093_HB2415

 
                                     LRB093 08635 AMC 08863 b

 1        AN ACT in relation to commercial 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 Article 2B and Sections
 6    9-103A and 9-324A as follows:

 7        (810 ILCS 5/Article 2B heading new)
 8                             ARTICLE 2B
 9            GUARANTEED PREPAYMENTS OF AGRICULTURAL GOODS

10        (810 ILCS 5/Article 2B, Part 1 heading new)
11    PART 1. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER

12        (810 ILCS 5/2B-101 new)
13        Sec. 2B-101.  Short title. This Article  shall  be  known
14    and  may  be  cited  as  Uniform  Commercial  Code-Guaranteed
15    Prepayments of Agricultural Goods.

16        (810 ILCS 5/2B-102 new)
17        Sec.  2B-102.  Scope;  limitation  to  agricultural  good
18    transactions.  Unless  the  context  otherwise requires, this
19    Article applies to transactions  in  agricultural  goods;  it
20    does  not  apply  to  any  transaction which does not include
21    agricultural goods.

22        (810 ILCS 5/2B-103 new)
23        Sec. 2B-103. Definitions and index of definitions.
24        (1)  In  this  Article  unless  the   context   otherwise
25    requires:
26             (a)  "Agricultural  goods" means any product used in
27        or for production agriculture.
 
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 1             (b) "Production agriculture" means the raising of or
 2        the propagation of livestock; crops for  sale  for  human
 3        consumption;   crops   for   livestock  consumption;  and
 4        production seed stock grown for the propagation  of  feed
 5        grains and the husbandry of animals or for the purpose of
 6        providing  a  food  product,  including  the husbandry of
 7        blood stock as a main source of providing a food product.
 8        "Production agriculture"  also  means  animal  husbandry,
 9        floriculture, aquaculture, horticulture, and viticulture.

10        (810 ILCS 5/Article 2B, Part 2 heading new)
11       PART 2. ESTABLISHMENT OF AGRICULTURAL GOODS PREPAYMENT
12                              GUARANTEE

13        (810 ILCS 5/2B-201 new)
14        Sec. 2B-201. Prepayment Guarantee.
15        (1)  For  the  purposes of this Article, a purchase takes
16    place when a purchaser pays  for  agricultural  goods  to  be
17    delivered immediately or at a later date.
18        (2)  In  the  event  that  the  recipient  of  monies for
19    agricultural goods becomes  insolvent,  the  purchaser  shall
20    receive  a  payment equal to the monies paid for agricultural
21    goods not delivered.
22        (3)  In the  event  that  the  recipient  of  monies  for
23    agricultural  goods  enters  into insolvency proceedings, the
24    purchaser shall serve as the first secured  creditor  in  the
25    insolvency proceedings.

26        (810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
27        Sec. 9-102. Definitions and index of definitions.
28        (a)  Article 9 definitions.  In this Article:
29             (1)  "Accession"  means  goods  that  are physically
30        united with  other  goods  in  such  a  manner  that  the
31        identity of the original goods is not lost.
 
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 1             (2)  "Account",  except  as  used  in "account for",
 2        means a  right  to  payment  of  a  monetary  obligation,
 3        whether  or  not  earned by performance, (i) for property
 4        that has  been  or  is  to  be  sold,  leased,  licensed,
 5        assigned,  or  otherwise  disposed  of, (ii) for services
 6        rendered or  to  be  rendered,  (iii)  for  a  policy  of
 7        insurance  issued  or  to be issued, (iv) for a secondary
 8        obligation incurred or to be  incurred,  (v)  for  energy
 9        provided or to be provided, (vi) for the use or hire of a
10        vessel  under  a charter or other contract, (vii) arising
11        out of the use of a credit or charge card or  information
12        contained  on  or  for  use  with  the card, or (viii) as
13        winnings in a lottery or other game of chance operated or
14        sponsored by a State, governmental unit of  a  State,  or
15        person  licensed  or  authorized to operate the game by a
16        State or governmental unit of a State.  The term includes
17        health-care-insurance receivables.   The  term  does  not
18        include  (i) rights to payment evidenced by chattel paper
19        or an instrument,  (ii)  commercial  tort  claims,  (iii)
20        deposit   accounts,   (iv)   investment   property,   (v)
21        letter-of-credit  rights  or  letters  of credit, or (vi)
22        rights to payment for money or funds  advanced  or  sold,
23        other  than  rights arising out of the use of a credit or
24        charge card or information contained on or for  use  with
25        the card.
26             (3)  "Account debtor" means a person obligated on an
27        account,  chattel paper, or general intangible.  The term
28        does not include persons obligated to  pay  a  negotiable
29        instrument,  even  if  the instrument constitutes part of
30        chattel paper.
31             (4)  "Accounting", except  as  used  in  "accounting
32        for", means a record:
33                  (A)  authenticated by a secured party;
34                  (B)  indicating  the  aggregate  unpaid secured
 
