State of Illinois
92nd General Assembly
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92_SB0805

 
                                               LRB9207991RCcd

 1        AN ACT in relation to business transactions.

 2        Be  it  enacted  by  the People of the State of Illinois,
 3    represented in the General Assembly:

 4        Section 5.  The Uniform Commercial  Code  is  amended  by
 5    changing  Section 9-102 and adding Sections 9-103A and 9-324A
 6    as follows:

 7        (810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
 8        (Text of Section before amendment by P.A. 91-893)
 9        Sec. 9-102. Policy and Subject Matter of Article.
10        (1)  Except as otherwise provided in  Section  9--104  on
11    excluded transactions, this Article applies
12             (a)  to  any  transaction  (regardless  of its form)
13    which is intended to create a security interest  in  personal
14    property or fixtures including goods, documents, instruments,
15    general intangibles, chattel paper or accounts; and also
16             (b)  to any sale of accounts or chattel paper.
17        (2)  This  Article  applies to security interests created
18    by contract including pledge, assignment,  chattel  mortgage,
19    chattel  trust,  trust  deed, factor's lien, equipment trust,
20    conditional  sale,  trust  receipt,  other  lien   or   title
21    retention  contract  and  lease  or  consignment  intended as
22    security. This Article does  not  apply  to  statutory  liens
23    except as provided in Section 9--310.
24        (3)  The  application  of  this  Article  to  a  security
25    interest  in a secured obligation is not affected by the fact
26    that the obligation is itself secured  by  a  transaction  or
27    interest to which this Article does not apply.
28        (4)  The  application  of  this  Article  to  a  security
29    interest in a deposit account shall not displace a common law
30    right of set-off of the secured party as to a deposit account
31    maintained with the secured party.
 
                            -2-                LRB9207991RCcd
 1    (Source: P.A. 87-1037.)

 2        (Text of Section after amendment by P.A. 91-893)
 3        Sec. 9-102. Definitions and index of definitions.
 4        (a)  Article 9 definitions.  In this Article:
 5             (1)  "Accession"  means  goods  that  are physically
 6        united with  other  goods  in  such  a  manner  that  the
 7        identity of the original goods is not lost.
 8             (2)  "Account",  except  as  used  in "account for",
 9        means a  right  to  payment  of  a  monetary  obligation,
10        whether  or  not  earned by performance, (i) for property
11        that has  been  or  is  to  be  sold,  leased,  licensed,
12        assigned,  or  otherwise  disposed  of, (ii) for services
13        rendered or  to  be  rendered,  (iii)  for  a  policy  of
14        insurance  issued  or  to be issued, (iv) for a secondary
15        obligation incurred or to be  incurred,  (v)  for  energy
16        provided or to be provided, (vi) for the use or hire of a
17        vessel  under  a charter or other contract, (vii) arising
18        out of the use of a credit or charge card or  information
19        contained  on  or  for  use  with  the card, or (viii) as
20        winnings in a lottery or other game of chance operated or
21        sponsored by a State, governmental unit of  a  State,  or
22        person  licensed  or  authorized to operate the game by a
23        State or governmental unit of a State.  The term includes
24        health-care-insurance receivables.   The  term  does  not
25        include  (i) rights to payment evidenced by chattel paper
26        or an instrument,  (ii)  commercial  tort  claims,  (iii)
27        deposit   accounts,   (iv)   investment   property,   (v)
28        letter-of-credit  rights  or  letters  of credit, or (vi)
29        rights to payment for money or funds  advanced  or  sold,
30        other  than  rights arising out of the use of a credit or
31        charge card or information contained on or for  use  with
32        the card.
33             (3)  "Account debtor" means a person obligated on an
34        account,  chattel paper, or general intangible.  The term
 
                            -3-                LRB9207991RCcd
 1        does not include persons obligated to  pay  a  negotiable
 2        instrument,  even  if  the instrument constitutes part of
 3        chattel paper.
 4             (4)  "Accounting", except  as  used  in  "accounting
 5        for", means a record:
 6                  (A)  authenticated by a secured party;
 7                  (B)  indicating  the  aggregate  unpaid secured
 8             obligations as of a  date  not  more  than  35  days
 9             earlier  or  35  days  later  than  the  date of the
10             record; and
11                  (C)  identifying   the   components   of    the
12             obligations in reasonable detail.
13             (5)  "Agricultural  lien"  means  an interest, other
14        than a security interest, in farm products:
15                  (A)  which secures payment or performance of an
16             obligation for:
17                       (i)  goods  or   services   furnished   in
18                  connection  with  a debtor's farming operation;
19                  or
20                       (ii)  rent on real property  leased  by  a
21                  debtor   in   connection   with   its   farming
22                  operation;
23                  (B)  which  is created by statute in favor of a
24             person that:
25                       (i)  in  the  ordinary   course   of   its
26                  business  furnished  goods  or  services  to  a
27                  debtor  in  connection  with a debtor's farming
28                  operation; or
29                       (ii)  leased real property to a debtor  in
30                  connection with the debtor's farming operation;
31                  and
32                  (C)  whose effectiveness does not depend on the
33             person's possession of the personal property.
34             (6)  "As-extracted collateral" means:
 
