Alberty Publishing Online: Item Detail

Price: $30.00
Revised: January 1, 2011 -31 pages

Description:
Form 5.4 contains two forms of an agreement creating a security interest in a member's interest in an LLC. The forms can be used if the interest of a member in an LLC is pledged as security for a loan to that member, and can also be in connection with an installment sale of an interest in an LLC. The forms are suitable for use whether the collateral is all or only part of a member's interest.

The first form is a security interest to be used if no certificate representing the interest has been issued by the LLC and the LLC has not elected to treat its members' interests as securities under Article 8 of the Uniform Commercial Code. This is the most common situation, and the security interest can be perfected by a filing with the appropriate state filing authority.

However, some LLCs issue certificates representing members' interests and elect to have these interests treated as securities under Article 8 of the Uniform Commercial Code. This is often done at the behest of a creditor of a member of the LLC because it allows the security interest to be perfected by taking possession of the membership certificate, which may have a higher priority than a security interest perfected by filing and will avoid certain risks that a security interest perfected by filing can be lost or subordinated.

Features:

Buy-sell provisions, voluntary transfers - Security agreement provides for the consent of the other members to a member's pledge of his or her interest in an LLC as collateral for a loan or other obligation and to the secured party's retention of the interest in satisfaction of the secured debt.
Default - Security agreement with an LLC member's interest as collateral specifies the events of default that permit the secured party to exercise its remedies.
Distributions - Security agreement with an LLC member's interest as collateral provides for the rights of the debtor and secured party to distributions from the LLC, including distributions on the dissolution and liquidation of an LLC.
Representations and warranties - Security agreement with an LLC member's interest as collateral contains warranties of title and good right to transfer.
Security interest - Security agreement for the creation of a security interest in all or part of a member's interest in an LLC.

FORM 5.4— Security Agreement with LLC Member's Interest as Collateral