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 1             obligations as of a  date  not  more  than  35  days
 2             earlier  or  35  days  later  than  the  date of the
 3             record; and
 4                  (C)  identifying   the   components   of    the
 5             obligations in reasonable detail.
 6             (5)  "Agricultural  lien"  means  an interest, other
 7        than a security interest, in farm products:
 8                  (A)  which secures payment or performance of an
 9             obligation  for  goods  or  services  furnished   in
10             connection with a debtor's farming operation;
11                  (B)  which  is created by statute in favor of a
12             person that in the ordinary course of  its  business
13             furnished   goods   or   services  to  a  debtor  in
14             connection with a debtor's farming operation; and
15                  (C)  whose effectiveness does not depend on the
16             person's possession of the personal property.
17             (6)  "As-extracted collateral" means:
18                  (A)  oil,  gas,  or  other  minerals  that  are
19             subject to a security interest that:
20                       (i)  is created  by  a  debtor  having  an
21                  interest in the minerals before extraction; and
22                       (ii)  attaches    to   the   minerals   as
23                  extracted; or
24                  (B)  accounts arising out of the  sale  at  the
25             wellhead  or minehead of oil, gas, or other minerals
26             in  which  the  debtor  had   an   interest   before
27             extraction.
28             (7)  "Authenticate" means:
29                  (A)  to sign; or
30                  (B)  to execute or otherwise adopt a symbol, or
31             encrypt or similarly process a record in whole or in
32             part,  with the present intent of the authenticating
33             person to identify the person and adopt or accept  a
34             record.
 
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 1             (8)  "Bank" means an organization that is engaged in
 2        the  business  of  banking.   The  term  includes savings
 3        banks, savings and loan associations, credit unions,  and
 4        trust companies.
 5             (9)  "Cash  proceeds" means proceeds that are money,
 6        checks, deposit accounts, or the like.
 7             (10)  "Certificate of title" means a certificate  of
 8        title  with  respect  to which a statute provides for the
 9        security interest in question  to  be  indicated  on  the
10        certificate  as  a  condition  or  result of the security
11        interest's obtaining priority over the rights of  a  lien
12        creditor with respect to the collateral.
13             (11)  "Chattel paper" means a record or records that
14        evidence  both  a  monetary  obligation  and  a  security
15        interest  in  specific  goods,  a  security  interest  in
16        specific goods and software used in the goods, a security
17        interest  in  specific goods and license of software used
18        in the goods, a lease of specific goods, or  a  lease  of
19        specified  goods  and  a  license of software used in the
20        goods.  In this paragraph, "monetary obligation" means  a
21        monetary  obligation secured by the goods or owed under a
22        lease of the goods and  includes  a  monetary  obligation
23        with  respect  to  software  used in the goods.  The term
24        does  not  include  (i)  charters  or   other   contracts
25        involving  the  use  or  hire of a vessel or (ii) records
26        that evidence a right to payment arising out of  the  use
27        of a credit or charge card or information contained on or
28        for  use with the card.  If a transaction is evidenced by
29        records  that  include  an  instrument   or   series   of
30        instruments,   the   group   of  records  taken  together
31        constitutes chattel paper.
32             (12)  "Collateral" means the property subject  to  a
33        security   interest   or  agricultural  lien.   The  term
34        includes:
 
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 1                  (A)  proceeds  to  which  a  security  interest
 2             attaches;
 3                  (B)  accounts,    chattel    paper,     payment
 4             intangibles,  and  promissory  notes  that have been
 5             sold; and
 6                  (C)  goods  that   are   the   subject   of   a
 7             consignment.
 8             (13)  "Commercial  tort claim" means a claim arising
 9        in tort with respect to which:
10                  (A)  the claimant is an organization; or
11                  (B)  the claimant  is  an  individual  and  the
12             claim:
13                       (i)  arose in the course of the claimant's
14                  business or profession; and
15                       (ii)  does not include damages arising out
16                  of  personal  injury  to  or  the  death  of an
17                  individual.
18             (14)  "Commodity   account"   means    an    account
19        maintained   by  a  commodity  intermediary  in  which  a
20        commodity contract is carried for a commodity customer.
21             (15)  "Commodity contract" means a commodity futures
22        contract, an option on a commodity  futures  contract,  a
23        commodity  option, or another contract if the contract or
24        option is:
25                  (A)  traded on or subject to  the  rules  of  a
26             board  of  trade  that  has  been  designated  as  a
27             contract  market  for  such  a  contract pursuant to
28             federal commodities laws; or
29                  (B)  traded on a  foreign  commodity  board  of
30             trade,  exchange,  or  market, and is carried on the
31             books of a commodity intermediary  for  a  commodity
32             customer.
33             (16)  "Commodity  customer" means a person for which
34        a commodity intermediary carries a commodity contract  on
 