                            -4-                LRB9207991RCcd
 1                  (A)  oil,  gas,  or  other  minerals  that  are
 2             subject to a security interest that:
 3                       (i)  is  created  by  a  debtor  having an
 4                  interest in the minerals before extraction; and
 5                       (ii)  attaches   to   the   minerals    as
 6                  extracted; or
 7                  (B)  accounts  arising  out  of the sale at the
 8             wellhead or minehead of oil, gas, or other  minerals
 9             in   which   the   debtor  had  an  interest  before
10             extraction.
11             (7)  "Authenticate" means:
12                  (A)  to sign; or
13                  (B)  to execute or otherwise adopt a symbol, or
14             encrypt or similarly process a record in whole or in
15             part, with the present intent of the  authenticating
16             person  to identify the person and adopt or accept a
17             record.
18             (8)  "Bank" means an organization that is engaged in
19        the business  of  banking.   The  term  includes  savings
20        banks,  savings and loan associations, credit unions, and
21        trust companies.
22             (9)  "Cash proceeds" means proceeds that are  money,
23        checks, deposit accounts, or the like.
24             (10)  "Certificate  of title" means a certificate of
25        title with respect to which a statute  provides  for  the
26        security  interest  in  question  to  be indicated on the
27        certificate as a condition  or  result  of  the  security
28        interest's  obtaining  priority over the rights of a lien
29        creditor with respect to the collateral.
30             (11)  "Chattel paper" means a record or records that
31        evidence  both  a  monetary  obligation  and  a  security
32        interest  in  specific  goods,  a  security  interest  in
33        specific goods and software used in the goods, a security
34        interest in specific goods and license of  software  used
 
                            -5-                LRB9207991RCcd
 1        in  the  goods,  a lease of specific goods, or a lease of
 2        specified goods and a license of  software  used  in  the
 3        goods.   In this paragraph, "monetary obligation" means a
 4        monetary obligation secured by the goods or owed under  a
 5        lease  of  the  goods  and includes a monetary obligation
 6        with respect to software used in  the  goods.   The  term
 7        does   not   include  (i)  charters  or  other  contracts
 8        involving the use or hire of a  vessel  or  (ii)  records
 9        that  evidence  a right to payment arising out of the use
10        of a credit or charge card or information contained on or
11        for use with the card.  If a transaction is evidenced  by
12        records   that   include   an  instrument  or  series  of
13        instruments,  the  group  of   records   taken   together
14        constitutes chattel paper.
15             (12)  "Collateral"  means  the property subject to a
16        security  interest  or  agricultural  lien.    The   term
17        includes:
18                  (A)  proceeds  to  which  a  security  interest
19             attaches;
20                  (B)  accounts,     chattel    paper,    payment
21             intangibles, and promissory  notes  that  have  been
22             sold; and
23                  (C)  goods   that   are   the   subject   of  a
24             consignment.
25             (13)  "Commercial tort claim" means a claim  arising
26        in tort with respect to which:
27                  (A)  the claimant is an organization; or
28                  (B)  the  claimant  is  an  individual  and the
29             claim:
30                       (i)  arose in the course of the claimant's
31                  business or profession; and
32                       (ii)  does not include damages arising out
33                  of personal  injury  to  or  the  death  of  an
34                  individual.
 
                            -6-                LRB9207991RCcd
 1             (14)  "Commodity    account"    means   an   account
 2        maintained  by  a  commodity  intermediary  in  which   a
 3        commodity contract is carried for a commodity customer.
 4             (15)  "Commodity contract" means a commodity futures
 5        contract,  an  option  on a commodity futures contract, a
 6        commodity option, or another contract if the contract  or
 7        option is:
 8                  (A)  traded  on  or  subject  to the rules of a
 9             board  of  trade  that  has  been  designated  as  a
10             contract market for  such  a  contract  pursuant  to
11             federal commodities laws; or
12                  (B)  traded  on  a  foreign  commodity board of
13             trade, exchange, or market, and is  carried  on  the
14             books  of  a  commodity intermediary for a commodity
15             customer.
16             (16)  "Commodity customer" means a person for  which
17        a  commodity intermediary carries a commodity contract on
18        its books.
19             (17)  "Commodity intermediary" means a person that:
20                  (A)  is  registered  as  a  futures  commission
21             merchant under federal commodities law; or
22                  (B)  in the ordinary  course  of  its  business
23             provides  clearance  or  settlement  services  for a
24             board  of  trade  that  has  been  designated  as  a
25             contract market pursuant to federal commodities law.
26             (18)  "Communicate" means:
27                  (A)  to  send  a  written  or  other   tangible
28             record;
29                  (B)  to  transmit  a record by any means agreed
30             upon  by  the  persons  sending  and  receiving  the
31             record; or
32                  (C)  in the case of transmission of a record to
33             or by a filing office, to transmit a record  by  any
34             means prescribed by filing-office rule.
 
