5), (6), 23 AND (7), AN INITIAL FINANCING STATEMENT FILED IN CONNECTION WITH 24 A PUBLIC-FINANCE TRANSACTION OR MANUFACTURED-HOME TRANSACTION IS 25 EFFECTIVE FOR A PERIOD OF 30 YEARS AFTER THE DATE OF FILING IF IT 26 INDICATES THAT IT IS FILED IN CONNECTION WITH A PUBLIC-FINANCE 27 TRANSACTION OR MANUFACTURED-HOME TRANSACTION. 02120'99 242 1 (3) THE EFFECTIVENESS OF A FILED FINANCING STATEMENT LAPSES 2 ON THE EXPIRATION OF THE PERIOD OF ITS EFFECTIVENESS UNLESS 3 BEFORE THE LAPSE A CONTINUATION STATEMENT IS FILED PURSUANT TO 4 SUBSECTION (4). UPON LAPSE, A FINANCING STATEMENT CEASES TO BE 5 EFFECTIVE AND ANY SECURITY INTEREST OR AGRICULTURAL LIEN THAT WAS 6 PERFECTED BY THE FINANCING STATEMENT BECOMES UNPERFECTED, UNLESS 7 THE SECURITY INTEREST IS PERFECTED OTHERWISE. IF THE SECURITY 8 INTEREST OR AGRICULTURAL LIEN BECOMES UNPERFECTED UPON LAPSE, IT 9 IS DEEMED NEVER TO HAVE BEEN PERFECTED AS AGAINST A PURCHASER OF 10 THE COLLATERAL FOR VALUE. 11 (4) A CONTINUATION STATEMENT MAY BE FILED ONLY WITHIN 6 12 MONTHS BEFORE THE EXPIRATION OF THE 5-YEAR PERIOD SPECIFIED IN 13 SUBSECTION (1) OR THE 30-YEAR PERIOD SPECIFIED IN SUBSECTION (2), 14 WHICHEVER IS APPLICABLE. 15 (5) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9510, UPON 16 TIMELY FILING OF A CONTINUATION STATEMENT, THE EFFECTIVENESS OF 17 THE INITIAL FINANCING STATEMENT CONTINUES FOR A PERIOD OF 5 YEARS 18 COMMENCING ON THE DAY ON WHICH THE FINANCING STATEMENT WOULD HAVE 19 BECOME INEFFECTIVE IN THE ABSENCE OF THE FILING. UPON THE EXPI- 20 RATION OF THE 5-YEAR PERIOD, THE FINANCING STATEMENT LAPSES IN 21 THE SAME MANNER AS PROVIDED IN SUBSECTION (3), UNLESS, BEFORE THE 22 LAPSE, ANOTHER CONTINUATION STATEMENT IS FILED PURSUANT TO SUB- 23 SECTION (4). SUCCEEDING CONTINUATION STATEMENTS MAY BE FILED IN 24 THE SAME MANNER TO CONTINUE THE EFFECTIVENESS OF THE INITIAL 25 FINANCING STATEMENT. 02120'99 243 1 (6) IF A DEBTOR IS A TRANSMITTING UTILITY AND A FILED 2 FINANCING STATEMENT SO INDICATES, THE FINANCING STATEMENT IS 3 EFFECTIVE UNTIL A TERMINATION STATEMENT IS FILED. 4 (7) A RECORD OF A MORTGAGE THAT IS EFFECTIVE AS A FINANCING 5 STATEMENT FILED AS A FIXTURE FILING UNDER SECTION 9502(3) REMAINS 6 EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING 7 UNTIL THE MORTGAGE IS RELEASED OR SATISFIED OF RECORD OR ITS 8 EFFECTIVENESS OTHERWISE TERMINATES AS TO THE REAL PROPERTY. 9 SEC. 9516. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 10 (2), COMMUNICATION OF A RECORD TO A FILING OFFICE AND TENDER OF 11 THE FILING FEE OR ACCEPTANCE OF THE RECORD BY THE FILING OFFICE 12 CONSTITUTES FILING. 13 (2) FILING DOES NOT OCCUR WITH RESPECT TO A RECORD THAT A 14 FILING OFFICE REFUSES TO ACCEPT BECAUSE OF 1 OR MORE OF THE 15 FOLLOWING: 16 (A) THE RECORD IS NOT COMMUNICATED BY A METHOD OR MEDIUM OF 17 COMMUNICATION AUTHORIZED BY THE FILING OFFICE. 18 (B) AN AMOUNT EQUAL TO OR GREATER THAN THE APPLICABLE FILING 19 FEE IS NOT TENDERED. 20 (C) THE FILING OFFICE IS UNABLE TO INDEX THE RECORD BECAUSE 21 OF 1 OR MORE OF THE FOLLOWING: 22 (i) IN THE CASE OF AN INITIAL FINANCING STATEMENT, THE 23 RECORD DOES NOT PROVIDE A NAME FOR THE DEBTOR. 24 (ii) IN THE CASE OF AN AMENDMENT OR CORRECTION STATEMENT, 25 THE RECORD DOES NOT IDENTIFY THE INITIAL FINANCING STATEMENT AS 26 REQUIRED BY SECTION 9512 OR 9518, AS APPLICABLE, OR IDENTIFIES AN 02120'99 244 1 INITIAL FINANCING STATEMENT WHOSE EFFECTIVENESS HAS LAPSED UNDER 2 SECTION 9515. 3 (iii) IN THE CASE OF AN INITIAL FINANCING STATEMENT THAT 4 PROVIDES THE NAME OF A DEBTOR IDENTIFIED AS AN INDIVIDUAL OR AN 5 AMENDMENT THAT PROVIDES A NAME OF A DEBTOR IDENTIFIED AS AN INDI- 6 VIDUAL THAT WAS NOT PREVIOUSLY PROVIDED IN THE FINANCING STATE- 7 MENT TO WHICH THE RECORD RELATES, THE RECORD DOES NOT IDENTIFY 8 THE DEBTOR'S LAST NAME. 9 (iv) IN THE CASE OF A RECORD FILED OR RECORDED IN THE FILING 10 OFFICE DESCRIBED IN SECTION 9501(1)(A), THE RECORD DOES NOT PRO- 11 VIDE A SUFFICIENT DESCRIPTION OF THE REAL PROPERTY TO WHICH IT 12 RELATES. 13 (D) IN THE CASE OF AN INITIAL FINANCING STATEMENT OR AN 14 AMENDMENT THAT ADDS A SECURED PARTY OF RECORD, THE RECORD DOES 15 NOT PROVIDE A NAME AND MAILING ADDRESS FOR THE SECURED PARTY OF 16 RECORD. 17 (E) IN THE CASE OF AN INITIAL FINANCING STATEMENT OR AN 18 AMENDMENT THAT PROVIDES A NAME OF A DEBTOR WHICH WAS NOT PREVI- 19 OUSLY PROVIDED IN THE FINANCING STATEMENT TO WHICH THE AMENDMENT 20 RELATES, THE RECORD DOES NOT PROVIDE OR INDICATE 1 OR MORE OF THE 21 FOLLOWING: 22 (i) PROVIDE A MAILING ADDRESS FOR THE DEBTOR. 23 (ii) INDICATE WHETHER THE DEBTOR IS AN INDIVIDUAL OR AN 24 ORGANIZATION. 25 (iii) IF THE FINANCING STATEMENT INDICATES THAT THE DEBTOR 26 IS AN ORGANIZATION, PROVIDE 1 OR MORE OF THE FOLLOWING: 02120'99 245 1 (A) A TYPE OF ORGANIZATION FOR THE DEBTOR. 2 (B) A JURISDICTION OF ORGANIZATION FOR THE DEBTOR. 3 (C) AN ORGANIZATIONAL IDENTIFICATION NUMBER FOR THE DEBTOR 4 OR INDICATE THAT THE DEBTOR HAS NONE. 5 (F) IN THE CASE OF AN ASSIGNMENT REFLECTED IN AN INITIAL 6 FINANCING STATEMENT UNDER SECTION 9514(1) OR AN AMENDMENT FILED 7 UNDER SECTION 9514(2), THE RECORD DOES NOT PROVIDE A NAME AND 8 MAILING ADDRESS FOR THE ASSIGNEE. 9 (G) IN THE CASE OF A CONTINUATION STATEMENT, THE RECORD IS 10 NOT FILED WITHIN THE 6-MONTH PERIOD PRESCRIBED BY SECTION 11 9515(4). 12 (H) IN THE CASE OF AN INITIAL FINANCING STATEMENT FILED WITH 13 THE SECRETARY OF STATE, THE RECORD DOES NOT CONTAIN THE TAX IDEN- 14 TIFICATION NUMBER OF, OR A CERTIFICATE PRESCRIBED BY THE SECRE- 15 TARY OF STATE AND SIGNED BY A DEBTOR STATING THAT THE DEBTOR DOES 16 NOT HAVE A TAX IDENTIFICATION NUMBER FROM, EACH DEBTOR. IF THE 17 RECORDS OF THE SECRETARY OF STATE INDICATE THAT A DEBTOR'S TAX 18 IDENTIFICATION NUMBER CONTAINED ON A FINANCING STATEMENT RECEIVED 19 FOR FILING IS OR MAY BE INCORRECT, THE SECRETARY OF STATE SHALL 20 NEVERTHELESS ACCEPT AND FILE THE FINANCING STATEMENT. THE SECRE- 21 TARY OF STATE MAY REQUEST THE SECURED PARTY OR OTHER PERSON WHO 22 SUBMITTED THE FINANCING STATEMENT TO FILE AN AMENDMENT TO THE 23 STATEMENT GIVING THE DEBTOR'S CORRECT TAX IDENTIFICATION NUMBER. 24 THE SIGNATURE OF THE DEBTOR IS NOT REQUIRED ON AN AMENDMENT THAT 25 CHANGES ONLY THE DEBTOR'S TAX IDENTIFICATION NUMBER. 26 (3) FOR PURPOSES OF SUBSECTION (2), BOTH OF THE FOLLOWING 27 APPLY: 02120'99 246 1 (A) A RECORD DOES NOT PROVIDE INFORMATION IF THE FILING 2 OFFICE IS UNABLE TO READ OR DECIPHER THE INFORMATION. 3 (B) A RECORD THAT DOES NOT INDICATE THAT IT IS AN AMENDMENT 4 OR IDENTIFY AN INITIAL FINANCING STATEMENT TO WHICH IT RELATES, 5 AS REQUIRED BY SECTION 9512, 9514, OR 9518, IS AN INITIAL FINANC- 6 ING STATEMENT. 7 (4) A RECORD THAT IS COMMUNICATED TO THE FILING OFFICE WITH 8 TENDER OF THE FILING FEE, BUT WHICH THE FILING OFFICE REFUSES TO 9 ACCEPT FOR A REASON OTHER THAN ONE SET FORTH IN SUBSECTION (2), 10 IS EFFECTIVE AS A FILED RECORD EXCEPT AS AGAINST A PURCHASER OF 11 THE COLLATERAL WHICH GIVES VALUE IN REASONABLE RELIANCE UPON THE 12 ABSENCE OF THE RECORD FROM THE FILES. 13 SEC. 9517. THE FAILURE OF THE FILING OFFICE TO INDEX A 14 RECORD CORRECTLY DOES NOT AFFECT THE EFFECTIVENESS OF THE FILED 15 RECORD. 16 SEC. 9518. (1) A PERSON MAY FILE IN THE FILING OFFICE A 17 CORRECTION STATEMENT WITH RESPECT TO A RECORD INDEXED THERE UNDER 18 THE PERSON'S NAME IF THE PERSON BELIEVES THAT THE RECORD IS INAC- 19 CURATE OR WAS WRONGFULLY FILED. 20 (2) A CORRECTION STATEMENT MUST DO ALL OF THE FOLLOWING: 21 (A) IDENTIFY THE RECORD TO WHICH IT RELATES BY BOTH OF THE 22 FOLLOWING: 23 (i) THE FILE NUMBER ASSIGNED TO THE INITIAL FINANCING STATE- 24 MENT TO WHICH THE RECORD RELATES. 25 (ii) IF THE CORRECTION STATEMENT RELATES TO A RECORD FILED 26 OR RECORDED IN A FILING OFFICE DESCRIBED IN SECTION 9501(1)(A), 02120'99 247 1 THE DATE THAT THE INITIAL FINANCING STATEMENT WAS FILED OR 2 RECORDED AND THE INFORMATION SPECIFIED IN SECTION 9502(2). 3 (B) INDICATE THAT IT IS A CORRECTION STATEMENT. 4 (C) PROVIDE THE BASIS FOR THE PERSON'S BELIEF THAT THE 5 RECORD IS INACCURATE AND INDICATE THE MANNER IN WHICH THE PERSON 6 BELIEVES THE RECORD SHOULD BE AMENDED TO CURE ANY INACCURACY OR 7 PROVIDE THE BASIS FOR THE PERSON'S BELIEF THAT THE RECORD WAS 8 WRONGFULLY FILED. 9 (3) THE FILING OF A CORRECTION STATEMENT DOES NOT AFFECT THE 10 EFFECTIVENESS OF AN INITIAL FINANCING STATEMENT OR OTHER FILED 11 RECORD. 12 SUBPART 2. DUTIES AND OPERATION OF FILING OFFICE 13 SEC. 9519. (1) FOR EACH RECORD FILED IN A FILING OFFICE, 14 THE FILING OFFICE SHALL DO ALL OF THE FOLLOWING: 15 (A) ASSIGN A UNIQUE NUMBER TO THE FILED RECORD. 16 (B) CREATE A RECORD THAT BEARS THE NUMBER ASSIGNED TO THE 17 FILED RECORD AND THE DATE AND TIME OF FILING. 18 (C) MAINTAIN THE FILED RECORD FOR PUBLIC INSPECTION. 19 (D) INDEX THE FILED RECORD IN ACCORDANCE WITH SUBSECTIONS 20 (3), (4), AND (5). 21 (2) A FILE NUMBER ASSIGNED AFTER JANUARY 1, 2002 MUST 22 INCLUDE A DIGIT THAT IS MATHEMATICALLY DERIVED FROM OR RELATED TO 23 THE OTHER DIGITS OF THE FILE NUMBER, AND AIDS THE FILING OFFICE 24 IN DETERMINING WHETHER A NUMBER COMMUNICATED AS THE FILE NUMBER 25 INCLUDES A SINGLE-DIGIT OR TRANSPOSITIONAL ERROR. 26 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTIONS (4) AND (5), 27 THE FILING OFFICE SHALL DO BOTH OF THE FOLLOWING: 02120'99 248 1 (A) INDEX AN INITIAL FINANCING STATEMENT ACCORDING TO THE 2 NAME OF THE DEBTOR AND INDEX ALL FILED RECORDS RELATING TO THE 3 INITIAL FINANCING STATEMENT IN A MANNER THAT ASSOCIATES WITH ONE 4 ANOTHER AN INITIAL FINANCING STATEMENT AND ALL FILED RECORDS 5 RELATING TO THE INITIAL FINANCING STATEMENT. 6 (B) INDEX A RECORD THAT PROVIDES A NAME OF A DEBTOR THAT WAS 7 NOT PREVIOUSLY PROVIDED IN THE FINANCING STATEMENT TO WHICH THE 8 RECORD RELATES ALSO ACCORDING TO THE NAME THAT WAS NOT PREVIOUSLY 9 PROVIDED. 10 (4) IF A FINANCING STATEMENT IS FILED AS A FIXTURE FILING OR 11 COVERS AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT, IT MUST BE 12 FILED FOR RECORD AND THE FILING OFFICE SHALL INDEX IT UNDER BOTH 13 OF THE FOLLOWING: 14 (A) UNDER THE NAMES OF THE DEBTOR AND OF EACH OWNER OF 15 RECORD SHOWN ON THE FINANCING STATEMENT AS IF THEY WERE THE MORT- 16 GAGORS UNDER A MORTGAGE OF THE REAL PROPERTY DESCRIBED. 17 (B) TO THE EXTENT THAT THE LAW OF THIS STATE PROVIDES FOR 18 INDEXING OF RECORDS OF MORTGAGES UNDER THE NAME OF THE MORTGAGEE, 19 UNDER THE NAME OF THE SECURED PARTY AS IF THE SECURED PARTY WERE 20 THE MORTGAGEE THEREUNDER, OR, IF INDEXING IS BY DESCRIPTION, AS 21 IF THE FINANCING STATEMENT WERE A RECORD OF A MORTGAGE OF THE 22 REAL PROPERTY DESCRIBED. 23 (5) IF A FINANCING STATEMENT IS FILED AS A FIXTURE FILING OR 24 COVERS AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT, THE FILING 25 OFFICE SHALL INDEX AN ASSIGNMENT FILED UNDER SECTION 9514(1) OR 26 AN AMENDMENT FILED UNDER SECTION 9514(2) UNDER BOTH OF THE 27 FOLLOWING: 02120'99 249 1 (A) UNDER THE NAME OF THE ASSIGNOR AS GRANTOR. 2 (B) TO THE EXTENT THAT THE LAW OF THIS STATE PROVIDES FOR 3 INDEXING A RECORD OF THE ASSIGNMENT OF A MORTGAGE UNDER THE NAME 4 OF THE ASSIGNEE, UNDER THE NAME OF THE ASSIGNEE. 5 (6) THE FILING OFFICE SHALL MAINTAIN A CAPABILITY TO DO BOTH 6 OF THE FOLLOWING: 7 (A) TO RETRIEVE A RECORD BY THE NAME OF THE DEBTOR AND BY 1 8 OF THE FOLLOWING: 9 (i) IF THE FILING OFFICE IS DESCRIBED IN SECTION 9501(1)(A), 10 BY THE FILE NUMBER ASSIGNED TO THE INITIAL FINANCING STATEMENT TO 11 WHICH THE RECORD RELATES AND THE DATE THAT THE RECORD WAS FILED 12 OR RECORDED. 13 (ii) IF THE FILING OFFICE IS DESCRIBED IN SECTION 14 9501(1)(B), BY THE FILE NUMBER ASSIGNED TO THE INITIAL FINANCING 15 STATEMENT TO WHICH THE RECORD RELATES. 16 (B) TO ASSOCIATE AND RETRIEVE WITH ONE ANOTHER AN INITIAL 17 FINANCING STATEMENT AND EACH FILED RECORD RELATING TO THE INITIAL 18 FINANCING STATEMENT. 