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 1        its books.
 2             (17)  "Commodity intermediary" means a person that:
 3                  (A)  is  registered  as  a  futures  commission
 4             merchant under federal commodities law; or
 5                  (B)  in  the  ordinary  course  of its business
 6             provides clearance  or  settlement  services  for  a
 7             board  of  trade  that  has  been  designated  as  a
 8             contract market pursuant to federal commodities law.
 9             (18)  "Communicate" means:
10                  (A)  to   send  a  written  or  other  tangible
11             record;
12                  (B)  to transmit a record by any  means  agreed
13             upon  by  the  persons  sending  and  receiving  the
14             record; or
15                  (C)  in the case of transmission of a record to
16             or  by  a filing office, to transmit a record by any
17             means prescribed by filing-office rule.
18             (19)  "Consignee" means a merchant  to  which  goods
19        are delivered in a consignment.
20             (20)  "Consignment"  means a transaction, regardless
21        of its form, in  which  a  person  delivers  goods  to  a
22        merchant for the purpose of sale and:
23                  (A)  the merchant:
24                       (i)  deals  in  goods of that kind under a
25                  name other than the name of the  person  making
26                  delivery;
27                       (ii)  is not an auctioneer; and
28                       (iii)  is   not  generally  known  by  its
29                  creditors  to  be  substantially   engaged   in
30                  selling the goods of others;
31                  (B)  with   respect   to   each  delivery,  the
32             aggregate value of the goods is $1,000  or  more  at
33             the time of delivery;
34                  (C)  the   goods   are   not   consumer   goods
 
                            -8-      LRB093 08635 AMC 08863 b
 1             immediately before delivery; and
 2                  (D)  the transaction does not create a security
 3             interest that secures an obligation.
 4             (21)  "Consignor" means a person that delivers goods
 5        to a consignee in a consignment.
 6             (22)  "Consumer debtor" means a debtor in a consumer
 7        transaction.
 8             (23)  "Consumer  goods" means goods that are used or
 9        bought  for  use  primarily  for  personal,  family,   or
10        household purposes.
11             (24)  "Consumer-goods  transaction" means a consumer
12        transaction in which:
13                  (A)  an   individual   incurs   an   obligation
14             primarily  for  personal,   family,   or   household
15             purposes; and
16                  (B)  a  security  interest  in  consumer  goods
17             secures the obligation.
18             (25)  "Consumer  obligor" means an obligor who is an
19        individual and who incurred the obligation as part  of  a
20        transaction  entered into primarily for personal, family,
21        or household purposes.
22             (26)  "Consumer transaction" means a transaction  in
23        which  (i)  an  individual incurs an obligation primarily
24        for personal,  family,  or  household  purposes,  (ii)  a
25        security  interest  secures the obligation, and (iii) the
26        collateral is held or acquired  primarily  for  personal,
27        family,   or   household  purposes.   The  term  includes
28        consumer-goods transactions.
29             (27)  "Continuation statement" means an amendment of
30        a financing statement which:
31                  (A)  identifies,  by  its  file   number,   the
32             initial financing statement to which it relates; and
33                  (B)  indicates   that   it  is  a  continuation
34             statement for, or that it is filed to  continue  the
 
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 1             effectiveness    of,    the   identified   financing
 2             statement.
 3             (28)  "Debtor" means:
 4                  (A)  a person having an interest, other than  a
 5             security  interest or other lien, in the collateral,
 6             whether or not the person is an obligor;
 7                  (B)  a  seller  of  accounts,  chattel   paper,
 8             payment intangibles, or promissory notes; or
 9                  (C)  a consignee.
10             (29)  "Deposit   account"   means  a  demand,  time,
11        savings, passbook, nonnegotiable certificates of deposit,
12        uncertificated certificates of deposit,  nontransferrable
13        certificates  of  deposit,  or similar account maintained
14        with a  bank.   The  term  does  not  include  investment
15        property or accounts evidenced by an instrument.
16             (30)  "Document"  means  a  document  of  title or a
17        receipt of the type described in Section 7-201(2).
18             (31)  "Electronic chattel paper" means chattel paper
19        evidenced  by  a  record   or   records   consisting   of
20        information stored in an electronic medium.
21             (32)  "Encumbrance"  means  a  right,  other than an
22        ownership interest, in real property.  The term  includes
23        mortgages and other liens on real property.
24             (33)  "Equipment"  means goods other than inventory,
25        farm products, or consumer goods.
26             (34)  "Farm  products"  means  goods,   other   than
27        standing  timber,  with  respect  to  which the debtor is
28        engaged in a farming operation and which are:
29                  (A)  crops grown,  growing,  or  to  be  grown,
30             including:
31                       (i)  crops  produced  on trees, vines, and
32                  bushes; and
33                       (ii)  aquatic    goods     produced     in
34                  aquacultural operations;
 