                            -7-                LRB9207991RCcd
 1             (19)  "Consignee"  means  a  merchant to which goods
 2        are delivered in a consignment.
 3             (20)  "Consignment" means a transaction,  regardless
 4        of  its  form,  in  which  a  person  delivers goods to a
 5        merchant for the purpose of sale and:
 6                  (A)  the merchant:
 7                       (i)  deals in goods of that kind  under  a
 8                  name  other  than the name of the person making
 9                  delivery;
10                       (ii)  is not an auctioneer; and
11                       (iii)  is  not  generally  known  by   its
12                  creditors   to   be  substantially  engaged  in
13                  selling the goods of others;
14                  (B)  with  respect  to   each   delivery,   the
15             aggregate  value  of  the goods is $1,000 or more at
16             the time of delivery;
17                  (C)  the   goods   are   not   consumer   goods
18             immediately before delivery; and
19                  (D)  the transaction does not create a security
20             interest that secures an obligation.
21             (21)  "Consignor" means a person that delivers goods
22        to a consignee in a consignment.
23             (22)  "Consumer debtor" means a debtor in a consumer
24        transaction.
25             (23)  "Consumer goods" means goods that are used  or
26        bought   for  use  primarily  for  personal,  family,  or
27        household purposes.
28             (24)  "Consumer-goods transaction" means a  consumer
29        transaction in which:
30                  (A)  an   individual   incurs   an   obligation
31             primarily   for   personal,   family,  or  household
32             purposes; and
33                  (B)  a  security  interest  in  consumer  goods
34             secures the obligation.
 
                            -8-                LRB9207991RCcd
 1             (25)  "Consumer obligor" means an obligor who is  an
 2        individual  and  who incurred the obligation as part of a
 3        transaction entered into primarily for personal,  family,
 4        or household purposes.
 5             (26)  "Consumer  transaction" means a transaction in
 6        which (i) an individual incurs  an  obligation  primarily
 7        for  personal,  family,  or  household  purposes,  (ii) a
 8        security interest secures the obligation, and  (iii)  the
 9        collateral  is  held  or acquired primarily for personal,
10        family,  or  household  purposes.   The   term   includes
11        consumer-goods transactions.
12             (27)  "Continuation statement" means an amendment of
13        a financing statement which:
14                  (A)  identifies,   by   its  file  number,  the
15             initial financing statement to which it relates; and
16                  (B)  indicates  that  it  is   a   continuation
17             statement  for,  or that it is filed to continue the
18             effectiveness   of,   the    identified    financing
19             statement.
20             (28)  "Debtor" means:
21                  (A)  a  person having an interest, other than a
22             security interest or other lien, in the  collateral,
23             whether or not the person is an obligor;
24                  (B)  a   seller  of  accounts,  chattel  paper,
25             payment intangibles, or promissory notes; or
26                  (C)  a consignee.
27             (29)  "Deposit  account"  means  a   demand,   time,
28        savings, passbook, nonnegotiable certificates of deposit,
29        uncertificated  certificates of deposit, nontransferrable
30        certificates of deposit, or  similar  account  maintained
31        with  a  bank.   The  term  does  not  include investment
32        property or accounts evidenced by an instrument.
33             (30)  "Document" means a  document  of  title  or  a
34        receipt of the type described in Section 7-201(2).
 