19 (7) THE FILING OFFICE SHALL NOT REMOVE A DEBTOR'S NAME FROM 20 THE INDEX UNTIL 1 YEAR AFTER THE EFFECTIVENESS OF A FINANCING 21 STATEMENT NAMING THE DEBTOR LAPSES UNDER SECTION 9515 WITH 22 RESPECT TO ALL SECURED PARTIES OF RECORD. 23 (8) THE FILING OFFICE SHALL PERFORM THE ACTS REQUIRED BY 24 SUBSECTIONS (1) THROUGH (5) AT THE TIME AND IN THE MANNER PRE- 25 SCRIBED BY FILING-OFFICE RULE, BUT NOT LATER THAN 2 BUSINESS DAYS 26 AFTER THE FILING OFFICE RECEIVES THE RECORD IN QUESTION. 02120'99 250 1 (9) SUBSECTIONS (2) AND (8) DO NOT APPLY TO A FILING OFFICE 2 DESCRIBED IN SECTION 9501(1)(A). 3 SEC. 9520. (1) A FILING OFFICE SHALL REFUSE TO ACCEPT A 4 RECORD FOR FILING FOR A REASON SET FORTH IN SECTION 9516(2) AND 5 MAY REFUSE TO ACCEPT A RECORD FOR FILING ONLY FOR A REASON SET 6 FORTH IN SECTION 9516(2). 7 (2) IF A FILING OFFICE REFUSES TO ACCEPT A RECORD FOR 8 FILING, IT SHALL COMMUNICATE TO THE PERSON THAT PRESENTED THE 9 RECORD THE FACT OF AND REASON FOR THE REFUSAL AND THE DATE AND 10 TIME THE RECORD WOULD HAVE BEEN FILED HAD THE FILING OFFICE 11 ACCEPTED IT. THE COMMUNICATION MUST BE MADE AT THE TIME AND IN 12 THE MANNER PRESCRIBED BY FILING-OFFICE RULE BUT, IN THE CASE OF A 13 FILING OFFICE DESCRIBED IN SECTION 9501(1)(B), IN NO EVENT MORE 14 THAN 2 BUSINESS DAYS AFTER THE FILING OFFICE RECEIVES THE 15 RECORD. 16 (3) A FILED FINANCING STATEMENT SATISFYING SECTION 9502(1) 17 AND (2) IS EFFECTIVE, EVEN IF THE FILING OFFICE IS REQUIRED TO 18 REFUSE TO ACCEPT IT FOR FILING UNDER SUBSECTION (1). HOWEVER, 19 SECTION 9338 APPLIES TO A FILED FINANCING STATEMENT PROVIDING 20 INFORMATION DESCRIBED IN SECTION 9516(2)(E) THAT IS INCORRECT AT 21 THE TIME THE FINANCING STATEMENT IS FILED. 22 (4) IF A RECORD COMMUNICATED TO A FILING OFFICE PROVIDES 23 INFORMATION THAT RELATES TO MORE THAN 1 DEBTOR, THIS PART APPLIES 24 AS TO EACH DEBTOR SEPARATELY. 25 SEC. 9521. (1) A FILING OFFICE THAT ACCEPTS WRITTEN RECORDS 26 FOR FILING SHALL NOT REFUSE TO ACCEPT A WRITTEN INITIAL FINANCING 02120'99 251 1 STATEMENT IN THE FOLLOWING FORM, EXCEPT FOR A REASON SET FORTH IN 2 SECTION 9516(2): 3 UCC FINANCING STATEMENT 4 FOLLOW INSTRUCTIONS (FRONT AND BACK) CAREFULLY 5 A. NAME AND PHONE OF CONTACT AT FILER [OPTIONAL] 6 _________________________________________________________________ 7 B. SEND ACKNOWLEDGMENT TO: (NAME AND ADDRESS) 8 ___________________________________ THE ABOVE SPACE IS FOR 9 ___________________________________ FILING OFFICE USE ONLY 10 1. DEBTOR'S EXACT FULL LEGAL NAME - INSERT ONLY 1 DEBTOR NAME 11 (1A OR 1B) - DO NOT ABBREVIATE OR COMBINE NAMES 12 1A. ORGANIZATION'S NAME 13 ____________________________________________________________ 14 OR 1B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 15 ____________________________________________________________ 16 1C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 17 ____________________________________________________________ 18 1D. TAX ID. NO. ADD'L INFO. RE 1E. TYPE OF ORGANIZATION 19 SSN OR EIN ORGANIZATION 20 DEBTOR 21 _______________ _______________ __________________________ 22 1F. JURISDICTION OF ORGANIZATION 1G. ORGANIZATIONAL ID. NO., 23 IF ANY 24 _____________________________________________________[ ] NONE 25 2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - INSERT ONLY 1 26 DEBTOR NAME (2A OR 2B) - DO NOT ABBREVIATE OR COMBINE NAMES 02120'99 252 1 2A. ORGANIZATION'S NAME 2 ____________________________________________________________ 3 OR 2B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 4 ____________________________________________________________ 5 2C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 6 ____________________________________________________________ 7 2D. TAX ID. NO. ADD'L INFO. RE 2E. TYPE OF ORGANIZATION 8 SSN OR EIN ORGANIZATION 9 DEBTOR 10 _______________ _______________ ____________________ 11 2F. JURISDICTION OF ORGANIZATION 2G. ORGANIZATIONAL ID. NO., 12 IF ANY 13 _____________________________________________________[ ] NONE 14 3. SECURED PARTY'S NAME (OR NAME OF TOTAL ASSIGNEE OF ASSIGNOR 15 S/P) - INSERT ONLY 1 SECURED PARTY NAME (3A OR 3B) 16 3A. ORGANIZATION'S NAME 17 ____________________________________________________________ 18 OR 3B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 19 ____________________________________________________________ 20 3C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 21 ____________________________________________________________ 22 4. THIS FINANCING STATEMENT COVERS THE FOLLOWING COLLATERAL: 23 ____________________________________________________________ 24 5. ALTERNATIVE DESIGNATION [IF APPLICABLE]: [ ] LESSEE/LESSOR 25 [ ] CONSIGNEE/CONSIGNOR [ ] BAILEE/BAILOR [ ] SELLER/BUYER 26 [ ] AG. LIEN [ ] NON-UCC FILING 02120'99 253 1 6. [ ] THIS FINANCING STATEMENT IS TO BE FILED (FOR RECORD) 2 (OR RECORDED) IN THE REAL ESTATE RECORDS. 3 ATTACH ADDENDUM [IF APPLICABLE] 4 7. CHECK TO REQUEST SEARCH REPORT(S) ON DEBTOR(S) 5 [ ] ALL DEBTORS [ ] DEBTOR 1 [ ] DEBTOR 2 6 [ADDITIONAL FEE] [OPTIONAL] 7 ____________________________________________________________ 8 8. OPTIONAL FILER REFERENCE DATA 9 ____________________________________________________________ 10 FILING OFFICE COPY - NATIONAL UCC FILING STATEMENT (FORM UCC 1) 11 (REV. 07/29/98) 12 [BACK OF FORM] 13 UCC FINANCING STATEMENT ADDENDUM 14 FOLLOW INSTRUCTIONS (FRONT AND BACK) CAREFULLY. 15 9. NAME OF FIRST DEBTOR (1A OR 1B) ON RELATED FINANCING 16 STATEMENT 17 ____________________________________________________________ 18 9A. ORGANIZATION'S NAME 19 ____________________________________________________________ 20 OR 9B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 21 ____________________________________________________________ 22 10. MISCELLANEOUS: 23 ___________________________________ THE ABOVE SPACE IS FOR 24 ___________________________________ FILING OFFICE USE ONLY 25 11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - INSERT ONLY 1 26 NAME (11A OR 11B) - DO NOT ABBREVIATE OR COMBINE NAMES 02120'99 254 1 11A. ORGANIZATION'S NAME 2 ____________________________________________________________ 3 OR 11B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 4 ____________________________________________________________ 5 11C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 6 ____________________________________________________________ 7 11D. TAX ID. NO. ADD'L INFO. RE 11E. TYPE OF ORGANIZATION 8 SSN OR EIN ORGANIZATION 9 DEBTOR 10 _______________ _______________ ____________________ 11 11F. JURISDICTION OF ORGANIZATION 11G. ORGANIZATIONAL 12 ID. NO., IF ANY 13 _________________________________ _______________[ ] NONE 14 12. [ ] ADDITIONAL SECURED PARTY'S OR [ ] ASSIGNOR S/P'S NAME - 15 INSERT ONLY 1 NAME (12A OR 12B). 16 12A. ORGANIZATION'S NAME 17 ____________________________________________________________ 18 OR 12B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 19 ____________________________________________________________ 20 12C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 21 ____________________________________________________________ 22 13. THIS FINANCING STATEMENT COVERS [ ] TIMBER TO BE CUT OR 23 [ ] AS-EXTRACTED COLLATERAL, OR IS FILED AS A [ ] FIXTURE 24 FILING. 25 14. DESCRIPTION OF REAL ESTATE: 26 ____________________________________________________________ 02120'99 255 1 15. NAME AND ADDRESS OF A RECORD OWNER OF THE ABOVE-DESCRIBED 2 REAL ESTATE (IF DEBTOR DOES NOT HAVE RECORD INTEREST): 3 16. ADDITIONAL COLLATERAL DESCRIPTION: 4 ____________________________________________________________ 5 17. CHECK ONLY IF APPLICABLE AND CHECK ONLY 1 BOX: 6 DEBTOR IS A [ ] TRUST OR [ ] TRUSTEE ACTING WITH RESPECT TO 7 PROPERTY HELD IN TRUST OR [ ] DECEDENT'S ESTATE 8 18. CHECK ONLY IF APPLICABLE AND CHECK ONLY 1 BOX: 9 [ ] DEBTOR IS A TRANSMITTING UTILITY 10 [ ] FILED IN CONNECTION WITH A MANUFACTURED-HOME TRANSACTION 11 - EFFECTIVE 30 YEARS 12 [ ] FILED IN CONNECTION WITH A PUBLIC-FINANCE TRANSACTION - 13 EFFECTIVE 30 YEARS 14 FILING OFFICE COPY - NATIONAL UCC FILING STATEMENT 15 (FORM UCC 1AD) (REV.07/29/98) 16 (2) A FILING OFFICE THAT ACCEPTS WRITTEN RECORDS FOR FILING 17 SHALL NOT REFUSE TO ACCEPT A WRITTEN FINANCING STATEMENT AMEND- 18 MENT IN THE FOLLOWING FORM, EXCEPT FOR A REASON SET FORTH IN SEC- 19 TION 9516(2): 20 UCC FINANCING STATEMENT AMENDMENT 21 FOLLOW INSTRUCTIONS (FRONT AND BACK) CAREFULLY 22 A. NAME AND PHONE OF CONTACT AT FILER [OPTIONAL] 23 _________________________________________________________________ 24 B. SEND ACKNOWLEDGMENT TO: (NAME AND ADDRESS) 25 ___________________________________ THE ABOVE SPACE IS FOR 26 ___________________________________ FILING OFFICE USE ONLY 02120'99 256 1 1A. INITIAL FINANCING STATEMENT FILE NO. 2 ________________________________________ 3 1B. [ ] THIS FINANCING STATEMENT AMENDMENT IS TO BE FILED (FOR 4 RECORD) (OR RECORDED) IN THE REAL ESTATE RECORDS. 5 2. [ ] TERMINATION: EFFECTIVENESS OF THE FINANCING STATEMENT 6 IDENTIFIED ABOVE IS TERMINATED WITH RESPECT TO SECURITY 7 INTEREST(S) OF THE SECURED PARTY AUTHORIZING THIS TERMINATION 8 STATEMENT. 9 3. [ ] CONTINUATION: EFFECTIVENESS OF THE FINANCING STATEMENT 10 IDENTIFIED ABOVE WITH RESPECT TO SECURITY INTEREST(S) OF THE 11 SECURED PARTY AUTHORIZING THIS CONTINUATION STATEMENT IS CON- 12 TINUED FOR THE ADDITIONAL PERIOD PROVIDED BY APPLICABLE LAW. 13 4. [ ] ASSIGNMENT (FULL OR PARTIAL): GIVE NAME OF ASSIGNEE IN 14 ITEM 7A OR 7B AND ADDRESS OF ASSIGNEE IN ITEM 7C; AND ALSO 15 GIVE NAME OF ASSIGNOR IN ITEM 9. 16 ____________________________________________________________ 17 5. AMENDMENT (PARTY INFORMATION): THIS AMENDMENT AFFECTS 18 [ ] DEBTOR OR [ ] SECURED PARTY OF RECORD. CHECK ONLY 1 OF 19 THESE 2 BOXES. ALSO CHECK 1 OF THE FOLLOWING THREE BOXES AND 20 PROVIDE APPROPRIATE INFORMATION IN ITEMS 6 AND/OR 7. 21 [ ] CHANGE NAME AND/OR ADDRESS: GIVE CURRENT RECORD NAME IN 22 ITEM 6A OR 6B; ALSO GIVE NEW NAME (IF NAME CHANGE) IN ITEM 7A 23 OR 7B AND/OR NEW ADDRESS (IF ADDRESS CHANGE) IN ITEM 7C. 24 [ ] DELETE NAME: GIVE RECORD NAME TO BE DELETED IN ITEM 6A 25 OR 6B. 26 [ ] ADD NAME: COMPLETE ITEM 7A OR 7B, AND ALSO ITEM 7C; ALSO 27 COMPLETE ITEMS 7D-7G (IF APPLICABLE). 02120'99 257 1 6. CURRENT RECORD INFORMATION: 2 6A. ORGANIZATION'S NAME 3 ____________________________________________________________ 4 OR 6B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 5 ____________________________________________________________ 6 7. CHANGED (NEW) OR ADDED INFORMATION: 7 7A. ORGANIZATION'S NAME 8 ____________________________________________________________ 9 OR 7B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 10 ____________________________________________________________ 11 7C. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 12 ____________________________________________________________ 13 7D. TAX ID. NO. ADD'L INFO. RE 7E. TYPE OF ORGANIZATION 14 SSN OR EIN ORGANIZATION 15 DEBTOR 16 _______________ _______________ ____________________ 17 7F. JURISDICTION OF ORGANIZATION 7G. ORGANIZATIONAL ID. NO., 18 IF ANY 19 _____________________________________________________[ ] NONE 20 8. AMENDMENT (COLLATERAL CHANGE): CHECK ONLY 1 BOX 21 DESCRIBE COLLATERAL [ ] DELETED OR [ ] ADDED, OR GIVE 22 ENTIRE [ ] RESTATED COLLATERAL DESCRIPTION, OR DESCRIBE 23 COLLATERAL [ ] ASSIGNED. 24 ____________________________________________________________ 25 9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT 26 (NAME OF ASSIGNOR, IF THIS IS AN ASSIGNMENT). IF THIS IS AN 27 AMENDMENT AUTHORIZED BY A DEBTOR WHICH ADDS COLLATERAL OR 02120'99 258 1 ADDS THE AUTHORIZING DEBTOR, OR IF THIS IS A TERMINATION 2 AUTHORIZED BY A DEBTOR, CHECK HERE [ ] AND ENTER NAME OF 3 DEBTOR AUTHORIZING THIS AMENDMENT. 