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 1                  (B)  livestock,   born   or  unborn,  including
 2             aquatic goods produced in aquacultural operations;
 3                  (C)  supplies used or  produced  in  a  farming
 4             operation; or
 5                  (D)  products  of  crops  or livestock in their
 6             unmanufactured states.
 7             (35)  "Farming     operation"     means     raising,
 8        cultivating,  propagating,  fattening,  grazing,  or  any
 9        other farming, livestock, or aquacultural operation.
10             (36)  "File number" means the number assigned to  an
11        initial financing statement pursuant to Section 9-519(a).
12             (37)  "Filing  office" means an office designated in
13        Section 9-501 as the place to file a financing statement.
14             (38)  "Filing-office  rule"  means  a  rule  adopted
15        pursuant to Section 9-526.
16             (39)  "Financing  statement"  means  a   record   or
17        records  composed  of  an initial financing statement and
18        any  filed  record  relating  to  the  initial  financing
19        statement.
20             (40)  "Fixture  filing"  means  the  filing   of   a
21        financing  statement  covering  goods  that are or are to
22        become fixtures and satisfying Section 9-502(a) and  (b).
23        The  term  includes  the  filing of a financing statement
24        covering goods of a transmitting utility which are or are
25        to become fixtures.
26             (41)  "Fixtures" means goods  that  have  become  so
27        related  to  particular real property that an interest in
28        them arises under real property law.
29             (42)  "General  intangible"   means   any   personal
30        property,   including   things   in  action,  other  than
31        accounts, chattel paper, commercial tort claims,  deposit
32        accounts,   documents,   goods,  instruments,  investment
33        property, letter-of-credit  rights,  letters  of  credit,
34        money, and oil, gas, or other minerals before extraction.
 
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 1        The term includes payment intangibles and software.
 2             (43)  "Good  faith"  means  honesty  in fact and the
 3        observance of reasonable  commercial  standards  of  fair
 4        dealing.
 5             (44)  "Goods" means all things that are movable when
 6        a  security  interest  attaches.   The  term includes (i)
 7        fixtures, (ii) standing timber that  is  to  be  cut  and
 8        removed  under  a  conveyance or contract for sale, (iii)
 9        the unborn young of animals, (iv) crops  grown,  growing,
10        or  to be grown, even if the crops are produced on trees,
11        vines, or bushes, and (v) manufactured homes.   The  term
12        also  includes  a  computer program embedded in goods and
13        any supporting information provided in connection with  a
14        transaction relating to the program if (i) the program is
15        associated  with  the  goods  in  such  a  manner that it
16        customarily is considered part of the goods, or  (ii)  by
17        becoming  the  owner  of  the  goods, a person acquires a
18        right to use the program in connection  with  the  goods.
19        The  term does not include a computer program embedded in
20        goods that consist solely of  the  medium  in  which  the
21        program  is  embedded.   The  term  also does not include
22        accounts, chattel paper, commercial tort claims,  deposit
23        accounts,  documents,  general  intangibles, instruments,
24        investment property, letter-of-credit rights, letters  of
25        credit,  money,  or  oil,  gas,  or other minerals before
26        extraction.
27             (45)  "Governmental  unit"  means   a   subdivision,
28        agency,  department,  county,  parish,  municipality,  or
29        other  unit  of  the  government  of the United States, a
30        State, or  a  foreign  country.   The  term  includes  an
31        organization having a separate corporate existence if the
32        organization  is eligible to issue debt on which interest
33        is exempt from income taxation  under  the  laws  of  the
34        United States.
 