                            -9-                LRB9207991RCcd
 1             (31)  "Electronic chattel paper" means chattel paper
 2        evidenced   by   a   record   or  records  consisting  of
 3        information stored in an electronic medium.
 4             (32)  "Encumbrance" means a  right,  other  than  an
 5        ownership  interest, in real property.  The term includes
 6        mortgages and other liens on real property.
 7             (33)  "Equipment" means goods other than  inventory,
 8        farm products, or consumer goods.
 9             (34)  "Farm   products"   means  goods,  other  than
10        standing timber, with respect  to  which  the  debtor  is
11        engaged in a farming operation and which are:
12                  (A)  crops  grown,  growing,  or  to  be grown,
13             including:
14                       (i)  crops produced on trees,  vines,  and
15                  bushes; and
16                       (ii)  aquatic     goods     produced    in
17                  aquacultural operations;
18                  (B)  livestock,  born  or   unborn,   including
19             aquatic goods produced in aquacultural operations;
20                  (C)  supplies  used  or  produced  in a farming
21             operation; or
22                  (D)  products of crops or  livestock  in  their
23             unmanufactured states.
24             (35)  "Farming     operation"     means     raising,
25        cultivating,  propagating,  fattening,  grazing,  or  any
26        other farming, livestock, or aquacultural operation.
27             (36)  "File  number" means the number assigned to an
28        initial financing statement pursuant to Section 9-519(a).
29             (37)  "Filing office" means an office designated  in
30        Section 9-501 as the place to file a financing statement.
31             (38)  "Filing-office  rule"  means  a  rule  adopted
32        pursuant to Section 9-526.
33             (39)  "Financing   statement"   means  a  record  or
34        records composed of an initial  financing  statement  and
 
                            -10-               LRB9207991RCcd
 1        any  filed  record  relating  to  the  initial  financing
 2        statement.
 3             (40)  "Fixture   filing"   means  the  filing  of  a
 4        financing statement covering goods that  are  or  are  to
 5        become  fixtures and satisfying Section 9-502(a) and (b).
 6        The term includes the filing  of  a  financing  statement
 7        covering goods of a transmitting utility which are or are
 8        to become fixtures.
 9             (41)  "Fixtures"  means  goods  that  have become so
10        related to particular real property that an  interest  in
11        them arises under real property law.
12             (42)  "General   intangible"   means   any  personal
13        property,  including  things  in   action,   other   than
14        accounts,  chattel paper, commercial tort claims, deposit
15        accounts,  documents,  goods,   instruments,   investment
16        property,  letter-of-credit  rights,  letters  of credit,
17        money, and oil, gas, or other minerals before extraction.
18        The term includes payment intangibles and software.
19             (43)  "Good faith" means honesty  in  fact  and  the
20        observance  of  reasonable  commercial  standards of fair
21        dealing.
22             (44)  "Goods" means all things that are movable when
23        a security interest  attaches.   The  term  includes  (i)
24        fixtures,  (ii)  standing  timber  that  is to be cut and
25        removed under a conveyance or contract  for  sale,  (iii)
26        the  unborn  young of animals, (iv) crops grown, growing,
27        or to be grown, even if the crops are produced on  trees,
28        vines,  or  bushes, and (v) manufactured homes.  The term
29        also includes a computer program embedded  in  goods  and
30        any  supporting information provided in connection with a
31        transaction relating to the program if (i) the program is
32        associated with the  goods  in  such  a  manner  that  it
33        customarily  is  considered part of the goods, or (ii) by
34        becoming the owner of the  goods,  a  person  acquires  a
 
                            -11-               LRB9207991RCcd
 1        right  to  use  the program in connection with the goods.
 2        The term does not include a computer program embedded  in
 3        goods  that  consist  solely  of  the medium in which the
 4        program is embedded.  The  term  also  does  not  include
 5        accounts,  chattel paper, commercial tort claims, deposit
 6        accounts, documents,  general  intangibles,  instruments,
 7        investment  property, letter-of-credit rights, letters of
 8        credit, money, or oil,  gas,  or  other  minerals  before
 9        extraction.
10             (45)  "Governmental   unit"   means  a  subdivision,
11        agency,  department,  county,  parish,  municipality,  or
12        other unit of the government  of  the  United  States,  a
13        State,  or  a  foreign  country.   The  term  includes an
14        organization having a separate corporate existence if the
15        organization is eligible to issue debt on which  interest
16        is  exempt  from  income  taxation  under the laws of the
17        United States.
18             (46)  "Health-care-insurance  receivable"  means  an
19        interest in or claim under a policy of insurance which is
20        a  right  to  payment  of  a  monetary   obligation   for
21        health-care goods or services provided.
22             (47)  "Instrument"  means a negotiable instrument or
23        any other writing that evidences a right to  the  payment
24        of  a  monetary  obligation,  is  not  itself  a security
25        agreement or lease, and is of a  type  that  in  ordinary
26        course  of  business  is transferred by delivery with any
27        necessary indorsement or assignment.  The term  does  not
28        include  (i) investment property, (ii) letters of credit,
29        (iii)  nonnegotiable  certificates   of   deposit,   (iv)
30        uncertificated     certificates     of    deposit,    (v)
31        nontransferrable  certificates  of   deposit,   or   (vi)
32        writings  that evidence a right to payment arising out of
33        the use  of  a  credit  or  charge  card  or  information
34        contained on or for use with the card.
 