4 9A. ORGANIZATION'S NAME 5 ____________________________________________________________ 6 OR 9B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 7 ____________________________________________________________ 8 10. OPTIONAL FILE REFERENCE DATA 9 ____________________________________________________________ 10 FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT 11 (FORM UCC3) (REV. 07/29/98) 12 [BACK OF FORM] 13 UCC FINANCING STATEMENT AMENDMENT ADDENDUM 14 FOLLOW INSTRUCTIONS (FRONT AND BACK) CAREFULLY 15 11. INITIAL FINANCING STATEMENT FILE NO. (SAME AS ITEM 1A ON 16 AMENDMENT FORM) 17 ____________________________________________________________ 18 12. NAME OF PARTY AUTHORIZING THIS AMENDMENT (SAME AS ITEM 9 ON 19 AMENDMENT FORM) 20 12A. ORGANIZATION'S NAME 21 ____________________________________________________________ 22 OR 12B. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 23 ____________________________________________________________ 24 13. USE THIS SPACE FOR ADDITIONAL INFORMATION 25 ___________________________________ THIS SPACE IS FOR 26 ___________________________________ FILING OFFICE USE ONLY 02120'99 259 1 FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT 2 ADDENDUM (FORM UCC3AD) (REV. 07/29/98) 3 (3) A FORM THAT A FILING OFFICE MAY NOT REFUSE TO ACCEPT 4 UNDER SUBSECTION (1) OR (2) MUST CONFORM TO THE FORMAT PRESCRIBED 5 FOR THE FORM BY THE NATIONAL CONFERENCE OF COMMISSIONERS. 6 SEC. 9522. (1) THE FILING OFFICE SHALL MAINTAIN A RECORD OF 7 THE INFORMATION PROVIDED IN A FILED FINANCING STATEMENT FOR AT 8 LEAST 1 YEAR AFTER THE EFFECTIVENESS OF THE FINANCING STATEMENT 9 HAS LAPSED UNDER SECTION 9515 WITH RESPECT TO ALL SECURED PARTIES 10 OF RECORD. THE RECORD MUST BE RETRIEVABLE BY USING THE NAME OF 11 THE DEBTOR AND 1 OF THE FOLLOWING: 12 (A) IF THE RECORD WAS FILED OR RECORDED IN THE FILING OFFICE 13 DESCRIBED IN SECTION 9501(1)(A), BY USING THE FILE NUMBER 14 ASSIGNED TO THE INITIAL FINANCING STATEMENT TO WHICH THE RECORD 15 RELATES AND THE DATE THAT THE RECORD WAS FILED OR RECORDED. 16 (B) IF RECORD WAS FILED IN THE FILING OFFICE DESCRIBED IN 17 SECTION 9501(1)(B), BY USING THE FILE NUMBER ASSIGNED TO THE INI- 18 TIAL FINANCING STATEMENT TO WHICH THE RECORD RELATES. 19 (2) EXCEPT TO THE EXTENT THAT A STATUTE GOVERNING DISPOSI- 20 TION OF PUBLIC RECORDS PROVIDES OTHERWISE, THE FILING OFFICE 21 IMMEDIATELY MAY DESTROY ANY WRITTEN RECORD EVIDENCING A FINANCING 22 STATEMENT. HOWEVER, IF THE FILING OFFICE DESTROYS A WRITTEN 23 RECORD, IT SHALL MAINTAIN ANOTHER RECORD OF THE FINANCING STATE- 24 MENT THAT COMPLIES WITH SUBSECTION (1). 25 SEC. 9523. (1) IF A PERSON THAT FILES A WRITTEN RECORD 26 REQUESTS AN ACKNOWLEDGMENT OF THE FILING, THE FILING OFFICE SHALL 27 SEND TO THE PERSON AN IMAGE OF THE RECORD SHOWING THE NUMBER 02120'99 260 1 ASSIGNED TO THE RECORD PURSUANT TO SECTION 9519(1)(A) AND THE 2 DATE AND TIME OF THE FILING OF THE RECORD. HOWEVER, IF THE 3 PERSON FURNISHES A COPY OF THE RECORD TO THE FILING OFFICE, THE 4 FILING OFFICE MAY INSTEAD DO BOTH OF THE FOLLOWING: 5 (A) NOTE UPON THE COPY THE NUMBER ASSIGNED TO THE RECORD 6 PURSUANT TO SECTION 9519(1)(A) AND THE DATE AND TIME OF THE 7 FILING OF THE RECORD. 8 (B) SEND THE COPY TO THE PERSON. 9 (2) IF A PERSON FILES A RECORD OTHER THAN A WRITTEN RECORD, 10 THE FILING OFFICE SHALL COMMUNICATE TO THE PERSON AN ACKNOWLEDG- 11 MENT THAT PROVIDES ALL OF THE FOLLOWING: 12 (A) THE INFORMATION IN THE RECORD. 13 (B) THE NUMBER ASSIGNED TO THE RECORD PURSUANT TO SECTION 14 9519(1)(A). 15 (C) THE DATE AND TIME OF THE FILING OF THE RECORD. 16 (3) THE FILING OFFICE SHALL COMMUNICATE OR OTHERWISE MAKE 17 AVAILABLE IN A RECORD 1 OR MORE OF THE FOLLOWING INFORMATION TO 18 ANY PERSON THAT REQUESTS IT: 19 (A) WHETHER THERE IS ON FILE ON A DATE AND TIME SPECIFIED BY 20 THE FILING OFFICE, BUT NOT A DATE EARLIER THAN 3 BUSINESS DAYS 21 BEFORE THE FILING OFFICE RECEIVES THE REQUEST, ANY FINANCING 22 STATEMENT THAT MEETS ALL OF THE FOLLOWING: 23 (i) DESIGNATES A PARTICULAR DEBTOR OR, IF THE REQUEST SO 24 STATES, DESIGNATES A PARTICULAR DEBTOR AT THE ADDRESS SPECIFIED 25 IN THE REQUEST. 26 (ii) HAS NOT LAPSED UNDER SECTION 9515 WITH RESPECT TO ALL 27 SECURED PARTIES OF RECORD. 02120'99 261 1 (iii) IF THE REQUEST SO STATES, HAS LAPSED UNDER SECTION 2 9515 AND A RECORD OF WHICH IS MAINTAINED BY THE FILING OFFICE 3 UNDER SECTION 9522(1). 4 (B) THE DATE AND TIME OF FILING OF EACH FINANCING 5 STATEMENT. 6 (C) THE INFORMATION PROVIDED IN EACH FINANCING STATEMENT. 7 (4) IN COMPLYING WITH ITS DUTY UNDER SUBSECTION (3), THE 8 FILING OFFICE MAY COMMUNICATE INFORMATION IN ANY MEDIUM. 9 HOWEVER, IF REQUESTED, THE FILING OFFICE SHALL COMMUNICATE INFOR- 10 MATION BY ISSUING ITS WRITTEN CERTIFICATE OR ANOTHER RECORD THAT 11 CAN BE ADMITTED INTO EVIDENCE IN THE COURTS OF THIS STATE WITHOUT 12 EXTRINSIC EVIDENCE OF ITS AUTHENTICITY. 13 (5) THE FILING OFFICE SHALL PERFORM THE ACTS REQUIRED BY 14 SUBSECTIONS (1) THROUGH (4) AT THE TIME AND IN THE MANNER PRE- 15 SCRIBED BY FILING-OFFICE RULE, BUT, IN THE CASE OF A FILING 16 OFFICE DESCRIBED IN SECTION 9501(1)(B), NOT LATER THAN 2 BUSINESS 17 DAYS AFTER THE FILING OFFICE RECEIVES THE REQUEST. 18 (6) AT LEAST WEEKLY, THE FILING OFFICE SHALL OFFER TO SELL 19 OR LICENSE TO THE PUBLIC ON A NONEXCLUSIVE BASIS, IN BULK, COPIES 20 OF ALL RECORDS FILED IN IT UNDER THIS PART, IN EVERY MEDIUM FROM 21 TIME TO TIME AVAILABLE TO THE FILING OFFICE. 22 (7) UPON REQUEST, THE FILING OFFICE SHALL FURNISH A COPY OF 23 A FILED FINANCING STATEMENT OR STATEMENT OF ASSIGNMENT FOR A UNI- 24 FORM FEE OF $1.00 PER PAGE. IF THE FILING OFFICE IS THE SECRE- 25 TARY OF STATE, THE SECRETARY OF STATE SHALL CHARGE AN ADDITIONAL 26 FEE OF $25.00 IF A PERSON REQUESTS EXPEDITING OF THE REGULAR 27 SEARCH PROCESS. THE SECRETARY OF STATE SHALL PROMULGATE RULES 02120'99 262 1 UNDER THE ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 PA 306, 2 MCL 24.201 TO 24.328, TO DEFINE WHAT CONSTITUTES EXPEDITING OF 3 THE REGULAR SEARCH PROCESS. 4 SEC. 9524. DELAY BY THE FILING OFFICE BEYOND A TIME LIMIT 5 PRESCRIBED BY THIS PART IS EXCUSED IF BOTH OF THE FOLLOWING 6 APPLY: 7 (A) THE DELAY IS CAUSED BY INTERRUPTION OF COMMUNICATION OR 8 COMPUTER FACILITIES, WAR, EMERGENCY CONDITIONS, FAILURE OF EQUIP- 9 MENT, OR OTHER CIRCUMSTANCES BEYOND CONTROL OF THE FILING 10 OFFICE. 11 (B) THE FILING OFFICE EXERCISES REASONABLE DILIGENCE UNDER 12 THE CIRCUMSTANCES. 13 SEC. 9525. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 14 (5), THE FEE FOR FILING AND INDEXING A RECORD UNDER THIS PART, 15 OTHER THAN AN INITIAL FINANCING STATEMENT OF THE KIND DESCRIBED 16 IN SECTION 9502(3), IS THE AMOUNT SPECIFIED IN SUBSECTION (3), IF 17 APPLICABLE, PLUS 1 OF THE FOLLOWING: 18 (A) $15.00 IF THE RECORD IS COMMUNICATED IN WRITING AND CON- 19 SISTS OF 1 OR 2 PAGES. 20 (B) $15.00 IF THE RECORD IS COMMUNICATED IN WRITING AND CON- 21 SISTS OF MORE THAN 2 PAGES. 22 (C) $15.00 IF THE RECORD IS COMMUNICATED BY ANOTHER MEDIUM 23 AUTHORIZED BY FILING-OFFICE RULE. 24 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), THE FEE 25 FOR FILING AND INDEXING AN INITIAL FINANCING STATEMENT OF THE 26 KIND DESCRIBED IN SECTION 9502(3) IS THE AMOUNT SPECIFIED IN 27 SUBSECTION (3), IF APPLICABLE, PLUS 1 OF THE FOLLOWING: 02120'99 263 1 (A) $15.00 IF THE FINANCING STATEMENT INDICATES THAT IT IS 2 FILED IN CONNECTION WITH A PUBLIC-FINANCE TRANSACTION. 3 (B) $15.00 IF THE FINANCING STATEMENT INDICATES THAT IT IS 4 FILED IN CONNECTION WITH A MANUFACTURED-HOME TRANSACTION. 5 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (5), IF A 6 RECORD IS COMMUNICATED IN WRITING, THE FEE FOR EACH NAME MORE 7 THAN 2 REQUIRED TO BE INDEXED IS $15.00. 8 (4) THE FEE FOR RESPONDING TO A REQUEST FOR INFORMATION FROM 9 THE FILING OFFICE, INCLUDING FOR ISSUING A CERTIFICATE SHOWING OR 10 OTHERWISE COMMUNICATING WHETHER THERE IS ON FILE ANY FINANCING 11 STATEMENT NAMING A PARTICULAR DEBTOR, IS 1 OF THE FOLLOWING: 12 (A) $15.00 IF THE REQUEST IS COMMUNICATED IN WRITING. 13 (B) $15.00 IF THE REQUEST IS COMMUNICATED BY ANOTHER MEDIUM 14 AUTHORIZED BY FILING-OFFICE RULE. 15 (5) THIS SECTION DOES NOT REQUIRE A FEE WITH RESPECT TO A 16 RECORD OF A MORTGAGE THAT IS EFFECTIVE AS A FINANCING STATEMENT 17 FILED AS A FIXTURE FILING OR AS A FINANCING STATEMENT COVERING 18 AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT UNDER SECTION 19 9502(3). HOWEVER, THE RECORDING AND SATISFACTION FEES THAT OTH- 20 ERWISE WOULD BE APPLICABLE TO THE RECORD OF THE MORTGAGE APPLY. 21 SEC. 9526. (1) THE SECRETARY OF STATE SHALL ADOPT AND PUB- 22 LISH RULES TO IMPLEMENT THIS ARTICLE. THE FILING-OFFICE RULES 23 MUST BE CONSISTENT WITH THIS ARTICLE AND ADOPTED AND PUBLISHED IN 24 ACCORDANCE WITH THE ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 25 PA 306, MCL 24.201 TO 24.328. 26 (2) TO KEEP THE FILING-OFFICE RULES AND PRACTICES OF THE 27 FILING OFFICE IN HARMONY WITH THE RULES AND PRACTICES OF FILING 02120'99 264 1 OFFICES IN OTHER JURISDICTIONS THAT ENACT SUBSTANTIALLY THIS 2 PART, AND TO KEEP THE TECHNOLOGY USED BY THE FILING OFFICE COM- 3 PATIBLE WITH THE TECHNOLOGY USED BY FILING OFFICES IN OTHER 4 JURISDICTIONS THAT ENACT SUBSTANTIALLY THIS PART, THE SECRETARY 5 OF STATE, SO FAR AS IS CONSISTENT WITH THE PURPOSES, POLICIES, 6 AND PROVISIONS OF THIS ARTICLE, IN ADOPTING, AMENDING, AND 7 REPEALING FILING-OFFICE RULES, SHALL DO ALL OF THE FOLLOWING: 8 (A) CONSULT WITH FILING OFFICES IN OTHER JURISDICTIONS THAT 9 ENACT SUBSTANTIALLY THIS PART. 10 (B) CONSULT THE MOST RECENT VERSION OF THE MODEL RULES 11 PROMULGATED BY THE INTERNATIONAL ASSOCIATION OF CORPORATE ADMIN- 12 ISTRATORS OR ANY SUCCESSOR ORGANIZATION. 13 (C) TAKE INTO CONSIDERATION THE RULES AND PRACTICES OF, AND 14 THE TECHNOLOGY USED BY, FILING OFFICES IN OTHER JURISDICTIONS 15 THAT ENACT SUBSTANTIALLY THIS PART. 16 SEC. 9527. THE SECRETARY OF STATE SHALL REPORT ANNUALLY TO 17 THE GOVERNOR AND LEGISLATURE ON THE OPERATION OF THE FILING 18 OFFICE. THE REPORT MUST CONTAIN A STATEMENT OF THE EXTENT TO 19 WHICH THE FILING-OFFICE RULES ARE NOT IN HARMONY WITH THE RULES 20 OF FILING OFFICES IN OTHER JURISDICTIONS THAT ENACT SUBSTANTIALLY 21 THIS PART AND THE REASONS FOR THESE VARIATIONS, AND THE 22 FILING-OFFICE RULES ARE NOT IN HARMONY WITH THE MOST RECENT VER- 23 SION OF THE MODEL RULES PROMULGATED BY THE INTERNATIONAL ASSOCIA- 24 TION OF CORPORATE ADMINISTRATORS, OR ANY SUCCESSOR ORGANIZATION, 25 AND THE REASONS FOR THESE VARIATIONS. 02120'99 265 1 PART 6 2 DEFAULT 3 SUBPART 1. DEFAULT AND ENFORCEMENT OF SECURITY INTEREST 4 SEC. 9601. (1) AFTER DEFAULT, A SECURED PARTY HAS THE 5 RIGHTS PROVIDED IN THIS PART AND, EXCEPT AS OTHERWISE PROVIDED IN 6 SECTION 9602, THOSE PROVIDED BY AGREEMENT OF THE PARTIES. A 7 SECURED PARTY MAY DO 1 OR MORE OF THE FOLLOWING: 8 (A) MAY REDUCE A CLAIM TO JUDGMENT, FORECLOSE, OR OTHERWISE 9 ENFORCE THE CLAIM, SECURITY INTEREST, OR AGRICULTURAL LIEN BY ANY 10 AVAILABLE JUDICIAL PROCEDURE. 11 (B) IF THE COLLATERAL IS DOCUMENTS, MAY PROCEED EITHER AS TO 12 THE DOCUMENTS OR AS TO THE GOODS THEY COVER. 13 (2) A SECURED PARTY IN POSSESSION OF COLLATERAL OR CONTROL 14 OF COLLATERAL UNDER SECTION 9104, 9105, 9106, OR 9107 HAS THE 15 RIGHTS AND DUTIES PROVIDED IN SECTION 9207. 16 (3) THE RIGHTS UNDER SUBSECTIONS (1) AND (2) ARE CUMULATIVE 17 AND MAY BE EXERCISED SIMULTANEOUSLY. 18 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (7) AND SEC- 19 TION 9605, AFTER DEFAULT, A DEBTOR AND AN OBLIGOR HAVE THE RIGHTS 20 PROVIDED IN THIS PART AND BY AGREEMENT OF THE PARTIES. 21 (5) IF A SECURED PARTY HAS REDUCED ITS CLAIM TO JUDGMENT, 22 THE LIEN OF ANY LEVY THAT MAY BE MADE UPON THE COLLATERAL BY 23 VIRTUE OF AN EXECUTION BASED UPON THE JUDGMENT RELATES BACK TO 24 THE EARLIEST OF THE FOLLOWING: 25 (A) THE DATE OF PERFECTION OF THE SECURITY INTEREST OR AGRI- 26 CULTURAL LIEN IN THE COLLATERAL. 02120'99 266 1 (B) THE DATE OF FILING A FINANCING STATEMENT COVERING THE 2 COLLATERAL. 3 (C) ANY DATE SPECIFIED IN A STATUTE UNDER WHICH THE AGRICUL- 4 TURAL LIEN WAS CREATED. 