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 1             (46)  "Health-care-insurance  receivable"  means  an
 2        interest in or claim under a policy of insurance which is
 3        a   right   to  payment  of  a  monetary  obligation  for
 4        health-care goods or services provided.
 5             (47)  "Instrument" means a negotiable instrument  or
 6        any  other  writing that evidences a right to the payment
 7        of a  monetary  obligation,  is  not  itself  a  security
 8        agreement  or  lease,  and  is of a type that in ordinary
 9        course of business is transferred by  delivery  with  any
10        necessary  indorsement  or assignment.  The term does not
11        include (i) investment property, (ii) letters of  credit,
12        (iii)   nonnegotiable   certificates   of  deposit,  (iv)
13        uncertificated    certificates    of     deposit,     (v)
14        nontransferrable   certificates   of   deposit,  or  (vi)
15        writings that evidence a right to payment arising out  of
16        the  use  of  a  credit  or  charge  card  or information
17        contained on or for use with the card.
18             (48)  "Inventory"  means  goods,  other  than   farm
19        products, which:
20                  (A)  are leased by a person as lessor;
21                  (B)  are  held by a person for sale or lease or
22             to be furnished under a contract of service;
23                  (C)  are furnished by a person under a contract
24             of service; or
25                  (D)  consist of raw materials, work in process,
26             or materials used or consumed in a business.
27             (49)  "Investment  property"   means   a   security,
28        whether    certificated   or   uncertificated,   security
29        entitlement, securities account, commodity  contract,  or
30        commodity account.
31             (50)  "Jurisdiction  of  organization", with respect
32        to a  registered  organization,  means  the  jurisdiction
33        under whose law the organization is organized.
34             (51)  "Letter-of-credit  right"  means  a  right  to
 
                            -13-     LRB093 08635 AMC 08863 b
 1        payment  or performance under a letter of credit, whether
 2        or not the beneficiary has demanded or  is  at  the  time
 3        entitled to demand payment or performance.  The term does
 4        not  include the right of a beneficiary to demand payment
 5        or performance under a letter of credit.
 6             (52)  "Lien creditor" means:
 7                  (A)  a creditor that has acquired a lien on the
 8             property involved by attachment, levy, or the like;
 9                  (B)  an assignee for benefit of creditors  from
10             the time of assignment;
11                  (C)  a  trustee  in bankruptcy from the date of
12             the filing of the petition; or
13                  (D)  a receiver in  equity  from  the  time  of
14             appointment.
15             (53)  "Manufactured   home"   means   a   structure,
16        transportable  in  one  or  more  sections, which, in the
17        traveling mode, is eight body feet or more in width or 40
18        body feet or more in length, or, when erected on site, is
19        320 or  more  square  feet,  and  which  is  built  on  a
20        permanent  chassis  and designed to be used as a dwelling
21        with or without a permanent foundation when connected  to
22        the   required  utilities,  and  includes  the  plumbing,
23        heating,   air-conditioning,   and   electrical   systems
24        contained therein.  The term includes any structure  that
25        meets  all  of  the requirements of this paragraph except
26        the size requirements  and  with  respect  to  which  the
27        manufacturer  voluntarily  files a certification required
28        by the United  States  Secretary  of  Housing  and  Urban
29        Development  and  complies with the standards established
30        under Title 42 of the United States Code.
31             (54)  "Manufactured-home   transaction"   means    a
32        secured transaction:
33                  (A)  that  creates  a  purchase-money  security
34             interest  in  a  manufactured  home,  other  than  a
 
                            -14-     LRB093 08635 AMC 08863 b
 1             manufactured home held as inventory; or
 2                  (B)  in which a manufactured home, other than a
 3             manufactured  home held as inventory, is the primary
 4             collateral.
 5             (55)  "Mortgage" means a consensual interest in real
 6        property, including fixtures, which  secures  payment  or
 7        performance of an obligation.
 8             (56)  "New debtor" means a person that becomes bound
 9        as  debtor under Section 9-203(d) by a security agreement
10        previously entered into by another person.
11             (57)  "New value"  means  (i)  money,  (ii)  money's
12        worth  in  property,  services,  or  new credit, or (iii)
13        release by  a  transferee  of  an  interest  in  property
14        previously  transferred to the transferee.  The term does
15        not  include  an  obligation  substituted   for   another
16        obligation.
17             (58)  "Noncash  proceeds"  means proceeds other than
18        cash proceeds.
19             (59)  "Obligor" means a person that, with respect to
20        an obligation secured by a security  interest  in  or  an
21        agricultural  lien on the collateral, (i) owes payment or
22        other performance of the obligation,  (ii)  has  provided
23        property  other  than the collateral to secure payment or
24        other  performance  of  the  obligation,  or   (iii)   is
25        otherwise  accountable in whole or in part for payment or
26        other performance of the obligation.  The term  does  not
27        include  issuers  or  nominated persons under a letter of
28        credit.
29             (60)  "Original debtor", except as used  in  Section
30        9-310(c),  means a person that, as debtor, entered into a
31        security agreement to which a new debtor has become bound
32        under Section 9-203(d).
33             (61)  "Payment   intangible"   means    a    general
34        intangible  under  which  the  account debtor's principal
 