                            -12-               LRB9207991RCcd
 1             (48)  "Inventory"   means  goods,  other  than  farm
 2        products, which:
 3                  (A)  are leased by a person as lessor;
 4                  (B)  are held by a person for sale or lease  or
 5             to be furnished under a contract of service;
 6                  (C)  are furnished by a person under a contract
 7             of service; or
 8                  (D)  consist of raw materials, work in process,
 9             or materials used or consumed in a business.
10             (49)  "Investment   property"   means   a  security,
11        whether   certificated   or   uncertificated,    security
12        entitlement,  securities  account, commodity contract, or
13        commodity account.
14             (50)  "Jurisdiction of organization",  with  respect
15        to  a  registered  organization,  means  the jurisdiction
16        under whose law the organization is organized.
17             (51)  "Letter-of-credit  right"  means  a  right  to
18        payment or performance under a letter of credit,  whether
19        or  not  the  beneficiary  has demanded or is at the time
20        entitled to demand payment or performance.  The term does
21        not include the right of a beneficiary to demand  payment
22        or performance under a letter of credit.
23             (52)  "Lien creditor" means:
24                  (A)  a creditor that has acquired a lien on the
25             property involved by attachment, levy, or the like;
26                  (B)  an  assignee for benefit of creditors from
27             the time of assignment;
28                  (C)  a trustee in bankruptcy from the  date  of
29             the filing of the petition; or
30                  (D)  a  receiver  in  equity  from  the time of
31             appointment.
32             (53)  "Manufactured   home"   means   a   structure,
33        transportable in one or  more  sections,  which,  in  the
34        traveling mode, is eight body feet or more in width or 40
 
                            -13-               LRB9207991RCcd
 1        body feet or more in length, or, when erected on site, is
 2        320  or  more  square  feet,  and  which  is  built  on a
 3        permanent chassis and designed to be used as  a  dwelling
 4        with  or without a permanent foundation when connected to
 5        the  required  utilities,  and  includes  the   plumbing,
 6        heating,   air-conditioning,   and   electrical   systems
 7        contained  therein.  The term includes any structure that
 8        meets all of the requirements of  this  paragraph  except
 9        the  size  requirements  and  with  respect  to which the
10        manufacturer voluntarily files a  certification  required
11        by  the  United  States  Secretary  of  Housing and Urban
12        Development and complies with the  standards  established
13        under Title 42 of the United States Code.
14             (54)  "Manufactured-home    transaction"   means   a
15        secured transaction:
16                  (A)  that  creates  a  purchase-money  security
17             interest  in  a  manufactured  home,  other  than  a
18             manufactured home held as inventory; or
19                  (B)  in which a manufactured home, other than a
20             manufactured home held as inventory, is the  primary
21             collateral.
22             (55)  "Mortgage" means a consensual interest in real
23        property,  including  fixtures,  which secures payment or
24        performance of an obligation.
25             (56)  "New debtor" means a person that becomes bound
26        as debtor under Section 9-203(d) by a security  agreement
27        previously entered into by another person.
28             (57)  "New  value"  means  (i)  money,  (ii) money's
29        worth in property, services,  or  new  credit,  or  (iii)
30        release  by  a  transferee  of  an  interest  in property
31        previously transferred to the transferee.  The term  does
32        not   include   an  obligation  substituted  for  another
33        obligation.
34             (58)  "Noncash proceeds" means proceeds  other  than
 
                            -14-               LRB9207991RCcd
 1        cash proceeds.
 2             (59)  "Obligor" means a person that, with respect to
 3        an  obligation  secured  by  a security interest in or an
 4        agricultural lien on the collateral, (i) owes payment  or
 5        other  performance  of  the obligation, (ii) has provided
 6        property other than the collateral to secure  payment  or
 7        other   performance   of  the  obligation,  or  (iii)  is
 8        otherwise accountable in whole or in part for payment  or
 9        other  performance  of the obligation.  The term does not
10        include issuers or nominated persons under  a  letter  of
11        credit.
12             (60)  "Original  debtor",  except as used in Section
13        9-310(c), means a person that, as debtor, entered into  a
14        security agreement to which a new debtor has become bound
15        under Section 9-203(d).
16             (61)  "Payment    intangible"    means   a   general
17        intangible under which  the  account  debtor's  principal
18        obligation is a monetary obligation.
19             (62)  "Person   related  to",  with  respect  to  an
20        individual, means:
21                  (A)  the spouse of the individual;
22                  (B)  a  brother,  brother-in-law,  sister,   or
23             sister-in-law of the individual;
24                  (C)  an  ancestor  or  lineal descendant of the
25             individual or the individual's spouse; or
26                  (D)  any other relative, by blood or  marriage,
27             of  the  individual  or  the individual's spouse who
28             shares the same home with the individual.
29             (63)  "Person  related  to",  with  respect  to   an
30        organization, means:
31                  (A)  a    person    directly    or   indirectly
32             controlling, controlled by, or under common  control
33             with the organization;
34                  (B)  an  officer  or  director  of, or a person
 