5 (6) A SALE PURSUANT TO AN EXECUTION IS A FORECLOSURE OF THE 6 SECURITY INTEREST OR AGRICULTURAL LIEN BY JUDICIAL PROCEDURE 7 WITHIN THE MEANING OF THIS SECTION. A SECURED PARTY MAY PURCHASE 8 AT THE SALE AND THEREAFTER HOLD THE COLLATERAL FREE OF ANY OTHER 9 REQUIREMENTS OF THIS ARTICLE. 10 (7) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9607(3), THIS 11 PART IMPOSES NO DUTIES UPON A SECURED PARTY THAT IS A CONSIGNOR 12 OR IS A BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, OR 13 PROMISSORY NOTES. 14 SEC. 9602. EXCEPT AS OTHERWISE PROVIDED IN SECTION 9624, TO 15 THE EXTENT THAT THEY GIVE RIGHTS TO A DEBTOR OR OBLIGOR AND 16 IMPOSE DUTIES ON A SECURED PARTY, THE DEBTOR OR OBLIGOR MAY NOT 17 WAIVE OR VARY THE RULES STATED IN THE FOLLOWING LISTED SECTIONS: 18 (A) SECTION 9207(2)(D)(iii), WHICH DEALS WITH USE AND OPERA- 19 TION OF THE COLLATERAL BY THE SECURED PARTY. 20 (B) SECTION 9210, WHICH DEALS WITH REQUESTS FOR AN ACCOUNT- 21 ING AND REQUESTS CONCERNING A LIST OF COLLATERAL AND STATEMENT OF 22 ACCOUNT. 23 (C) SECTION 9607(3), WHICH DEALS WITH COLLECTION AND 24 ENFORCEMENT OF COLLATERAL. 25 (D) SECTIONS 9608(1) AND 9615(3) TO THE EXTENT THAT THEY 26 DEAL WITH APPLICATION OR PAYMENT OF NONCASH PROCEEDS OF 27 COLLECTION, ENFORCEMENT, OR DISPOSITION. 02120'99 267 1 (E) SECTIONS 9608(1) AND 9615(4) TO THE EXTENT THAT THEY 2 REQUIRE ACCOUNTING FOR OR PAYMENT OF SURPLUS PROCEEDS OF 3 COLLATERAL. 4 (F) SECTION 9609 TO THE EXTENT THAT IT IMPOSES UPON A 5 SECURED PARTY THAT TAKES POSSESSION OF COLLATERAL WITHOUT JUDI- 6 CIAL PROCESS THE DUTY TO DO SO WITHOUT BREACH OF THE PEACE. 7 (G) SECTIONS 9610(2), 9611, 9613, AND 9614, WHICH DEAL WITH 8 DISPOSITION OF COLLATERAL. 9 (H) SECTION 9615(6), WHICH DEALS WITH CALCULATION OF A DEFI- 10 CIENCY OR SURPLUS WHEN A DISPOSITION IS MADE TO THE SECURED 11 PARTY, A PERSON RELATED TO THE SECURED PARTY, OR A SECONDARY 12 OBLIGOR. 13 (I) SECTION 9616, WHICH DEALS WITH EXPLANATION OF THE CALCU- 14 LATION OF A SURPLUS OR DEFICIENCY. 15 (J) SECTIONS 9620, 9621, AND 9622, WHICH DEAL WITH ACCEP- 16 TANCE OF COLLATERAL IN SATISFACTION OF OBLIGATION. 17 (K) SECTION 9623, WHICH DEALS WITH REDEMPTION OF 18 COLLATERAL. 19 (l) SECTION 9624, WHICH DEALS WITH PERMISSIBLE WAIVERS. 20 (M) SECTIONS 9625 AND 9626, WHICH DEAL WITH THE SECURED 21 PARTY'S LIABILITY FOR FAILURE TO COMPLY WITH THIS ARTICLE. 22 SEC. 9603. (1) THE PARTIES MAY DETERMINE BY AGREEMENT THE 23 STANDARDS MEASURING THE FULFILLMENT OF THE RIGHTS OF A DEBTOR OR 24 OBLIGOR AND THE DUTIES OF A SECURED PARTY UNDER A RULE STATED IN 25 SECTION 9602 IF THE STANDARDS ARE NOT MANIFESTLY UNREASONABLE. 26 (2) SUBSECTION (1) DOES NOT APPLY TO THE DUTY UNDER SECTION 27 9609 TO REFRAIN FROM BREACHING THE PEACE. 02120'99 268 1 SEC. 9604. (1) IF A SECURITY AGREEMENT COVERS BOTH PERSONAL 2 AND REAL PROPERTY, A SECURED PARTY MAY DO EITHER OF THE 3 FOLLOWING: 4 (A) PROCEED UNDER THIS PART AS TO THE PERSONAL PROPERTY 5 WITHOUT PREJUDICING ANY RIGHTS WITH RESPECT TO THE REAL 6 PROPERTY. 7 (B) PROCEED AS TO BOTH THE PERSONAL PROPERTY AND THE REAL 8 PROPERTY IN ACCORDANCE WITH THE RIGHTS WITH RESPECT TO THE REAL 9 PROPERTY, IN WHICH CASE THE OTHER PROVISIONS OF THIS PART DO NOT 10 APPLY. 11 (2) SUBJECT TO SUBSECTION (3), IF A SECURITY AGREEMENT 12 COVERS GOODS THAT ARE OR BECOME FIXTURES, A SECURED PARTY MAY DO 13 EITHER OF THE FOLLOWING: 14 (A) PROCEED UNDER THIS PART. 15 (B) PROCEED IN ACCORDANCE WITH THE RIGHTS WITH RESPECT TO 16 REAL PROPERTY, IN WHICH CASE THE OTHER PROVISIONS OF THIS PART DO 17 NOT APPLY. 18 (3) SUBJECT TO THE OTHER PROVISIONS OF THIS PART, IF A 19 SECURED PARTY HOLDING A SECURITY INTEREST IN FIXTURES HAS PRIOR- 20 ITY OVER ALL OWNERS AND ENCUMBRANCERS OF THE REAL PROPERTY, THE 21 SECURED PARTY, AFTER DEFAULT, MAY REMOVE THE COLLATERAL FROM THE 22 REAL PROPERTY. 23 (4) A SECURED PARTY THAT REMOVES COLLATERAL SHALL PROMPTLY 24 REIMBURSE ANY ENCUMBRANCER OR OWNER OF THE REAL PROPERTY, OTHER 25 THAN THE DEBTOR, FOR THE COST OF REPAIR OF ANY PHYSICAL INJURY 26 CAUSED BY THE REMOVAL. THE SECURED PARTY NEED NOT REIMBURSE THE 27 ENCUMBRANCER OR OWNER FOR ANY DIMINUTION IN VALUE OF THE REAL 02120'99 269 1 PROPERTY CAUSED BY THE ABSENCE OF THE GOODS REMOVED OR BY ANY 2 NECESSITY OF REPLACING THEM. A PERSON ENTITLED TO REIMBURSEMENT 3 MAY REFUSE PERMISSION TO REMOVE UNTIL THE SECURED PARTY GIVES 4 ADEQUATE ASSURANCE FOR THE PERFORMANCE OF THE OBLIGATION TO 5 REIMBURSE. 6 SEC. 9605. A SECURED PARTY DOES NOT OWE A DUTY BASED ON ITS 7 STATUS AS SECURED PARTY TO EITHER OF THE FOLLOWING: 8 (A) TO A PERSON THAT IS A DEBTOR OR OBLIGOR, UNLESS THE 9 SECURED PARTY KNOWS ALL OF THE FOLLOWING: 10 (i) THAT THE PERSON IS A DEBTOR OR OBLIGOR. 11 (ii) THE IDENTITY OF THE PERSON. 12 (iii) HOW TO COMMUNICATE WITH THE PERSON. 13 (B) TO A SECURED PARTY OR LIENHOLDER THAT HAS FILED A 14 FINANCING STATEMENT AGAINST A PERSON, UNLESS THE SECURED PARTY 15 KNOWS BOTH OF THE FOLLOWING: 16 (i) THAT THE PERSON IS A DEBTOR. 17 (ii) THE IDENTITY OF THE PERSON. 18 SEC. 9606. FOR PURPOSES OF THIS PART, A DEFAULT OCCURS IN 19 CONNECTION WITH AN AGRICULTURAL LIEN AT THE TIME THE SECURED 20 PARTY BECOMES ENTITLED TO ENFORCE THE LIEN IN ACCORDANCE WITH THE 21 STATUTE UNDER WHICH IT WAS CREATED. 22 SEC. 9607. (1) IF SO AGREED, AND IN ANY EVENT AFTER 23 DEFAULT, A SECURED PARTY MAY DO 1 OR MORE OF THE FOLLOWING: 24 (A) NOTIFY AN ACCOUNT DEBTOR OR OTHER PERSON OBLIGATED ON 25 COLLATERAL TO MAKE PAYMENT OR OTHERWISE RENDER PERFORMANCE TO OR 26 FOR THE BENEFIT OF THE SECURED PARTY. 02120'99 270 1 (B) TAKE ANY PROCEEDS TO WHICH THE SECURED PARTY IS ENTITLED 2 UNDER SECTION 9315. 3 (C) ENFORCE THE OBLIGATIONS OF AN ACCOUNT DEBTOR OR OTHER 4 PERSON OBLIGATED ON COLLATERAL AND EXERCISE THE RIGHTS OF THE 5 DEBTOR WITH RESPECT TO THE OBLIGATION OF THE ACCOUNT DEBTOR OR 6 OTHER PERSON OBLIGATED ON COLLATERAL TO MAKE PAYMENT OR OTHERWISE 7 RENDER PERFORMANCE TO THE DEBTOR, AND WITH RESPECT TO ANY PROP- 8 ERTY THAT SECURES THE OBLIGATIONS OF THE ACCOUNT DEBTOR OR OTHER 9 PERSON OBLIGATED ON THE COLLATERAL. 10 (D) IF IT HOLDS A SECURITY INTEREST IN A DEPOSIT ACCOUNT 11 PERFECTED BY CONTROL UNDER SECTION 9104(1)(A), APPLY THE BALANCE 12 OF THE DEPOSIT ACCOUNT TO THE OBLIGATION SECURED BY THE DEPOSIT 13 ACCOUNT. 14 (E) IF IT HOLDS A SECURITY INTEREST IN A DEPOSIT ACCOUNT 15 PERFECTED BY CONTROL UNDER SECTION 9104(1)(B) OR (C), INSTRUCT 16 THE BANK TO PAY THE BALANCE OF THE DEPOSIT ACCOUNT TO OR FOR THE 17 BENEFIT OF THE SECURED PARTY. 18 (2) IF NECESSARY TO ENABLE A SECURED PARTY TO EXERCISE UNDER 19 SUBSECTION (1)(C) THE RIGHT OF A DEBTOR TO ENFORCE A MORTGAGE 20 NONJUDICIALLY, THE SECURED PARTY MAY RECORD BOTH OF THE FOLLOWING 21 IN THE OFFICE IN WHICH A RECORD OF THE MORTGAGE IS RECORDED: 22 (A) A COPY OF THE SECURITY AGREEMENT THAT CREATES OR PRO- 23 VIDES FOR A SECURITY INTEREST IN THE OBLIGATION SECURED BY THE 24 MORTGAGE. 25 (B) THE SECURED PARTY'S SWORN AFFIDAVIT IN RECORDABLE FORM 26 STATING THAT A DEFAULT HAS OCCURRED AND THE SECURED PARTY IS 27 ENTITLED TO ENFORCE THE MORTGAGE NONJUDICIALLY. 02120'99 271 1 (3) A SECURED PARTY SHALL PROCEED IN A COMMERCIALLY 2 REASONABLE MANNER IF THE SECURED PARTY MEETS BOTH OF THE 3 FOLLOWING: 4 (A) UNDERTAKES TO COLLECT FROM OR ENFORCE AN OBLIGATION OF 5 AN ACCOUNT DEBTOR OR OTHER PERSON OBLIGATED ON COLLATERAL. 6 (B) IS ENTITLED TO CHARGE BACK UNCOLLECTED COLLATERAL OR 7 OTHERWISE TO FULL OR LIMITED RECOURSE AGAINST THE DEBTOR OR A 8 SECONDARY OBLIGOR. 9 (4) A SECURED PARTY MAY DEDUCT FROM THE COLLECTIONS MADE 10 PURSUANT TO SUBSECTION (3) REASONABLE EXPENSES OF COLLECTION AND 11 ENFORCEMENT, INCLUDING REASONABLE ATTORNEY FEES AND LEGAL 12 EXPENSES INCURRED BY THE SECURED PARTY. 13 (5) THIS SECTION DOES NOT DETERMINE WHETHER AN ACCOUNT 14 DEBTOR, BANK, OR OTHER PERSON OBLIGATED ON COLLATERAL OWES A DUTY 15 TO A SECURED PARTY. 16 SEC. 9608. (1) IF A SECURITY INTEREST OR AGRICULTURAL LIEN 17 SECURES PAYMENT OR PERFORMANCE OF AN OBLIGATION, THE FOLLOWING 18 RULES APPLY: 19 (A) A SECURED PARTY SHALL APPLY OR PAY OVER FOR APPLICATION 20 THE CASH PROCEEDS OF COLLECTION OR ENFORCEMENT UNDER THIS SECTION 21 IN THE FOLLOWING ORDER TO: 22 (i) THE REASONABLE EXPENSES OF COLLECTION AND ENFORCEMENT 23 AND, TO THE EXTENT PROVIDED FOR BY AGREEMENT AND NOT PROHIBITED 24 BY LAW, REASONABLE ATTORNEY FEES AND LEGAL EXPENSES INCURRED BY 25 THE SECURED PARTY. 02120'99 272 1 (ii) THE SATISFACTION OF OBLIGATIONS SECURED BY THE SECURITY 2 INTEREST OR AGRICULTURAL LIEN UNDER WHICH THE COLLECTION OR 3 ENFORCEMENT IS MADE. 4 (iii) THE SATISFACTION OF OBLIGATIONS SECURED BY ANY SUBOR- 5 DINATE SECURITY INTEREST IN OR OTHER LIEN ON THE COLLATERAL 6 SUBJECT TO THE SECURITY INTEREST OR AGRICULTURAL LIEN UNDER WHICH 7 THE COLLECTION OR ENFORCEMENT IS MADE IF THE SECURED PARTY 8 RECEIVES AN AUTHENTICATED DEMAND FOR PROCEEDS BEFORE DISTRIBUTION 9 OF THE PROCEEDS IS COMPLETED. 10 (B) IF REQUESTED BY A SECURED PARTY, A HOLDER OF A SUBORDI- 11 NATE SECURITY INTEREST OR OTHER LIEN SHALL FURNISH REASONABLE 12 PROOF OF THE INTEREST OR LIEN WITHIN A REASONABLE TIME. UNLESS 13 THE HOLDER COMPLIES, THE SECURED PARTY NEED NOT COMPLY WITH THE 14 HOLDER'S DEMAND UNDER SUBDIVISION (A)(iii). 15 (C) A SECURED PARTY NEED NOT APPLY OR PAY OVER FOR APPLICA- 16 TION NONCASH PROCEEDS OF COLLECTION AND ENFORCEMENT UNDER THIS 17 SECTION UNLESS THE FAILURE TO DO SO WOULD BE COMMERCIALLY 18 UNREASONABLE. A SECURED PARTY THAT APPLIES OR PAYS OVER FOR 19 APPLICATION NONCASH PROCEEDS SHALL DO SO IN A COMMERCIALLY REA- 20 SONABLE MANNER. 21 (D) A SECURED PARTY SHALL ACCOUNT TO AND PAY A DEBTOR FOR 22 ANY SURPLUS, AND THE OBLIGOR IS LIABLE FOR ANY DEFICIENCY. 23 (2) IF THE UNDERLYING TRANSACTION IS A SALE OF ACCOUNTS, 24 CHATTEL PAPER, PAYMENT INTANGIBLES, OR PROMISSORY NOTES, THE 25 DEBTOR IS NOT ENTITLED TO ANY SURPLUS, AND THE OBLIGOR IS NOT 26 LIABLE FOR ANY DEFICIENCY. 02120'99 273 1 SEC. 9609. (1) AFTER DEFAULT, A SECURED PARTY MAY DO 1 OR 2 MORE OF THE FOLLOWING: 3 (A) TAKE POSSESSION OF THE COLLATERAL. 4 (B) WITHOUT REMOVAL, RENDER EQUIPMENT UNUSABLE AND DISPOSE 5 OF COLLATERAL ON A DEBTOR'S PREMISES UNDER SECTION 9610. 6 (2) A SECURED PARTY MAY PROCEED UNDER SUBSECTION (1) EITHER 7 PURSUANT TO JUDICIAL PROCESS, OR WITHOUT JUDICIAL PROCESS IF IT 8 PROCEEDS WITHOUT BREACH OF THE PEACE. 9 (3) IF SO AGREED, AND IN ANY EVENT AFTER DEFAULT, A SECURED 10 PARTY MAY REQUIRE THE DEBTOR TO ASSEMBLE THE COLLATERAL AND MAKE 11 IT AVAILABLE TO THE SECURED PARTY AT A PLACE TO BE DESIGNATED BY 12 THE SECURED PARTY THAT IS REASONABLY CONVENIENT TO BOTH PARTIES. 13 SEC. 9610. (1) AFTER DEFAULT, A SECURED PARTY MAY SELL, 14 LEASE, LICENSE, OR OTHERWISE DISPOSE OF ANY OR ALL OF THE COLLAT- 15 ERAL IN ITS PRESENT CONDITION OR FOLLOWING ANY COMMERCIALLY REA- 16 SONABLE PREPARATION OR PROCESSING. 17 (2) EVERY ASPECT OF A DISPOSITION OF COLLATERAL, INCLUDING 18 THE METHOD, MANNER, TIME, PLACE, AND OTHER TERMS, MUST BE COMMER- 19 CIALLY REASONABLE. IF COMMERCIALLY REASONABLE, A SECURED PARTY 20 MAY DISPOSE OF COLLATERAL BY PUBLIC OR PRIVATE PROCEEDINGS, BY 1 21 OR MORE CONTRACTS, AS A UNIT OR IN PARCELS, AND AT ANY TIME AND 22 PLACE AND ON ANY TERMS. 23 (3) A SECURED PARTY MAY PURCHASE COLLATERAL EITHER AT A 24 PUBLIC DISPOSITION, OR AT A PRIVATE DISPOSITION ONLY IF THE COL- 25 LATERAL IS OF A KIND THAT IS CUSTOMARILY SOLD ON A RECOGNIZED 26 MARKET OR THE SUBJECT OF WIDELY DISTRIBUTED STANDARD PRICE 27 QUOTATIONS. 02120'99 274 1 (4) A CONTRACT FOR SALE, LEASE, LICENSE, OR OTHER 2 DISPOSITION INCLUDES THE WARRANTIES RELATING TO TITLE, POSSES- 3 SION, QUIET ENJOYMENT, AND THE LIKE WHICH BY OPERATION OF LAW 4 ACCOMPANY A VOLUNTARY DISPOSITION OF PROPERTY OF THE KIND SUBJECT 5 TO THE CONTRACT. 