                            -15-     LRB093 08635 AMC 08863 b
 1        obligation is a monetary obligation.
 2             (62)  "Person  related  to",  with  respect  to   an
 3        individual, means:
 4                  (A)  the spouse of the individual;
 5                  (B)  a   brother,  brother-in-law,  sister,  or
 6             sister-in-law of the individual;
 7                  (C)  an ancestor or lineal  descendant  of  the
 8             individual or the individual's spouse; or
 9                  (D)  any  other relative, by blood or marriage,
10             of the individual or  the  individual's  spouse  who
11             shares the same home with the individual.
12             (63)  "Person   related  to",  with  respect  to  an
13        organization, means:
14                  (A)  a   person    directly    or    indirectly
15             controlling,  controlled by, or under common control
16             with the organization;
17                  (B)  an officer or director  of,  or  a  person
18             performing  similar  functions  with respect to, the
19             organization;
20                  (C)  an officer or director  of,  or  a  person
21             performing  similar  functions  with  respect  to, a
22             person described in subparagraph (A);
23                  (D)  the spouse of an individual  described  in
24             subparagraph (A), (B), or (C); or
25                  (E)  an  individual  who is related by blood or
26             marriage to an individual described in  subparagraph
27             (A),  (B), (C), or (D) and shares the same home with
28             the individual.
29             (64)  "Proceeds",  except   as   used   in   Section
30        9-609(b), means the following property:
31                  (A)  whatever is acquired upon the sale, lease,
32             license,   exchange,   or   other   disposition   of
33             collateral;
34                  (B)  whatever  is  collected on, or distributed
 
                            -16-     LRB093 08635 AMC 08863 b
 1             on account of, collateral;
 2                  (C)  rights arising out of collateral;
 3                  (D)  to the extent of the value of  collateral,
 4             claims  arising  out  of the loss, nonconformity, or
 5             interference   with   the   use   of,   defects   or
 6             infringement  of  rights  in,  or  damage  to,   the
 7             collateral; or
 8                  (E)  to  the  extent of the value of collateral
 9             and to the extent  payable  to  the  debtor  or  the
10             secured  party,  insurance  payable by reason of the
11             loss or nonconformity of, defects or infringement of
12             rights in, or damage to, the collateral.
13             (64.1)  "Production-money crops"  means  crops  that
14        secure   a   production-money  obligation  incurred  with
15        respect to the production of those crops.
16             (64.2)  "Production-money   obligation"   means   an
17        obligation of an obligor incurred for new value given  to
18        enable  the  debtor  to  produce crops if the value is in
19        fact used for the production of crops.
20             (64.3)  "Production of crops" includes  tilling  and
21        otherwise   preparing   land   for   growing,   planting,
22        cultivating,  fertilizing,  irrigating,  harvesting,  and
23        gathering  crops,  and  protecting  them  from  damage or
24        disease.
25             (65)  "Promissory note"  means  an  instrument  that
26        evidences  a  promise  to pay a monetary obligation, does
27        not evidence an order to pay, and  does  not  contain  an
28        acknowledgment  by  a bank that the bank has received for
29        deposit a sum of money or funds.
30             (66)  "Proposal" means a record authenticated  by  a
31        secured  party  which  includes  the  terms  on which the
32        secured party is willing to accept collateral in full  or
33        partial   satisfaction   of  the  obligation  it  secures
34        pursuant to Sections 9-620, 9-621, and 9-622.
 
                            -17-     LRB093 08635 AMC 08863 b
 1             (67)  "Public-finance transaction" means  a  secured
 2        transaction in connection with which:
 3                  (A)  debt securities are issued;
 4                  (B)  all  or a portion of the securities issued
 5             have an initial  stated  maturity  of  at  least  20
 6             years; and
 7                  (C)  the   debtor,   obligor,   secured  party,
 8             account  debtor  or  other   person   obligated   on
 9             collateral,   assignor  or  assignee  of  a  secured
10             obligation, or assignor or assignee  of  a  security
11             interest  is  a  State  or  a governmental unit of a
12             State.
13             (68)  "Pursuant to commitment", with respect  to  an
14        advance  made  or  other  value given by a secured party,
15        means pursuant to the secured party's obligation, whether
16        or not a subsequent event of default or other  event  not
17        within  the  secured  party's control has relieved or may
18        relieve the secured party from its obligation.
19             (69)  "Record", except as used in "for record",  "of
20        record",  "record  or  legal  title", and "record owner",
21        means information that is inscribed on a tangible  medium
22        or  which  is stored in an electronic or other medium and
23        is retrievable in perceivable form.
24             (70)  "Registered     organization"     means     an
25        organization organized solely under the law of  a  single
26        State  or  the United States and as to which the State or
27        the United States must maintain a public  record  showing
28        the organization to have been organized.
29             (71)  "Secondary  obligor"  means  an obligor to the
30        extent that:
31                  (A)  the obligor's obligation is secondary; or
32                  (B)  the obligor has a right of  recourse  with
33             respect  to  an  obligation  secured  by  collateral
34             against  the debtor, another obligor, or property of
 
