Collateral Assignment of Acquisition Agreement

Summary

This template is 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. This template includes practical guidance and drafting notes. This template includes granting language for a security interest in the underlying acquisition agreement, making this a “security agreement” for purposes of the Uniform Commercial Code (UCC) (U.C.C. § 9-102(a)(74)). Entering into a security agreement is a necessary first step of creating an effective security interest binding on the debtor (i.e., attachment). In addition to this, counsel will also need to file a UCC financing statement to ensure that the security interest is properly perfected. This collateral assignment should be defined as a “loan document” (and, more specifically, a “security document”). As such it is drafted by lender’s counsel. The template itself is fairly standard across acquisition financings, and it necessarily contains the grant, express rights of the lender to assume certain rights of the buyer upon an event of default, authorization for the lender to file UCC financing statements, along with standard covenants and representations and warranties covering, including specific obligations of the assignor under the acquisition agreement. For additional guidance on securing and perfecting security interests, see: • Collateral Package Documentation (Security Agreement) • Perfecting Security Interests by Possession, Filing, and Control • Perfection Methods in Various Types of Collateral Chart • UCC Financing Statements and Amendments • Security Interests Resource Kit