6 (5) A SECURED PARTY MAY DISCLAIM OR MODIFY WARRANTIES UNDER 7 SUBSECTION (4) EITHER IN A MANNER THAT WOULD BE EFFECTIVE TO DIS- 8 CLAIM OR MODIFY THE WARRANTIES IN A VOLUNTARY DISPOSITION OF 9 PROPERTY OF THE KIND SUBJECT TO THE CONTRACT OF DISPOSITION, OR 10 BY COMMUNICATING TO THE PURCHASER A RECORD EVIDENCING THE CON- 11 TRACT FOR DISPOSITION AND INCLUDING AN EXPRESS DISCLAIMER OR MOD- 12 IFICATION OF THE WARRANTIES. 13 (6) A RECORD IS SUFFICIENT TO DISCLAIM WARRANTIES UNDER SUB- 14 SECTION (5) IF IT INDICATES "THERE IS NO WARRANTY RELATING TO 15 TITLE, POSSESSION, QUIET ENJOYMENT, OR THE LIKE IN THIS 16 DISPOSITION" OR USES WORDS OF SIMILAR IMPORT. 17 SEC. 9611. (1) AS USED IN THIS SECTION, "NOTIFICATION DATE" 18 MEANS THE EARLIER OF THE DATE ON WHICH 1 OF THE FOLLOWING 19 OCCURS: 20 (A) A SECURED PARTY SENDS TO THE DEBTOR AND ANY SECONDARY 21 OBLIGOR AN AUTHENTICATED NOTIFICATION OF DISPOSITION. 22 (B) THE DEBTOR AND ANY SECONDARY OBLIGOR WAIVE THE RIGHT TO 23 NOTIFICATION. 24 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), A 25 SECURED PARTY THAT DISPOSES OF COLLATERAL UNDER SECTION 9610 26 SHALL SEND TO THE PERSONS SPECIFIED IN SUBSECTION (3) A 27 REASONABLE AUTHENTICATED NOTIFICATION OF DISPOSITION. 02120'99 275 1 (3) TO COMPLY WITH SUBSECTION (2), THE SECURED PARTY SHALL 2 SEND AN AUTHENTICATED NOTIFICATION OF DISPOSITION TO ALL OF THE 3 FOLLOWING: 4 (A) THE DEBTOR. 5 (B) ANY SECONDARY OBLIGOR. 6 (C) IF THE COLLATERAL IS OTHER THAN CONSUMER GOODS, ALL OF 7 THE FOLLOWING, AS APPLICABLE: 8 (i) ANY OTHER PERSON FROM WHICH THE SECURED PARTY HAS 9 RECEIVED, BEFORE THE NOTIFICATION DATE, AN AUTHENTICATED NOTIFI- 10 CATION OF A CLAIM OF AN INTEREST IN THE COLLATERAL. 11 (ii) ANY OTHER SECURED PARTY OR LIENHOLDER THAT, 10 DAYS 12 BEFORE THE NOTIFICATION DATE, HELD A SECURITY INTEREST IN OR 13 OTHER LIEN ON THE COLLATERAL PERFECTED BY THE FILING OF A FINANC- 14 ING STATEMENT THAT IDENTIFIED THE COLLATERAL, WAS INDEXED UNDER 15 THE DEBTOR'S NAME AS OF THAT DATE, AND WAS FILED IN THE OFFICE IN 16 WHICH TO FILE A FINANCING STATEMENT AGAINST THE DEBTOR COVERING 17 THE COLLATERAL AS OF THAT DATE. 18 (iii) ANY OTHER SECURED PARTY THAT, 10 DAYS BEFORE THE NOTI- 19 FICATION DATE, HELD A SECURITY INTEREST IN THE COLLATERAL PERFEC- 20 TED BY COMPLIANCE WITH A STATUTE, REGULATION, OR TREATY DESCRIBED 21 IN SECTION 9311(1). 22 (4) SUBSECTION (2) DOES NOT APPLY IF THE COLLATERAL IS PER- 23 ISHABLE OR THREATENS TO DECLINE SPEEDILY IN VALUE OR IS OF A TYPE 24 CUSTOMARILY SOLD ON A RECOGNIZED MARKET. 25 (5) A SECURED PARTY COMPLIES WITH THE REQUIREMENT FOR NOTI- 26 FICATION PRESCRIBED BY SUBSECTION (3)(C)(ii) IF THE SECURED PARTY 27 DOES BOTH OF THE FOLLOWING: 02120'99 276 1 (A) NOT LATER THAN 20 DAYS OR EARLIER THAN 30 DAYS BEFORE 2 THE NOTIFICATION DATE, THE SECURED PARTY REQUESTS, IN A COMMER- 3 CIALLY REASONABLE MANNER, INFORMATION CONCERNING FINANCING STATE- 4 MENTS INDEXED UNDER THE DEBTOR'S NAME IN THE OFFICE INDICATED IN 5 SUBSECTION (3)(C)(ii). 6 (B) BEFORE THE NOTIFICATION DATE, 1 OF THE FOLLOWING 7 APPLIES: 8 (i) THE SECURED PARTY DID NOT RECEIVE A RESPONSE TO THE 9 REQUEST FOR INFORMATION. 10 (ii) THE SECURED PARTY RECEIVED A RESPONSE TO THE REQUEST 11 FOR INFORMATION AND SENT AN AUTHENTICATED NOTIFICATION OF DISPO- 12 SITION TO EACH SECURED PARTY OR OTHER LIENHOLDER NAMED IN THAT 13 RESPONSE WHOSE FINANCING STATEMENT COVERED THE COLLATERAL. 14 SEC. 9612. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 15 (2), WHETHER A NOTIFICATION IS SENT WITHIN A REASONABLE TIME IS A 16 QUESTION OF FACT. 17 (2) IN A TRANSACTION OTHER THAN A CONSUMER TRANSACTION, A 18 NOTIFICATION OF DISPOSITION SENT AFTER DEFAULT AND 10 DAYS OR 19 MORE BEFORE THE EARLIEST TIME OF DISPOSITION SET FORTH IN THE 20 NOTIFICATION IS SENT WITHIN A REASONABLE TIME BEFORE THE 21 DISPOSITION. 22 SEC. 9613. EXCEPT IN A CONSUMER-GOODS TRANSACTION, THE FOL- 23 LOWING RULES APPLY: 24 (A) THE CONTENTS OF A NOTIFICATION OF DISPOSITION ARE SUFFI- 25 CIENT IF THE NOTIFICATION DOES ALL OF THE FOLLOWING: 26 (i) DESCRIBES THE DEBTOR AND THE SECURED PARTY. 02120'99 277 1 (ii) DESCRIBES THE COLLATERAL THAT IS THE SUBJECT OF THE 2 INTENDED DISPOSITION. 3 (iii) STATES THE METHOD OF INTENDED DISPOSITION. 4 (iv) STATES THAT THE DEBTOR IS ENTITLED TO AN ACCOUNTING OF 5 THE UNPAID INDEBTEDNESS AND STATES THE CHARGE, IF ANY, FOR AN 6 ACCOUNTING. 7 (v) STATES THE TIME AND PLACE OF A PUBLIC SALE OR THE TIME 8 AFTER WHICH ANY OTHER DISPOSITION IS TO BE MADE. 9 (B) WHETHER THE CONTENTS OF A NOTIFICATION THAT LACKS ANY OF 10 THE INFORMATION SPECIFIED IN SUBDIVISION (A) ARE NEVERTHELESS 11 SUFFICIENT IS A QUESTION OF FACT. 12 (C) THE CONTENTS OF A NOTIFICATION PROVIDING SUBSTANTIALLY 13 THE INFORMATION SPECIFIED IN SUBDIVISION (A) ARE SUFFICIENT, EVEN 14 IF THE NOTIFICATION INCLUDES INFORMATION NOT SPECIFIED BY THAT 15 PARAGRAPH OR MINOR ERRORS THAT ARE NOT SERIOUSLY MISLEADING. 16 (D) A PARTICULAR PHRASING OF THE NOTIFICATION IS NOT 17 REQUIRED. 18 (E) THE FOLLOWING FORM OF NOTIFICATION AND THE FORM APPEAR- 19 ING IN SECTION 9614(C), WHEN COMPLETED, EACH PROVIDES SUFFICIENT 20 INFORMATION: 21 NOTIFICATION OF DISPOSITION OF COLLATERAL 22 TO: [NAME OF DEBTOR, OBLIGOR, OR OTHER PERSON TO 23 WHICH THE NOTIFICATION IS SENT] 24 FROM: [NAME, ADDRESS, AND TELEPHONE NUMBER OF 25 SECURED PARTY] 26 NAME OF DEBTOR(S): [INCLUDE ONLY IF DEBTOR(S) ARE NOT AN 27 ADDRESSEE] 28 [FOR A PUBLIC DISPOSITION:] 02120'99 278 1 WE WILL SELL [OR LEASE OR LICENSE, AS APPLICABLE] THE 2 [DESCRIBE COLLATERAL] [TO THE HIGHEST QUALIFIED BIDDER] IN PUBLIC 3 AS FOLLOWS: 4 DAY AND DATE: ____________________ 5 TIME: ____________________ 6 PLACE: ____________________ 7 [FOR A PRIVATE DISPOSITION:] 8 WE WILL SELL [OR LEASE OR LICENSE, AS APPLICABLE] THE 9 [DESCRIBE COLLATERAL] PRIVATELY SOMETIME AFTER [DAY AND DATE]. 10 YOU ARE ENTITLED TO AN ACCOUNTING OF THE UNPAID INDEBTEDNESS 11 SECURED BY THE PROPERTY THAT WE INTEND TO SELL [OR LEASE OR 12 LICENSE, AS APPLICABLE] [FOR A CHARGE OF $_______________]. YOU 13 MAY REQUEST AN ACCOUNTING BY CALLING US AT [TELEPHONE NUMBER]. 14 [END OF FORM] 15 SEC. 9614. IN A CONSUMER-GOODS TRANSACTION, THE FOLLOWING 16 RULES APPLY: 17 (A) A NOTIFICATION OF DISPOSITION MUST PROVIDE ALL OF THE 18 FOLLOWING INFORMATION: 19 (i) THE INFORMATION SPECIFIED IN SECTION 9613(A). 20 (ii) A DESCRIPTION OF ANY LIABILITY FOR A DEFICIENCY OF THE 21 PERSON TO WHICH THE NOTIFICATION IS SENT. 22 (iii) A TELEPHONE NUMBER FROM WHICH THE AMOUNT THAT MUST BE 23 PAID TO THE SECURED PARTY TO REDEEM THE COLLATERAL UNDER SECTION 24 9623 IS AVAILABLE. 25 (iv) A TELEPHONE NUMBER OR MAILING ADDRESS FROM WHICH ADDI- 26 TIONAL INFORMATION CONCERNING THE DISPOSITION AND THE OBLIGATION 27 SECURED IS AVAILABLE. 02120'99 279 1 (B) A PARTICULAR PHRASING OF THE NOTIFICATION IS NOT 2 REQUIRED. 3 (C) THE FOLLOWING FORM OF NOTIFICATION, WHEN COMPLETED, PRO- 4 VIDES SUFFICIENT INFORMATION: 5 [NAME AND ADDRESS OF SECURED PARTY] 6 [DATE] 7 NOTICE OF OUR PLAN TO SELL PROPERTY 8 [NAME AND ADDRESS OF ANY OBLIGOR WHO IS ALSO A DEBTOR] 9 SUBJECT: [IDENTIFICATION OF TRANSACTION] 10 WE HAVE YOUR [DESCRIBE COLLATERAL], BECAUSE YOU BROKE PROM- 11 ISES IN OUR AGREEMENT. 12 [FOR A PUBLIC DISPOSITION:] 13 WE WILL SELL [DESCRIBE COLLATERAL] AT PUBLIC SALE. A SALE 14 COULD INCLUDE A LEASE OR LICENSE. THE SALE WILL BE HELD AS 15 FOLLOWS: 16 DATE: ____________________ 17 TIME: ____________________ 18 PLACE: ____________________ 19 YOU MAY ATTEND THE SALE AND BRING BIDDERS IF YOU WANT. 20 [FOR A PRIVATE DISPOSITION:] 21 WE WILL SELL [DESCRIBE COLLATERAL] AT PRIVATE SALE SOMETIME 22 AFTER [DATE]. A SALE COULD INCLUDE A LEASE OR LICENSE. 23 THE MONEY THAT WE GET FROM THE SALE (AFTER PAYING OUR COSTS) 24 WILL REDUCE THE AMOUNT YOU OWE. IF WE GET LESS MONEY THAN YOU 25 OWE, YOU [WILL OR WILL NOT, AS APPLICABLE] STILL OWE US THE 26 DIFFERENCE. IF WE GET MORE MONEY THAN YOU OWE, YOU WILL GET THE 27 EXTRA MONEY, UNLESS WE MUST PAY IT TO SOMEONE ELSE. 02120'99 280 1 YOU CAN GET THE PROPERTY BACK AT ANY TIME BEFORE WE SELL IT 2 BY PAYING US THE FULL AMOUNT YOU OWE (NOT JUST THE PAST DUE 3 PAYMENTS), INCLUDING OUR EXPENSES. TO LEARN THE EXACT AMOUNT YOU 4 MUST PAY, CALL US AT [TELEPHONE NUMBER]. 5 IF YOU WANT US TO EXPLAIN TO YOU IN WRITING HOW WE HAVE FIG- 6 URED THE AMOUNT THAT YOU OWE US, YOU MAY CALL US AT [TELEPHONE 7 NUMBER] [OR WRITE US AT [SECURED PARTY'S ADDRESS]] AND REQUEST A 8 WRITTEN EXPLANATION. [WE WILL CHARGE YOU $_______________ FOR 9 THE EXPLANATION IF WE SENT YOU ANOTHER WRITTEN EXPLANATION OF THE 10 AMOUNT YOU OWE US WITHIN THE LAST 6 MONTHS.] 11 IF YOU NEED MORE INFORMATION ABOUT THE SALE, CALL US AT 12 [TELEPHONE NUMBER] [OR WRITE US AT [SECURED PARTY'S ADDRESS]]. 13 WE ARE SENDING THIS NOTICE TO THE FOLLOWING OTHER PEOPLE WHO 14 HAVE AN INTEREST IN [DESCRIBE COLLATERAL] OR WHO OWE MONEY UNDER 15 YOUR AGREEMENT: [NAMES OF ALL OTHER DEBTORS AND OBLIGORS, IF 16 ANY]. 17 [END OF FORM] 18 (D) A NOTIFICATION IN THE FORM OF SUBDIVISION (C) IS SUFFI- 19 CIENT, EVEN IF ADDITIONAL INFORMATION APPEARS AT THE END OF THE 20 FORM. 21 (E) A NOTIFICATION IN THE FORM OF SUBDIVISION (C) IS SUFFI- 22 CIENT, EVEN IF IT INCLUDES ERRORS IN INFORMATION NOT REQUIRED BY 23 SUBDIVISION (A), UNLESS THE ERROR IS MISLEADING WITH RESPECT TO 24 RIGHTS ARISING UNDER THIS ARTICLE. 25 (F) IF A NOTIFICATION UNDER THIS SECTION IS NOT IN THE FORM 26 OF SUBDIVISION (C), LAW OTHER THAN THIS ARTICLE DETERMINES THE 27 EFFECT OF INCLUDING INFORMATION NOT REQUIRED BY SUBDIVISION (A). 02120'99 281 1 SEC. 9615. (1) A SECURED PARTY SHALL APPLY OR PAY OVER FOR 2 APPLICATION THE CASH PROCEEDS OF DISPOSITION IN THE FOLLOWING 3 ORDER: 4 (A) TO THE REASONABLE EXPENSES OF RETAKING, HOLDING, PREPAR- 5 ING FOR DISPOSITION, PROCESSING, AND DISPOSING, AND, TO THE 6 EXTENT PROVIDED FOR BY AGREEMENT AND NOT PROHIBITED BY LAW, REA- 7 SONABLE ATTORNEY FEES AND LEGAL EXPENSES INCURRED BY THE SECURED 8 PARTY. 9 (B) TO THE SATISFACTION OF OBLIGATIONS SECURED BY THE SECUR- 10 ITY INTEREST OR AGRICULTURAL LIEN UNDER WHICH THE DISPOSITION IS 11 MADE. 12 (C) TO THE SATISFACTION OF OBLIGATIONS SECURED BY ANY SUBOR- 13 DINATE SECURITY INTEREST IN OR OTHER SUBORDINATE LIEN ON THE COL- 14 LATERAL IF BOTH OF THE FOLLOWING, IF APPLICABLE, ARE MET: 15 (i) THE SECURED PARTY RECEIVES FROM THE HOLDER OF THE SUBOR- 16 DINATE SECURITY INTEREST OR OTHER LIEN AN AUTHENTICATED DEMAND 17 FOR PROCEEDS BEFORE DISTRIBUTION OF THE PROCEEDS IS COMPLETED. 18 (ii) IN A CASE IN WHICH A CONSIGNOR HAS AN INTEREST IN THE 19 COLLATERAL, THE SUBORDINATE SECURITY INTEREST OR OTHER LIEN IS 20 SENIOR TO THE INTEREST OF THE CONSIGNOR. 21 (D) TO A SECURED PARTY THAT IS A CONSIGNOR OF THE COLLATERAL 22 IF THE SECURED PARTY RECEIVES FROM THE CONSIGNOR AN AUTHENTICATED 23 DEMAND FOR PROCEEDS BEFORE DISTRIBUTION OF THE PROCEEDS IS 24 COMPLETED. 25 (2) IF REQUESTED BY A SECURED PARTY, A HOLDER OF A SUBORDI- 26 NATE SECURITY INTEREST OR OTHER LIEN SHALL FURNISH REASONABLE 27 PROOF OF THE INTEREST OR LIEN WITHIN A REASONABLE TIME. UNLESS 02120'99 282 1 THE HOLDER DOES SO, THE SECURED PARTY NEED NOT COMPLY WITH THE 2 HOLDER'S DEMAND UNDER SUBSECTION (1)(C). 3 (3) A SECURED PARTY NEED NOT APPLY OR PAY OVER FOR APPLICA- 4 TION NONCASH PROCEEDS OF DISPOSITION UNDER THIS SECTION UNLESS 5 THE FAILURE TO DO SO WOULD BE COMMERCIALLY UNREASONABLE. A 6 SECURED PARTY THAT APPLIES OR PAYS OVER FOR APPLICATION NONCASH 7 PROCEEDS SHALL DO SO IN A COMMERCIALLY REASONABLE MANNER. 8 (4) IF THE SECURITY INTEREST UNDER WHICH A DISPOSITION IS 9 MADE SECURES PAYMENT OR PERFORMANCE OF AN OBLIGATION, AFTER 10 MAKING THE PAYMENTS AND APPLICATIONS REQUIRED BY SUBSECTION (1) 11 AND PERMITTED BY SUBSECTION (3), BOTH OF THE FOLLOWING APPLY: 12 (A) UNLESS SUBSECTION (1)(D) REQUIRES THE SECURED PARTY TO 13 APPLY OR PAY OVER CASH PROCEEDS TO A CONSIGNOR, THE SECURED PARTY 14 SHALL ACCOUNT TO AND PAY A DEBTOR FOR ANY SURPLUS. 