                            -18-     LRB093 08635 AMC 08863 b
 1             either.
 2             (72)  "Secured party" means:
 3                  (A)  a  person  in  whose  favor   a   security
 4             interest is created or provided for under a security
 5             agreement,  whether  or  not  any  obligation  to be
 6             secured is outstanding;
 7                  (B)  a person that holds an agricultural lien;
 8                  (C)  a consignor;
 9                  (D)  a person to which accounts, chattel paper,
10             payment intangibles, or promissory notes  have  been
11             sold;
12                  (E)  a   trustee,   indenture  trustee,  agent,
13             collateral agent, or other representative  in  whose
14             favor  a  security  interest or agricultural lien is
15             created or provided for; or
16                  (F)  a person that holds  a  security  interest
17             arising   under   Section  2-401,  2-505,  2-711(3),
18             2A-508(5), 4-210, or 5-118.
19             (73)  "Security agreement" means an  agreement  that
20        creates or provides for a security interest.
21             (74)  "Send",   in   connection  with  a  record  or
22        notification, means:
23                  (A)  to  deposit  in  the  mail,  deliver   for
24             transmission,  or  transmit by any other usual means
25             of  communication,   with   postage   or   cost   of
26             transmission  provided for, addressed to any address
27             reasonable under the circumstances; or
28                  (B)  to cause the record or notification to  be
29             received  within  the  time  that it would have been
30             received if properly sent under subparagraph (A).
31             (75)  "Software" means a computer  program  and  any
32        supporting  information  provided  in  connection  with a
33        transaction relating to the program. The  term  does  not
34        include  a  computer  program  that  is  included  in the
 
                            -19-     LRB093 08635 AMC 08863 b
 1        definition of goods.
 2             (76)  "State" means a State of  the  United  States,
 3        the  District of Columbia, Puerto Rico, the United States
 4        Virgin Islands, or any territory  or  insular  possession
 5        subject to the jurisdiction of the United States.
 6             (77)  "Supporting      obligation"      means      a
 7        letter-of-credit   right  or  secondary  obligation  that
 8        supports  the  payment  or  performance  of  an  account,
 9        chattel paper,  a  document,  a  general  intangible,  an
10        instrument, or investment property.
11             (78)  "Tangible  chattel  paper" means chattel paper
12        evidenced  by  a  record   or   records   consisting   of
13        information that is inscribed on a tangible medium.
14             (79)  "Termination  statement" means an amendment of
15        a financing statement which:
16                  (A)  identifies,  by  its  file   number,   the
17             initial financing statement to which it relates; and
18                  (B)  indicates  either that it is a termination
19             statement or that the identified financing statement
20             is no longer effective.
21             (80)  "Transmitting   utility"   means   a    person
22        primarily engaged in the business of:
23                  (A)  operating   a   railroad,  subway,  street
24             railway, or trolley bus;
25                  (B)  transmitting communications  electrically,
26             electromagnetically, or by light;
27                  (C)  transmitting  goods  by pipeline or sewer;
28             or
29                  (D)  transmitting or producing and transmitting
30             electricity, steam, gas, or water.
31        (b)  Definitions  in  other  Articles.    The   following
32    definitions in other Articles apply to this Article:
33        "Applicant". Section 5-102.
34        "Beneficiary". Section 5-102.
 
                            -20-     LRB093 08635 AMC 08863 b
 1        "Broker". Section 8-102.
 2        "Certificated security".  Section 8-102.
 3        "Check".  Section 3-104.
 4        "Clearing corporation".  Section 8-102.
 5        "Contract for sale".  Section 2-106.
 6        "Customer".  Section 4-104.
 7        "Entitlement holder".  Section 8-102.
 8        "Financial asset".  Section 8-102.
 9        "Holder in due course".  Section 3-302.
10        "Issuer"   (with   respect  to  a  letter  of  credit  or
11    letter-of-credit right).  Section 5-102.
12        "Issuer" (with respect to a security).  Section 8-201.
13        "Lease".  Section 2A-103.
14        "Lease agreement".  Section 2A-103.
15        "Lease contract".  Section 2A-103.
16        "Leasehold interest".  Section 2A-103.
17        "Lessee".  Section 2A-103.
18        "Lessee in ordinary course of business".  Section 2A-103.
19        "Lessor".  Section 2A-103.
20        "Lessor's residual interest".  Section 2A-103.
21        "Letter of credit".  Section 5-102.
22        "Merchant".  Section 2-104.
23        "Negotiable instrument".  Section 3-104.
24        "Nominated person".  Section 5-102.
25        "Note".  Section 3-104.
26        "Proceeds of a letter of credit".  Section 5-114.
27        "Prove".  Section 3-103.
28        "Sale".  Section 2-106.
29        "Securities account".  Section 8-501.
30        "Securities intermediary".  Section 8-102.
31        "Security".  Section 8-102.
32        "Security certificate".  Section 8-102.
33        "Security entitlement".  Section 8-102.
34        "Uncertificated security".  Section 8-102.
 