                            -15-               LRB9207991RCcd
 1             performing similar functions with  respect  to,  the
 2             organization;
 3                  (C)  an  officer  or  director  of, or a person
 4             performing similar  functions  with  respect  to,  a
 5             person described in subparagraph (A);
 6                  (D)  the  spouse  of an individual described in
 7             subparagraph (A), (B), or (C); or
 8                  (E)  an individual who is related by  blood  or
 9             marriage  to an individual described in subparagraph
10             (A), (B), (C), or (D) and shares the same home  with
11             the individual.
12             (64)  "Proceeds",   except   as   used   in  Section
13        9-609(b), means the following property:
14                  (A)  whatever is acquired upon the sale, lease,
15             license,   exchange,   or   other   disposition   of
16             collateral;
17                  (B)  whatever is collected on,  or  distributed
18             on account of, collateral;
19                  (C)  rights arising out of collateral;
20                  (D)  to  the extent of the value of collateral,
21             claims arising out of the  loss,  nonconformity,  or
22             interference   with   the   use   of,   defects   or
23             infringement   of  rights  in,  or  damage  to,  the
24             collateral; or
25                  (E)  to the extent of the value  of  collateral
26             and  to  the  extent  payable  to  the debtor or the
27             secured party, insurance payable by  reason  of  the
28             loss or nonconformity of, defects or infringement of
29             rights in, or damage to, the collateral.
30             (64.1)  "Production-money  crops"  means  crops that
31        secure  a  production-money  obligation   incurred   with
32        respect to the production of those crops.
33             (64.2)  "Production-money   obligation"   means   an
34        obligation  of an obligor incurred for new value given to
 
                            -16-               LRB9207991RCcd
 1        enable the debtor to produce crops if  the  value  is  in
 2        fact used for the production of crops.
 3             (64.3)  "Production  of  crops" includes tilling and
 4        otherwise   preparing   land   for   growing,   planting,
 5        cultivating,  fertilizing,  irrigating,  harvesting,  and
 6        gathering crops,  and  protecting  them  from  damage  or
 7        disease.
 8             (65)  "Promissory  note"  means  an  instrument that
 9        evidences a promise to pay a  monetary  obligation,  does
10        not  evidence  an  order  to pay, and does not contain an
11        acknowledgment by a bank that the bank has  received  for
12        deposit a sum of money or funds.
13             (66)  "Proposal"  means  a record authenticated by a
14        secured party which  includes  the  terms  on  which  the
15        secured  party is willing to accept collateral in full or
16        partial  satisfaction  of  the  obligation   it   secures
17        pursuant to Sections 9-620, 9-621, and 9-622.
18             (67)  "Public-finance  transaction"  means a secured
19        transaction in connection with which:
20                  (A)  debt securities are issued;
21                  (B)  all or a portion of the securities  issued
22             have  an  initial  stated  maturity  of  at least 20
23             years; and
24                  (C)  the  debtor,   obligor,   secured   party,
25             account   debtor   or   other  person  obligated  on
26             collateral,  assignor  or  assignee  of  a   secured
27             obligation,  or  assignor  or assignee of a security
28             interest is a State or  a  governmental  unit  of  a
29             State.
30             (68)  "Pursuant  to  commitment", with respect to an
31        advance made or other value given  by  a  secured  party,
32        means pursuant to the secured party's obligation, whether
33        or  not  a subsequent event of default or other event not
34        within the secured party's control has  relieved  or  may
 