15 (B) THE OBLIGOR IS LIABLE FOR ANY DEFICIENCY. 16 (5) IF THE UNDERLYING TRANSACTION IS A SALE OF ACCOUNTS, 17 CHATTEL PAPER, PAYMENT INTANGIBLES, OR PROMISSORY NOTES, THE 18 DEBTOR IS NOT ENTITLED TO ANY SURPLUS, AND THE OBLIGOR IS NOT 19 LIABLE FOR ANY DEFICIENCY. 20 (6) THE SURPLUS OR DEFICIENCY FOLLOWING A DISPOSITION IS 21 CALCULATED BASED ON THE AMOUNT OF PROCEEDS THAT WOULD HAVE BEEN 22 REALIZED IN A DISPOSITION COMPLYING WITH THIS PART TO A TRANS- 23 FEREE OTHER THAN THE SECURED PARTY, A PERSON RELATED TO THE 24 SECURED PARTY, OR A SECONDARY OBLIGOR IF BOTH OF THE FOLLOWING 25 APPLY: 26 (A) THE TRANSFEREE IN THE DISPOSITION IS THE SECURED PARTY, 27 A PERSON RELATED TO THE SECURED PARTY, OR A SECONDARY OBLIGOR. 02120'99 283 1 (B) THE AMOUNT OF PROCEEDS OF THE DISPOSITION IS 2 SIGNIFICANTLY BELOW THE RANGE OF PROCEEDS THAT A COMPLYING DISPO- 3 SITION TO A PERSON OTHER THAN THE SECURED PARTY, A PERSON RELATED 4 TO THE SECURED PARTY, OR A SECONDARY OBLIGOR WOULD HAVE BROUGHT. 5 (7) ALL OF THE FOLLOWING APPLY TO A SECURED PARTY THAT 6 RECEIVES CASH PROCEEDS OF A DISPOSITION IN GOOD FAITH AND WITHOUT 7 KNOWLEDGE THAT THE RECEIPT VIOLATES THE RIGHTS OF THE HOLDER OF A 8 SECURITY INTEREST OR OTHER LIEN THAT IS NOT SUBORDINATE TO THE 9 SECURITY INTEREST OR AGRICULTURAL LIEN UNDER WHICH THE DISPOSI- 10 TION IS MADE: 11 (A) THE SECURED PARTY TAKES THE CASH PROCEEDS FREE OF THE 12 SECURITY INTEREST OR OTHER LIEN. 13 (B) THE SECURED PARTY IS NOT OBLIGATED TO APPLY THE PROCEEDS 14 OF THE DISPOSITION TO THE SATISFACTION OF OBLIGATIONS SECURED BY 15 THE SECURITY INTEREST OR OTHER LIEN. 16 (C) THE SECURED PARTY IS NOT OBLIGATED TO ACCOUNT TO OR PAY 17 THE HOLDER OF THE SECURITY INTEREST OR OTHER LIEN FOR ANY 18 SURPLUS. 19 SEC. 9616. (1) AS USED IN THIS SECTION: 20 (A) "EXPLANATION" MEANS A WRITING THAT DOES ALL OF THE 21 FOLLOWING: 22 (i) STATES THE AMOUNT OF THE SURPLUS OR DEFICIENCY. 23 (ii) PROVIDES AN EXPLANATION IN ACCORDANCE WITH SUBSECTION 24 (3) OF HOW THE SECURED PARTY CALCULATED THE SURPLUS OR 25 DEFICIENCY. 26 (iii) STATES, IF APPLICABLE, THAT FUTURE DEBITS, CREDITS, 27 CHARGES, INCLUDING ADDITIONAL CREDIT SERVICE CHARGES OR INTEREST, 02120'99 284 1 REBATES, AND EXPENSES MAY AFFECT THE AMOUNT OF THE SURPLUS OR 2 DEFICIENCY. 3 (iv) PROVIDES A TELEPHONE NUMBER OR MAILING ADDRESS FROM 4 WHICH ADDITIONAL INFORMATION CONCERNING THE TRANSACTION IS 5 AVAILABLE. 6 (B) "REQUEST" MEANS A RECORD THAT MEETS ALL OF THE 7 FOLLOWING: 8 (i) AUTHENTICATED BY A DEBTOR OR CONSUMER OBLIGOR. 9 (ii) REQUESTING THAT THE RECIPIENT PROVIDE AN EXPLANATION. 10 (iii) SENT AFTER DISPOSITION OF THE COLLATERAL UNDER SECTION 11 9610. 12 (2) IN A CONSUMER-GOODS TRANSACTION IN WHICH THE DEBTOR IS 13 ENTITLED TO A SURPLUS OR A CONSUMER OBLIGOR IS LIABLE FOR A DEFI- 14 CIENCY UNDER SECTION 9615, THE SECURED PARTY SHALL DO BOTH OF THE 15 FOLLOWING: 16 (A) SEND AN EXPLANATION TO THE DEBTOR OR CONSUMER OBLIGOR, 17 AS APPLICABLE, AFTER THE DISPOSITION AND IN ACCORDANCE WITH BOTH 18 OF THE FOLLOWING: 19 (i) SENT BEFORE OR WHEN THE SECURED PARTY ACCOUNTS TO THE 20 DEBTOR AND PAYS ANY SURPLUS OR FIRST MAKES WRITTEN DEMAND ON THE 21 CONSUMER OBLIGOR AFTER THE DISPOSITION FOR PAYMENT OF THE 22 DEFICIENCY. 23 (ii) SENT WITHIN 14 DAYS AFTER RECEIPT OF A REQUEST. 24 (B) IN THE CASE OF A CONSUMER OBLIGOR WHO IS LIABLE FOR A 25 DEFICIENCY, WITHIN 14 DAYS AFTER RECEIPT OF A REQUEST, SEND TO 26 THE CONSUMER OBLIGOR A RECORD WAIVING THE SECURED PARTY'S RIGHT 27 TO A DEFICIENCY. 02120'99 285 1 (3) TO COMPLY WITH SUBSECTION (1)(A)(ii), A WRITING MUST 2 PROVIDE THE FOLLOWING INFORMATION IN THE FOLLOWING ORDER: 3 (A) THE AGGREGATE AMOUNT OF OBLIGATIONS SECURED BY THE 4 SECURITY INTEREST UNDER WHICH THE DISPOSITION WAS MADE, AND, IF 5 THE AMOUNT REFLECTS A REBATE OF UNEARNED INTEREST OR CREDIT SERV- 6 ICE CHARGE, AN INDICATION OF THAT FACT, CALCULATED AS OF A SPECI- 7 FIED DATE, THAT IS 1 OF THE FOLLOWING: 8 (i) IF THE SECURED PARTY TAKES OR RECEIVES POSSESSION OF THE 9 COLLATERAL AFTER DEFAULT, NOT MORE THAN 35 DAYS BEFORE THE 10 SECURED PARTY TAKES OR RECEIVES POSSESSION. 11 (ii) IF THE SECURED PARTY TAKES OR RECEIVES POSSESSION OF 12 THE COLLATERAL BEFORE DEFAULT OR DOES NOT TAKE POSSESSION OF THE 13 COLLATERAL, NOT MORE THAN 35 DAYS BEFORE THE DISPOSITION. 14 (B) THE AMOUNT OF PROCEEDS OF THE DISPOSITION. 15 (C) THE AGGREGATE AMOUNT OF THE OBLIGATIONS AFTER DEDUCTING 16 THE AMOUNT OF PROCEEDS. 17 (D) THE AMOUNT, IN THE AGGREGATE OR BY TYPE, AND TYPES OF 18 EXPENSES, INCLUDING EXPENSES OF RETAKING, HOLDING, PREPARING FOR 19 DISPOSITION, PROCESSING, AND DISPOSING OF THE COLLATERAL, AND 20 ATTORNEY FEES SECURED BY THE COLLATERAL THAT ARE KNOWN TO THE 21 SECURED PARTY AND RELATE TO THE CURRENT DISPOSITION. 22 (E) THE AMOUNT, IN THE AGGREGATE OR BY TYPE, AND TYPES OF 23 CREDITS, INCLUDING REBATES OF INTEREST OR CREDIT SERVICE CHARGES, 24 TO WHICH THE OBLIGOR IS KNOWN TO BE ENTITLED AND THAT ARE NOT 25 REFLECTED IN THE AMOUNT IN SUBDIVISION (A). 26 (F) THE AMOUNT OF THE SURPLUS OR DEFICIENCY. 02120'99 286 1 (4) A PARTICULAR PHRASING OF THE EXPLANATION IS NOT 2 REQUIRED. AN EXPLANATION COMPLYING SUBSTANTIALLY WITH THE 3 REQUIREMENTS OF SUBSECTION (1) IS SUFFICIENT, EVEN IF IT INCLUDES 4 MINOR ERRORS THAT ARE NOT SERIOUSLY MISLEADING. 5 (5) A DEBTOR OR CONSUMER OBLIGOR IS ENTITLED WITHOUT CHARGE 6 TO 1 RESPONSE TO A REQUEST UNDER THIS SECTION DURING ANY 6-MONTH 7 PERIOD IN WHICH THE SECURED PARTY DID NOT SEND TO THE DEBTOR OR 8 CONSUMER OBLIGOR AN EXPLANATION PURSUANT TO SUBSECTION (2)(A). 9 THE SECURED PARTY MAY REQUIRE PAYMENT OF A CHARGE NOT EXCEEDING 10 $25.00 FOR EACH ADDITIONAL RESPONSE. 11 SEC. 9617. (1) A SECURED PARTY'S DISPOSITION OF COLLATERAL 12 AFTER DEFAULT DOES ALL OF THE FOLLOWING: 13 (A) TRANSFERS TO A TRANSFEREE FOR VALUE ALL OF THE DEBTOR'S 14 RIGHTS IN THE COLLATERAL. 15 (B) DISCHARGES THE SECURITY INTEREST UNDER WHICH THE DISPO- 16 SITION IS MADE. 17 (C) DISCHARGES ANY SUBORDINATE SECURITY INTEREST OR OTHER 18 SUBORDINATE LIEN. 19 (2) A TRANSFEREE THAT ACTS IN GOOD FAITH TAKES FREE OF THE 20 RIGHTS AND INTERESTS DESCRIBED IN SUBSECTION (1), EVEN IF THE 21 SECURED PARTY FAILS TO COMPLY WITH THIS ARTICLE OR THE REQUIRE- 22 MENTS OF ANY JUDICIAL PROCEEDING. 23 (3) IF A TRANSFEREE DOES NOT TAKE FREE OF THE RIGHTS AND 24 INTERESTS DESCRIBED IN SUBSECTION (1), THE TRANSFEREE TAKES THE 25 COLLATERAL SUBJECT TO ALL OF THE FOLLOWING: 26 (A) THE DEBTOR'S RIGHTS IN THE COLLATERAL. 02120'99 287 1 (B) THE SECURITY INTEREST OR AGRICULTURAL LIEN UNDER WHICH 2 THE DISPOSITION IS MADE. 3 (C) ANY OTHER SECURITY INTEREST OR OTHER LIEN. 4 SEC. 9618. (1) A SECONDARY OBLIGOR ACQUIRES THE RIGHTS AND 5 BECOMES OBLIGATED TO PERFORM THE DUTIES OF THE SECURED PARTY 6 AFTER ALL OF THE FOLLOWING: 7 (A) THE SECONDARY OBLIGOR RECEIVES AN ASSIGNMENT OF A 8 SECURED OBLIGATION FROM THE SECURED PARTY. 9 (B) THE SECONDARY OBLIGOR RECEIVES A TRANSFER OF COLLATERAL 10 FROM THE SECURED PARTY AND AGREES TO ACCEPT THE RIGHTS AND ASSUME 11 THE DUTIES OF THE SECURED PARTY. 12 (C) THE SECONDARY OBLIGOR IS SUBROGATED TO THE RIGHTS OF A 13 SECURED PARTY WITH RESPECT TO COLLATERAL. 14 (2) AN ASSIGNMENT, TRANSFER, OR SUBROGATION DESCRIBED IN 15 SUBSECTION (1) RESULTS IN BOTH OF THE FOLLOWING: 16 (A) IT IS NOT A DISPOSITION OF COLLATERAL UNDER SECTION 17 9610. 18 (B) IT RELIEVES THE SECURED PARTY OF FURTHER DUTIES UNDER 19 THIS ARTICLE. 20 SEC. 9619. (1) AS USED IN THIS SECTION, "TRANSFER 21 STATEMENT" MEANS A RECORD AUTHENTICATED BY A SECURED PARTY STAT- 22 ING ALL OF THE FOLLOWING: 23 (A) THAT THE DEBTOR HAS DEFAULTED IN CONNECTION WITH AN 24 OBLIGATION SECURED BY SPECIFIED COLLATERAL. 25 (B) THAT THE SECURED PARTY HAS EXERCISED ITS POSTDEFAULT 26 REMEDIES WITH RESPECT TO THE COLLATERAL. 02120'99 288 1 (C) THAT, BY REASON OF THE EXERCISE, A TRANSFEREE HAS 2 ACQUIRED THE RIGHTS OF THE DEBTOR IN THE COLLATERAL. 3 (D) THE NAME AND MAILING ADDRESS OF THE SECURED PARTY, 4 DEBTOR, AND TRANSFEREE. 5 (2) A TRANSFER STATEMENT ENTITLES THE TRANSFEREE TO THE 6 TRANSFER OF RECORD OF ALL RIGHTS OF THE DEBTOR IN THE COLLATERAL 7 SPECIFIED IN THE STATEMENT IN ANY OFFICIAL FILING, RECORDING, 8 REGISTRATION, OR CERTIFICATE-OF-TITLE SYSTEM COVERING THE 9 COLLATERAL. IF A TRANSFER STATEMENT IS PRESENTED WITH THE APPLI- 10 CABLE FEE AND REQUEST FORM TO THE OFFICIAL OR OFFICE RESPONSIBLE 11 FOR MAINTAINING THE SYSTEM, THE OFFICIAL OR OFFICE SHALL DO ALL 12 OF THE FOLLOWING: 13 (A) ACCEPT THE TRANSFER STATEMENT. 14 (B) PROMPTLY AMEND ITS RECORDS TO REFLECT THE TRANSFER. 15 (C) IF APPLICABLE, ISSUE A NEW APPROPRIATE CERTIFICATE OF 16 TITLE IN THE NAME OF THE TRANSFEREE. 17 (3) A TRANSFER OF THE RECORD OR LEGAL TITLE TO COLLATERAL TO 18 A SECURED PARTY UNDER SUBSECTION (2) OR OTHERWISE IS NOT OF 19 ITSELF A DISPOSITION OF COLLATERAL UNDER THIS ARTICLE AND DOES 20 NOT OF ITSELF RELIEVE THE SECURED PARTY OF ITS DUTIES UNDER THIS 21 ARTICLE. 22 SEC. 9620. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 23 (7), A SECURED PARTY MAY ACCEPT COLLATERAL IN FULL OR PARTIAL 24 SATISFACTION OF THE OBLIGATION IT SECURES ONLY IF ALL OF THE FOL- 25 LOWING ARE MET: 26 (A) THE DEBTOR CONSENTS TO THE ACCEPTANCE UNDER SUBSECTION 27 (3). 02120'99 289 1 (B) THE SECURED PARTY DOES NOT RECEIVE, WITHIN THE TIME SET 2 FORTH IN SUBSECTION (4), A NOTIFICATION OF OBJECTION TO THE PRO- 3 POSAL AUTHENTICATED BY 1 OF THE FOLLOWING: 4 (i) A PERSON TO WHICH THE SECURED PARTY WAS REQUIRED TO SEND 5 A PROPOSAL UNDER SECTION 9621. 6 (ii) ANY OTHER PERSON, OTHER THAN THE DEBTOR, HOLDING AN 7 INTEREST IN THE COLLATERAL SUBORDINATE TO THE SECURITY INTEREST 8 THAT IS THE SUBJECT OF THE PROPOSAL. 9 (C) IF THE COLLATERAL IS CONSUMER GOODS, THE COLLATERAL IS 10 NOT IN THE POSSESSION OF THE DEBTOR WHEN THE DEBTOR CONSENTS TO 11 THE ACCEPTANCE. 12 (D) SUBSECTION (5) DOES NOT REQUIRE THE SECURED PARTY TO 13 DISPOSE OF THE COLLATERAL OR THE DEBTOR WAIVES THE REQUIREMENT 14 PURSUANT TO SECTION 9624. 15 (2) A PURPORTED OR APPARENT ACCEPTANCE OF COLLATERAL UNDER 16 THIS SECTION IS INEFFECTIVE UNLESS BOTH OF THE FOLLOWING OCCUR: 17 (A) THE SECURED PARTY CONSENTS TO THE ACCEPTANCE IN AN 18 AUTHENTICATED RECORD OR SENDS A PROPOSAL TO THE DEBTOR. 19 (B) THE CONDITIONS OF SUBSECTION (1) ARE MET. 20 (3) ALL OF THE FOLLOWING APPLY FOR PURPOSES OF THIS 21 SECTION: 22 (A) A DEBTOR CONSENTS TO AN ACCEPTANCE OF COLLATERAL IN PAR- 23 TIAL SATISFACTION OF THE OBLIGATION IT SECURES ONLY IF THE DEBTOR 24 AGREES TO THE TERMS OF THE ACCEPTANCE IN A RECORD AUTHENTICATED 25 AFTER DEFAULT. 26 (B) A DEBTOR CONSENTS TO AN ACCEPTANCE OF COLLATERAL IN FULL 27 SATISFACTION OF THE OBLIGATION IT SECURES ONLY IF THE DEBTOR 02120'99 290 1 AGREES TO THE TERMS OF THE ACCEPTANCE IN A RECORD AUTHENTICATED 2 AFTER DEFAULT OR THE SECURED PARTY MEETS ALL OF THE FOLLOWING 3 REQUIREMENTS: 4 (i) SENDS TO THE DEBTOR AFTER DEFAULT A PROPOSAL THAT IS 5 UNCONDITIONAL OR SUBJECT ONLY TO A CONDITION THAT COLLATERAL NOT 6 IN THE POSSESSION OF THE SECURED PARTY BE PRESERVED OR 7 MAINTAINED. 8 (ii) IN THE PROPOSAL, PROPOSES TO ACCEPT COLLATERAL IN FULL 9 SATISFACTION OF THE OBLIGATION IT SECURES. 10 (iii) DOES NOT RECEIVE A NOTIFICATION OF OBJECTION AUTHENTI- 11 CATED BY THE DEBTOR WITHIN 20 DAYS AFTER THE PROPOSAL IS SENT. 12 (4) TO BE EFFECTIVE UNDER SUBSECTION (1)(B), A NOTIFICATION 13 OF OBJECTION MUST BE RECEIVED BY THE SECURED PARTY WITHIN OR 14 BEFORE 1 OF THE FOLLOWING: 15 (A) IN THE CASE OF A PERSON TO WHICH THE PROPOSAL WAS SENT 16 PURSUANT TO SECTION 9621, WITHIN 20 DAYS AFTER NOTIFICATION WAS 17 SENT TO THAT PERSON. 18 (B) IN OTHER CASES, 1 OF THE FOLLOWING: 19 (i) WITHIN 20 DAYS AFTER THE LAST NOTIFICATION WAS SENT PUR- 20 SUANT TO SECTION 9621. 21 (ii) IF A NOTIFICATION WAS NOT SENT, BEFORE THE DEBTOR CON- 22 SENTS TO THE ACCEPTANCE UNDER SUBSECTION (3). 