                            -21-     LRB093 08635 AMC 08863 b
 1        (c)  Article 1 definitions  and  principles.   Article  1
 2    contains  general  definitions and principles of construction
 3    and interpretation applicable throughout this Article.
 4    (Source: P.A. 91-893, eff. 7-1-01; 92-819, eff. 8-21-02.)

 5        (810 ILCS 5/9-103A new)
 6        Sec. 9-103A. "Production-money crops";  "production-money
 7    obligation";  production-money  security  interest; burden of
 8    establishing.
 9        (a) A security interest in crops  is  a  production-money
10    security   interest   to   the  extent  that  the  crops  are
11    production-money crops.
12        (b) If the extent to  which  a  security  interest  is  a
13    production-money security interest depends on the application
14    of  a payment to a particular obligation, the payment must be
15    applied:
16             (1) in accordance  with  any  reasonable  method  of
17        application to which the parties agree;
18             (2)  in  the  absence of the parties' agreement to a
19        reasonable method, in accordance with  any  intention  of
20        the  obligor manifested at or before the time of payment;
21        or
22             (3) in the absence of an agreement to  a  reasonable
23        method  and  a  timely  manifestation  of  the  obligor's
24        intention, in the following order:
25                  (A) to obligations that are not secured; and
26                  (B)  if more than one obligation is secured, to
27             obligations  secured  by  production-money  security
28             interests in the order in  which  those  obligations
29             were incurred.
30        (c)  A  production-money  security interest does not lose
31    its status as such, even if:
32             (1)  the  production-money  crops  also  secure   an
33        obligation that is not a production-money obligation;
 
                            -22-     LRB093 08635 AMC 08863 b
 1             (2)  collateral  that  is not production-money crops
 2        also secures the production-money obligation; or
 3             (3)  the  production-money   obligation   has   been
 4        renewed, refinanced, or restructured.
 5        (d)  A secured party claiming a production-money security
 6    interest has the burden of establishing the extent  to  which
 7    the   security   interest   is  a  production-money  security
 8    interest.

 9        (810 ILCS 5/9-324A new)
10        Sec.  9-324A.  Priority  of   production-money   security
11    interests and agricultural liens.
12        (a)  Except  as  otherwise  provided  in subsections (c),
13    (d), and (e), if  the  requirements  of  subsection  (b)  are
14    satisfied,  a perfected production-money security interest in
15    production-money  crops  has  priority  over  a   conflicting
16    security  interest in the same crops and, except as otherwise
17    provided  in  Section  9-327,  also  has  priority  in  their
18    identifiable proceeds.
19        (b) A production-money  security  interest  has  priority
20    under subsection (a) if:
21             (1)   the   production-money  security  interest  is
22        perfected by filing  when  the  production-money  secured
23        party  first  gives  a  new value to enable the debtor to
24        produce the crops;
25             (2) the  production-money  secured  party  sends  an
26        authenticated   notification   to   the   holder  of  the
27        conflicting security interest not less than  10  or  more
28        than  30  days  before the production-money secured party
29        first gives new value to enable the debtor to produce the
30        crops if the  holder  had  filed  a  financing  statement
31        covering  the crops before the date of the filing made by
32        the production-money secured party; and
33             (3)    the    notification    states    that     the
 
                            -23-     LRB093 08635 AMC 08863 b
 1        production-money  secured party has or expects to acquire
 2        a production-money  security  interest  in  the  debtor's
 3        crops and provides a description of the crops.
 4        (c)  Excepts  as  otherwise provided in subsection (d) or
 5    (e),  if  more  than  one  security  interest  qualifies  for
 6    priority in the same collateral  under  subsection  (a),  the
 7    security  interests  rank  according  to  priority in time of
 8    filing under Section 9-322(a).
 9        (d) To the extent  that  a  person  holding  a  perfected
10    security  interest  in  production-money  crops  that are the
11    subject of a production-money  security  interest  gives  new
12    value  to  enable  the debtor to produce the production-money
13    crops and the value is in fact used for the production of the
14    production-money crops, the security interests rank according
15    to priority in time of filing under Section 9-322(a).
16        (e)  To  the  extent  that  a  person   holds   both   an
17    agricultural lien and a production-money security interest in
18    the  same collateral securing the same obligations, the rules
19    of priority applicable to agricultural liens govern priority.

20        Section 99. Effective date. This Act  takes  effect  upon
21    becoming law.