                            -17-               LRB9207991RCcd
 1        relieve the secured party from its obligation.
 2             (69)  "Record",  except as used in "for record", "of
 3        record", "record or legal  title",  and  "record  owner",
 4        means  information that is inscribed on a tangible medium
 5        or which is stored in an electronic or other  medium  and
 6        is retrievable in perceivable form.
 7             (70)  "Registered     organization"     means     an
 8        organization  organized  solely under the law of a single
 9        State or the United States and as to which the  State  or
10        the  United  States must maintain a public record showing
11        the organization to have been organized.
12             (71)  "Secondary obligor" means an  obligor  to  the
13        extent that:
14                  (A)  the obligor's obligation is secondary; or
15                  (B)  the  obligor  has a right of recourse with
16             respect  to  an  obligation  secured  by  collateral
17             against the debtor, another obligor, or property  of
18             either.
19             (72)  "Secured party" means:
20                  (A)  a   person   in  whose  favor  a  security
21             interest is created or provided for under a security
22             agreement, whether  or  not  any  obligation  to  be
23             secured is outstanding;
24                  (B)  a person that holds an agricultural lien;
25                  (C)  a consignor;
26                  (D)  a person to which accounts, chattel paper,
27             payment  intangibles,  or promissory notes have been
28             sold;
29                  (E)  a  trustee,  indenture   trustee,   agent,
30             collateral  agent,  or other representative in whose
31             favor a security interest or  agricultural  lien  is
32             created or provided for; or
33                  (F)  a  person  that  holds a security interest
34             arising  under  Section  2-401,   2-505,   2-711(3),
 
                            -18-               LRB9207991RCcd
 1             2A-508(5), 4-210, or 5-118.
 2             (73)  "Security  agreement"  means an agreement that
 3        creates or provides for a security interest.
 4             (74)  "Send",  in  connection  with  a   record   or
 5        notification, means:
 6                  (A)  to   deposit  in  the  mail,  deliver  for
 7             transmission, or transmit by any other  usual  means
 8             of   communication,   with   postage   or   cost  of
 9             transmission provided for, addressed to any  address
10             reasonable under the circumstances; or
11                  (B)  to  cause the record or notification to be
12             received within the time that  it  would  have  been
13             received if properly sent under subparagraph (A).
14             (75)  "Software"  means  a  computer program and any
15        supporting information  provided  in  connection  with  a
16        transaction  relating  to  the program. The term does not
17        include a  computer  program  that  is  included  in  the
18        definition of goods.
19             (76)  "State"  means  a  State of the United States,
20        the District of Columbia, Puerto Rico, the United  States
21        Virgin  Islands,  or  any territory or insular possession
22        subject to the jurisdiction of the United States.
23             (77)  "Supporting      obligation"      means      a
24        letter-of-credit  right  or  secondary  obligation   that
25        supports  the  payment  or  performance  of  an  account,
26        chattel  paper,  a  document,  a  general  intangible, an
27        instrument, or investment property.
28             (78)  "Tangible chattel paper" means  chattel  paper
29        evidenced   by   a   record   or  records  consisting  of
30        information that is inscribed on a tangible medium.
31             (79)  "Termination statement" means an amendment  of
32        a financing statement which:
33                  (A)  identifies,   by   its  file  number,  the
34             initial financing statement to which it relates; and
 
                            -19-               LRB9207991RCcd
 1                  (B)  indicates either that it is a  termination
 2             statement or that the identified financing statement
 3             is no longer effective.
 4             (80)  "Transmitting    utility"   means   a   person
 5        primarily engaged in the business of:
 6                  (A)  operating  a  railroad,   subway,   street
 7             railway, or trolley bus;
 8                  (B)  transmitting  communications electrically,
 9             electromagnetically, or by light;
10                  (C)  transmitting goods by pipeline  or  sewer;
11             or
12                  (D)  transmitting or producing and transmitting
13             electricity, steam, gas, or water.
14        (b)  Definitions   in   other  Articles.   The  following
15    definitions in other Articles apply to this Article:
16        "Applicant". Section 5-102.
17        "Beneficiary". Section 5-102.
18        "Broker". Section 8-102.
19        "Certificated security".  Section 8-102.
20        "Check".  Section 3-104.
21        "Clearing corporation".  Section 8-102.
22        "Contract for sale".  Section 2-106.
23        "Customer".  Section 4-104.
24        "Entitlement holder".  Section 8-102.
25        "Financial asset".  Section 8-102.
26        "Holder in due course".  Section 3-302.
27        "Issuer"  (with  respect  to  a  letter  of   credit   or
28    letter-of-credit right).  Section 5-102.
29        "Issuer" (with respect to a security).  Section 8-201.
30        "Lease".  Section 2A-103.
31        "Lease agreement".  Section 2A-103.
32        "Lease contract".  Section 2A-103.
33        "Leasehold interest".  Section 2A-103.
34        "Lessee".  Section 2A-103.
 