23 (5) A SECURED PARTY THAT HAS TAKEN POSSESSION OF COLLATERAL 24 SHALL DISPOSE OF THE COLLATERAL PURSUANT TO SECTION 9610 WITHIN 25 THE TIME SPECIFIED IN SUBSECTION (6) IF 1 OF THE FOLLOWING IS 26 MET: 02120'99 291 1 (A) SIXTY PERCENT OF THE CASH PRICE HAS BEEN PAID IN THE 2 CASE OF A PURCHASE-MONEY SECURITY INTEREST IN CONSUMER GOODS. 3 (B) SIXTY PERCENT OF THE PRINCIPAL AMOUNT OF THE OBLIGATION 4 SECURED HAS BEEN PAID IN THE CASE OF A NON-PURCHASE-MONEY SECUR- 5 ITY INTEREST IN CONSUMER GOODS. 6 (6) TO COMPLY WITH SUBSECTION (5), THE SECURED PARTY SHALL 7 DISPOSE OF THE COLLATERAL WITHIN 1 OF THE FOLLOWING: 8 (A) WITHIN 90 DAYS AFTER TAKING POSSESSION. 9 (B) WITHIN ANY LONGER PERIOD TO WHICH THE DEBTOR AND ALL 10 SECONDARY OBLIGORS HAVE AGREED IN AN AGREEMENT TO THAT EFFECT 11 ENTERED INTO AND AUTHENTICATED AFTER DEFAULT. 12 (7) IN A CONSUMER TRANSACTION, A SECURED PARTY MAY NOT 13 ACCEPT COLLATERAL IN PARTIAL SATISFACTION OF THE OBLIGATION IT 14 SECURES. 15 SEC. 9621. (1) A SECURED PARTY THAT DESIRES TO ACCEPT COL- 16 LATERAL IN FULL OR PARTIAL SATISFACTION OF THE OBLIGATION IT 17 SECURES SHALL SEND ITS PROPOSAL TO ALL OF THE FOLLOWING: 18 (A) ANY PERSON FROM WHICH THE SECURED PARTY HAS RECEIVED, 19 BEFORE THE DEBTOR CONSENTED TO THE ACCEPTANCE, AN AUTHENTICATED 20 NOTIFICATION OF A CLAIM OF AN INTEREST IN THE COLLATERAL. 21 (B) ANY OTHER SECURED PARTY OR LIENHOLDER THAT, 10 DAYS 22 BEFORE THE DEBTOR CONSENTED TO THE ACCEPTANCE, HELD A SECURITY 23 INTEREST IN OR OTHER LIEN ON THE COLLATERAL PERFECTED BY THE 24 FILING OF A FINANCING STATEMENT THAT MET ALL OF THE FOLLOWING: 25 (i) IDENTIFIED THE COLLATERAL. 26 (ii) WAS INDEXED UNDER THE DEBTOR'S NAME AS OF THAT DATE. 02120'99 292 1 (iii) WAS FILED IN THE OFFICE OR OFFICES IN WHICH TO FILE A 2 FINANCING STATEMENT AGAINST THE DEBTOR COVERING THE COLLATERAL AS 3 OF THAT DATE. 4 (C) ANY OTHER SECURED PARTY THAT, 10 DAYS BEFORE THE DEBTOR 5 CONSENTED TO THE ACCEPTANCE, HELD A SECURITY INTEREST IN THE COL- 6 LATERAL PERFECTED BY COMPLIANCE WITH A STATUTE, REGULATION, OR 7 TREATY DESCRIBED IN SECTION 9311(1). 8 (2) A SECURED PARTY THAT DESIRES TO ACCEPT COLLATERAL IN 9 PARTIAL SATISFACTION OF THE OBLIGATION IT SECURES SHALL SEND ITS 10 PROPOSAL TO ANY SECONDARY OBLIGOR IN ADDITION TO THE PERSONS 11 DESCRIBED IN SUBSECTION (1). 12 SEC. 9622. (1) A SECURED PARTY'S ACCEPTANCE OF COLLATERAL 13 IN FULL OR PARTIAL SATISFACTION OF THE OBLIGATION IT SECURES DOES 14 ALL OF THE FOLLOWING: 15 (A) DISCHARGES THE OBLIGATION TO THE EXTENT CONSENTED TO BY 16 THE DEBTOR. 17 (B) TRANSFERS TO THE SECURED PARTY ALL OF A DEBTOR'S RIGHTS 18 IN THE COLLATERAL. 19 (C) DISCHARGES THE SECURITY INTEREST OR AGRICULTURAL LIEN 20 THAT IS THE SUBJECT OF THE DEBTOR'S CONSENT AND ANY SUBORDINATE 21 SECURITY INTEREST OR OTHER SUBORDINATE LIEN. 22 (D) TERMINATES ANY OTHER SUBORDINATE INTEREST. 23 (2) A SUBORDINATE INTEREST IS DISCHARGED OR TERMINATED UNDER 24 SUBSECTION (1), EVEN IF THE SECURED PARTY FAILS TO COMPLY WITH 25 THIS ARTICLE. 26 SEC. 9623. (1) A DEBTOR, ANY SECONDARY OBLIGOR, OR ANY 27 OTHER SECURED PARTY OR LIENHOLDER MAY REDEEM COLLATERAL. 02120'99 293 1 (2) TO REDEEM COLLATERAL, A PERSON SHALL TENDER BOTH OF THE 2 FOLLOWING: 3 (A) FULFILLMENT OF ALL OBLIGATIONS SECURED BY THE 4 COLLATERAL. 5 (B) THE REASONABLE EXPENSES AND ATTORNEY FEES DESCRIBED IN 6 SECTION 9615(1)(A). 7 (3) A REDEMPTION MAY OCCUR AT ANY TIME BEFORE A SECURED 8 PARTY HAS DONE 1 OF THE FOLLOWING: 9 (A) HAS COLLECTED COLLATERAL UNDER SECTION 9607. 10 (B) HAS DISPOSED OF COLLATERAL OR ENTERED INTO A CONTRACT 11 FOR ITS DISPOSITION UNDER SECTION 9610. 12 (C) HAS ACCEPTED COLLATERAL IN FULL OR PARTIAL SATISFACTION 13 OF THE OBLIGATION IT SECURES UNDER SECTION 9622. 14 SEC. 9624. (1) A DEBTOR OR SECONDARY OBLIGOR MAY WAIVE THE 15 RIGHT TO NOTIFICATION OF DISPOSITION OF COLLATERAL UNDER SECTION 16 9611 ONLY BY AN AGREEMENT TO THAT EFFECT ENTERED INTO AND AUTHEN- 17 TICATED AFTER DEFAULT. 18 (2) A DEBTOR MAY WAIVE THE RIGHT TO REQUIRE DISPOSITION OF 19 COLLATERAL UNDER SECTION 9620(5) ONLY BY AN AGREEMENT TO THAT 20 EFFECT ENTERED INTO AND AUTHENTICATED AFTER DEFAULT. 21 (3) EXCEPT IN A CONSUMER-GOODS TRANSACTION, A DEBTOR OR SEC- 22 ONDARY OBLIGOR MAY WAIVE THE RIGHT TO REDEEM COLLATERAL UNDER 23 SECTION 9623 ONLY BY AN AGREEMENT TO THAT EFFECT ENTERED INTO AND 24 AUTHENTICATED AFTER DEFAULT. 25 SUBPART 2. NONCOMPLIANCE WITH ARTICLE 26 SEC. 9625. (1) IF IT IS ESTABLISHED THAT A SECURED PARTY IS 27 NOT PROCEEDING IN ACCORDANCE WITH THIS ARTICLE, A COURT MAY ORDER 02120'99 294 1 OR RESTRAIN COLLECTION, ENFORCEMENT, OR DISPOSITION OF COLLATERAL 2 ON APPROPRIATE TERMS AND CONDITIONS. 3 (2) SUBJECT TO SUBSECTIONS (3), (4), AND (6), A PERSON IS 4 LIABLE FOR DAMAGES IN THE AMOUNT OF ANY LOSS CAUSED BY A FAILURE 5 TO COMPLY WITH THIS ARTICLE. LOSS CAUSED BY A FAILURE TO COMPLY 6 WITH A REQUEST UNDER SECTION 9210 MAY INCLUDE LOSS RESULTING FROM 7 THE DEBTOR'S INABILITY TO OBTAIN, OR INCREASED COSTS OF, ALTERNA- 8 TIVE FINANCING. 9 (3) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9628, BOTH OF 10 THE FOLLOWING APPLY: 11 (A) A PERSON THAT, AT THE TIME OF THE FAILURE, WAS A DEBTOR, 12 WAS AN OBLIGOR, OR HELD A SECURITY INTEREST IN OR OTHER LIEN ON 13 THE COLLATERAL MAY RECOVER DAMAGES UNDER SUBSECTION (2) FOR ITS 14 LOSS. 15 (B) IF THE COLLATERAL IS CONSUMER GOODS, A PERSON THAT WAS A 16 DEBTOR OR A SECONDARY OBLIGOR AT THE TIME A SECURED PARTY FAILED 17 TO COMPLY WITH THIS PART MAY RECOVER FOR THAT FAILURE IN ANY 18 EVENT AN AMOUNT NOT LESS THAN THE CREDIT SERVICE CHARGE PLUS 10% 19 OF THE PRINCIPAL AMOUNT OF THE OBLIGATION OR THE TIME-PRICE DIF- 20 FERENTIAL PLUS 10% OF THE CASH PRICE. 21 (4) A DEBTOR WHOSE DEFICIENCY IS ELIMINATED UNDER SECTION 22 9626 MAY RECOVER DAMAGES FOR THE LOSS OF ANY SURPLUS. HOWEVER, A 23 DEBTOR OR SECONDARY OBLIGOR WHOSE DEFICIENCY IS ELIMINATED OR 24 REDUCED UNDER SECTION 9626 MAY NOT OTHERWISE RECOVER UNDER SUB- 25 SECTION (2) FOR NONCOMPLIANCE WITH THE PROVISIONS OF THIS PART 26 RELATING TO COLLECTION, ENFORCEMENT, DISPOSITION, OR ACCEPTANCE. 02120'99 295 1 (5) IN ADDITION TO ANY DAMAGES RECOVERABLE UNDER SUBSECTION 2 (2), THE DEBTOR, CONSUMER OBLIGOR, OR PERSON NAMED AS A DEBTOR IN 3 A FILED RECORD, AS APPLICABLE, MAY RECOVER $500.00 IN EACH CASE 4 FROM A PERSON THAT DOES 1 OR MORE OF THE FOLLOWING: 5 (A) FAILS TO COMPLY WITH SECTION 9208. 6 (B) FAILS TO COMPLY WITH SECTION 9209. 7 (C) FILES A RECORD THAT THE PERSON IS NOT ENTITLED TO FILE 8 UNDER SECTION 9509(1). 9 (D) FAILS TO CAUSE THE SECURED PARTY OF RECORD TO FILE OR 10 SEND A TERMINATION STATEMENT AS REQUIRED BY SECTION 9513(1) OR 11 (3). 12 (E) FAILS TO COMPLY WITH SECTION 9616(2)(A) AND WHOSE FAIL- 13 URE IS PART OF A PATTERN, OR CONSISTENT WITH A PRACTICE, OF 14 NONCOMPLIANCE. 15 (F) FAILS TO COMPLY WITH SECTION 9616(2)(B). 16 (6) A DEBTOR OR CONSUMER OBLIGOR MAY RECOVER DAMAGES UNDER 17 SUBSECTION (2) AND, IN ADDITION, $500.00 IN EACH CASE FROM A 18 PERSON THAT, WITHOUT REASONABLE CAUSE, FAILS TO COMPLY WITH A 19 REQUEST UNDER SECTION 9210. A RECIPIENT OF A REQUEST UNDER SEC- 20 TION 9210 THAT NEVER CLAIMED AN INTEREST IN THE COLLATERAL OR 21 OBLIGATIONS THAT ARE THE SUBJECT OF A REQUEST UNDER THAT SECTION 22 HAS A REASONABLE EXCUSE FOR FAILURE TO COMPLY WITH THE REQUEST 23 WITHIN THE MEANING OF THIS SUBSECTION. 24 (7) IF A SECURED PARTY FAILS TO COMPLY WITH A REQUEST 25 REGARDING A LIST OF COLLATERAL OR A STATEMENT OF ACCOUNT UNDER 26 SECTION 9210, THE SECURED PARTY MAY CLAIM A SECURITY INTEREST 02120'99 296 1 ONLY AS SHOWN IN THE STATEMENT INCLUDED IN THE REQUEST AS AGAINST 2 A PERSON THAT IS REASONABLY MISLED BY THE FAILURE. 3 SEC. 9626. (1) IN AN ACTION ARISING FROM A TRANSACTION, 4 OTHER THAN A CONSUMER TRANSACTION, IN WHICH THE AMOUNT OF A DEFI- 5 CIENCY OR SURPLUS IS IN ISSUE, THE FOLLOWING RULES APPLY: 6 (A) A SECURED PARTY NEED NOT PROVE COMPLIANCE WITH THE PRO- 7 VISIONS OF THIS PART RELATING TO COLLECTION, ENFORCEMENT, DISPO- 8 SITION, OR ACCEPTANCE UNLESS THE DEBTOR OR A SECONDARY OBLIGOR 9 PLACES THE SECURED PARTY'S COMPLIANCE IN ISSUE. 10 (B) IF THE SECURED PARTY'S COMPLIANCE IS PLACED IN ISSUE, 11 THE SECURED PARTY HAS THE BURDEN OF ESTABLISHING THAT THE COLLEC- 12 TION, ENFORCEMENT, DISPOSITION, OR ACCEPTANCE WAS CONDUCTED IN 13 ACCORDANCE WITH THIS PART. 14 (C) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9628, IF A 15 SECURED PARTY FAILS TO PROVE THAT THE COLLECTION, ENFORCEMENT, 16 DISPOSITION, OR ACCEPTANCE WAS CONDUCTED IN ACCORDANCE WITH THE 17 PROVISIONS OF THIS PART RELATING TO COLLECTION, ENFORCEMENT, DIS- 18 POSITION, OR ACCEPTANCE, THE LIABILITY OF A DEBTOR OR A SECONDARY 19 OBLIGOR FOR A DEFICIENCY IS LIMITED TO AN AMOUNT BY WHICH THE SUM 20 OF THE SECURED OBLIGATION, EXPENSES, AND ATTORNEY FEES EXCEEDS 21 THE GREATER OF 1 OF THE FOLLOWING: 22 (i) THE PROCEEDS OF THE COLLECTION, ENFORCEMENT, DISPOSI- 23 TION, OR ACCEPTANCE. 24 (ii) THE AMOUNT OF PROCEEDS THAT WOULD HAVE BEEN REALIZED 25 HAD THE NONCOMPLYING SECURED PARTY PROCEEDED IN ACCORDANCE WITH 26 THE PROVISIONS OF THIS PART RELATING TO COLLECTION, ENFORCEMENT, 27 DISPOSITION, OR ACCEPTANCE. 02120'99 297 1 (D) FOR PURPOSES OF SUBDIVISION (C)(ii), THE AMOUNT OF 2 PROCEEDS THAT WOULD HAVE BEEN REALIZED IS EQUAL TO THE SUM OF THE 3 SECURED OBLIGATION, EXPENSES, AND ATTORNEY FEES UNLESS THE 4 SECURED PARTY PROVES THAT THE AMOUNT IS LESS THAN THAT SUM. 5 (E) IF A DEFICIENCY OR SURPLUS IS CALCULATED UNDER SECTION 6 9615(6), THE DEBTOR OR OBLIGOR HAS THE BURDEN OF ESTABLISHING 7 THAT THE AMOUNT OF PROCEEDS OF THE DISPOSITION IS SIGNIFICANTLY 8 BELOW THE RANGE OF PRICES THAT A COMPLYING DISPOSITION TO A 9 PERSON OTHER THAN THE SECURED PARTY, A PERSON RELATED TO THE 10 SECURED PARTY, OR A SECONDARY OBLIGOR WOULD HAVE BROUGHT. 11 (2) THE LIMITATION OF THE RULES IN SUBSECTION (1) TO TRANS- 12 ACTIONS OTHER THAN CONSUMER TRANSACTIONS IS INTENDED TO LEAVE TO 13 THE COURT THE DETERMINATION OF THE PROPER RULES IN CONSUMER 14 TRANSACTIONS. THE COURT MAY NOT INFER FROM THAT LIMITATION THE 15 NATURE OF THE PROPER RULE IN CONSUMER TRANSACTIONS AND MAY CON- 16 TINUE TO APPLY ESTABLISHED APPROACHES. 17 SEC. 9627. (1) THE FACT THAT A GREATER AMOUNT COULD HAVE 18 BEEN OBTAINED BY A COLLECTION, ENFORCEMENT, DISPOSITION, OR 19 ACCEPTANCE AT A DIFFERENT TIME OR IN A DIFFERENT METHOD FROM THAT 20 SELECTED BY THE SECURED PARTY IS NOT OF ITSELF SUFFICIENT TO PRE- 21 CLUDE THE SECURED PARTY FROM ESTABLISHING THAT THE COLLECTION, 22 ENFORCEMENT, DISPOSITION, OR ACCEPTANCE WAS MADE IN A COMMER- 23 CIALLY REASONABLE MANNER. 24 (2) A DISPOSITION OF COLLATERAL IS MADE IN A COMMERCIALLY 25 REASONABLE MANNER IF THE DISPOSITION IS MADE IN THE USUAL MANNER 26 ON ANY RECOGNIZED MARKET, AT THE PRICE CURRENT IN ANY RECOGNIZED 27 MARKET AT THE TIME OF THE DISPOSITION, OR OTHERWISE IN CONFORMITY 02120'99 298 1 WITH REASONABLE COMMERCIAL PRACTICES AMONG DEALERS IN THE TYPE OF 2 PROPERTY THAT WAS THE SUBJECT OF THE DISPOSITION. 3 (3) A COLLECTION, ENFORCEMENT, DISPOSITION, OR ACCEPTANCE IS 4 COMMERCIALLY REASONABLE IF IT HAS BEEN APPROVED IN A JUDICIAL 5 PROCEEDING, BY A BONA FIDE CREDITORS' COMMITTEE, BY A REPRESENTA- 6 TIVE OF CREDITORS, OR BY AN ASSIGNEE FOR THE BENEFIT OF 7 CREDITORS. 8 (4) APPROVAL UNDER SUBSECTION (3) NEED NOT BE OBTAINED, AND 9 LACK OF APPROVAL DOES NOT MEAN THAT THE COLLECTION, ENFORCEMENT, 10 DISPOSITION, OR ACCEPTANCE IS NOT COMMERCIALLY REASONABLE. 11 SEC. 9628. (1) UNLESS A SECURED PARTY KNOWS THAT A PERSON 12 IS A DEBTOR OR OBLIGOR, KNOWS THE IDENTITY OF THE PERSON, AND 13 KNOWS HOW TO COMMUNICATE WITH THE PERSON, BOTH OF THE FOLLOWING 14 APPLY: 15 (A) THE SECURED PARTY IS NOT LIABLE TO THE PERSON, OR TO A 16 SECURED PARTY OR LIENHOLDER THAT HAS FILED A FINANCING STATEMENT 17 AGAINST THE PERSON, FOR FAILURE TO COMPLY WITH THIS ARTICLE. 18 (B) THE SECURED PARTY'S FAILURE TO COMPLY WITH THIS ARTICLE 19 DOES NOT AFFECT THE LIABILITY OF THE PERSON FOR A DEFICIENCY. 