Acknowledgment and Agreement for Collateral Assignment of Acquisition Agreement

Summary

This template is an acknowledgment to an assignment of an acquisition agreement, in which a buyer in an acquisition grants to a secured lender a security interest in the underlying purchase agreement as collateral for a loan. The acknowledgment is made by the seller, which is not a party to the assignment agreement. This template includes practical guidance and drafting notes. While this acknowledgment does not impact the underlying security interest granted by the borrower (as buyer under the acquisition agreement), it is intended to facilitate the lender’s exercise of remedies under the acquisition agreement. That is, the acknowledgment is not necessary to render the assignment a “security agreement” for purposes of the Uniform Commercial Code (UCC) (U.C.C. § 9-102(a)(74)), nor is it a requirement to perfect that security interest. However, the lender may assume certain rights of the buyer under the acquisition agreement in an event of default. It may also assume at its discretion some of the buyer’s obligations. For example, the lender may assert claims due from the seller to the buyer and may cure the buyer’s defaults under the acquisition agreement. This acknowledgement puts the seller on notice as to the existence of that assignment and thereby would eliminate any surprises (or objections) should the lender step into the shoes of the buyer. The acknowledgment could also be affixed to the assignment as an additional exhibit. See Collateral Assignment of Acquisition Agreement for the underlying assignment. For additional guidance on securing and perfecting security interests, see Security Interests Resource Kit.