                            -20-               LRB9207991RCcd
 1        "Lessee in ordinary course of business".  Section 2A-103.
 2        "Lessor".  Section 2A-103.
 3        "Lessor's residual interest".  Section 2A-103.
 4        "Letter of credit".  Section 5-102.
 5        "Merchant".  Section 2-104.
 6        "Negotiable instrument".  Section 3-104.
 7        "Nominated person".  Section 5-102.
 8        "Note".  Section 3-104.
 9        "Proceeds of a letter of credit".  Section 5-114.
10        "Prove".  Section 3-103.
11        "Sale".  Section 2-106.
12        "Securities account".  Section 8-501.
13        "Securities intermediary".  Section 8-102.
14        "Security".  Section 8-102.
15        "Security certificate".  Section 8-102.
16        "Security entitlement".  Section 8-102.
17        "Uncertificated security".  Section 8-102.
18        (c)  Article  1  definitions  and  principles.  Article 1
19    contains general definitions and principles  of  construction
20    and interpretation applicable throughout this Article.
21    (Source: P.A. 91-893, eff. 7-1-01.)

22        (810 ILCS 5/9-103A new)
23        Sec.  9-103A. "Production-money crops"; "production-money
24    obligation"; production-money security  interest;  burden  of
25    establishing.
26        (a)  A  security  interest in crops is a production-money
27    security  interest  to  the  extent  that   the   crops   are
28    production-money crops.
29        (b)  If  the  extent  to  which  a security interest is a
30    production-money security interest depends on the application
31    of a payment to a particular obligation, the payment must  be
32    applied:
33             (1)  in  accordance  with  any  reasonable method of
 
                            -21-               LRB9207991RCcd
 1        application to which the parties agree;
 2             (2) in the absence of the parties'  agreement  to  a
 3        reasonable  method,  in  accordance with any intention of
 4        the obligor manifested at or before the time of  payment;
 5        or
 6             (3)  in  the absence of an agreement to a reasonable
 7        method  and  a  timely  manifestation  of  the  obligor's
 8        intention, in the following order:
 9                  (A) to obligations that are not secured; and
10                  (B) if more than one obligation is secured,  to
11             obligations  secured  by  production-money  security
12             interests  in  the  order in which those obligations
13             were incurred.
14        (c) A production-money security interest  does  not  lose
15    its status as such, even if:
16             (1)   the  production-money  crops  also  secure  an
17        obligation that is not a production-money obligation;
18             (2) collateral that is  not  production-money  crops
19        also secures the production-money obligation; or
20             (3)   the   production-money   obligation  has  been
21        renewed, refinanced, or restructured.
22        (d) A secured party claiming a production-money  security
23    interest  has  the burden of establishing the extent to which
24    the  security  interest  is   a   production-money   security
25    interest.

26        (810 ILCS 5/9-324A new)
27        Sec.   9-324A.   Priority  of  production-money  security
28    interests and agricultural liens.
29        (a)  Except as otherwise  provided  in  subsections  (c),
30    (d),  and  (e),  if  the  requirements  of subsection (b) are
31    satisfied, a perfected production-money security interest  in
32    production-money   crops  has  priority  over  a  conflicting
33    security interest in the same crops and, except as  otherwise
 
                            -22-               LRB9207991RCcd
 1    provided  in  Section  9-327,  also  has  priority  in  their
 2    identifiable proceeds.
 3        (b)  A  production-money  security  interest has priority
 4    under subsection (a) if:
 5             (1)  the  production-money  security   interest   is
 6        perfected  by  filing  when  the production-money secured
 7        party first gives a new value to  enable  the  debtor  to
 8        produce the crops;
 9             (2)  the  production-money  secured  party  sends an
10        authenticated  notification  to   the   holder   of   the
11        conflicting  security  interest  not less than 10 or more
12        than 30 days before the  production-money  secured  party
13        first gives new value to enable the debtor to produce the
14        crops  if  the  holder  had  filed  a financing statement
15        covering the crops before the date of the filing made  by
16        the production-money secured party; and
17             (3)     the    notification    states    that    the
18        production-money secured party has or expects to  acquire
19        a  production-money  security  interest  in  the debtor's
20        crops and provides a description of the crops.
21        (c) Excepts as otherwise provided in  subsection  (d)  or
22    (e),  if  more  than  one  security  interest  qualifies  for
23    priority  in  the  same  collateral under subsection (a), the
24    security interests rank according  to  priority  in  time  of
25    filing under Section 9-322(a).
26        (d)  To  the  extent  that  a  person holding a perfected
27    security interest in  production-money  crops  that  are  the
28    subject  of  a  production-money  security interest gives new
29    value to enable the debtor to  produce  the  production-money
30    crops and the value is in fact used for the production of the
31    production-money crops, the security interests rank according
32    to priority in time of filing under Section 9-322(a).
33        (e)   To   the   extent  that  a  person  holds  both  an
34    agricultural lien and a production-money security interest in
 
                            -23-               LRB9207991RCcd
 1    the same collateral securing the same obligations, the  rules
 2    of priority applicable to agricultural liens govern priority.

 3        Section  99.   Effective  date.   This  Act  takes effect
 4    January 1, 2002.

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