20 (2) A SECURED PARTY IS NOT LIABLE BECAUSE OF ITS STATUS AS 21 SECURED PARTY TO EITHER OF THE FOLLOWING: 22 (A) TO A PERSON THAT IS A DEBTOR OR OBLIGOR, UNLESS THE 23 SECURED PARTY KNOWS ALL OF THE FOLLOWING: 24 (i) THAT THE PERSON IS A DEBTOR OR OBLIGOR. 25 (ii) THE IDENTITY OF THE PERSON. 26 (iii) HOW TO COMMUNICATE WITH THE PERSON. 02120'99 299 1 (B) TO A SECURED PARTY OR LIENHOLDER THAT HAS FILED A 2 FINANCING STATEMENT AGAINST A PERSON, UNLESS THE SECURED PARTY 3 KNOWS BOTH OF THE FOLLOWING: 4 (i) THAT THE PERSON IS A DEBTOR. 5 (ii) THE IDENTITY OF THE PERSON. 6 (3) A SECURED PARTY IS NOT LIABLE TO ANY PERSON, AND A 7 PERSON'S LIABILITY FOR A DEFICIENCY IS NOT AFFECTED, BECAUSE OF 8 ANY ACT OR OMISSION ARISING OUT OF THE SECURED PARTY'S REASONABLE 9 BELIEF THAT A TRANSACTION IS NOT A CONSUMER-GOODS TRANSACTION OR 10 A CONSUMER TRANSACTION OR THAT GOODS ARE NOT CONSUMER GOODS, IF 11 THE SECURED PARTY'S BELIEF IS BASED ON ITS REASONABLE RELIANCE ON 12 1 OR MORE OF THE FOLLOWING: 13 (A) A DEBTOR'S REPRESENTATION CONCERNING THE PURPOSE FOR 14 WHICH COLLATERAL WAS TO BE USED, ACQUIRED, OR HELD. 15 (B) AN OBLIGOR'S REPRESENTATION CONCERNING THE PURPOSE FOR 16 WHICH A SECURED OBLIGATION WAS INCURRED. 17 (4) A SECURED PARTY IS NOT LIABLE TO ANY PERSON UNDER SEC- 18 TION 9625(3)(B) FOR ITS FAILURE TO COMPLY WITH SECTION 9616. 19 (5) A SECURED PARTY IS NOT LIABLE UNDER SECTION 9625(3)(B) 20 MORE THAN ONCE WITH RESPECT TO ANY 1 SECURED OBLIGATION. 21 PART 7 22 TRANSITION 23 SEC. 9701. THIS AMENDATORY ACT TAKES EFFECT ON JULY 1, 24 2001. 25 SEC. 9702. (1) EXCEPT AS OTHERWISE PROVIDED IN THIS PART, 26 THIS AMENDATORY ACT APPLIES TO A TRANSACTION OR LIEN WITHIN ITS 02120'99 300 1 SCOPE, EVEN IF THE TRANSACTION OR LIEN WAS ENTERED INTO OR 2 CREATED BEFORE THIS AMENDATORY ACT TAKES EFFECT. 3 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3) AND SEC- 4 TIONS 9703 THROUGH 9708, BOTH OF THE FOLLOWING APPLY: 5 (A) TRANSACTIONS AND LIENS THAT WERE NOT GOVERNED BY THIS 6 ARTICLE BEFORE THIS AMENDATORY ACT TAKES EFFECT, WERE VALIDLY 7 ENTERED INTO OR CREATED BEFORE THIS AMENDATORY ACT TAKES EFFECT, 8 AND WOULD BE SUBJECT TO THIS AMENDATORY ACT IF THEY HAD BEEN 9 ENTERED INTO OR CREATED AFTER THIS AMENDATORY ACT TAKES EFFECT, 10 AND THE RIGHTS, DUTIES, AND INTERESTS FLOWING FROM THOSE TRANSAC- 11 TIONS AND LIENS REMAIN VALID AFTER THIS AMENDATORY ACT TAKES 12 EFFECT. 13 (B) THE TRANSACTIONS AND LIENS MAY BE TERMINATED, COMPLETED, 14 CONSUMMATED, AND ENFORCED AS REQUIRED OR PERMITTED BY THIS AMEN- 15 DATORY ACT OR BY THE LAW THAT OTHERWISE WOULD APPLY IF THIS AMEN- 16 DATORY ACT HAD NOT TAKEN EFFECT. 17 (3) THIS AMENDATORY ACT DOES NOT AFFECT AN ACTION, CASE, OR 18 PROCEEDING COMMENCED BEFORE THIS AMENDATORY ACT TAKES EFFECT. 19 SEC. 9703. (1) A SECURITY INTEREST THAT IS ENFORCEABLE 20 IMMEDIATELY BEFORE THIS AMENDATORY ACT TAKES EFFECT AND WOULD 21 HAVE PRIORITY OVER THE RIGHTS OF A PERSON THAT BECOMES A LIEN 22 CREDITOR AT THAT TIME IS A PERFECTED SECURITY INTEREST UNDER THIS 23 AMENDATORY ACT IF, WHEN THIS AMENDATORY ACT TAKES EFFECT, THE 24 APPLICABLE REQUIREMENTS FOR ENFORCEABILITY AND PERFECTION UNDER 25 THIS AMENDATORY ACT ARE SATISFIED WITHOUT FURTHER ACTION. 26 (2) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9705, IF, 27 IMMEDIATELY BEFORE THIS AMENDATORY ACT TAKES EFFECT, A SECURITY 02120'99 301 1 INTEREST IS ENFORCEABLE AND WOULD HAVE PRIORITY OVER THE RIGHTS 2 OF A PERSON THAT BECOMES A LIEN CREDITOR AT THAT TIME, BUT THE 3 APPLICABLE REQUIREMENTS FOR ENFORCEABILITY OR PERFECTION UNDER 4 THIS AMENDATORY ACT ARE NOT SATISFIED WHEN THIS AMENDATORY ACT 5 TAKES EFFECT, ALL OF THE FOLLOWING APPLY TO THE SECURITY 6 INTEREST: 7 (A) THE SECURITY INTEREST IS A PERFECTED SECURITY INTEREST 8 FOR 1 YEAR AFTER THIS AMENDATORY ACT TAKES EFFECT. 9 (B) THE SECURITY INTEREST REMAINS ENFORCEABLE THEREAFTER 10 ONLY IF THE SECURITY INTEREST BECOMES ENFORCEABLE UNDER SECTION 11 9203 BEFORE THE YEAR EXPIRES. 12 (C) THE SECURITY INTEREST REMAINS PERFECTED THEREAFTER ONLY 13 IF THE APPLICABLE REQUIREMENTS FOR PERFECTION UNDER THIS AMENDA- 14 TORY ACT ARE SATISFIED BEFORE THE YEAR EXPIRES. 15 SEC. 9704. ALL OF THE FOLLOWING APPLY TO A SECURITY INTER- 16 EST THAT IS ENFORCEABLE IMMEDIATELY BEFORE THIS AMENDATORY ACT 17 TAKES EFFECT BUT WHICH WOULD BE SUBORDINATE TO THE RIGHTS OF A 18 PERSON THAT BECOMES A LIEN CREDITOR AT THAT TIME: 19 (A) THE SECURITY INTEREST REMAINS AN ENFORCEABLE SECURITY 20 INTEREST FOR 1 YEAR AFTER THIS AMENDATORY ACT TAKES EFFECT. 21 (B) THE SECURITY INTEREST REMAINS ENFORCEABLE THEREAFTER IF 22 THE SECURITY INTEREST BECOMES ENFORCEABLE UNDER SECTION 9203 WHEN 23 THIS AMENDATORY ACT TAKES EFFECT OR WITHIN 1 YEAR THEREAFTER. 24 (C) THE SECURITY INTEREST BECOMES PERFECTED UNDER 1 OF THE 25 FOLLOWING: 02120'99 302 1 (i) WITHOUT FURTHER ACTION, WHEN THIS AMENDATORY ACT TAKES 2 EFFECT IF THE APPLICABLE REQUIREMENTS FOR PERFECTION UNDER THIS 3 AMENDATORY ACT ARE SATISFIED BEFORE OR AT THAT TIME. 4 (ii) WHEN THE APPLICABLE REQUIREMENTS FOR PERFECTION ARE 5 SATISFIED IF THE REQUIREMENTS ARE SATISFIED AFTER THAT TIME. 6 SEC. 9705. (1) IF ACTION, OTHER THAN THE FILING OF A 7 FINANCING STATEMENT, IS TAKEN BEFORE THIS AMENDATORY ACT TAKES 8 EFFECT AND THE ACTION WOULD HAVE RESULTED IN PRIORITY OF A SECUR- 9 ITY INTEREST OVER THE RIGHTS OF A PERSON THAT BECOMES A LIEN 10 CREDITOR HAD THE SECURITY INTEREST BECOME ENFORCEABLE BEFORE THIS 11 AMENDATORY ACT TAKES EFFECT, THE ACTION IS EFFECTIVE TO PERFECT A 12 SECURITY INTEREST THAT ATTACHES UNDER THIS AMENDATORY ACT WITHIN 13 1 YEAR AFTER THIS AMENDATORY ACT TAKES EFFECT. AN ATTACHED 14 SECURITY INTEREST BECOMES UNPERFECTED 1 YEAR AFTER THIS AMENDA- 15 TORY ACT TAKES EFFECT UNLESS THE SECURITY INTEREST BECOMES A PER- 16 FECTED SECURITY INTEREST UNDER THIS AMENDATORY ACT BEFORE THE 17 EXPIRATION OF THAT PERIOD. 18 (2) THE FILING OF A FINANCING STATEMENT BEFORE THIS AMENDA- 19 TORY ACT TAKES EFFECT IS EFFECTIVE TO PERFECT A SECURITY INTEREST 20 TO THE EXTENT THE FILING WOULD SATISFY THE APPLICABLE REQUIRE- 21 MENTS FOR PERFECTION UNDER THIS AMENDATORY ACT. 22 (3) THIS AMENDATORY ACT DOES NOT RENDER INEFFECTIVE AN 23 EFFECTIVE FINANCING STATEMENT THAT, BEFORE THIS AMENDATORY ACT 24 TAKES EFFECT, IS FILED AND SATISFIES THE APPLICABLE REQUIREMENTS 25 FOR PERFECTION UNDER THE LAW OF THE JURISDICTION GOVERNING PER- 26 FECTION AS PROVIDED IN SECTION 9103 BEFORE THIS AMENDATORY ACT 27 TAKES EFFECT. HOWEVER, EXCEPT AS OTHERWISE PROVIDED IN 02120'99 303 1 SUBSECTIONS (4) AND (5) AND SECTION 9706, THE FINANCING STATEMENT 2 CEASES TO BE EFFECTIVE AT THE EARLIER OF THE FOLLOWING: 3 (A) THE TIME THE FINANCING STATEMENT WOULD HAVE CEASED TO BE 4 EFFECTIVE UNDER THE LAW OF THE JURISDICTION IN WHICH IT IS 5 FILED. 6 (B) JUNE 30, 2006. 7 (4) THE FILING OF A CONTINUATION STATEMENT AFTER THIS AMEN- 8 DATORY ACT TAKES EFFECT DOES NOT CONTINUE THE EFFECTIVENESS OF 9 THE FINANCING STATEMENT FILED BEFORE THIS AMENDATORY ACT TAKES 10 EFFECT. HOWEVER, UPON THE TIMELY FILING OF A CONTINUATION STATE- 11 MENT AFTER THIS AMENDATORY ACT TAKES EFFECT AND IN ACCORDANCE 12 WITH THE LAW OF THE JURISDICTION GOVERNING PERFECTION AS PROVIDED 13 IN PART 3, THE EFFECTIVENESS OF A FINANCING STATEMENT FILED IN 14 THE SAME OFFICE IN THAT JURISDICTION BEFORE THIS AMENDATORY ACT 15 TAKES EFFECT CONTINUES FOR THE PERIOD PROVIDED BY THE LAW OF THAT 16 JURISDICTION. 17 (5) SUBSECTION (3)(B) APPLIES TO A FINANCING STATEMENT THAT, 18 BEFORE THIS AMENDATORY ACT TAKES EFFECT, IS FILED AGAINST A 19 TRANSMITTING UTILITY AND SATISFIES THE APPLICABLE REQUIREMENTS 20 FOR PERFECTION UNDER THE LAW OF THE JURISDICTION GOVERNING PER- 21 FECTION AS PROVIDED IN SECTION 9103 BEFORE THIS AMENDATORY ACT 22 TAKES EFFECT ONLY TO THE EXTENT THAT PART 3 PROVIDES THAT THE LAW 23 OF A JURISDICTION OTHER THAN JURISDICTION IN WHICH THE FINANCING 24 STATEMENT IS FILED GOVERNS PERFECTION OF A SECURITY INTEREST IN 25 COLLATERAL COVERED BY THE FINANCING STATEMENT. 26 (6) A FINANCING STATEMENT THAT INCLUDES A FINANCING 27 STATEMENT FILED BEFORE THIS AMENDATORY ACT TAKES EFFECT AND A 02120'99 304 1 CONTINUATION STATEMENT FILED AFTER THIS AMENDATORY ACT TAKES 2 EFFECT IS EFFECTIVE ONLY TO THE EXTENT THAT IT SATISFIES THE 3 REQUIREMENTS OF PART 5 FOR AN INITIAL FINANCING STATEMENT. 4 SEC. 9706. (1) THE FILING OF AN INITIAL FINANCING STATEMENT 5 IN THE OFFICE SPECIFIED IN SECTION 9501 CONTINUES THE EFFECTIVE- 6 NESS OF A FINANCING STATEMENT FILED BEFORE THIS AMENDATORY ACT 7 TAKES EFFECT IF ALL OF THE FOLLOWING APPLY: 8 (A) THE FILING OF AN INITIAL FINANCING STATEMENT IN THAT 9 OFFICE WOULD BE EFFECTIVE TO PERFECT A SECURITY INTEREST UNDER 10 THIS AMENDATORY ACT. 11 (B) THE PRE-EFFECTIVE-DATE FINANCING STATEMENT WAS FILED IN 12 AN OFFICE IN ANOTHER STATE OR ANOTHER OFFICE IN THIS STATE. 13 (C) THE INITIAL FINANCING STATEMENT SATISFIES SUBSECTION 14 (3). 15 (2) THE FILING OF AN INITIAL FINANCING STATEMENT UNDER SUB- 16 SECTION (1) CONTINUES THE EFFECTIVENESS OF THE PRE-EFFECTIVE-DATE 17 FINANCING STATEMENT IF BOTH OF THE FOLLOWING APPLY: 18 (A) IF THE INITIAL FINANCING STATEMENT IS FILED BEFORE THIS 19 AMENDATORY ACT TAKES EFFECT, FOR THE PERIOD PROVIDED IN SECTION 20 9403 BEFORE THIS AMENDATORY ACT TAKES EFFECT WITH RESPECT TO A 21 FINANCING STATEMENT. 22 (B) IF THE INITIAL FINANCING STATEMENT IS FILED AFTER THIS 23 AMENDATORY ACT TAKES EFFECT, FOR THE PERIOD PROVIDED IN SECTION 24 9515 WITH RESPECT TO AN INITIAL FINANCING STATEMENT. 25 (3) TO BE EFFECTIVE FOR PURPOSES OF SUBSECTION (1), AN INI- 26 TIAL FINANCING STATEMENT MUST DO ALL OF THE FOLLOWING: 02120'99 305 1 (A) SATISFY THE REQUIREMENTS OF PART 5 FOR AN INITIAL 2 FINANCING STATEMENT. 3 (B) IDENTIFY THE PRE-EFFECTIVE-DATE FINANCING STATEMENT BY 4 INDICATING THE OFFICE IN WHICH THE FINANCING STATEMENT WAS FILED 5 AND PROVIDING THE DATES OF FILING AND FILE NUMBERS, IF ANY, OF 6 THE FINANCING STATEMENT AND OF THE MOST RECENT CONTINUATION 7 STATEMENT FILED WITH RESPECT TO THE FINANCING STATEMENT. 8 (C) INDICATE THAT THE PRE-EFFECTIVE-DATE FINANCING STATEMENT 9 REMAINS EFFECTIVE. 10 SEC. 9707. A PERSON MAY FILE AN INITIAL FINANCING STATEMENT 11 OR A CONTINUATION STATEMENT UNDER THIS PART IF BOTH OF THE FOL- 12 LOWING APPLY: 13 (A) THE SECURED PARTY OF RECORD AUTHORIZES THE FILING. 14 (B) THE FILING IS NECESSARY UNDER THIS PART TO DO 1 OF THE 15 FOLLOWING: 16 (i) TO CONTINUE THE EFFECTIVENESS OF A FINANCING STATEMENT 17 FILED BEFORE THIS AMENDATORY ACT TAKES EFFECT. 18 (ii) TO PERFECT OR CONTINUE THE PERFECTION OF A SECURITY 19 INTEREST. 20 SEC. 9708. (1) THIS AMENDATORY ACT DETERMINES THE PRIORITY 21 OF CONFLICTING CLAIMS TO COLLATERAL. HOWEVER, IF THE RELATIVE 22 PRIORITIES OF THE CLAIMS WERE ESTABLISHED BEFORE THIS AMENDATORY 23 ACT TAKES EFFECT, THIS ARTICLE AS IN EFFECT BEFORE THIS AMENDA- 24 TORY ACT TAKES EFFECT DETERMINES PRIORITY. 25 (2) FOR PURPOSES OF SECTION 9322(1), THE PRIORITY OF A 26 SECURITY INTEREST THAT BECOMES ENFORCEABLE UNDER SECTION 9203 OF 27 THIS AMENDATORY ACT DATES FROM THE TIME THIS AMENDATORY ACT TAKES 02120'99 306 1 EFFECT IF THE SECURITY INTEREST IS PERFECTED UNDER THIS 2 AMENDATORY ACT BY THE FILING OF A FINANCING STATEMENT BEFORE THIS 3 AMENDATORY ACT TAKES EFFECT WHICH WOULD NOT HAVE BEEN EFFECTIVE 4 TO PERFECT THE SECURITY INTEREST UNDER THIS ARTICLE AS IN EFFECT 5 BEFORE THIS AMENDATORY ACT TAKES EFFECT. THIS SUBSECTION DOES 6 NOT APPLY TO CONFLICTING SECURITY INTERESTS EACH OF WHICH IS PER- 7 FECTED BY THE FILING OF A FINANCING STATEMENT DESCRIBED IN THIS 8 SUBSECTION. 9 Enacting section 1. Sections 9112, 9113, 9114, 9115, 9116, 10 9408a, and 9410 of the uniform commercial code, 1962 PA 174, 11 MCL 440.9112, 440.9113, 440.9114, 440.9115, 440.9116, 440.9408a, 12 and 440.9410, are repealed. 02120'99 Final page. DAM